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Monday, November 28, 2022

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Westlife Development – Big Mac Story Has Just Begun: Prabhudas Lilladher

Our recent management interaction reinforced our positive stance on the Westlife Development Ltd. given-

  1. plans to add 35-40 stores in FY23 and 200 stores by FY26,

  2. strong innovation pipeline across burgers and chicken,

  3. probability of staggered increase in royalty (4% in FY23, 4.5% in FY24, 5% in FY25/26) beyond FY26,

  4. sustained success of launches like gourmet burgers and meals and fried chicken and,

  5. strong start to new stores in tier-II/III with sales at par with older stores.

Growth momentum remains strong on the back of sustained growth in dine in and convenience channel (two times pre-Covid levels), positive response to fried chicken pilot in West (five-10 stores in Mumbai) and traction in gourmet burgers and meal options.

We believe input cost pressures have peaked out and 5% price increase from May 2022 will aid margin expansion in coming quarters.

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