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Westlife Development Limited May 2015
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Highest Annual Sales Per Store
Fortune India 2011
Interbrand 2013 World’s 7th most valuable brand
Most Admired Company – Fortune 2014
McDonald’s leads globally
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16th Rank on Brand Equity’s MOST EXCITING BRANDS 2014
The Economic Times is an English-language Indian daily newspaper
published by the Bennett, Coleman & Co. Ltd. first published in 1961.
It is the world's second-most widely read English-language business
newspaper, after the Wall Street Journal
Brand Equity is a weekly color supplement that appears every
Wednesday, which covers marketing, advertising, media and market
research.
Number 1 in the QSR Category
recognized in India as well
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Great Place to Work® Award – 1st in the Food
Retail (QSR) category and 4th in India’s top 10
employers in Retail
HRPL BACKGROUND :
•Started as a Joint Venture in 1995 •Ownership status changed to DL* in May 2010 •DL develops sites at their own cost and pays
a royalty
MFA# KEY HIGHLIGHTS : •Right to own and operate McDonald’s
restaurants in Western and Southern India until 2030
• HRPL pays royalty and fees to McDonald’s
Corporation
First Restaurant in
Mumbai, 1996
HARDCASTLE RESTAURANTS
PVT. LTD.
(HRPL )
West and South
CONNAUGHT PLAZA
RESTAURANTS PVT. LTD.
(CPRL)
North and East
*DL: Development Licensee A Development Licensee, in the context of McDonald’s, means an entity which is granted franchise rights, by McDonald’s Corporation or its affiliates, to own and operate McDonald’s restaurants, to adopt and use the McDonald’s system to develop and run McDonald’s restaurants in a given area, and to advertise and use the McDonald’s brand name and trademarks for products sold at such restaurants. •Map of India is indicative # MFA : Master Franchise Agreement
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ownership structure
Westlife Development Ltd
(BSE : 505533)
100% Hardcastle Restaurants Pvt. Ltd.
FII and Public
38%
Promoter Group
62%
Shareholding Pattern*
*As at Mar 31, 2015
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building the eco system 1995-2012
1995-2012
Glocal 1995-96
Building the
FOUNDATION 1997-2003
GROWING the Category
2003-2012
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building the eco system
glocal: cultural sensitivity
Only country to have
SEPARATE Vegetarian and
Non Vegetarian Kitchens
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building the eco system
glocal: menu localization
Local tastes like “Aloo Tikki” in a uniquely McDonald’s form
Adapting popular
forms like the
PUFF
McAloo Tikki
Chicken McGrill
Pizza McPuff
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building the eco system
glocal: building a local supply chain
Developed a
cold chain
Global suppliers with
local production
Creating direct linkage
to the farms
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Over 95% localization
building the eco system
glocal: developing sustainable unit economics
• Local supply chain for equipment
• Right Sizing Restaurants • Optimizing Kitchen Capacity
• Over 95% of produce locally sourced
• Tax Rationalization • Increased supplier capacity through
3rd party business
2003
1996
2003
-X%
2240 basis points improvement 1X
0.4X
Average Development Cost Restaurant Operating Margins
19
96
* Graphs not to scale, for representational purpose only
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creating the category Quick Service Restaurants (QSR)
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creating the category
nascent category in 2003
Eating out was an
occasion
Of the 100 eating
occasions in a month, people were eating
out only 3 times*
‘Housewives’
Our Number 1 competitor
* Source: Brand Track, Mumbai
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creating the category
driving up the average unit volume
CONVENIENCE For servicing all
occasions
VALUE For driving new
users and
frequency
MENU To provide
modern choices
for all day parts
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creating the category
value: building block approach
Everyday
Affordability Filling
Affordable
Meals Place
to
refuel
2004 2009 2012
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creating the category
through new stores and brand extensions
McDelivery Breakfast Kiosk
For all OCCASIONS that
the customer eats out
And for all
DAY PARTS
Across CUSTOMER segments
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55
130
1996-2003 2004-2008 2009-2012
Store Count
16
creating the category
menu: modern choices with taste that consumers like
Chicken
McNuggets
2010
McFlurry
2011
McEgg
2012 Spice Fest
2012
McSpicy
2011
McAloo Tikki
2004
Breakfast
2009
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Saucy Wraps
2014
creating the category
we drove the growth in the category
3
7.8
2003 2012
IEO Monthly Frequency, MUMBAI
1x
1.74 x
2003 2012
HRPL Average Volume Growth
Per Annum
(INR Mio)
* Source: Brand Track, Mumbai
IEO : Informal eating Out
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grow and dominate 2013 onwards
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changing profile of category
QSR moved
from being an
occasion to a
destination to
refuel
As a Fad As a
status symbol
As a
necessity
2003 2009 2014
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IEO
USD 96 Bn
QSR
USD 15.6 Bn
IFF
USD 14.5 Bn
WFF
USD
1 Bn
11%
11%
11%
14%
Estimated Growth in 2014
grow and dominate
IEO is growing, will continue to grow in the future as well
3
10 8.6
18
Mumbai Benchmark Asian
City
IEO Monthly Frequency
2003 2013
Source: Euromonitor IEO : Informal Eating Out; IFF: Indian Fast Food; WFF: Western Fast Food
Source: Brand Track, Mumbai
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60% of the population below
the age of 30
Western fast food driven by
Teens and YANKS
Macro factors will drive further growth
1x
1y 1z
1.7x
1.8y 2.8z
IEO IFF WFF
2008 2013
Source: Euromonitor Graph not to scale, for representation purpose only
22 22
levers for growth over the next 5 years
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levers for growth
1. Broadening Accessibility
3. Margin
Expansion
2. Growing Baseline
Sales
4. Growth through people
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broadening accessibility
Grow store
footprint
Unit
Economics
25
High Streets
broadening accessibility
grow responsibly
BUILD REAL ESTATE
COMPETITIVE ADVANTAGE
• Balance between quality
real estate and pace
• Portfolio Approach
• Long Term Deals
Includes 2 Franchisee stores As of March 2015
Malls GROW RESPONSIBLY
• Getting the business
model and profit formula
right before scaling
• Keep evolving with
changing cost realities
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YEA
RS
7 Y
EA
RS
5 Y
EA
RS
18 STORES
69 STORES
122 STORES
1997 - 2003 2004-2010 2011-2015
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broadening accessibility
building unit economics
Average investment of INR 25-30 Mio
Stores typically need 2-3 years to establish,
depending upon the brand
awareness in the city
Year 3:
Sales: INR 40-50 Mio
Cash ROI: 22% - 25%
Continuous innovation to optimize restaurant
development costs.
Yielded results in FY15
1/3 of Key,
Core and Non Core Cities Un-
penetrated
Balance
Potential of
600+ stores
Basis Global Index of an Asian city
1.32 restaurants per 100,000 people
190 Cities untapped in our region, since
current presence in 20 cities
broadening accessibility
improve brand access
Tamil Nadu 11 Restaurants
Chattisgarh 0 Restaurant
Madhya Pradesh
3 Restaurants
Kerala 5 Restaurants
Gujarat 25
Restaurants
Telangana 18 Restaurants
Karnataka 49 Restaurants
Maharashtra
98 Restaurants
Significant potential in existing towns
and cities
Most cities and towns significantly
under penetrated
Indicates the number of stores in each state as
of March 2015 29
7 Y
EA
RS
7 Y
EA
RS
3 Y
EA
RS
1997 - 2003 2004-2010 2011-2013
NEX
T 5
YEA
RS
175 – 250 Stores
74 STORES
69 STORES
18 STORES
2014 Onwards
175 - 250 new stores over the next 5 years
30
Years denote fiscal years
growing base line
Value
Menu
Brand
Extensions
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Making the brand ACCESSIBLE in NEW MARKETS
providing VALUE FOR MONEY, not a price point
Ad
din
g N
EW
USER
S t
o t
he
bra
nd
in
EX
ISTI
NG
ma
rke
ts
32
growing base line
new menu platforms
Platforms that leverage EXISTING
INVESTMENTS and capacity
Providing modern choices to
consumers of today
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growing base line
contemporary menu choices
Masala Grill Burger McEgg Burger
Chicken Maharaja Mac
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Reduced fat sauces
growing base line
brand extensions
Brand extensions will continue to add to the baseline as our
offerings and reach grow
75-150 McCafé's over 3-5 years
24/7 McDelivery Service Breakfast Dessert Kiosks 35
Brand extensions add another touch point with the consumer and a new
occasion for customer to walk-in
re-imaging with brand extensions
Modernize the customer experience through restaurant re-imaging initiatives
Providing contemporary restaurant designs & relevant experience to our consumers
36
Base Line Value Menu Brand
Extensions
QSC Increased
Base Line
growing base line
through occasions, day parts and customer segments
Graph not to scale, for representation purpose only
37
margin expansion
38
margin expansion
operating leverage
Bulk of the cost incurred for operating In Store
Adding brand extensions helps grow sales, while optimizing assets
Diagram representative, not indicative of size of impact
In-store Business
McCafé
24 Hours
Breakfast McDelivery
Menu Management
Leverage cost
through scale
via effective
supply chain
management
margin expansion
operating leverage
Building block on margin
All levers of the
business model
coming together
EBITDA Gross
Margin
Operating
Leverage
Royalty G&A EBITDA
Graph not to scale, for representation purpose only
40
people
41
people pipeline
Strong LEADERSHIP TEAM providing
strategic direction backed by an
experienced CROSS
FUNCTIONAL TEAM managing execution
Leadership team
committed to TALENT
MANAGEMENT,
investing over 20
days each year for
building pipeline
Investments in
LEARNING AND
DEVELOPMENT ,
especially in mid
management to
build skills for the
future
Engaging
7,500+ people
across 26
cities
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43
Vice Chairman
MD
Marketing
Communications
Marketing
Menu Mgt.
Development
Constructions
Corporate Alliances
Real Estate
Business Operations
Regional Directors
Regional Teams
Mumbai
Rest of West
South
Supply Chain
Supply Chain
QA
People Resources
Training
Corporate HR
Talent Mgt
Finance and IT
Finance
IT
people
A deep
organization
Focused on Talent
Management
175-250 new stores
in the next 5 years
Growing baseline
Margin Expansion
People
in summary
44
financial summary
45
store growth, sales and comparable sales trends
55 74 87 107 130 161 184 209
10 20 14 21 24
32 29 27
-100
-80
-60
-40
-20
0
20
40
0
50
100
150
200
250
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Total Stores New Stores
1,604 2,104 2,772 3,793
5,445
6,810 7,384
7,640
41%
31% 32% 37%
44%
25% 8% 3%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Sales ( INR Mio) Sales Growth %
25% CAGR
46
19% 9% 12%
17% 22%
6%
-6% -6% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Comps%
margin trajectory
47
54.7% 56.0%
56.7% 57.1%
55.6% 56.0%
57.6% 58.4%
52.0%
53.0%
54.0%
55.0%
56.0%
57.0%
58.0%
59.0%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
Gross Margin %
76 52 120 400
672 627 488
316
4.8% 2.5%
4.4%
10.5% 12.3%
9.2%
6.6% 4.1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
-
100
200
300
400
500
600
700
800
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
INR Mio
EBITDA EBITDA %
general & administration (G&A)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
FY09 FY10 FY11 FY12 FY13 FY14 FY15
G&A Headcount 48
established model for tapping into the
potential
Real Estate
portfolio array
Provides competitive
differentiation
World’s
Largest QSR Brand
Brand connect with the target audience
Favorite Place and way
to eat
49
Indigenous Supply Chain for competitive
advantage
Farm to FORK
thank you
50