Westlife Foodworld Limited, the master franchisee for McDonald's in West and South India, has announced a significant update regarding its royalty fee structure for the fiscal year 2026 (FY26). The company has established a royalty fee of 5.00% to be paid to McDonald's Corporation, contingent upon meeting specific network growth objectives.

Key Details of the Royalty Agreement

Implications and Context

This royalty fee arrangement is a crucial aspect of Westlife Foodworld's relationship with McDonald's Corporation. As the master franchisee, Westlife Foodworld operates McDonald's restaurants in West and South India through its wholly-owned subsidiary, Hardcastle Restaurants Pvt Ltd (HRPL).

The linking of the royalty fee to network growth objectives suggests a strategic approach by both parties. It incentivizes Westlife Foodworld to expand its McDonald's restaurant network, potentially leading to increased market presence and revenue for both entities.

Disclosure and Compliance

The company made this announcement in compliance with Regulation 30 read with Part A of Schedule III of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. This level of transparency is crucial for shareholders and potential investors to understand the financial obligations and growth strategies of the company.

Westlife Foodworld has stated that further details of this arrangement are available on their official website, providing stakeholders with additional resources for information.

As the fast-food industry continues to evolve in India, this royalty structure could play a significant role in shaping Westlife Foodworld's expansion plans and financial performance in the coming years.

Westlife Foodworld Limited , the company behind McDonald's restaurants in West and South India, has reported a steady performance for the first quarter of fiscal year 2026, navigating through a soft business environment while achieving notable improvements in key financial metrics.

Financial Highlights

The company posted consolidated revenue of Rs. 6.60 billion for Q1 FY26, reflecting a 7% year-over-year growth. Westlife Foodworld achieved a historic high gross margin of 71.60%, up 160 basis points sequentially, driven by significant enhancements in supply chain efficiencies.

Operating EBITDA reached Rs. 855.00 million, up 7% from the previous year, while cash profit after tax stood at Rs. 474.00 million, contributing to 7.20% of sales.

Same-Store Sales and Digital Business

Same-store sales growth stood at 0.50% with stable guest count and average check. The company's digital business continues to contribute significantly, accounting for around 75% of total sales. Westlife's digital platforms, including self-ordering kiosks, the McDelivery app, and the My McDonald's reward program, have seen strong traction with over 44 million cumulative downloads and more than 3 million monthly active users.

Network Expansion and Restaurant Format

During the quarter, Westlife Foodworld opened 9 new restaurants, bringing its total store count to 444 across 71 cities. Nearly all restaurants now feature McCafé and Experience of the Future formats, with 24% offering drive-thru services.

Strategic Initiatives

The company is strengthening its regional leadership team in South India to improve performance in that market, where growth has been slower compared to western regions. Westlife has also established a new vertical focused on long-term initiatives, termed as Horizon 2 projects, with a strategic outlook extending beyond 2027.

Dividend Announcement

The Board of Directors has approved an interim dividend of Rs. 0.75 per equity share, demonstrating the company's commitment to shareholder value creation.

Management Commentary

Akshay Jatia, President and CEO of Westlife Foodworld, commented on the results: "We started this financial year on a steady note, navigating a persistent soft business environment. However, we remain optimistic that eating out frequency will gradually improve supported by lower consumer level inflation."

Saurabh Kalra, Managing Director, added: "Our growth factors are intact. We are fundamentally re-evaluating what truly matters to the customers. While the business environment remains soft and the market is largely drawn towards affordability, we are instead focusing on consumers and redefining what value truly means to them."

Outlook

The management remains optimistic about progressively improving momentum during the year. The company maintains its Vision 2027 target of 580-630 restaurants and expects gradual improvement in performance through the year despite the current soft business environment.

Upcoming Investor Event

Westlife Foodworld has announced its participation in the Emkay Confluence 2025 event, scheduled for August 14, 2025. This in-person group meeting provides an opportunity for investors and analysts to engage with the company's management and gain further insights into its performance and strategies.

As Westlife Foodworld continues to navigate the challenging market conditions, its focus on operational excellence, strategic expansion, and customer-centric initiatives positions the company to capitalize on the gradual recovery in consumer spending and dining-out trends.