Off-premise sales helped us recover quickly: McDonald's Smita Jatia

Westlife Development Ltd, which owns Hardcastle Restaurants, the master franchisee of McDonald's restaurants for West and South India, is back on the expansion mode after navigating the new normal arisen due to the pandemic. The company plans to add 25-30 restaurants every year as situation normalises across the country. In a conversation with Bizz Buzz, company's Managing Director Smita Jatia said that the introduction of McSpicy Fried Chicken in south Indian market is likely to boost its average unit volume (AUV) in coming days. The restaurant chain is also witnessing rising sales from off-premise channels apart from dine-in. According to Jatia, the shift in consumer behaviour with rising trust on branded players like McDonald's is likely to stay here, which will support its growth in coming years. The company also said that its business in July has come back to pre-pandemic levels

How is the business for McDonald's restaurants during this pandemic period? Has business been impacted due to lockdowns and other operational challenges?

The first wave is now over and done. The second wave was a bit of a bummer. However, we have pretty much recovered from the fourth quarter of FY21 to the pre-Covid levels. That is despite that dine-in is still at 70 per cent (capacity). What helped us was that all our convenience channels whether deliveries, takeaways, drive-throughs had accelerated. With the help of that, even if dine-in is a little bit muted because of regulations and restrictions, we are able to recover. We are very happy how the fourth quarter has panned out for us. We are excited about our plans for FY22.

However, every business was unprepared for an event. However, most businesses had their play book ready during the second wave of the pandemic. Because of that, we were able to bounce back very fast. April-June period was the worst month of the second wave, but we are happy to say that we have already seen 90-95 per cent recovery in June. If I compare July 2021 to July 2019, we have completely recovered. That was despite the fact that dine-in was only allowed till 4 PM in Maharashtra. Therefore, the foundation we had laid during the first wave through various channels, were accelerating in a big way.

Now, dine-in has been allowed till 10 PM in Maharashtra and other states. So, we are very confident of achieving our targets for FY22. To me, Covid has to be built-in in the plans of businesses. We have all the levers in place not only through our channel, but also through various strategic levers.

What are your plans for South India? Is there anything specific the company is planning for this region?

In south India, we have done extensive research and got some very strong insights. As a brand, we operate across breakfast, lunch, dinner, and snacking and we have various categories like burgers, chicken, beverages, dessert, etc. On early days, our biggest focus was on burgers and today, we can say that we are the undisputed leader in burger space. Chicken is the most used meat in our country. When we talk about south, we see a huge unorganized bone in chicken market. We feel that the same level of quality and hygiene, if bone in chicken is introduced, we will be able to dominate this market also. To give a reference, bone in chicken is not something new as it has already been available in a lot of Asian markets like Singapore, Philippines, Malaysia.

So, our introduction of McSpicy Fried Chicken in south (and soon, we will introduce it in Maharashtra), will help us in improving our average unit volume even higher. Globally, we have the highest AUV (average unit volume). Even if you compare the AUV across all our peers, we have the highest AUV. This is because we are just not a burger player and we have offerings across burgers, chicken, desserts, beverages and many more. We just introduced this bone in chicken product which has flavour right up to the bone. In this product, the flavour goes up to the last bite. Another important part is the aspect of quality and food safety. We have 64 checks on the chicken when it is procured from farm to come to the plate. During this pandemic period, quality and hygiene is of utmost importance. And our product maintains high quality in both these aspects.

During this pandemic, many restaurants have shutdown shops permanently. Has that helped branded player like McDonald's to drive business growth?

This pandemic has brought in change in the consumer behaviour. Channels like deliveries, drive through and others are here to stay. And when dine-in opens as people meet friends, family, and colleagues, the growth happens. I think, the recovery is combination of many factors. It's not that the restaurants are closed, therefore people are coming to us. Every brand has to work to understand what the consumer wants. As a team, we now understand that the pandemic has to be built-in, in our plans. Because it's not going anywhere tomorrow. There is a new normal that has now come in.

What is the contribution of sales that is coming from online route now? Has that increased substantially during the last one year?

We don't break up these numbers. But what I can say that our sales from deliveries have increased two to three times. Obviously, there is a shift in the ratio of off-premises sales to sales at stores. This shift is here to stay. This shift is also very powerful because we are now truly showing how McDoland is a convenient brand not just a dine-in brand. We are very excited about our growth plans. In our investors' call, we have said that we are back on the expansion mode. We plan to open 25-30 restaurants every year.