Westlife Development Ltd. · CHHATTISGARH - 2 MAHARASHTRA - 127 TELANGANA - 25 KARNATAKA - 57 GOA - 2 ANDHRA PRADESH - 4 PUDUCHERRY - 1 ... pizza, other cuisine fast food + Ice cream

Westlife Development | 2019 | Confidential | February 01, 2019 | 1 www.westlife.co.in

Westlife Development Ltd.Hardcastle Restaurants Pvt. Ltd.

Corporate PresentationMarch, 2019


Disclaimer

This presentation contains forward-looking statements that represent our beliefs, projections and

predictions about future events or our future performance. Forward-looking statements can be identified

by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,”

“believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar

expressions or phrases. These forward-looking statements are necessarily subjective and involve known

and unknown risks, uncertainties and other important factors that could cause our actual results,

performance or achievements or industry results to differ materially from any future results, performance

or achievement described in or implied by such statements. The forward-looking statements contained

herein include statements about the business prospects of Westlife Development Ltd (‘Westlife

Development’), its ability to attract customers, its affordable platform, its expectation for revenue

generation and its outlook. These statements are subject to the general risks inherent in Westlife

Development’s business. These expectations may or may not be realized. Some of these expectations

may be based upon assumptions or judgments that prove to be incorrect. In addition, Westlife

Development’s business and operations involve numerous risks and uncertainties, many of which are

beyond the control of Westlife Development, which could result in Westlife Development’s expectations

not being realized or otherwise materially affect the financial condition, results of operations and cash

flows of Westlife Development. Additional information relating to the uncertainties affecting Westlife

Development’s business is contained in its filings with various regulators and the Bombay Stock

Exchange (BSE). The forward-looking statements are made only as of the date hereof, and Westlife

Development does not undertake any obligation to (and expressly disclaims any obligation to update any

forward-looking statements to reflect events or circumstances after the date such statements were made,

or to reflect the occurrence of unanticipated events.


McDonald’s leads globally

Forbes 2018 Brand Ranking - World’s 11th most valuable brand

# 1. Apple

# 2. Google

# 3. Microsoft

# 4. Facebook

# 5. Amazon

# 6. Coca-Cola

# 7. Samsung

# 8. Disney

# 9. Toyota

# 10. AT&T

# 11. McDonald’s

# 12. GE

# 13. Mercedes - Benz

# 14. Intel

# 15. Louis Vuitton


Recognised in India as well

Great Place to Work® Award

- Among Top 10 company to

work for in Retail Industry –

2018 (4th year in a row)

Fortune India ‘Next 500’

– Giants of Tomorrow

Fulcrum Gold Award - Best

Consumer Products and

Retail sector campaign for

‘Flavours without Borders’

campaign

Go forth & Multiple Award

2017 – Best GTM concepts for

new restaurant opening and

EOTF

*Note: PCI is People Capital Index


WFF – A nascent but rapidly growing category

QSR

USD 21.6 bn

IFF

USD 19.8 bn

WFF

USD 1.8 bn

IEO

USD 131 bn8.9%

9.2%

8.8%

13.4%

3

108.6

18

12.1

20

Mumbai Benchmark Asian City

IEO Monthly Frequency

2003 2013 2018

Source: Brand Track, Mumbai and Internal McDonald’s sources

Source: Euromonitor

IEO : Informal Eating Out; IFF: Indian Fast Food;

WFF: Western Fast Food

Estimated Growth

rates over 2017-22

15 year

CAGR 9.7%

15 year

CAGR 4.7%


About Westlife Development Limited

One of the fastest

growing players in

India’s quick service

restaurant (QSR) sector

292* restaurants

across 40 cities

(as of Dec 2018)

Modern &

contemporary store

designs enhancing

Customer Experience

WDL through its

subsidiary HRPL

operates McDonald’s;

62% promoter holding

Robust Supply Chain;

Integrated Farm to

Fork Model

Wide range of menu

offering, servicing all

day and providing value

for money

182 McCafé's and

210 McDelivery

(as of Dec 2018)

Good Food Story –

Continuous improvement

to provide wholesome &

nutritious food

Note: WDL: Westlife Development Ltd; HRPL: Hardcastle Restaurants Private Ltd.

* System-wide HRPL stores


Evolution of WDL and Key Milestones

FY95 – FY97

1995 - Started as a

Joint Venture

Oct 1996 - 1st store in

Mumbai

FY01 – FY03

Dec 2001 - Drive-Thru

started at Mumbai

(Kalamboli)

FY04 – FY06

Mar 2004 - MDS

started in Mumbai

Oct 2004 – Entered

south market

FY07 – FY09

Sep 2007 - 50th HRPL

Store in Mumbai

FY10 – FY12

May 2010 - Ownership status

changed to DL*

Oct 2010 - 100th HRPL store

in Bengaluru

FY13 – FY15

Oct 2013 - McCafe started in

Mumbai

Jun 2014 - 200th HRPL store in

Mumbai

FY16 – FY18

Sept 2015 - 50th McCafe

Mar 2016 - 250th HRPL store in

Mumbai

Dec 2016 - 100th McCafe

Mar 2018 - 150th McCafeNote: *DL – Development License

Stores are system-wide HRPL stores

STORE ADDITIONS

PRODUCT PLATFORMS & INNOVATIVE PRODUCT ADDITIONS

Chicken

McNuggets

2010

McFlurry

2011

McEgg

2012

Spice Fest

2012

McSpicy

2011

McAloo

Tikki

2004Breakfast

2010Masala Grill

2013

Veg Pops

2013

Royale

2014

CWT

2014

CPP

2015

Indi

McSpicy

2015

Maharaja Mac

2016/17

Good Food

Journey;

Rice Bowls 2018


Strategic Levers

Our

RestaurantOur

BrandOur

People

Running great

restaurants

Right location and

Right Economies

Modern and

Contemporary designs

Food – Menu

and Value

Brand Extensions

Trust and

Permissibility

Talent

Management

High Performance

Culture

Financial Discipline

Training &

Development


• Menu innovation and launched strong product platforms

• Integrated “farm to fork” supply chain

• Economies of scale, high food safety standards and product

consistency

• Continuously work with farmers on an extensive agronomy program

• Delivering wholesome and nutritious food options – The Good Food

Story

• Stores with contemporary design and the EOTF stores - ROP 2.0 platform

model

• Diverse portfolio of restaurants (Malls, Food courts, DT, High street &

Transit points) built through intelligent market planning and penetration

• Long term deals (normally 20 years vs. industry average of 9-12 years)

• Strong unit economics - cash on cash ROI of 20%+ in 24 - 30 months

• One of the most experienced management team in QSR industry

with deep knowledge of the business

• Strong people development and management processes in place

• Strong knowledge transfer from McDonald’s Corp

• Company incurs ~1.25 lac hours in training programs at restaurant level

and has various structured training programs for senior management

Solid Foundation – A Competitive

Advantage


Vision 2022

BROADENING ACCESSIBILITY

OF BRAND MCDONALD’S

•400 – 500 restaurants

Presence in 45+ cities

• Investment of Rs 5+

bn

GROW BASELINE SALES

•Mid to high single digit SSSG%

•McCafé : 75 to 300-350

•McDelivery: 124 to 300-325

•80-100 EoTF restaurants

•Leverage other brand extensions

and menu in future

•Sales growth to Rs. 20 –

25 Bn

•Take EBITDA margin to

low to mid teens

•Restaurant level cash on

cash returns >20%

GROW MARKET SHARE

& MARGIN


Broadening Accessibility Of Brand

McDonald's

OUR RESTAURANT


Our Footprint

GUJARAT - 40

CHHATTISGARH - 2

MAHARASHTRA - 127

TELANGANA - 25

KARNATAKA - 57

GOA - 2

ANDHRA PRADESH - 4

PUDUCHERRY - 1

KERALA - 8

TAMIL NADU - 21

MADHYA PRADESH - 5

Total Restaurants – 292*

Presence in 40 cities

(as of Dec 2018)

14%

43%

1%

20%

2%

7%

0%1% 9%

1% 2%

Gujarat Maharashtra GoaKarnataka Kerala Tamil NaduPuducherry Andhra Pradesh TelanganaChattisgarh Madhya Pradesh

Note: India Map not to scaleNote: * System-wide HRPL stores


Store Additions

FY12 FY13 FY14 FY15 FY16 FY17 FY18 9MFY19

129

161

184209

236258

277

292*

Over 3x stores in last ~9 years

FY11FY10

10787

* System-wide HRPL stores


Achievements under ROP 2.0Initiatives under ROP 2.0

Restaurant Design

• New External Façade

• Pre-fabrication of parts of

the building structure

Equipment Options

• Localization of seating and

kitchen equipment, yet

providing an upgraded look

Operating Costs

• Use of energy saving

equipment

• Redesign of HVAC basis heat

map

• Improved labour productivity

Results of ROP 2.0 significantly

outperformed our targets

1x 0.8x 0.7x

24 months

12-18 months

~12 months

Negative

margins

Break

even

Positive

margins

and cash

flow

Avg

Development

Cost1

Cash

Breakeven1

ROM %1

2012 -14ROP 2.0

Target

ROP 2.0

Actual

Cash on Cash ROI1 to 10%+ in Year 1

Note: 1. Can vary basis restaurant type, region and presence of brand extensions


New Business Unit Economics (ROP 2.0)

Average

Investment of

~INR 25 mn

Stores typically need 2-3

years to establish,

depending upon the brand

awareness in the city

Year 1: Positive

contribution to ROM%

Year 3: Sales: INR 40-

45 mn; Cash ROI:

20%+


EOTF Design Enhancing Customer Experience

Our Restaurant Designs

Modern and contemporary store designs


Grow Baseline Sales

OUR BRAND


Chicken

Burger

Pizza

Beverages

Desserts

Delivery

Breakfast

Indian fast food

Others

Servicing multiple segments – A competitive

advantage

1 – Fortune India 2011

* Graphs not to scale, for representational purpose only

McDonald’s globally has the highest average unit

volume of $2.4 million1

McDonald’s India has wide exposure to the different

segments in QSR

BurgersOver 10 products with manyburgers that record annual sales of Rs 1+ billion

Wraps5 wraps

SidesStrong sides offering

Desserts$130 million category

BreakfastOnly organized WFF player in this space$2+ billion market

BeveragesWFF player with the widest variety in this space$4+ billion market

Menu : Strategic lever for driving AUV


* Source : Euromonitor International - QSR Food Service Market, HRPL proprietary third party market segmentation study

Past market segment – Chicken, burger, pizza, other cuisine fast food + Ice cream parlors

$1.3b

1,723

$0.45b

$0.6b

$1.75b

$2.35b

Past marketsegmentexposure

Delivery market New marketsegmentexposure

Coffee andSpecialty

beverages

Total marketsegmentexposure

Total market segment exposure for McDonald’s*

Brand extensions increase addressable

market and add more occasions

In-store for celebrations,

bonding and hanging out

McDelivery, Drive Thru and

breakfast for convenience

McCafé for experience

and indulgence

As we add brand extensions to

each restaurant, the results are

greater as a whole than the

individual parts resulting in

1+1+1=5


Some of the initiatives and menu additions in TTM

Growing baseline sales by various

initiatives and menu additions

What’s Your Spice Fest Introduced Whole

Wheat Buns

National Basketball

Association Partnership

Egg Festival -

McBreakfast

Introduced Rice Bowls

Introduced Fruit SplashIntroduced McSaver Combos


Growing baseline sales through brand

extensions

Organized café market is expected to be USD 2.25

bn by 2020 from USD 1 bn in 2014

McCafé brings premium coffee to India – 100%

Arabica and hand crafted barista coffee

With McCafe, HRPL gets an opportunity to serve

customers at all hours and not just during peak

lunch and dinner time

Enter the coffee and specialty beverages arena to

broaden it’s opportunity beyond the QSR industry

Serves ~45 hot & cold beverages – cappuccinos,

smoothies, share shakes, frappes, iced teas & more

Overall the Company has 182 McCafes as of Dec

2018

McCafé goal is to become the café destination built around the premium coffee

platform at affordable price having unique relevant offering options of food



extensions

Online food delivery business is USD 1.6Bn in

FY2019-20 and is likely to double to USD 3.2Bn in

FY20-211

Customer convenience is the core of all our operations,

so it’s a way of extending ease and convenience by

delivering food at customers’ doorsteps

McDelivery services are available through our own

channels as well as third party aggregators.

– Digital and tech initiatives aid in driving robust

growth of ~4.3x in sales over last 4 years

Our competitive advantage:

– Operations (Out time and delivery time is lot lower

than most other QSR),

– Variety of food and beverages (most of the QSR

don’t have full-fledged beverage and Breakfast play),

– Strong reach and penetration,

– Food offers

IF YOU CAN'T COME TO McDONALD'S, McDONALD'S WILL COME TO YOU

Source: 1) 2018, Redseer Consulting Research



extensions

Breakfast category was launched in 2010. McBreakfast, the first ever branded breakfast

category in India was introduced in 2017

McBreakfast offerings aims at providing wholesome nutritious breakfast rich in protein

Primary purpose is to add convenience to the fast paced lives of our customers

New breakfast menu is a good blend between the classic Continental and Indian offerings

- Veg & Egg Muffins, Masala Dosa Brioche, Scrambled Eggs, Hot Cake and Waffles


Improving sales through technology

Launched Global McDonald’s App in India – feel a part of the crowd

Brings customers to unique offers that are customized just for them. Based on their past

orders, it puts together all their favorites in different combos at unbelievable prices

Custom-made for Customer

Convenient store locator to find the nearest McDonald’s around

Store Locator

McDelivery is also integrated with the McDonald’s Global App for customer convenience

Integrated App

Customer gets exclusive deals on food they love, both in-store deals and deals on McDelivery. Also, makes it easy to redeem and enjoy great offers from mobile device anytime and anywhere.

Provides convenience & customer is updated


Building trust and permissibility

Soft serve is 100%

milk

96% fat free

McAloo tikki is a

balanced mealMcVeggie has

25% more dietary

fibres

No artificial colour,

preservatives or

flavours in our patties

40% less oil in our

mayo; Up to 11%

less calories in our

burgers

Up to 20% less

sodium in our

products

Whole wheat buns

with sesame lining

…By constantly improving our food

Most Breakfast

patties are grilled

or steamed


Only country to have

SEPARATE Vegetarian and

Non Vegetarian Kitchens

Local tastes like “Aloo Tikki” & “Rice meal” in a uniquely McDonald’s form

Adapting

popular forms

like PUFF

Cultural Sensitivity & Menu Localization


Tier 1 Supplier

Processing unit

Strong Long term

relationships with

most of our suppliers

/ vendors

Grower / Processor

• Lettuce growers

• Potato growers

• Poultry

• Coating systems

Tier 2 Supplier

InboundTransportation

OutboundTransportation

Distribution Center

• Noida

• Mumbai

• Calcutta

• Bangalore

Dedicated

fleet of multi-

temp and

single temp

trucks

Dedicated

fleet of

refrigerated

trucks

Radhakrishna Foodland is sole service provider

292

restaurants

across

40 cities

Return logistics(for plastic crates)

Farm to Fork Supply Chain Model

– A Competitive Advantage

RestaurantDistribution & Logistics Service Provider

Differentiating Factors

Temperature controlled movement and storage - utmost care taken of perishability & shelf life of each product

Major supply points network optimized – either close to source of raw material or close to market – reduction in food miles

Significant economies to the system - A result of the partnering and long term approach with Suppliers

Over 95% local sourcing


High Performance Culture

OUR PEOPLE


Talent Management & High Performance Culture

High potential assessment – program to identify and train future leaders of the

organization

Building a succession & talent pipeline – Ensure readiness of our talent pool to source

future positions which may emerge

Management Development Program – managers trained on skills like Behavioural

Event Interviewing skills, Situational Leadership workshop among many others

Training & Development

Total employee count – Over 9000

Our People – Our Employees

Company incurs ~1.25 lac training hours annually for restaurant level operations

across different formats and work areas

HRPL also conducts various management training programs and workshops

enabling them to improve on required skills and knowledge and be future managers


Grow Market Share & Margins

FINANCIAL DISCIPLINE


1.7

%

3.1

%

8.4

%

3.4

% 6.5

%

5.1

%

1.0

%

8.7

%

8.4

%

20

.7% 2

5.1

%

24

.1%

25.7

%

14

.5%

Q2

FY

16

Q3 F

Y16

Q4 F

Y16

Q1

FY

17

Q2 F

Y17

Q3 F

Y17

Q4

FY

17

Q1 F

Y18

Q2 F

Y18

Q3

FY

18

Q4 F

Y18

Q1 F

Y19

Q2

FY

19

Q3 F

Y19

Healthy SSSG for 14 consecutive quarters by

focusing on delivering great customer

experience, menu innovation and growth

across Delivery, McCafe and Breakfast

Strong SSSG momentum leading to

strengthening of baseline

Sustained momentum in same store sales

resulted in higher average sales per

restaurant (AUV) & operational profitability

100

.0

100

.0

100

.0

100

.0

95.1

101

.7

103

.1

108

.4

98.3

108

.3

108

.4

109

.5

106

.9

117

.4

130.8

136

.9

13

2.6

147

.6

149.8

Q1 Q2 Q3 Q4

FY15* FY16 FY17 FY18 FY19

NOTE: *FY15 SSG normalized to base of 100


Trend in Sales & SSG

7,403 7,643

8,334

9,308

11,349 10,624

-6.4%-5.9%

1.8%4.0%

15.8%

21.1%

-10%

-5%

0%

5%

10%

15%

20%

25%

-

2,000

4,000

6,000

8,000

10,000

12,000

FY14 FY15 FY16 FY17 FY18 9MFY19

(Rs. In mn)


Trend in Gross Margins

56.9%

58.4%

60.0%60.7%

62.6%

63.9%



Trend in ROM & Op. EBITDA

12.6%

8.7%

11.9%11.0%

13.1%

14.9%


Restaurant Operating Margins (ROM)

7.3%

2.7%

5.9% 5.3%

7.5%

9.4%


Operating EBITDA Margins


Trend in PAT & Cash Profits

10

-291

-206

-121

129

332


Profit After Tax (PAT)

488

273

438

560

889

961


Cash Profits

(Rs. In mn)


Shareholding Pattern of WDL

Westlife Development Ltd

(BSE : 505533)

100% Hardcastle Restaurants Pvt.

Ltd.

FII and Public38%Promoter

Group62%

Shareholding Pattern*

*Shareholding Pattern as on Dec 31, 2018

Major Public Institutional Shareholders

• Arisaig India Fund Limited

• SBI Mutual Fund

• Bay Capital Investments

• Tree Line Investment Management

Strong Promoter Commitment


THANK YOU

Documents

Westlife Development Ltd. · CHHATTISGARH - 2 MAHARASHTRA - 127 TELANGANA - 25 KARNATAKA - 57 GOA - 2 ANDHRA PRADESH - 4 PUDUCHERRY - 1 ... pizza, other cuisine fast food + Ice cream