Westlife Development Limitedwestlife.co.in/.../Presentations/WDLInvestorPresentation_Nov2016.pdf ·...
Transcript of Westlife Development Limitedwestlife.co.in/.../Presentations/WDLInvestorPresentation_Nov2016.pdf ·...
Westlife Development Limited November 2016
1
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• This presentation does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase or subscribe for or otherwise
acquire, any securities in the Company or in the other entities referred to herein or in its or their respective affiliates or associates, nor shall it or any part of it
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2
Highest Annual Sales Per Store
Fortune India 2011
McDonald’s leads globally
3
Interbrand 2015 World’s 9th most valuable brand
Most Admired Company – Fortune 2014
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
4
Great Place to Work®
Award – Best company to
work for in Retail Industry -
2016
Fortune India ‘Next 500’ – Giants of
Tomorrow, 2016
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 5
400+ Restaurants pan India
ownership structure
Westlife Development Ltd
(BSE : 505533)
100% Hardcastle
Restaurants Pvt. Ltd.
FII and Public
38%
Promoter Group
62%
Shareholding Pattern*
*As at Sep 30, 2016
6
building the eco system 1995-2012
1995-2012
Glocal 1995-96
Building the
FOUNDATION 1997-2003
GROWING the Category
2003-2012
7
building the eco system
glocal: cultural sensitivity
Only country to have
SEPARATE Vegetarian and
Non Vegetarian Kitchens
8
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
9
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
10
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
11
creating the category Quick Service Restaurants (QSR)
12
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
13
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
14
creating the category
value: building block approach
Everyday
Affordability Filling
Affordable
Meals Place
to
refuel
2004 2009 2012
15
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
18
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
17
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
18
grow and dominate 2013 onwards
19
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
20
IEO
$ 112 Bn
QSR
$ 18 Bn
IFF
$ 16.7 Bn
WFF
$ 1.3 Bn
8%
7%
7%
12%
Estimated Growth in 2016
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
21
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
*YANKS – Young Adults No Kids
levers for growth over the next 5 years
23
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 2016
Malls GROW RESPONSIBLY
• Getting the business
model and profit formula
right before scaling
• Keep evolving with
changing cost realities
7
YEA
RS
7 Y
EA
RS
6 Y
EA
RS
18 STORES
69 STORES
149 STORES
1997 - 2003 2004-2010 2011-2016
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broadening accessibility
building unit economics
Average investment of INR 23-25 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: 20%+
27
Developed new Restaurant Operating
Platform (ROP) 2.0
Average Development Cost*
Encouraging early results delivered by ROP 2.0
20
12
-14
Restaurant Operating Margins*
20
16
RO
P 2
.0
300 – 350 bps improvement for
new restaurants
2012
-14
20
16
R
OP
2.0
1x
0.8x
Cash breakeven* 2
01
2-1
4
20
16
R
OP
2.0
24
months 12-18
months
* Can vary basis restaurant type, region and presence of brand extensions
** Graphs not to scale, for representational purpose only
Cash on cash ROI* to 20%+ in 24 – 30 months
28
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 30 cities
broadening accessibility
improve brand access
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Tamil Nadu 14 Restaurants
Chhattisgarh 1 Restaurant
Madhya Pradesh
3 Restaurants
Kerala 7 Restaurants
Gujarat 30
Restaurants
Telangana 22 Restaurants
Karnataka 53 Restaurants
Maharashtra 112 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 Sep 2016 30
Goa 1 Restaurant
Andhra Pradesh 2 Restaurant
7 Y
EA
RS
7 Y
EA
RS
6 Y
EA
RS
1997 - 2003 2004-2010 2011-2016
NEX
T 6
-7
YEA
RS
214 – 264 Stores
149 STORES
69 STORES
18 STORES
2016 Onwards
450 - 500 restaurants by 2022
31
Years denote fiscal years
growing base line
Value
Menu
Brand
Extensions
32
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
33
growing base line
new menu platforms
Platforms that leverage EXISTING
INVESTMENTS and capacity
Providing modern choices to
consumers of today
34
growing base line
contemporary menu choices
Chicken McGrill McEgg Burger
Reduction in sodium content of French fries
and McNuggets
35
Reduced fat sauces
growing base line
brand extensions
Brand extensions will continue to add to the baseline as our
offerings and reach grow
110-130 McCafé's by FY17E
24/7 McDelivery Service Breakfast Dessert Kiosks 36
Brand extensions add another touch point with
the consumer and a new occasion for customer to
walk-in
growing base line
brand extensions
Evolving customer interface and digital enablement
Strong operational processes and systems
FY14 FY15 FY16
McDelivery Sales
37
Role of Brand extensions – Increases
addressable base
* 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 market segment
exposure
Delivery market New market segment
exposure
Coffee and Specialty
beverages
Total market segment
exposure
Total market segment exposure for McDonald’s*
38
growing base line
re-imaging with brand extensions
Modernize the customer experience through restaurant re-imaging initiatives
Providing contemporary restaurant designs & relevant experience to our consumers
39
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
40
margin expansion
41
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
42
margin expansion
levers
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
43
people
44
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
7,000+ people
across 32
cities
45
46
people
A deep
organization
Focused on Talent
Management
Vice Chairman
Legal & CS MD
Business Operations
Regional
Directors
Regional
Marketiing
Information
Technology
Business Excellence &
People Resources
People Resources &
Administration
Restaurant Solutions Group
New Product Development
Corporate Communications
Brand Extensions
Marketing & Menu
Management
Marketing
Menu Management
Finance & Accounts
Internal Audit
Investor Relations
Financial Planning
Accounting & Taxation
McOpCo Accounts
Supply Chain & QA
Supply Chain
Quality Assurance
Consumer & Business Insights
Development
450-500 stores by
2022
Growing baseline
Margin Expansion
People
in summary
47
financial summary
48
store growth, sales and comparable sales trends
55 74 87 107 130 161 184 209
236
10 20 14 21 24
32 29 27 30
-100
-80
-60
-40
-20
0
20
40
0
50
100
150
200
250
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Total Stores New Stores
1,604 2,104 2,772 3,793
5,445
6,810 7,384
7,640 8,334
41%
31% 32% 37%
44%
25% 8% 3%
9%
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 FY16
Sales ( INR Mio) Sales Growth %
23% CAGR
49
19% 9% 12%
17% 22%
6%
-6% -6%
2%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Comps%
margin trajectory
50
54.7% 56.0% 56.7% 57.1%
55.6% 56.0%
57.6% 58.4%
60.0%
52.0%
53.0%
54.0%
55.0%
56.0%
57.0%
58.0%
59.0%
60.0%
61.0%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Gross Margin %
76 52 120 400
672 627 488
205
488
4.8% 2.5%
4.4%
10.5% 12.3%
9.2%
6.6%
2.7%
5.9%
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 FY16
INR Mio
EBITDA EBITDA %
general & administration (G&A)
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 FY16
G&A 51
Outlook for FY17
Consumer sentiment steadily improving
Differentiated experience for our consumers through
Re-imaging
McCafé
Web & mobile platform driving significant growth for
McDelivery
ROP 2.0 driving better RoI & efficient P&L on newer
restaurants
52
52
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
53
Indigenous Supply Chain for competitive
advantage
Farm to FORK
thank you
54