Westlife’s McDonald’s Sales Rise 16.3% as Lease and Closure Costs Leave a Reported Loss

Westlife Foodworld, the operator of McDonald’s restaurants across western and southern India, delivered a sharp recovery in customer spending during the quarter ended 30 September 2026. Revenue rose 16.3% year on year to ₹7.47 billion and same-store sales increased 10.1%, the strongest comparable-sales reading disclosed in the company’s latest five-quarter table.

The operating improvement did not translate cleanly into the statutory bottom line. Westlife reported a net loss of ₹20.4 million, even as operating EBITDA rose 29.1% to ₹980.5 million. The gap matters: it shows why restaurant investors and suppliers need to distinguish trading momentum from the accounting effects of a lease-heavy store network and from exceptional charges tied to restaurant relocation or closure.

Westlife released the results on 23 October 2026. The group had 492 restaurants in 80 cities at the end of September and says it still plans to open more than 60 restaurants in the financial year ending March 2027, with a target of more than 580 by March 2028. Those commitments make the quality of cash generation—not sales growth alone—the central question for the next several quarters.

The operating business accelerated

Same-store sales growth improved from 4.3% in the June quarter and from a 2.8% decline a year earlier. Westlife attributed the rise to higher transactions, stronger dine-in traffic, growth in delivery and a broader menu spanning value meals, chicken, beverages and premium products. The company also said it maintained its share of India’s organised quick-service restaurant market, although that statement is a company assessment rather than an independently audited market-share measure.

On-premise sales accounted for 59% of revenue and off-premise channels for 41%. Digital channels generated more than 75% of sales, while the McDonald’s app averaged about 4.2 million monthly active users and had surpassed 58 million cumulative downloads. That mix gives Westlife a large first-party ordering and loyalty channel, but it also raises the importance of app engagement, delivery economics and discount discipline.

Trailing-12-month comparable average unit volume reached ₹62.3 million, 3% above the prior-year level. The increase is modest relative to the quarterly revenue surge because the network continues to expand: Westlife opened 11 restaurants and closed one during the quarter. New stores lift group sales before they enter the same-store comparison, while recently opened sites typically need time to mature.

Why reported profit turned negative

Westlife presents both post-Ind AS 116 and adjusted pre-Ind AS 116 measures. Under the reported lease-accounting presentation, operating EBITDA was ₹980.5 million, up from ₹759.4 million. On the adjusted pre-Ind AS 116 basis, which treats leases more like conventional rental expense, operating EBITDA was ₹579.2 million, up 45.2% from ₹399.0 million.

That difference is not cash appearing from nowhere. Ind AS 116 removes most operating lease rent from operating expenses, then records depreciation on right-of-use assets and interest on lease liabilities lower in the income statement. For a restaurant operator with hundreds of leased locations, the standard can make EBITDA look materially larger while also increasing depreciation and finance costs.

In Westlife’s reconciliation, the pre-Ind AS 116 profit after tax was ₹91.4 million. Lease-accounting adjustments reduced that measure by ₹111.8 million, producing the reported ₹20.4 million loss. Financial expense reached ₹400.0 million and depreciation and amortisation reached ₹619.0 million in the quarter.

Year-on-year comparisons at net-profit level are also distorted by exceptional items. The September 2025 quarter included ₹460.6 million of exceptional income, while the latest quarter recorded ₹45.9 million of exceptional expense associated with assets written off following restaurant relocations or closures. The reported swing from a ₹277.1 million profit a year ago to a small loss now therefore overstates the deterioration in current restaurant trading.

Five numbers that explain the quarter

• Revenue: ₹7.47 billion, up 16.3% year on year.

• Same-store sales growth: 10.1%, versus a 2.8% decline in the comparable quarter.

• Reported operating EBITDA: ₹980.5 million, a 13.1% margin and 29.1% year-on-year growth.

• Adjusted pre-Ind AS 116 profit after tax: ₹91.4 million, compared with a reported loss of ₹20.4 million after lease-accounting adjustments.

• Restaurant network: 492 locations in 80 cities, after 11 openings and one closure during the quarter.

Food and labour costs remain the constraint

Westlife’s adjusted gross margin was 67.6%, unchanged both sequentially and year on year under the company’s regrouped presentation of processing charges. Management said vegetable oil and chicken were the principal commodity pressures, while utility expenses also rose. These are important inputs for the wider food-service chain: cooking oil, poultry, electricity and delivery capacity can all limit how much sales growth converts into restaurant-level margin.

Employee costs were affected by a higher minimum wage in Karnataka. Even so, the restaurant operating margin held broadly stable: 19.3% on the post-Ind AS 116 presentation and 13.9% on the adjusted basis. Westlife said greater digital participation added about 60 basis points to margin, partly offsetting input inflation.

The company expects gross margin to stay above 67% in the near term. That is guidance, not a guaranteed outcome. Oil and poultry costs can move quickly, and a large opening programme adds pre-opening expenditure, recruitment needs and early-stage stores that may initially dilute average returns.

What matters next

For suppliers and competitors, Westlife’s quarter signals that urban quick-service demand in its territories was considerably stronger than a year earlier. For shareholders and lenders, however, the more demanding test is whether higher store sales generate enough cash to fund expansion while absorbing rent, interest, depreciation and periodic closure costs.

Three indicators will show whether the recovery is durable. First, same-store sales need to remain transaction-led rather than depend mainly on pricing or promotions. Second, adjusted restaurant and operating margins must hold as oil, chicken, wages and utilities fluctuate. Third, newly opened restaurants need to mature fast enough that network growth improves total cash earnings rather than merely enlarging revenue.

The quarter is therefore neither a simple profit warning nor an uncomplicated growth story. It is a case of genuine operating acceleration inside a capital- and lease-intensive model whose statutory earnings remain sensitive to accounting presentation, financing costs and store-level portfolio decisions.

Sources and methodology

Agrilinkage reviewed Westlife Foodworld’s official Q2 FY27 earnings presentation and exchange-filed results. Percentage changes in this article are calculated from the disclosed rupee figures where needed; rounded company headline figures are identified as such. The hero image is an original Agrilinkage conceptual illustration and does not depict a Westlife or McDonald’s restaurant.

Westlife Foodworld Q2 FY27 earnings presentation filed with the National Stock Exchange on 23 October 2026: https://nsearchives.nseindia.com/corporate/RadhaWestlife_23102026130715_Submission_of_Earning_Presentation_-_30092026.pdf

Westlife Foodworld results press release filed with BSE on 23 October 2026: https://www.bseindia.com/xml-data/corpfiling/AttachLive/a5749bf6-dba8-4d8f-b33d-2c3c4e87e224.pdf

Westlife Foodworld consolidated financial results filed with BSE: https://www.bseindia.com/xml-data/corpfiling/AttachLive/e6e8eb54-5e89-42f3-bdbc-10e32c4c2d23.pdf