Burger King has outperformed McDonald’s partner WestLife

An IPO of a company in the food business always arouses market interest. The IPO of Burger King India Limited opens next week. While going through the RHP, one data point struck us as interesting: since Burger King entered the market in India, it has matched WestLife Development for incremental sales.

McDonald’s had divided India into 2 parts and given local rights to 2 franchisees. Westlife Development is McDonald’s India partner for West and South India. The partner for North and East was earlier a company called Connaught Plaza Restaurants, with whom McD had a fallout.

Burger King came to India in 2015; FY16 was the first year when it reported its first full year results. In that FY15, Westlife had a sales of Rs 7.6B (Rs 760 crore). Since then, Westlife added Rs 7.8B of sales over the 5 year period FY15-20, a CAGR of 15.2%. In the same period, Burger King added sales of Rs 8.4B.

One can say that Westlife had regional restrictions, while Burger King had none. However, given the size of the opportunity, better brand name, and a running business, Westlife should have done better.

Contrast Westlife’s performance with Domino’s, which had sales of Rs 20.9B in FY15, a much bigger base. Domino’s added incremental sales of Rs 17.9B in FY15-20, indicated a CAGR of 13.2%. Domino’s is the runaway leader in the branded quick service restaurant (QSR) business in India.

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