Wednesday, November 27

Geopolitical turmoil weighs on McD's sales

Global geopolitical turmoil has impacted sales at McDonald's in West and South India, and some stores "are not even doing half of what was pre-crisis," Saurabh Kalra, managing director at Westlife Foodworld, said at a July-September post earnings analyst call. "I don't think a lot of stores which got impacted last year have come up to the level of what they were pre-crisis," Kalra said, addressing analyst queries on the impact of the ongoing war in the Middle East region.The developments in India come at a time when listed quick service restaurants chains such as Sapphire Foods and Devyani International, which operate Pizza Hut and KFC restaurants in India as independent franchise partners, Westlife Foodworld, Burger King and Domino's have cited stress in quarterly profits or same store sales on account of heightened hyper local competition and food inflation.The Israel-Gaza war has been hurting American brands such as Coca-Cola, Burger King, McDonald's and Starbucks worldwide over boycott calls and anti-American sentiment, especially in Asian and Middle East countries, over allegations that the brands finance Israel's war efforts. "There was a part of stores which were impacted. They are marginally better off but still largely remain impacted. And I can quote a few examples of Mumbai Central, Mazgaon where what we used to do, we are not even doing half of what we used to do. So, it remains tough in some of those belts," Kalra said.Westlife Foodworld reported a steep 98.4% drop in profit at '35.7 lakh in the September quarter, while same-store sales growth declined 6.5%, owing to "subdued in-store business", the company said in its earnings statement.On when the burger-and-fries chain expects to recover from the downturn, Kalra said: "We have built a lot of good momentum and we believe the negative cycle should be behind us and we should be able to do a better job in H2. We believe we are poised if the consumption trends come back; we are poised to be able to create the results which normally you would expect from us."A September 4 Reuters report said Coca-Cola and PepsiCo have seen demand downturn in Muslim-majority countries including Egypt and Pakistan, and are facing challenges from local sodas in those countries due to consumer boycotts on account of the Israel-Gaza war.
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