Hike GST, But Allow Input Tax Credit For QSRs That Employ Many: Amit Jatia

Amit Jatia, Vice-Chairman of Westlife Development which operates McDonald’s India restaurants in West and South India, and has around 90 per cent market share of the burger market, talks to Pavan Lall about new operating standards the parent company has set, challenges for the QSR business here, and how the epidemic has impacted business. Edited Excerpts:

How has the epidemic impacted you, and what sort of toll is it taking on the staff and your company?

Of our 320 locations, between 80 and 100 restaurants are doing delivery, and in limited cases takeaway and pick up. So, of course, our business is seeing an impact but we haven't had any layoffs or pay-cuts for any of our 10,000 employees, yet. For those frontline employees who are are at home, the company is leveraging its digital platform to conduct training modules for the future.

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Are there remedial measures the state could take to help support your industry?

If you look at the entire QSR industry we don't have the option to avail of input tax credits, which is something that ought to be considered given that the restaurants across the country under McDonald's use local materials, local food, and employ locals. My view is increase GST by another 5 percent if need be but allow for input tax credits.

How are real estate rentals impacting you, given revenue in most locations are, and may be zero for a while?

We have a mix of real estate models across locations that are in high street, specialty, and standalone facilities and so if you look at our rentals our exposure is as de-risked as can be. For example, while our land-lords complain about how tough we are as negotiators, our leases across the board, are always long -term and for as long as 20 years which means we get good deals.

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Can you give us a sense of how the delivery model is panning out, given that you had earlier projected it would grow significantly? What about innovation at the brand?

The business for takeaway is strong and we have around a 1000 employees on the ground working at making that happen through a combination of aggregators as well as our own delivery service. We see it growing more than expected in the near to middle future. There are new guidelines HQ has sent out which require gloves for food handlers, minimum distance in the restaurant, more frequent cleaning of rest rooms and tables and more. On new additions on the food side, there's fried chicken and Schezwan burgers which customers love, I'm told.

How much of an impact has the lock down had on your expansion plan?

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It will take a couple quarters to get a handle on that but it obviously won't be what it could have. However because we entered this downturn with strong balance sheets we feel we can ride through and emerge stronger. Mumbai for example where we have a 100 restaurants, has the market-potential to double in the next three to five years. I strongly believe that the food and retail business can become an integral part of the economy, in the years to come. We are not going to shut down. We will make bold calls in the near future.