Nov 3 (Reuters) -

Westlife Foodworld, which operates fast-food chain

McDonald's in west and south India, said on Monday it

would launch a 20-minute food delivery model through its app to

boost same-store sales by 3%-5% in the next two years.

The move is aimed at strengthening its delivery business

and reducing reliance on "unpredictable" third-party

performance, CEO Akshay Jatia said on a post-earnings call,

without disclosing details.

McDonald's has its 'McDelivery' app and is also on

platforms such as Swiggy and Zomato.

Delivery accounts for about 40% of Westlife Foodworld's

total sales. The 20-minute model has undergone a pilot launch

with strong results, Jatia said.

The company expects delivery sales through its own app

to double in the next two years, adding 3%-5% to same-store

sales growth, he added.

Westlife Foodworld also expects to generate about

400-500 million rupees ($4.55 million-$5.69 million) in cash

flow over the next year from new initiatives.

Fast-food chains have been grappling with falling demand in

India over the last two years amid rising living costs,

especially in urban centers. Competition from local eateries has

also risen in metro cities where Westlife has its largest

presence.

Rival Jubilant Foodworks, which operates

Domino's stores in India, is the only fast-food chain

bucking the trend

with lower pricing and a 30-minute delivery model.

Westlife reported an adjusted loss for the second quarter,

also hurt by soaring expenses.

The company posted a consolidated loss before exceptional

items and tax of 158.5 million rupees for the quarter ended

September 30. It reported a profit of 7.1 million rupees for the

year-ago quarter.

Westlife's same-store sales, which measure revenue from

stores in operation for the last one year, fell 2.8% in the

quarter. Rising ingredient and labour costs also weighed on

margins, with expenses climbing 7%.

However, it recorded a one-time gain of 581.7 million rupees

from selling a store property. Revenue rose 3.8% to 6.42 billion

rupees.

Peer Sapphire Foods, which operates KFC and

Pizza Hut restaurants in India, also posted a bigger quarterly

loss.

($1 = 87.8950 Indian rupees)

(Komal Salecha in Bengaluru; Editing by Harikrishnan Nair,

Abinaya Vijayaraghavan and Maju Samuel)