2 months ago
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Sapphire Foods India , the operator of KFC and Pizza Hut restaurants, on Friday reported its biggest quarterly decline in profit since listing in 2021, hurt by domestic competition and as inflation-weary consumers cut back spending on fast food.
The Yum Brands franchisee's consolidated net profit fell nearly 69% to ₹101.4 million ($1.22 million) for the quarter ended Dec. 31.
Analysts, on average, had expected a profit of ₹239.6 million, according to LSEG data.
Inflation-hit consumers continued to cut back spending on discretionary items during the quarter. To counter this, fast-food outlets in India have been rolling out cheaper menu items and launching more marketing campaigns to bolster demand.
Despite this, companies including Sapphire, which offers pizzas starting at ₹169, have also been facing stiff competition from local pizzerias that offer cheaper options, denting the profits of bigger quick service restaurants.
Its same-store sales, which measure the growth in revenue from stores that have been in operation for at least a year, declined 2% at KFC restaurants and fell 19% at Pizza Hut.
Total revenue rose 12% to ₹6.66 billion, while expenses jumped nearly 16%. This led to its margins on earnings before interest, tax, depreciation and amortization (EBITDA) contracting to 18.4% from 19.6% an year earlier.
Shares of Sapphire, which also operates Pizza Hut stores in Sri Lanka, however, rose 2% after the results. They fell 2% in the third quarter.
Domino's Pizza operator Jubilant Foodworks reported a surprise fall in quarterly profit, while KFC India operator Devyani posted its slowest revenue growth since listing amid higher costs.
