Pizza Hut India operator reports biggest profit fall since listing

Bengaluru: 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 per cent to Rs 101.4 million ($1.22 million) for the quarter ended December 31.

Analysts, on average, had expected a profit of Rs 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 pizza's starting at 169 rupees, 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 per cent at KFC restaurants and fell 19 per cent at Pizza Hut.

Total revenue rose 12 per cent to Rs 6.66 billion, while expenses jumped nearly 16 per cent. This led to its margins on earnings before interest, tax, depreciation and amortization (EBITDA) contracting to 18.4 per cent from 19.6 per cent an year ago.

Shares of Sapphire, which also operates Pizza Hut stores in Sri Lanka, however, rose 2 per cent after the results. They fell 2 per cent 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.

($1 = 82.9700 Indian rupees)