Aggregate recovery was led by Jubilant Foodworks (Jubi), which saw a 19 per cent on-year increase in revenue
The aggregate revenue growth of listed quick service restaurant (QSR) companies was 12 per cent year-on-year in the third quarter of the current financial year (Q3FY25), according to a BNP Paribas Exane Research report. This was after witnessing double-digit growth after five quarters of growing at seven to nine per cent year-on-year (YoY)
Aggregate recovery was led by Jubilant Foodworks (Jubi), which saw a 19 per cent on-year increase in revenue. Gross margin declined YoY across companies (except Burger King and Barbeque Nation) as companies continued to offer value to consumers amid a slowdown in urban consumption.
Due to increased operating costs, new store costs and weak same-store sales growth (SSSG), the earnings before interest, tax, depreciation and amortisation (EBITDA) margin decline YoY continued for the third quarter as well.
The report added that given the weak demand scenario, most companies continue to refrain from taking price hikes and are focusing on launching value products and driving dine-in growth via marketing and promotions. Consensus earnings for the industry continued to be lowered.
Helped by initiatives such as a lower threshold for free delivery, menu innovations and dine-in focused value offerings, Jubi, which was a laggard in earlier quarters, witnessed 19 per cent YoY revenue growth, outperforming peers among the listed QSR firms. Average daily sales (ADS) continued to decline on-year for most companies, except for Jubi and Sapphire (Pizza Hut), witnessing 10 per cent and 7 per cent ADS growth on a year-on-year basis, respectively.
Growth in store additions remained strong at 15 per cent YoY in Q3FY25. As seen in earlier quarters, SSSG or like-for-like (LFL) growth on a YoY basis remained negative for most companies. LFL on-year growth was positive only for Jubi and Sapphire (Pizza Hut) at 13 per cent and 5 per cent, respectively.
The report noted that aggregators continue to add restaurants to their network. Zomato’s average monthly active restaurant partners increased significantly, from 61,000 in FY19 to 3,06,000 as of 9MFY25. QSR sales are now getting fragmented as consumers have more options to choose from (in terms of restaurants, cuisines etc.). This is denting the already weak average daily sales of the QSR industry, along with the general weakness in demand, as per the report.
