The drop in profits comes amidst sluggish demand and escalating costs
Sapphire Foods India, the operator of Pizza Hut in India has reported its largest profit decline to date. The drop in profits comes amidst sluggish demand and escalating costs, underscoring the ongoing struggles faced by businesses in the sector.
The consolidated net profit of the Yum Brands franchisee experienced a decline of 98 per cent, amounting to 23.9 million Indian rupees ($286,271.4) for the quarter concluded on March 31. This marks the fourth consecutive quarter of profit decline for the franchisee.
According to data from LSEG, analysts had anticipated a profit of 44.5 million rupees on average.
Following the announcement of the financial results, the company’s shares, which were listed in November 2021, witnessed a decline of up to 3.3 per cent.
Throughout the fiscal year, quick-service restaurants in India faced challenges in attracting customers, primarily due to reduced spending caused by persistent inflationary pressures. The country’s food inflation, which constitutes a significant portion of the overall consumer price basket, remained elevated throughout the year.
Sapphire Foods, operating various restaurants, introduced new menu items at lower price points and offered value-added meals such as Pizza Hut’s Melts, a cheesy pizza-sandwich meal priced at 259 rupees and above. However, despite these efforts, customer turnout remained subdued.
Expenses surged by 15 per cent as raw material prices increased by 9.4 per cent. Meanwhile, revenue recorded a growth of 12.7 per cent, reaching 6.2 billion rupees.
