Sapphire Foods India, the operator of KFC and Pizza Hut restaurants, revealed its largest quarterly earnings drop since going public in 2021, hampered by local competition and inflation-weary consumers cutting back on fast food spending.
The Yum Brands franchisee’s overall net profit plummeted roughly 69 per cent to 101.4 million rupees (USD 1.22 million) in the quarter ending 31 December.
According to LSEG statistics, analysts predicted an average profit of 239.6 million rupees.
Consumers impacted by inflation continued to reduce their spending on discretionary products throughout the quarter. To counteract this, fast-food restaurants in India have begun introducing cheaper menu items and increasing marketing initiatives to boost demand.
Despite this, firms such as Sapphire, which serves pizzas beginning at 169 rupees, have faced tough competition from smaller pizzerias that provide lower-cost choices, reducing the revenues of larger quick-service restaurants.
Same-store sales, which measure revenue growth in establishments open for at least a year, dipped 2 per cent at KFC outlets and 19 per cent at Pizza Hut.
Total income surged 12 per cent to 6.66 billion rupees, while costs increased by approximately 16 per cent. This resulted in earnings before interest, tax, depreciation, and amortisation (EBITDA) margins of 18.4 per cent, down from 19.6 per cent the previous year.
Sapphire, which also manages Pizza Hut outlets in Sri Lanka, saw its shares rise 2 per cent on the findings. They declined 2 per cent during the third quarter.
