KFC India operator Devyani's revenue growth slowest since listing; costs spike

Devyani International

02/02/2024 07:29

CHENNAI/BENGALURU, Feb 2 (Reuters) - KFC India operator
Devyani International  DEVY.NS  reported its slowest quarterly
revenue growth since listing more than two years ago on Friday,
as consumers cut back their spending on pizzas and fried chicken
amid soaring inflation.
    Global fast-food restaurants in India have done everything
from rolling out cheaper menu items and launching marketing
campaigns with celebrities to prop up demand but are still
struggling to attract cost-conscious customers.
    Devyani International reported 7% growth in revenue from
operations to 8.43 billion rupees ($101.77 million) for the
third quarter ended Dec. 31, marking its slowest revenue growth
since its listing in September 2021. It missed analysts'
estimate of 8.96 billion rupees, according to LSEG data.
    This comes at a time when consumers are particularly turning
to local pizzerias offering much cheaper pies, denting profits
at Domino's operator Jubilant FoodWorks  JUBI.NS  and Devyani's
Pizza Hut restaurants.
    "Consumer sentiment remains subdued, despite Q3
traditionally being a strong and festive quarter," Chairman Ravi
Kant Jaipuria said in a statement.
    This, coupled with total expenses jumping nearly 16% from a
year earlier, further dented Devyani's margins.
    Its earnings before interest, tax, depreciation and
amortization (EBITDA) margin contracted to 17.4% from 22% an
year ago. 
    Its consolidated profit slumped nearly 87% to 96.2 million
rupees.
    However, the company remains optimistic about witnessing a
recovery over the next few quarters and is confident of reaching
2,000 stores by end of calendar year 2024, it said.
    Shares of Devyani, which declined 6% in January, fell as
much as 2.1% after the results.
    Earlier this week, Jubilant Foodworks reported a surprise
profit fall, while Westlife Foodworld  WEST.NS , which runs
McDonald's restaurants in southern and western India, posted a
bigger-than-expected profit drop.


($1 = 82.8350 Indian rupees)

 (Reporting by Praveen Paramasivam in Chennai and Ashna Teresa
Britto in Bengaluru; Editing by Rashmi Aich)
 ((Praveen.Paramasivam@thomsonreuters.com; +91 867-525-3569;))