India KFC operator Devyani International posts 43% drop in Q2 profit

Sapphire Foods India

07/11/2023 07:29

BENGALURU, Nov 7 (Reuters) - India's Devyani
International  DEVY.NS  reported a 43.2% fall in  quarterly
profit on Tuesday as a rise in raw material costs at the KFC and
Pizza Hut operator overshadowed a bump in promotions-led demand
at its fast-food chains. 
    Consolidated net profit fell to 333.5 million rupees ($4.01
million) for the second quarter ended September 30, from 587.6
million rupees a year ago. 
    "High inflation across industries and categories from a
macro-economic perspective has led to a short-term impact on
consumer sentiment and depressed consumer spending in the last
few quarters," Chairman Ravi Kant Jaipuria said in a statement.
    However, Devyani's revenue from operations rose 9.6% to 8.19
billion rupees, driven in part by its "Wednesday offers" at KFC
and a one-plus-one deal at Pizza Hut. 
    The September quarter saw prices of several ingredients,
including cheese and vegetables, rising, prompting many
restaurants to even take tomatoes off the table. 
        Devyani, which is also the Indian franchisee for the
Costa Coffee chain, said its total expenses jumped nearly 16.3%
from a year earlier.
    Indian food companies have also been battling slowing
customer footfall as high inflation keeps consumers from
discretionary spending. Retail inflation during the second
quarter was between 5.02%-7.44%, driven by high vegetable
prices. 
    Rival Sapphire Foods India  SAPI.NS , which also operates
Pizza Hut in India, reported a 20% fall in quarterly same-store
sales last week, saying it was "cautious" about opening more
outlets.
        McDonald's operator Westlife Foodworld  WEST.NS  also
posted a drop in profit in late October, blaming a slowdown in
consumer spending and demand.
    Shares of Devyani were up 2.3% at 194 rupees at 12:45 p.m.
IST. 


($1 = 83.2575 Indian rupees)

 (Reporting by Ashna Teresa Britto in Bengaluru; Editing by
Nivedita Bhattacharjee)
 ((AshnaTeresa.Britto@thomsonreuters.com;))