Pizza Hut India operator posts biggest profit drop yet on slow demand, piling costs (updated)

Sapphire Foods India

10/05/2024 10:00

(Adds details)
       BENGALURU, May 10 (Reuters) - Sapphire Foods India
 SAPI.NS , which operates the Pizza Hut and KFC chains of
restaurants, posted its biggest profit fall since listing and
missed estimates on Friday, as inflation-weary customers
continued to cut back on dining out and ordering in.
    The Yum Brands  YUM.N  franchisee's consolidated net profit
fell 98% to 23.9 million Indian rupees ($286,271.4) for the
quarter ended March 31, marking its fourth straight quarterly
profit fall.
    Analysts, on average, had expected a profit of 44.5 million
rupees, according to LSEG data.
        Shares of the company, which went public in November
2021, fell as much as 3.3% after the results.
  
    India's quick-service restaurants struggled throughout the
fiscal year to lure in customers, who cut back spending due to
sticky inflation. The country's food inflation, which accounts
for nearly half of the overall consumer price basket, has
remained high so far this year.
    Sapphire Foods's restaurants launched new items at lower
prices, as well as valued-added meals such as Pizza Hut's launch
of a cheesy pizza-sandwich meal called Melts priced at 259
rupees and above, but customers could not be swayed.
    Expenses rose 15% as raw material prices climbed 9.4%.
Revenue climbed 12.7% to 6.2 billion rupees.
    Rival McDonald's India franchisee Westlife  WEST.NS  also
posted a 96% slide in fourth-quarter profit on frail demand.
    Devyani International  DEVY.NS , which also operates KFC
outlets in the country, and Domino's India-franchisee Jubilant
FoodWorks  JUBI.NS  are yet to report results.
        
  
($1 = 83.4872 Indian rupees)

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