Pizza Hut India operator reports biggest profit fall since listing (updated)

Sapphire Foods India

09/02/2024 08:38

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       BENGALURU, Feb 9 (Reuters) - Sapphire Foods India
 SAPI.NS , the operator of KFC and Pizza Hut restaurants, on
Friday reported its biggest quarterly decline in profit since
listing in 2021, hurt by domestic competition and as
inflation-weary consumers cut back spending on fast food.
    The Yum Brands  YUM.N  franchisee's consolidated net profit
fell nearly 69% to 101.4 million rupees ($1.22 million) for the
quarter ended Dec. 31.
    Analysts, on average, had expected a profit of 239.6 million
rupees, according to LSEG data.
    Inflation-hit consumers continued to cut back spending on
discretionary items during the quarter. To counter this,
fast-food outlets in India have been rolling out cheaper menu
items and launching more marketing campaigns to bolster demand.
    Despite this, companies including Sapphire, which offers
pizza's starting at 169 rupees, have also been facing stiff
competition from local pizzerias that offer cheaper options,
denting the profits of bigger quick service restaurants.
    Its same-store sales, which measure the growth in revenue
from stores that have been in operation for at least a year,
declined 2% at KFC restaurants and fell 19% at Pizza Hut.
    Total revenue rose 12% to 6.66 billion rupees, while
expenses jumped nearly 16%. This led to its margins on earnings
before interest, tax, depreciation and amortization (EBITDA)
contracting to 18.4% from 19.6% an year ago.
    Shares of Sapphire, which also operates Pizza Hut stores in
Sri Lanka, however, rose 2% after the results. They fell 2% in
the third quarter.
    Domino's Pizza operator Jubilant Foodworks  JUBI.NS 
reported a surprise fall in quarterly profit, while KFC India
operator Devyani posted its slowest revenue growth since listing
amid higher costs.

($1 = 82.9700 Indian rupees)

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