Restaurant Brands Asia on Monday revealed a steeper first-quarter loss, attributing it to Burger King’s India operator facing higher raw material expenses and a considerable outlay on expanding its store network.
According to an exchange filing, the restaurant chain’s consolidated net loss for the quarter ended June 30 expanded to 504.8 million rupees ($6.1 million), compared to 475 million rupees recorded in the same period the previous year.
Total expenses surged by more than 21%, reaching 6.72 billion rupees, primarily driven by a 26% increase in the cost of materials consumed. The rise in material costs was attributed to the escalation in the prices of ingredients such as cheese and vegetables.
The upward trend in costs has also exerted pressure on the profitability of competitors, including KFC franchisees Sapphire Foods India and Devyani International, as well as Domino’s Pizza operator Jubilant FoodWorks.
Earlier this year, Restaurant Brands Asia introduced new meals starting at 99 rupees ($1.20), strategically aligning with other global chains in India that focused on more affordable options to entice consumers amidst high inflation and reduced discretionary spending.
The company experienced a 25% increase in revenue from operations, reaching 6.11 billion rupees, thanks to the successful launch of new offerings and the expansion of its restaurant network in India and Indonesia. Over the past 12 months, the company opened numerous new restaurants in these countries, where it holds master franchisee rights.
Following the release of the results, shares of Restaurant Brands Asia, which also operates Restaurant Brands International’s Popeyes stores in Indonesia, recorded a nearly 2% increase. In the June quarter, the shares surged by almost 20%.