Sapphire Foods India, the company operating the Pizza Hut and KFC chains of restaurants, reported its largest profit decline since going public and missed estimates on Friday. This was attributed to inflation-weary customers cutting back on dining out and ordering in.
The consolidated net profit of the Yum Brands franchisee plummeted by 98% to INR 2.39 crore ($286,271.4) for the quarter ended March 31, marking its fourth consecutive quarterly profit decline.
According to LSEG data, analysts had anticipated a profit of INR 4.45 crore on average.
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Following the results, shares of the company, which debuted on the stock market in November 2021, declined by as much as 3.3%.
During the fiscal year, India’s fast-food eateries faced challenges in attracting customers, as consumer spending dwindled amidst persistent inflation. Food prices, constituting a significant portion of the overall consumer expense, have maintained elevated levels throughout the year.
Sapphire Foods introduced new menu items at reduced rates, including value-added meals like Pizza Hut’s “Melts,” a cheesy pizza-sandwich combo priced at 259 rupees and beyond. Despite these efforts, customers remained unmoved.
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Costs surged by 15% due to a 9.4% increase in raw material prices, while revenue saw a 12.7% rise to reach INR 620 crore.
McDonald’s India franchisee Westlife, a rival, also experienced a significant 96% decline in fourth-quarter profits due to weak demand.
Devyani International, known for its KFC outlets in the country, and Jubilant FoodWorks, the franchisee for Domino’s in India, have not yet disclosed their financial results.
