Indian KFC operator Sapphire Foods’ quarterly loss widens on muted fast-food demand

Sapphire Foods, which operates KFC and Pizza Hut restaurants in India, reported a wider quarterly net loss, as urban demand stayed muted while raw material and marketing costs rose.

Popular fast-food chains in India have been struggling to grow their same store sales, facing stiff competition from local chains for urban consumers who are cutting back on dining out amid the high cost of living in metros.

Sapphire, which is the franchisee operator for U.S.-based Yum Brands, reported a consolidated net loss of 127.7 million rupees ($1.45 million), compared to a loss of 30.4 million rupees a year ago.

Its consolidated revenue from operations rose 6.7% to 7.42 billion rupees, with the number of restaurants rising by 88 from a year earlier to 997 as of September end.

However, same-store sales at KFC declined 3%, partly due to the impact of a nine-day festival when many Hindus avoid meat.

Same store sales at Pizza Hut fell 8% year on year.

Sapphire’s consolidated core profit margin declined by 230 basis points to 14.3% in the second quarter.

Peer Devyani International, also a Yum Brands franchisee operator of KFC and Pizza Hut restaurants in India, has yet to report its results.

Domino’s India operator Jubilant Foodworks is the only chain that stands in contrast to the trend, leaning in on lower pricing and 30-minute delivery to lure consumers.