Sapphire Foods India Reports Steeper-than-Expected Q1 Profit Decline Amid Rising Costs
BENGALURU, July 30 (Reuters) – Sapphire Foods India, operator of the Pizza Hut and KFC chains, reported a significant decline in first-quarter profit on Tuesday. The company faced rising costs and struggled to attract budget-conscious customers.
The Yum Brands franchisee’s consolidated net profit dropped 68% to 85.2 million rupees ($1.02 million) for the quarter ending June 30, falling short of the average analyst expectation of 173.9 million rupees, according to LSEG data.
India’s quick-service chains have been grappling with challenges in attracting customers due to persistent inflation, which hovered around 5% during the quarter. Fast-food franchises, including Sapphire Foods, have experienced low demand as consumers, facing financial strain, have reduced their spending on dining out and takeout orders.
The cost of key raw materials, such as cheese, chicken, and tomatoes, has also been on the rise. Despite these challenges, Sapphire Foods’ revenue from operations increased by 10% to 7.18 billion rupees in the June quarter, though it missed analysts’ estimate of 7.23 billion rupees. The company reported that ingredient prices rose nearly 10%, causing total expenses to increase by 13% to 7.12 billion rupees.
Meanwhile, McDonald’s India operator Westlife Foodworld saw a drop in first-quarter profit due to weak demand. Burger King’s India operator Restaurant Brands Asia reported a smaller first-quarter loss, thanks to offers and discounts that attracted customers.
Rivals Devyani International, which also operates KFC outlets in India, and Domino’s India franchisee Jubilant FoodWorks, have yet to report their results.
Business Description: Sapphire Foods India Limited
Sapphire Foods India Limited is involved in the quick service restaurant (QSR) and casual dining industry. As a franchisee of Yum Brands, the company operates in India, Sri Lanka, and the Maldives. Its brands include Kentucky Fried Chicken (KFC), Pizza Hut, and Taco Bell. KFC offers a variety of chicken dishes, including bone-in and boneless options, burgers, rice bowls, wraps, beverages, and desserts. Pizza Hut provides an extensive menu of pizzas, pasta, appetizers, beverages, and desserts, catering to various meal times. Taco Bell’s menu features diverse taco fillings, sauces, and unique items like sweet burritos and bell wings. Sapphire Foods operates around 579 restaurant