Restaurant India News: Costa Coffee India Posts 31 Percent Revenue Growth Despite Margin Pressure and Slower Same-Store Sales

Swiggy has announced a new round of employee stock option (ESOP) grants worth approximately Rs 150 crore, as the company continues to invest in growth and employee incentives despite widening losses.

According to a filing with the National Stock Exchange dated July 11, Swiggy issued 38.86 lakh stock options under its ESOP 2024 plan. The grant is valued based on the previous market closing price of Rs 385.15 per share.

These stock options carry an exercise price of Rs 1 each and convert into fully paid-up equity shares after vesting. Employees can exercise the options any time post-vesting until the company’s liquidation.

This comes after the company’s earlier ESOP package in April, which was valued at Rs 443.4 crore, as disclosed in a separate filing. In January, Swiggy had also approved the allotment of 2.61 crore equity shares to employees under its ESOP 2015 and ESOP 2021 plans, according to an exchange filing at that time.

Swiggy reported a net loss of Rs 1,081 crore for the January–March quarter, nearly doubling over the previous period, largely due to aggressive expansion of its quick commerce business. The company was reportedly opening close to four dark stores per day during this time.

However, the expansion strategy also boosted Swiggy’s consolidated operating revenue, which rose 45 percent year-on-year to Rs 4,410 crore in the same quarter.

The food delivery sector in India is projected to grow by 13–14 percent in the coming years, with a steady-state EBITDA margin of around 5 percent, according to a new report by HSBC Global Investment Research. The report also highlights that competitive intensity in the quick commerce segment has moderated recently, supporting stock performance in the near term.

According to HSBC, competition in quick commerce appears significantly more manageable than it was six months ago.

“To be fair there is no dearth of capital for most players even now but as discussed in our earlier note, we believe the incremental benefit of high cash burn is diminishing now,” the report states.

With capital still accessible but its effectiveness diminishing, companies are expected to shift focus toward improving asset utilization and retaining customers acquired over the past year.

“Overall, we think that near-term growth is likely to remain strong and profitability should gradually improve as well,” HSBC adds.

The report notes that while variable costs — including picker and delivery partner wages — have increased over the past few quarters, dark store cost trends have shown signs of stabilizing. Corporate-level costs, which include management and technology, currently account for about 5 percent of gross order value (GOV), but HSBC expects this figure to decline to 2–3 percent over the next four to five years as operations scale.

A key topic among investors remains the appropriate valuation benchmark for the sector. HSBC comments on Zomato’s valuation within the broader consumer discretionary category.

“With a duopoly industry structure and very low reinvestment rate, we think valuations for Zomato should be at least the average of the other consumer discretionary companies in India,” the report says.

Most consumer discretionary firms in India trade at an EV/EBITDA multiple between 15x and 60x. HSBC applies a 40x EV/EBITDA target multiple to Zomato, also noting that the company has significant tax assets, which make it appear cheaper on a price-to-earnings basis compared to peers.

Jubilant FoodWorks Limited has announced its financial results for the nine months and quarter ending December 31, 2024, highlighting growth in revenue, store expansions, and digital engagement.

9M FY25 Performance

• System Sales: Rs. 69,168 million
• Revenue: Rs. 60,385 million, up 48.0% YoY
• EBITDA: Rs. 11,837 million, an increase of 42.1% YoY
• Store Expansion: 269 net new stores, bringing the total to 3,260

The company’s profit after tax before exceptional items stood at Rs. 1,830 million, with a 3.0% margin. EBITDA margin was reported at 19.6%, down by 81 basis points.

DP Eurasia, which operates in Turkey, Azerbaijan, and Georgia, recorded revenue of Rs. 14,262 million, with an EBITDA margin of 23.0% and a PAT margin of 7.2%.

Q3 FY25 Performance

• System Sales: Rs. 24,084 million
• Revenue: Rs. 21,508 million, up 56.1% YoY
• EBITDA: Rs. 4,020 million, an increase of 43.5% YoY
• Store Expansion: 130 net new stores (India: 67, Turkey: 61, Bangladesh: 2)

The company reported a profit after tax before exceptional items of Rs. 506 million, with a 2.4% margin. EBITDA margin stood at 18.7%, lower by 163 basis points.

Domino’s India Performance

• Revenue Growth: 18.3%, driven by a 33.8% increase in order volume
• Delivery Revenue: Up 29.7%, now contributing 71.4% of total sales
• LFL Growth: 12.5%, led by 24.7% growth in the delivery segment
• Store Expansion: 60 new outlets, entering 19 new cities, bringing the network to 2,139 stores across 466 cities

Digital Engagement:

• Monthly Active Users (App): 13.7 million, up 30.5% YoY
• App Installs: 11.7 million, up 28.6% YoY
• Loyalty Program Membership: 30.8 million, up 43.3% YoY

India Segment Update
Revenue from operations in India reached Rs. 16,111 million, growing 18.9%, driven by Domino’s 18.3% revenue increase. Domino’s LFL growth stood at 12.5%, with delivery LFL at 24.7%. EBITDA for the segment was Rs. 3,128 million, with a 19.4% margin. The company added 67 net stores across brands in India, ending the period with 2,266 outlets.

International Segment Update

• DP Eurasia: System sales reached Rs. 7,544 million. Revenue was Rs. 5,044 million, up 9.5% quarter-on-quarter, with an EBITDA margin of 18.3% and a PAT margin of 2.4%.
• Sri Lanka: Revenue increased by 65.4% YoY, driven by same-store sales growth. Initiatives such as store relocations, new product launches, and marketing strategies contributed to this performance.
• Bangladesh: Revenue stood at Rs. 173 million, marking a 38.6% increase.
• Store Expansion: 63 net new stores were added across international markets, bringing the total network to 994 stores.

Shyam S. Bhartia, Chairman, and Hari S. Bhartia, Co-Chairman of Jubilant FoodWorks stated, "Q3 FY25 was a defining quarter for the company. This success underscores the strength of our strategy and our team's dedication. We remain focused on further strengthening Domino’s, enhancing the customer experience, and accelerating the path to profitability for our emerging brands. We are confident that our customer-centric approach and investments in technology and innovation will continue to drive sustainable, profitable growth.”

Sameer Khetarpal, CEO and MD, Jubilant FoodWorks added, "This is a quarter of new highs—not only in revenue but also in same-store sales growth, store expansion, app traffic, app conversion, customer loyalty, new customer acquisition, and highest absolute EBITDA. We remain focused on building platforms and accelerating our prowess as a food-tech company."

Jubilant FoodWorks continues to strengthen its presence in India and international markets, leveraging digital engagement, store expansion, and strategic initiatives to drive growth.

Devyani International Ltd (DIL), the largest franchisee of Yum Brands in India, reported a consolidated net loss of Rs 7.65 crore for the third quarter ending December 2024, citing increased expenses and higher tax liabilities. The company had recorded a net profit of Rs 5.07 crore during the same period last year, according to a regulatory filing.  

The company, which operates KFC, Pizza Hut, and Costa Coffee in India, posted consolidated revenue of Rs 1,294.4 crore for the quarter, up from Rs 843.13 crore in the corresponding quarter of the previous fiscal year. However, total expenses rose significantly to Rs 1,294.84 crore, compared to Rs 838.06 crore in the same quarter last year. Tax expenses also increased to Rs 16.17 crore from Rs 4.61 crore in the year-ago period.  

DIL Non-Executive Chairman Ravi Jaipuria noted that while the company’s revenue grew 53.5 percent year-on-year, there was "slightly better margin performance because of better SSSG (same-store sales growth) and certain fresh cost optimisation measures."  

Jaipuria also highlighted that DIL has met its store expansion targets, surpassing 2,000 outlets across all brands and geographies during the quarter, ahead of its initial projections. 

According to a report by the World Health Organisation (WHO), per capita alcohol consumption in India has more than doubled from 2005 to 2016.

The consumption of alcohol has risen in the country from 2.4 litres in 2005 to 5.7 litres in 2016. Of the total consumption, 4.2 litres are consumed by men and 1.5 litre by women.

The total per capita alcohol consumption is likely to increase in half of the WHO regions by 2025, with the highest increase expected for South East Asia Region. An increase of 2.2 litres is predicted in India.

The report by the WHO also said that the second-highest increase is projected for the populations of the Western Pacific Region, where the population of China is the largest.  An increase in per capita consumption of 0.9 litres of pure alcohol is expected by 2025.

The harmful use of alcohol is the leading risk factor for population health worldwide. It has a direct impact on many health-related targets of the Sustainable Development Goals (SDGs), including those for maternal and child health, infectious diseases (HIV, viral hepatitis, tuberculosis), non-communicable diseases and mental health, injuries and poisonings.

In 2016, the consumption of alcohol resulted in around 3 million deaths worldwide and 132.6 million disability-adjusted life years (DALYs). Of which, an estimated 2.3 million deaths and 106.5 million DALYs were among men while 0.7 million women died and experienced 26.1 million DALYs.

India, projected to be the most populous country over the next decade, will be the world's largest milk producer by 2026 and will account for the biggest increase in wheat production globally, according to a report by the UN and OECD.

The OECD-FAO Agricultural Outlook 2017-2026 said the world's population will increase from 7.3 to 8.2 billion over the course of the next decade with India and Sub-Saharan Africa accounting for 56 per cent of total population growth.

India's population will grow from 1.3 billion to 1.5 billion, an increase of almost 150 million. India will overtake China and is projected to be the most populous country in the world by 2026.

The report said that given their strong population growth, India and Sub-Saharan Africa will also drive a large share of global demand.

It further said that over the first quarter of the 21st century, milk production in India will be nearly tripled.

According to the report by the UN and Organisation for Economic Cooperation and Development, "Over the course of the outlook period alone, milk production in India will grow 49 per cent; in 2026, India will be the world's largest milk producer, with an output one-third above that of the second largest producer, the European Union."

The report further stated, global production of wheat is projected to increase by 11 per cent over the outlook period of 2017-2026, while the wheat area increases by only 1.8 per cent.

The increase in wheat production is expected to occur through higher yields, most notably in Asia and Pacific, which will account for 46 per cent of additional wheat production.

Within the region and globally, India (15 Mt) will account for the biggest increase in production and Pakistan (6 Mt) and China (5.5 Mt) are also expected to have significant gains.

The European Union accounts for 13 per cent of the production increase. Rice production is expected to grow by 66 Mt and will be almost exclusively driven by yield growth, which accounts for 93 per cent of additional production.

The global area dedicated to rice is expected to increase by only a per cent from the base period, while global yields will increase by 12 per cent. Major production gains are projected for India, Indonesia, Myanmar, Thailand and Vietnam with yields in these countries are expected to increase by over 15 per cent.

The report said that global food commodity prices are projected to remain low over the next decade compared to previous peaks, as demand growth in a number of emerging economies is expected to slow down and biofuel policies have a diminished impact on markets.