Restaurant India News: Devyani International Posts Rs 219 Million Loss as QSR Demand Slows in India

Devyani International, which operates KFC and Pizza Hut restaurants in India under the Yum! Brands franchise, reported a quarterly loss as consumer demand across its portfolio remained weak.

The company recorded a net loss of Rs 219 million (USD 2.49 million) for the quarter ending September, compared to a profit of Rs 170,000 in the same period last year. Revenue from operations rose 12.6 percent to Rs 13.77 billion, driven by the addition of 263 new stores over the past year, bringing the total count to 2,184 outlets.

Devyani introduced new low-priced menu items, including a chickpea burger at KFC priced below one dollar and a three-topping pizza at Pizza Hut, aimed at drawing in more value-conscious customers.

However, same-store sales for KFC fell 4.2 percent, while Pizza Hut saw a decline of 4.1 percent from a year earlier. The company attributed the pressure to intense competition from local eateries and a slow recovery in urban demand. The company’s EBITDA margin slipped to 14.1 percent in the second quarter, down from 16.3 percent a year ago, partly due to the acquisition of Sky Gate Hospitality, owner of the Biryani by Kilo chain, which is currently operating at a loss.

Devyani noted that the Indian government’s Goods and Services Tax reductions had a “very minimal” impact on the quick-service restaurant category.

Yum! Brands, the parent company, announced earlier this week that it has initiated a strategic review of Pizza Hut’s global operations, a move that could result in a partial or full divestment. The company cited Pizza Hut’s slower performance compared to KFC and Taco Bell as a key factor behind the decision.

In contrast, Sapphire Foods, another Yum! Brands franchisee in India, reported a wider quarterly loss in October and confirmed plans to pause Pizza Hut expansion after same-store sales fell 8 percent.