India’s fast-food industry is witnessing a major battle among leading food outlet brands, as they are fighting with a significant downfall in quarterly earnings amidst changing consumer habits and economic headwinds.
Analysts predict a decline in earnings for major players like Jubilant Foodworks, Devyani International, Sapphire Foods India, and others, attributing it to cash-strapped consumers reducing their dining out and ordering in activities.
Throughout 2023, pizza franchisees like Jubilant Foodworks and Devyani International faced intensified competition, with burger chains also joining the trend later in the year due to inflationary pressures.
New affordable menu items, such as Burger King’s 99-rupee combination deals, or burger prices starting at just Rs 49 have failed to attract consumers and the impact of such deals has remained minimal amid India’s persistently high inflation rates.
“Earlier you might be visiting (fast-food chains) three or four times monthly. Now everyone is restricting to once or twice,” remarked Kranthi Bathini, equity strategist at WealthMills Securities, highlighting the shift in consumer behavior.
Analysts predict significant declines in net income for major players like Devyani and Sapphire, with expectations of widening losses for Burger King operator Restaurant Brands Asia. Same-store sales are also anticipated to fall, particularly affecting Pizza Hut stores with a decline of more than 10 percent.
However, despite these challenges, franchisees remain undeterred, continuing to expand their reach nationwide. Operators like Sapphire and Devyani, which also manage KFC stores, are opening new restaurants from Kalimpong in West Bengal to Shoolagiri in Tamil Nadu, indicating their long-term commitment to growth.
While aggressive store opening plans are expected to drive future growth, immediate earnings growth remains difficult to reach amidst stiff competition from local rivals. Regional players like La Pino’z, Jumboking, and Biggies Burger are mounting pressure on international counterparts.
(with inputs from agencies)
