Gurugram: Devyani International, the Indian operator of KFC and Pizza Hut outlets, has reported a sharp reduction in its second-quarter net loss as stronger same-store sales at KFC restaurants helped offset rising raw material costs.
The company recorded a consolidated net loss of 2.4 million rupees ($25,301.78) for the quarter, compared with a loss of 218.9 million rupees (approximately $2.31 million) in the corresponding period a year earlier. The improvement came as KFC outlets delivered stronger sales despite increased competition and higher operating expenses across India’s quick-service restaurant sector.
Same-store sales at KFC restaurants increased by 4.4 percent, marking the third consecutive quarter of growth. The performance indicates continued demand at the chain’s existing outlets and provided support to the company’s quarterly results.
Devyani International operates as a franchisee of US-based Yum Brands, which owns the KFC and Pizza Hut brands. Restaurant operators across India have stepped up discounts and value meal offers to attract consumers who remain cautious about spending. Competition from newer domestic players has also increased pressure on established chains to offer more affordable options.
The sector has faced additional cost pressures since the conflict in the Middle East began. Restaurants experiences higher expenses for raw materials and energy. At the same time, competition from local rivals encourages promotional pricing to retain customers and attract new diners.
The company’s consolidated gross margin declined by 60 basis points compared with the previous quarter. However, it improved by 70 basis points from the same period last year to reach 68.5 percent.
The company’s remained on track to achieve its full-year expansion forecast of 200 to 220 net new outlets. The planned additions form part of the company’s growth strategy as competition continues across India’s quick-service restaurant market.
Investor response to the results was positive. The company’s shares rose by as much as 5.8 percent during the session before trading 4.3 percent higher at 125.6 rupees (approximately $1.32). The gains reflected market reaction to the narrower quarterly loss and continued sales growth at KFC outlets.
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