KFC India operator Devyani tops Q1 profit view as discounts drive demand
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KFC India operator Devyani International reported a better-than-expected first-quarter profit on Monday, as promotions and discounts drew customers in.
Consolidated net profit rose to 301.1 million rupees ($3.6 million) for the quarter ended June 30 from 117.6 million rupees a year ago.
Analysts, on average, expected a profit of 207.5 million rupees, as per LSEG data.
To attract budget-conscious customers, Devyani offered discounts and promotional offers such as chicken rolls at 99 rupees ($1.2) at its KFC outlets. The T20 Cricket World Cup and the coinciding school holidays also helped drive its sales.
India's quick-service restaurant (QSR) chains have struggled with sluggish demand and rising costs amid inflationary pressures. The country's retail inflation hovered around 5% throughout the quarter due to elevated food prices.
Rival Sapphire Foods India and Westlife Foodworld reported a bigger-than-expected decline in profit, amid frail demand, while Burger King's India operator Restaurant Brands Asia reported a narrower first-quarter loss as offers and discounts swayed customers.
Devyani, which also operates the Costa Coffee chain, said its revenue from operations rose 44% to 12.22 billion rupees in the quarter.
However, its earnings before interest, tax, depreciation and amortization margin contracted to 18.3% from 20.5% an year ago, with expenses surging 43%.
Same store sales at its KFC India operations also saw a de-growth of 7% compared to 0.9% an year ago.
Devyani's shares fell as much as 3.5% after the results.
Indian shares were trading lower on Monday, with the benchmark Nifty 50 index down 2.3% amid a broader market sell-off.
($1 = 83.8450 Indian rupees)
