Pizza Hut India operator reports biggest profit fall since listing

BENGALURU (Reuters) -Sapphire Foods India, the operator of KFC and Pizza Hut restaurants, on Friday reported its biggest quarterly decline in profit since listing in 2021, hurt by domestic competition and as inflation-weary consumers cut back spending on fast food.

The Yum Brands franchisee's consolidated net profit fell nearly 69% to 101.4 million rupees ($1.22 million) for the quarter ended Dec. 31.

Analysts, on average, had expected a profit of 239.6 million rupees, according to LSEG data.

Inflation-hit consumers continued to cut back spending on discretionary items during the quarter. To counter this, fast-food outlets in India have been rolling out cheaper menu items and launching more marketing campaigns to bolster demand.

Despite this, companies including Sapphire, which offers pizza's starting at 169 rupees, have also been facing stiff competition from local pizzerias that offer cheaper options, denting the profits of bigger quick service restaurants.

Its same-store sales, which measure the growth in revenue from stores that have been in operation for at least a year, declined 2% at KFC restaurants and fell 19% at Pizza Hut.

Total revenue rose 12% to 6.66 billion rupees, while expenses jumped nearly 16%. This led to its margins on earnings before interest, tax, depreciation and amortization (EBITDA) contracting to 18.4% from 19.6% an year ago.

Shares of Sapphire, which also operates Pizza Hut stores in Sri Lanka, however, rose 2% after the results. They fell 2% in the third quarter.

Domino's Pizza operator Jubilant Foodworks reported a surprise fall in quarterly profit, while KFC India operator Devyani posted its slowest revenue growth since listing amid higher costs.

($1 = 82.9700 Indian rupees)

(Reporting by Ashna Teresa Britto in Bengaluru; Editing by Sonia Cheema)