Indian franchisee of Yum Brands posts narrowing loss as KFC sales recover

((Automated translation by Reuters using machine learning and generative AI, please refer to the following disclaimer: https://bit.ly/rtrsauto)) (Correction of title to correct a typo in the company name) by Surbhi Misra

Devyani International DEVY.NS, the Indian franchisee of the American company Yum Brands YUM.N, announced a lower quarterly loss on Friday, as strong growth in like-for-like sales at KFC restaurants offset higher costs.

India’s fast food sector is facing low urban demand, leading companies to rely on discounts, promotions and value-priced menus to attract customers.

Devyani, who operates KFC and Pizza Hut restaurants, said attractive price offers and marketing campaigns had boosted sales at KFC, while the shortage of cooking gas due to the Middle East conflict had had only a minimal impact on operations.

The company remains optimistic about demand despite “fluctuating” external and seasonal factors, chief executive Manish Dawar said in a post-results conference call.

KFC’s sales recovery was mainly driven by increased footfall in theaters after the company reduced online discounts and implemented more attractive prices and offers in stores, Dawar said.

KFC India’s like-for-like sales growth reached its highest level in 14 quarters at 4.9% in the quarter ended March. The brand’s revenue increased by 14.6% year-on-year.

This positive sales trend continued at the start of the current quarter, the CEO said.

Devyani opened 217 net new outlets in the last fiscal year across all brands, including KFC, Costa Coffee, Vaango and Biryani By Kilo, taking its total outlets to 2,256 at the end of March.

The company plans to open 200-225 more outlets this financial year, including around 100-120 KFC outlets, but will not expand its Pizza Hut network as it closes loss-making stores and focuses on improving profitability through unit, declared the director general.

Pizza Hut India’s revenue fell 3.5% year-on-year, highlighting continued pressure on the sector.

Overall, Devyani International posted a consolidated net loss of 100.4 million rupees ($1.05 million), compared to a loss of 147.4 million rupees a year ago.

Operating revenue increased by 18.5% to Rs 14.37 billion.

($1 = 95.8800 Indian rupees)