Devyani International, the operator of KFC in India, reported a better-than-expected first-quarter profit on Monday, driven by promotional offers and discounts that attracted budget-conscious customers.
Consolidated net profit for the quarter ending June 30 rose to 301.1 million rupees (USD 3.6 million) from 117.6 million rupees a year ago. This exceeded analysts’ expectations, who had predicted a profit of 207.5 million rupees, according to LSEG data.
To entice budget-conscious customers, Devyani offered discounts and promotions, such as chicken rolls priced at 99 rupees (USD 1.2) at its KFC outlets. The T20 Cricket World Cup and school holidays also boosted sales.
India’s quick-service restaurant (QSR) chains have faced sluggish demand and rising costs due to inflation. The country’s retail inflation hovered around 5 per cent throughout the quarter, driven by elevated food prices.
Rival chains like Sapphire Foods India and Westlife Foodworld reported a larger-than-expected decline in profit due to weak demand. Meanwhile, Restaurant Brands Asia, which operates Burger King in India, reported a narrower first-quarter loss as offers and discounts attracted customers.
Devyani, which also operates Costa Coffee, saw its revenue from operations rise by 44 per cent to 12.22 billion rupees in the quarter. However, its earnings before interest, tax, depreciation, and amortization (EBITDA) margin fell to 18.3 per cent from 20.5 per cent a year ago, with expenses surging by 43 per cent.
Same-store sales at KFC India experienced a decline of seven per cent compared to a 0.9 per cent growth a year ago.
Following the results, Devyani’s shares fell by as much as 3.5 per cent.
On Monday, Indian shares were trading lower, with the benchmark Nifty 50 index down 2.3 per cent amid a broader market sell-off.