KFC India operator Sapphire Foods slips into loss in Q3 on one-time labour charge

KFC India operator Sapphire Foods slips into loss in Q3 on one-time labour charge

• Sapphire Foods posted a Q3 loss due to a one-time charge from new labour codes
• Revenue rose 8 percent to Rs 814 crore despite mixed demand at KFC and Pizza Hut
• Sapphire and Devyani International to merge in a $934 million deal

Did our AI summary help?

Sapphire Foods, the operator of KFC and Pizza Hut restaurants in India, posted a third-quarter loss on Friday due to a one-time charge linked to the country's new labour codes, even as revenue rose.

Sapphire, the franchisee for US-based Yum Brands, reported a consolidated net loss of Rs 4.8 crore for the quarter ended December 31, compared to a profit of Rs 12 crore a year earlier.

Revenue from operations rose nearly 8% to Rs 814 crore.

In afternoon trade, its shares were trading 1% lower at Rs 215.22 apiece

Its expenses increased 8.4% to Rs 813 crore, broadly in line with revenue growth, while the company took a one-time charge of Rs 8 crore tied to the new labour laws.

Fast-food chains in India face stiff competition from local eateries and cloud kitchens, prompting companies to offer deeper discounts to shield their volumes.

Sapphire rolled out offers such as a chicken burger meal for Rs 99 during the third quarter.

Demand was mixed at some of its brands. Its same-store sales, which refer to sales from stores open for at least 12 months, at KFC rose 1% in the third quarter, rebounding from a 3% decline a year ago. Pizza Hut's same store sales, however, plunged 12% year-on-year, compared to a 5% rise a year earlier.

The company added 31 new restaurants in the October-December period to take the total to 1028 stores, as of December end.

Peer Devyani International, also a Yum Brands franchisee of KFC and Pizza Hut restaurants in India, posted a wider third-quarter loss earlier this week.

Shares of the company were last down 1%.

In January, Sapphire and Devyani said they will merge in a $934 million deal, creating a fast-food franchisee powerhouse in the world's most populous country.