KFC India operator Devyani's revenue growth slowest since listing; costs spike

CHENNAI/BENGALURU, Feb 2 (Reuters) - KFC India operator Devyani International reported its slowest quarterly revenue growth since listing more than two years ago on Friday, as consumers cut back their spending on pizzas and fried chicken amid soaring inflation.

Global fast-food restaurants in India have done everything from rolling out cheaper menu items and launching marketing campaigns with celebrities to prop up demand but are still struggling to attract cost-conscious customers.

Devyani International reported 7% growth in revenue from operations to ₹843 crore ($101.77 million) for the third quarter ended Dec. 31, marking its slowest revenue growth since its listing in September 2021. It missed analysts' estimate of ₹896 crore, according to LSEG data.

This comes at a time when consumers are particularly turning to local pizzerias offering much cheaper pies, denting profits at Domino's operator Jubilant FoodWorks and Devyani's Pizza Hut restaurants.

"Consumer sentiment remains subdued, despite Q3 traditionally being a strong and festive quarter," Chairman Ravi Kant Jaipuria said in a statement.

This, coupled with total expenses jumping nearly 16% from a year earlier, further dented Devyani's margins.

Its earnings before interest, tax, depreciation and amortization (EBITDA) margin contracted to 17.4% from 22% an year ago.

Its consolidated profit slumped nearly 87% to ₹9.6 crore.

However, the company remains optimistic about witnessing a recovery over the next few quarters and is confident of reaching 2,000 stores by the end of calendar year 2024, it said.

Shares of Devyani, which declined 6% in January, fell as much as 2.1% after the results.