Wanna get our awesome news?

Subscribe to our newsletter!


Actually we won’t spam you and keep your personal data secure

As the voice of the Indian restaurant industry, we represent the interests of 500000+ restaurants & an industry valued @ USD 4 billion. Whether a chain or independent restaurant, the NRAI is here to help every step of the way. Join us!


After sluggish growth for two years, QSR companies see an uptick


MUMBAI|NEW DELHI: After more than two years of dull sales, the restaurant business is back to double-digit growth, helped by outlets in new markets and a surge in discount-driven footfall at malls.

Stocks of the three listed restaurant companies in India touched 52-week highs in August, gaining more than half a billion dollars in market capitalisation in the past three months. The market value of Jubilant FoodWorksBSE 1.47 %, the operator of Domino’s Pizza and Dunkin’ Donuts, climbed 44 per cent over the past three months to about Rs 8,880 crore on Thursday.

Westlife DevelopmentBSE 1.55 %, which runs McDonald’s outlets in west and south India, and Speciality Restaurants, owner of Mainland China and Oh! Calcutta restaurants, saw their market capitalisation gain by 18 per cent and 53 per cent, respectively. The combined market value of the trio stood at Rs 13,290 crore ($2 billion), an addition of about Rs 3,500 crore since June.

The focus on delivering “better value for money and innovation” contributed to a growth uptick, along with reduction of losses, controlling costs and driving efficiencies, which led to higher operating margins, said Pratik Pota, chief executive, Jubilant, while announcing the June quarter earnings last month.

After sluggish growth for two years, QSR companies see an uptick

Jubilant has been running a daily promotion for Domino’s as ‘everyday value’ compared with the earlier once-a-week discounting.

“We are convinced that the approach of having a standard affordable price everyday instead of driving frequent deep discounts is a more sustainable way of giving consumers value, allowing them to build consumption frequency and habit instead of waiting for specific days,” Pota said during an earnings call.

    • P2P lending is here! Earn returns as high as 25% p.a.

    • Drink this to lose weight faster and easie

Recommended By Colombia

Jubilant posted same-store sales growth of 6.5 per cent in the June quarter, the highest since Q1 of FY16, while operating profit margin at 11.7 per cent was the highest in two years. Westlife Development’s same-store sales grew 9 per cent, the fastest in four years. Restaurant sales are picking up after more than two years as consumers cut spending amid economic uncertainty, including the currency note ban in November.

“The effect of demonetisation on consumer sentiment is wearing off,” said Anjan Chatterjee, founder of Speciality Restaurants.

“There was a lag in recent months but in the long run, our outlook remains robust. There will always be some quarters of slow growth and others will be high-growth ones.”

Growth in April-June quarter was also likely aided by factors such as early and longer end-of season sales by retail chains and positive responses to some bigbudget movies, which attracted more people to shopping malls.

Analysts and industry experts said while green shoots of revival are visible, it’s too early to forecast a mid-term, sustained recovery.

“In the medium term, the industry is expected to go through a rough patch, with the environment remaining subdued. We expect competitive intensity by online players such as Swiggy and Zomato and private equity-funded food players to remain an overhang, with key risk delays in recovery of consumer discretionary spends,” said Abneesh Roy, senior vice-president, EdelweissBSE 1.35 % Securities.

Another factor is GST, which will have a short-term impact, according to Amit Jatia, vice chairman at Westlife Development.

“I feel that the brand is quite well entrenched in what I am seeing right now, I am quite confident we will overcome that and I feel the consumer sentiment is looking good. So I am quite confident of sort of moving in the direction that I talked about,” Jatia said in an earnings call earlier this month.

Source: Economic Times

Recommended for you