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India system sales second fastest growing market for Pizza Hut



NEW DELHI: India is the second fastest growing market for Pizza Hut with 22% system sales growth for the April-June quarter, said Yum! Brands, the owner of the US quick service restaurant brand.

Africa grew the fastest at 43% in year-on-year system sales, though on a much smaller base in comparison to India, the company said in its earnings statement. It did not specify actual sales numbers.

System sales, or a metric similar to same-store growth, is measured by sales at outlets that have been operational for at least a year.

Global chief executive Greg Creed said the restaurant chain remained on track with its full-year 2018 guidance.

In India, Pizza Hut operations are entirely franchised, and split up largely between RJ Corp-promoted Devyani International and Sapphire Foods India, a consortium of funds led by Samara Capital. It has 396 stores in India and is bigger than KFC and Taco Bell, the other two brands that Yum owns.

Pizza Hut India managing director Unnat Varma said: “Focus on freshness of food, regular menu innovation, pricing and tight control over costs have driven growth, along with a rapidly growing delivery model.” He said the outlook for the eating out sector was positive, with consumption back on improved consumer sentiment, regular online and in-store promotions and quality of food.

Analysts said the quick service restaurant (QSR) sector in India has overcome the impact of macros such as the note ban in 2016 and GST rollout. “We reiterate our positive stance on the QSR sector based on reduction in GST rate and massive funding received by online food tech players such as Swiggy and Zomato,” Philip Capital wrote in a report.

Jubilant FoodWorks, which runs Domino’s Pizza and Dunkin’ Donuts outlets in India, reported same-store sales growth of 26.2% — a six-year high — with the company’s profit going up over three times for the June quarter. Likewise, same-store sales for WestlifeNSE 0.00 % Development, which owns Hardcastle Restaurants and operates McDonald’s in the West and South India, reported double digit same store sales growth of 24.1% in the quarter ended June 30, 2018.

Worldwide, however, while Yum system sales grew 4% and its KFC and Taco Bell businesses expanded 6% and 5%, respectively, Pizza Hut remained flat. “Operating margin decreased 3.5 percentage points driven by the gross higher advertising fund revenues,” the company said, adding that the second-quarter core operating profit was consistent with its expectations. “We are seeing good progress against our plans as we start the second half of the year,” Creed said in the earnings statement.

Pizza Hut has now roped in actor Abhay Deol as face of the brand.

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