Burgers, Coffee Turn Favourites In First Quarter While Pizza Loses Out
Pizza growth continues to drag while burgers continue to appeal to the Indian palette
Burgers and coffee seemed to appeal to Indian taste buds more than pizza in the April-June quarter, helping Westlife Development Ltd. and Coffee Day Enterprises Ltd. report a rise in sales and positive growth in same-store sales, while peers Jubilant Foodworks Ltd. and Speciality Restaurants Ltd. witnessed a decline.
A slew of product launches coupled with store expansion in existing and new geographies in the country led to its strong first quarter performance, Amit Jatia, vice chairman of Westlife Development said in the company’s press release following earnings.
The company which runs McDonald’s in the southern and western parts of the country witnessed same-store sales growth of 3.4 percent in the April to June quarter of financial year 2016-17 compared to a de-growth in the year-ago period. Consolidated net sales increased by 10.8 percent to Rs 226.3 crore in the same quarter.
In the quarter ended June, U.S.-based Yum! Brands’ Pizza Hut saw its India sales decline 7 percent year-on-year, while KFC’s sales fell 1 percent, Edelweiss Financial Services Ltd said in a July report. The burger category is recovering faster than pizza, the report added.
“Burgers are priced relatively lower and fit into the all-day dining concept since they can be consumed both as a snack as well as a meal. On the other hand, a pizza is a more planned meal and is also priced higher,” Abneesh Roy, senior vice-president of Institutional Equities at Edelweiss, and the author of the report quoted above told BloomberQuint over the phone.
Jubilant Foodworks Has A Pizza Problem
Jubilant Foodworks, which typically sees a large chunk of its revenue come from Domino’s Pizza, attributed its 3.2 percent decline in same-store sales, in the quarter ending June, to the month of Ramadan and the delayed launch of new product offerings. The company’s same-store sales grew 4.6 percent in the April to June quarter of the last financial year.
Net sales in the April-June quarter increased by 6.69 percent on a year-on-year basis to Rs 608.76 crore.
Domino’s Pizza added Pizza Mania Extremes and Burger Pizza to its menu in India but only towards the fag end of the quarter, which further dented Jubilant Foodworks’ volumes and same-store sales growth, the company said in a conference call with analysts post earnings.
Bucking The Trend
Coffee Global Enterprises saw its same-store sales growth expand 4.06 percent in the April to June quarter compared to 3.06 percent in the year-ago period.
The coffee chain also increased the number of offerings in the April-June quarter on the back of freshly-assembled food which it launched across 110 outlets in Mumbai and Pune. It subsequently scaled up in Delhi, Kolkata, Hyderabad, Chennai and other smaller cities.
Restaurants See Sluggish Business
The fine dining major, Speciality Restaurants also saw its same-store sales growth decline 8 percent in the quarter, which the company attributed to consumers not loosening their purse strings during a conference call with analysts.
Net sales in April-June stood at Rs 78.6 crore compared to Rs 80.1 crore in the year-ago period.
The company, which runs the restaurant chain Mainland China, told analysts in a conference call after its first quarter results, that some of its restaurants which were launched in the last one year have not yet broken even, and it has refrained from adding new stores in the quarter ended June.
Speciality Restaurant, which has 123 outlets across the country out of which 22 are run by franchisees, said that it will be cautious on its expansion plans going forward.
The company is currently in the process of converting more outlets of Mainland China into Asia Kitchen, which caters to customers at lower price points, Indraneil Palit - executive director -projects, business development and strategic planning said in the conference call.