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In the first quarter (Q1) of the ongoing financial year ending June 30, Westlife Foodworld, which operates McDonald’s outlets in the South and West, reported an 88 per cent drop in net profit.
While net sales remained flat, its same-store sales growth (SSSG) fell by 6.7 per cent, impacted by “subdued in-store business, although the off-premise segment saw positive same-store sales”, the company said.
Sapphire Foods India, which operates KFC and Pizza Hut outlets, also reported a 68 per cent drop in net profit in Q1.
Meanwhile, SSSG for KFC and Pizza Hut declined 6 per cent and 7 per cent year-on-year, respectively.
While high levels of food inflation continue to impact raw material prices, the lingering effects of inflation are making consumers pull back on discretionary spending, contributing to the sector’s slowdown.
From value offerings and expanded menus to increasing store counts, quick-service restaurants (QSRs) are approaching the broader weak demand sentiment creatively.
In June this year, pizza chain Domino’s said it plans to open 180–200 new stores every year to reach 4,000 outlets in the next four years.
“We see massive headroom in the Indian market.
"Very few people still eat pizza outside.
"As the frequency of dining out grows — on the back of a younger, more affluent population — pizza consumption will also grow,” Sameer Batra, chief business officer and president of Domino’s India, told Business Standard.
Going forward, Batra said the next focus area for the chain will be to grow its dine-in business.
According to the India Food Services Report 2024 by the National Restaurant Association of India, the Indian food services market is estimated at Rs 5.7 trillion, with organised QSR chains currently valued at Rs 67,560 crore.
The market is estimated to grow 8.1 per cent annually to reach Rs 7.8 trillion by 2028.
This growth signals increasing choices for Indian consumers.
In such a scenario, necessity seems to be the mother of innovation, as QSR chains have started expanding menu offerings.
“We saw negative SSSG and an impact on consumption in the past few quarters.
"With new restaurants and mom-and-pop stores mushrooming, consumers continue to be spoilt for choice.
"So, it is imperative for establishments to reinvent themselves and offer new things,” said Sagar Daryani, chief executive officer at Wow! Momo.
“We believe in converting roadside cuisine into a brand.
"After a pilot in East India, we are looking to expand Wow! Kulfi in the coming months,” he said.
With sales touching Rs 1 crore in the first month, the chain hopes to clock in monthly revenues of Rs 4-5 crore from this vertical by the end of 2024-25.
Additionally, the chain aims to achieve 40 per cent growth this financial year.
McDonald’s India (North & East) is pushing the accelerator on value offerings while also tapping into new growth areas.
“We are focused on offering value-driven options to our customers to navigate the evolving landscape and reignite growth.
"Our McDeal platform offers three-piece meal options at just Rs 99, giving great value for money to customers,” said Rajeev Ranjan, managing director of McDonald’s India (North & East).
“We continue to refresh our menu choices with launches that include local flavours, ensuring our offerings remain relevant and enticing,” he further said.
The chain is also tapping into the growing coffee culture in India with McCafé.
“We recently opened our 50th McCafé in May, continuing our expansion in the competitive café segment to meet the growing demand for premium yet affordable coffee.
"Our expansion plans aim to increase revenue and satisfy the growing demand for coffee by leveraging McDonald’s existing infrastructure.
"In 2024, we aim to broaden our reach by achieving about 120 McCafés,” Ranjan added.
