KFC India operator posts quarterly loss as expenses rise

Sapphire Foods India, which operates Pizza Hut and KFC restaurants in the country, reported a quarterly loss on Wednesday, as expenses rose and fast-food restaurant chains faced stiff competition from local cafes and online kitchens.

The restaurant operator posted a net loss of 18 million rupees ($208,345.39) for the first quarter ended June 30, compared to a profit of 85.2 million rupees a year earlier, according to a regulatory filing.

Total expenses rose 10.4%.

Popular fast-food chains including Pizza Hut and KFC have been struggling to maintain same-store sales growth in India, as consumers wary of high cost of living cut back on dining out and ordering in.

They are turning to heavy discounting to draw more diners, with KFC pushing its nine-piece fried chicken for 299 rupees ($3.50) in a deal that it called “epic savers” and Pizza Hut offering a free Pepsi with select pizzas during the quarter.

Still, the efforts fell short at Sapphire Foods, with same-store sales flat at KFC and down 8% at Pizza Hut in India.

However, its move to open dozens of news stores in the 12 months to June-end helped Sapphire Foods, one of the two Yum Brands (YUM.N) franchisees in India, push its revenue higher by 8.1% to 7.77 billion rupees.

($1 = 86.3950 Indian rupees)