KFC India operator widens losses

Devyani International, which operates KFC and Pizza Hut restaurants in India, posted a wider loss in the fourth quarter on Friday, as rising costs took a toll.

The franchisee reported 147.4 million Indian rupees ($1.7 million) in consolidated net loss for the three months ended March 31, compared to a loss of 74.7 million rupees a year ago.

It booked an impairment charge of 135.7 million rupees but did not disclose any further details.

The company’s expenses surged nearly 13.5% due to higher costs for key ingredients like cheese and palm oil, alongside a significant jump in employee costs.

Global fast-food chains like KFC, McDonald’s, Domino’s and Pizza Hut, are rolling out pocket-friendly pizzas and burgers in the world’s fastest-growing economy, where consumers are curbing discretionary spending due to rising costs of living and sluggish wage growth.

Cheaper items on the menu and store additions over the last year paid off as revenue from operations rose nearly 16% to 12.13 billion rupees in the reported quarter.

Pizza Hut’s same-store sales grew 1%, while that of KFC outlets declined 6.1%, even though it was an improvement compared to last year’s 7.1% drop.

Devyani, which also operates Costa Coffee stores, now has 2,039 restaurants across geographies including, India, Nigeria, Nepal and Thailand.

Last month, the company acquired a controlling stake in Sky Gate, which owns the popular brand “Biryani By Kilo”.