KFC and Pizza Hut operator Sapphire Foods' net profit drops 25 pc in Q4

IANS May 7, 2025 402 views

Sapphire Foods, the operator of KFC and Pizza Hut in India and Sri Lanka, saw a 25% drop in net profit for Q4 despite a 13% revenue increase. The company continued its expansion strategy, adding six new KFC outlets and reaching a total of 963 restaurants. While facing profitability challenges in India, the Sri Lanka business demonstrated robust growth with a 16% same-store sales increase. The mixed financial performance highlights the complex dynamics of the restaurant franchise market in South Asia.

"Revenue showed healthy growth, but profitability metrics remained under pressure" - Sapphire Foods Financial Report
New Delhi, May 7: Sapphire Foods India, the operator of KFC and Pizza Hut outlets in India and Sri Lanka, on Wednesday reported a 25 per cent drop in its consolidated net profit for the March quarter (Q4), which fell to Rs 17.91 crore from Rs 23.9 crore in the same period last fiscal (Q4 FY24).

Key Points

1

KFC and Pizza Hut operator experiences profit challenges in Q4

2

Company adds 6 new KFC outlets during quarter

3

Sri Lanka operations show strong performance

4

Consolidated revenue grows 13% year-on-year

This decline came despite a 13 per cent year-on-year (YoY) growth in revenue, which rose to Rs 711 crore in Q4.

The increase in revenue was mainly driven by strong performance from KFC India and Pizza Hut operations in Sri Lanka.

During the quarter, the company added six new KFC outlets, bringing the total number of restaurants to 963 as of March 31.

While revenue showed healthy growth, profitability metrics remained under pressure.

Consolidated restaurant EBITDA declined 1 per cent YoY, with the margin standing at 12 per cent.

Adjusted EBITDA dropped 7 per cent to Rs 50.8 crore, with an adjusted margin of 7.2 per cent.

However, consolidated EBITDA saw a modest 3 per cent rise to Rs 113.3 crore, though the EBITDA margin declined by 150 basis points to 16 per cent.

Sapphire’s consolidated profit after tax (PAT) for the quarter stood at just Rs 2 crore, with an adjusted PAT of Rs 3.3 crore, representing a margin of only 0.5 per cent.

In FY25, the company’s Pizza Hut business in India faced challenges, with the restaurant's EBITDA margin falling by 250 basis points YoY to 2.4 per cent.

Despite this, the company continued to expand, adding 15 new Pizza Hut outlets during the year and taking the total to 334.

On a positive note, Sapphire Foods’ Sri Lanka business delivered a strong performance. Same-store sales growth stood at 16 per cent, with transactions also showing healthy momentum.

The Sri Lanka restaurant EBITDA margin improved by 250 basis points to 14.8 per cent.

Sales in Sri Lanka grew 19 per cent in local currency terms and 31 per cent in Indian rupee terms.

-- IANS

Reader Comments

R
Rahul K.
Not surprising at all. The prices at KFC and Pizza Hut have gone up so much in last 2 years while quality has gone down. A normal meal costs ₹500+ now! No wonder profits are falling - middle class families like mine have stopped eating there regularly. Better to support local eateries.
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Priya M.
Interesting how their Sri Lanka business is doing well while India operations struggle. Maybe they should learn from their Lankan model? Also shows how our economy is still recovering post-pandemic while smaller neighbors bounce back faster. Food for thought! 🧐
A
Arjun S.
As someone who worked in QSR industry, this is classic case of over-expansion. They're opening too many outlets too fast without proper demand analysis. Pizza Hut especially has lost its premium positioning - now just another pizza place competing with Domino's and local chains.
S
Shweta R.
The numbers tell the real story - revenue up but profits down. Means their costs are out of control. Probably paying too much for rent, staff and ingredients while unable to raise prices further. Tough spot to be in! Maybe time to rethink their whole business model in India.
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Vikram J.
Honestly, their pizza quality has deteriorated so much. Last time I ordered, the crust was like cardboard! No wonder people aren't coming back. They need to focus on quality rather than just opening new outlets. Indian consumers aren't fools - we know good food when we taste it.
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Neha T.
The Sri Lanka success shows these brands still have potential. Maybe Indian market is just too competitive now with so many options from Swiggy/Zomato. Personally I prefer ordering from cloud kitchens - same taste at half price! 😋 Sapphire Foods needs to adapt to changing consumer habits.

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Tags:
Sapphire Foods KFC Pizza Hut Restaurant Earnings Q4 Financial Results India Restaurant Market Sri Lanka Business