India sales growth continues for Pizza Hut, KFC

Yum! Brands sees rise in sales for fifth straight quarter, signalling recovery in food services

For the fifth straight quarter, fast-food major Yum! Brands, which operates Pizza Hut, KFC and Taco Bell in India, saw strong sales growth, pointing to a recovery in food services, analysts said.

For the July-September period, KFC reported a system sales growth of 8 per cent and Pizza Hut of 7 per cent. System sales growth is industry parlance for overall topline growth. 

Yum! did not disclose same-store sales growth (SSG), which is basically sales growth for stores one year and above. However, Yum! did give a sense of SSG for the September quarter, saying emerging markets (which includes India) saw SSG of 5 per cent for KFC and 2 per cent for developed markets (excluding the US). In Pizza Hut's case, SSG was flat in emerging markets and 4 per cent in developed markets (excluding the US).

 

Yum! is the second food service major in India after Jubilant FoodWorks, the operator of Domino's Pizza and Dunkin Donuts, to report a good set of numbers in the quarter. Westlife Development, which runs McDonald's in the west and south of India, is yet to disclose its numbers. 

SSG for Jubilant FoodWorks came in at 5.5 per cent for the July-September period, its second straight quarter of a strong figure. In the three months ended June, SSG of Jubilant FoodWorks was 6.5 per cent, the highest in nine quarters. 

Yum!'s turnaround in India began in the September 2016 quarter, when it reported an SSG of 6 per cent for Pizza Hut and 13 per cent for KFC.
 

The company bettered its performance for the quarter ended December 2016, characterised by the note ban, when it reported an SSG of 9 per cent for Pizza Hut and 16 per cent for KFC.

In the March quarter, sales growth tapered to levels of 6 per cent for Pizza Hut and 2 per cent for KFC, with the June quarter showing signs of recovery again. 

While Yum! has pushed value offerings aggressively at both KFC and Pizza Hut, it has also begun tweaking its pizza outlets to improve sales throughput. Twenty stores out of a total of 350 Pizza Hut restaurants in India now have an open kitchen in them.