Quick service restaurants may not get mojo back soon, say analysts

Analysts believe moderation in same-stores sales growth would impact operating profitability and return ratios

The stocks of two quick service restaurants (QSRs), Jubilant FoodWorks (Jubilant) and Westlife Development (Westlife), have gained 5-13 per cent this month, outpacing a 3 per cent rise in the BSE Sensex. The strong earnings boost expected from corporation tax cuts has kept investors’ hope alive for these stocks. Analysts, however, suggest beyond tax savings, the fundamental outlook will be subdued given the moderation in growth in April-June period (Q1) and similar expectations for the September quarter (Q2).

Domino’s Pizza in the US is expected to record slower growth, indicating growth pressure for Indian QSRs in near to medium term.