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Quick service restaurant (QSR) majors reported weak same-store sales (SSS) and softer profitability in the April–June quarter. While stiffer competition and sluggish urban demand dragged the sector, Jubilant FoodWorks — the country’s largest listed player — once again broke away from the pack with double-digit SSS growth.
Driven by Domino’s Pizza, standalone revenue rose 18 per cent year-on-year (Y-o-Y). Orders grew 17.3 per cent, with like-for-like sales up 11.6 per cent. SSS growth for Domino’s held firm at 11.6 per cent — its third straight quarter in double digits. Deliveries led the charge, with revenue up 25 per cent and like-for-like growth at 20 per cent. Deliveries now contribute 73 per cent of total revenue, up from 69 per cent a year earlier. Dine-in revenue grew 2.5 per cent Y-o-Y, aided by stronger lunch-hour traffic.
Analysts at Motilal Oswal Securities, led by Naveen Trivedi, said, “Jubilant’s focus on customer acquisition and increasing order frequency is powering strong delivery growth. Value-driven offerings and product innovation will continue to support order growth in 2025-26 (FY26).”
Margins broadly met Street expectations. Gross margins slipped 200 basis points (bps) Y-o-Y to 74.1 per cent due to heavier investment in growth and margin-dilutive launches. Operating profit, however, climbed 22 per cent Y-o-Y, with operating margins widening by 40 bps. Adjusting for political contributions in the base quarter, margins were flat at 12 per cent.
What helped sustain margins was better sourcing and sharper value offerings without price hikes. Kotak Securities analysts, led by Jaykumar Doshi, highlighted Domino’s “superior execution, successful innovations, and an improving price-value equation versus peers”. The company has held off price increases in a soft macro environment and preserved margins through supply-chain efficiencies.
Kotak Securities has inched up its target and kept an ‘add’ rating, while Motilal Oswal Securities maintained a ‘neutral’ call, citing rich valuations.
Competitors, meanwhile, struggled. Despite a low base, Pizza Hut chains run by Devyani International and Sapphire Foods India were hardest hit by the urban slowdown. Sapphire’s Pizza Hut SSS fell 8 per cent against a minus 7 per cent base, while Devyani reported a 4.2 per cent drop on a minus 8.6 per cent base.
Sapphire’s KFC business recorded flat SSS growth after a 1 per cent rise in the January–March quarter, while Devyani’s KFC arm logged a 0.7 per cent fall — its ninth straight quarterly decline.
Antique Stock Broking has maintained a cautious stance on Sapphire, trimming its FY26 and 2026–27 (FY27) operating profit forecasts by 13 and 14 per cent, respectively, to reflect the slower-than-expected recovery.
JM Financial cut Devyani’s operating profit projections by 4–10 per cent and margin forecasts by 50–90 bps. The cuts follow Devyani’s strategy of driving higher transactions through value offers and combos, which may squeeze margins in the short term but could revive average daily sales growth.
Westlife FoodWorld delivered its third consecutive quarter of positive SSS growth, aided by higher guest counts and stable unit orders. But rising employee costs capped operating margins at 7.7 per cent. Antique Stock Broking retained a ‘hold’ rating and pared FY26/FY27 operating profit estimates by 2–4 per cent due to elevated near-term staff costs.
Restaurant Brands Asia (Burger King India) posted domestic SSS growth of 2.6 per cent, short of the expected 4 per cent. Margins also missed expectations. Nirmal Bang Equities analysts Krishnan Sambamoorthy and Sunny Bhadra see little sign that Burger King — or the QSR sector — has turned a corner amid weak urban demand. Its Indonesian business showed early signs of improvement, but profitability remains distant. The brokerage has a ‘hold’ rating on the stock, given fair valuations.
