Restaurants company Sapphire Foods India announced Q1FY24 results:
- Q1FY24 consolidated restaurant sales (Rs 6,526 million) grew by 20% despite the consumer demand headwinds. Raw Material inflation has cooled off thereby improving gross margins. In these conditions, both KFC and Pizza Hut focussed on winning consumer trust by delivering value and product innovation (e.g., KFC Snackers Rs 99/- range, Pizza Hut 10 new core pizzas) with strong advertising programs.
- Added 35 restaurants in Q1FY24 (17 KFC, 16 Pizza Hut, 1 KFC and Pizza Hut each in Maldives) taking the total restaurant count to 778.
- Consolidated restaurant EBITDA grew YoY in absolute terms by 12%, and the margin was 17.2% (down 130 bps).
- Consolidated EBITDA (Rs 1,224 million, 18.8%) grew YoY by 10% (down 170 bps) and consolidated Adj. EBITDA (Rs 772 million, 11.8%) grew YoY by 7% (down 150 bps).
- Consolidated PBT (Rs 336 million, 5.2%) declined YoY by 6% (down 140 bps).
- Consolidated PAT was Rs 249 million (3.8%).
- Despite flat SSSG (ADS improved over the sequential quarter), KFC delivered strong financial performance. Overall restaurant sales grew YoY by 21%. Gross margin recovery (up 130 bps over the sequential quarter) and cost controls enabled KFC to deliver one of the highest-ever Restaurant EBITDA at 20.8% (up 50 bps YoY). To bolster our menu options across day parts we launched KFC Snackers, a range of 7 products at Rs 99/- which includes Chicken Rolls, Longer Chicken Burger, Popcorn, Fries, and Beverage options.
- Pizza Hut's overall restaurant sales grew by 12%, however, SSSG declined by 9% (SSTG was flat & ADS improved over the sequential quarter). While there was gross margin recovery (up 50 bps over sequential quarter) restaurant EBITDA dropped to 9.0% (down 580 bps YoY) because of operating deleverage. We continue to invest in the brand through higher advertising spending along with product and value innovations. Our focus on execution to deliver superior customer experience has resulted in us being recognised by YUM! as the No. 1 Franchisee globally for Guest Experience Scores.
- Sri Lanka's overall restaurant sales grew by 9% in LKR (up 27% in Rs terms) while SSSG was flat. Consumer demand continues to be challenged due to the cumulative impact of inflation and higher direct taxes. Raw Material prices have remained largely stable over the last quarter. Restaurant EBITDA margins were at 13.0% (down 250 bps YoY) due to operating deleverage.