Quick Service Restaurant Chains in India Face Declining Sales

Quick Service Restaurant Chains in India Face Declining Sales

VoM News Desk | September 15, 2023 | 05:40 PM IST | Breaking News | Follow on Google News

Quick Service Restaurant Chains in India Face Declining Sales. Image/Indian Express

Quick service restaurant (QSR) chains in India, including Domino’s and Pizza Hut, have reported a decline in same-store sales during the April-June quarter for the first time in years. The QSR industry in India is facing challenges as consumer demand has further decelerated in the ongoing quarter. Reports indicate that even tier 2/3 cities are experiencing reduced foot traffic, particularly in mall food courts.

Impact of Inflation and Falling Discretionary Spending

The QSR industry in India is grappling with inflation, which has dampened consumer demand and increased production costs. Rising prices and falling discretionary spending have led to stress for restaurant operators. Several companies, including Jubilant Foodworks, Devyani International, Sapphire Foods, and Westlife Foodworld, have reported challenges due to the current economic environment.

Industry Demand and Management Commentary

Management commentary from Jubilant Foodworks, which operates Domino’s and other chains in India, suggests that demand in the QSR industry is decelerating, and recent trends are tougher than in the previous six months. This decline in demand is seen across markets, brands, and formats. Same-store sales growth, which had been decelerating for several quarters, turned negative in the April-June period.

Ongoing Challenges and Outlook

Analysts anticipate that the challenges may continue in the current quarter, with an additional month of rainy weather potentially further impacting sales. While the industry hopes for a recovery in the third quarter (October-December), analysts are cautious and do not expect a quick bounce-back. They note that QSR recovery tends to be slower as consumer sentiment and frequency of dining out do not change immediately.

Coping Strategies

To cope with the declining demand, Jubilant Foodworks plans to introduce more affordable options in the pizza category, such as the Pizza Mania, which starts at Rs 49. The company also aims to regionalize menus, enhance combo offerings, and expand store locations, with a goal of opening 3,000 stores in the mid-to-long term. Additionally, Jubilant Foodworks has entered the fried chicken category with Popeyes and is exploring the use of bold Cajun spices to cater to the Indian palate.

Other major QSR players in India, like Devyani International and Sapphire Foods, are adopting similar strategies to navigate the current economic challenges.

VoM News Desk

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