Why Did Sapphire Foods, Operator of KFC and Pizza Hut, Experience a 25% Net Profit Decline in Q4?
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Synopsis
Sapphire Foods India, the franchisee of KFC and Pizza Hut, reports a significant 25% drop in net profit for Q4 despite a revenue increase. Explore the reasons behind this decline and the company's ongoing expansion efforts.
Key Takeaways
- 25% decline in consolidated net profit for Q4, totaling Rs 17.91 crore.
- Revenue growth of 13% year-on-year, reaching Rs 711 crore.
- Opened 6 new KFC outlets, totaling 963 restaurants.
- Pizza Hut business faced challenges, with margin dropping to 2.4%.
- Strong performance in Sri Lanka, with 16% same-store sales growth.
New Delhi, May 7 (NationPress) Sapphire Foods India, which operates KFC and Pizza Hut franchises across India and Sri Lanka, disclosed a 25% decrease in its consolidated net profit for the March quarter (Q4), dropping to Rs 17.91 crore from Rs 23.9 crore in the same quarter last fiscal year (Q4 FY24).
Despite this downturn, the company saw a 13% year-on-year (YoY) increase in revenue, which climbed to Rs 711 crore in Q4.
The revenue growth was primarily fueled by robust performances from KFC India and Pizza Hut operations in Sri Lanka.
In the mentioned quarter, Sapphire Foods opened six new KFC outlets, resulting in a total of 963 restaurants as of March 31.
While revenue exhibited strong growth, profitability measures faced challenges.
The consolidated restaurant EBITDA saw a 1% YoY decline, with the margin resting at 12%.
Adjusted EBITDA fell 7% to Rs 50.8 crore, reflecting an adjusted margin of 7.2%.
On a positive note, consolidated EBITDA experienced a modest 3% increase to Rs 113.3 crore, although the EBITDA margin decreased by 150 basis points to 16%.
Sapphire’s consolidated profit after tax (PAT) for the quarter was merely Rs 2 crore, with an adjusted PAT of Rs 3.3 crore, resulting in a margin of just 0.5%.
In FY25, the company faced hurdles within its Pizza Hut segment in India, as the restaurant's EBITDA margin dropped by 250 basis points YoY to 2.4%.
Nonetheless, Sapphire continued to expand, adding 15 new Pizza Hut locations throughout the year, bringing the total to 334 outlets.
A silver lining emerged from Sapphire Foods’ operations in Sri Lanka, where the business displayed impressive growth. Same-store sales surged by 16%, accompanied by a boost in transactions.
The Sri Lanka restaurant EBITDA margin enhanced by 250 basis points to 14.8%.
Sales in Sri Lanka experienced a 19% rise in local currency and a remarkable 31% growth when converted to Indian rupees.
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Point of View
It is crucial to analyze the challenges faced by Sapphire Foods India in light of their recent financial report. While the drop in net profit is concerning, it is essential to recognize their ongoing efforts to expand their presence in both India and Sri Lanka, reflecting resilience amidst adversity.
NationPress
11/06/2025
Frequently Asked Questions
What caused Sapphire Foods' net profit decline?
Sapphire Foods experienced a 25% drop in net profit mainly due to pressure on profitability measures, despite a revenue increase driven by strong performances in KFC India and Pizza Hut Sri Lanka.
How many new outlets did Sapphire Foods open?
In the March quarter, Sapphire Foods opened six new KFC outlets, bringing the total to 963. Additionally, they added 15 new Pizza Hut locations throughout the year, increasing the total to 334.
What is the performance of Sapphire Foods in Sri Lanka?
Sapphire Foods' operations in Sri Lanka showed strong performance, with same-store sales growth of 16% and an EBITDA margin improvement of 250 basis points to 14.8%.
