Why Did KFC Operator Devyani International Experience a Loss of Rs 23.9 Crore in Q2?
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Synopsis
Devyani International Limited, the owner of KFC and Pizza Hut, reported staggering losses of Rs 23.9 crore in Q2 FY26, despite a revenue surge due to new store openings. Factors such as seasonal festivities and unseasonal rains impacted their performance significantly. Discover how these elements play into the overall market dynamics!
Key Takeaways
- Devyani International reported a loss of Rs 23.9 crore in Q2 FY26.
- Revenue grew to Rs 1,377 crore, a 13 percent YoY increase.
- New store openings contributed significantly to revenue growth.
- Seasonal festivities and weather impacted consumption.
- Strategic partnerships aim to enhance brand portfolio.
Mumbai, Nov 6 (NationPress) - Devyani International Limited, known for managing renowned quick service restaurant (QSR) brands such as KFC and Pizza Hut, reported a loss of Rs 23.9 crore in the second quarter of FY26, a sharp decline from a profit of Rs 2.2 crore in the preceding quarter (Q1 FY26).
Comparatively, the losses escalated by an alarming 367 percent year-on-year, rising from a loss of Rs 4.9 crore in the same quarter of the previous fiscal year (Q2 FY25), according to its stock exchange disclosure.
The company pointed to the reduced out-of-home consumption impacted by the simultaneous occurrences of Shraavana and Navaratri during this quarter, as mentioned in the exchange filing on Thursday.
Additionally, unseasonal rains, particularly in the eastern regions of the country during the vital second half of September, adversely affected performance.
Despite these losses, the company's consolidated revenues ascended to Rs 1,377 crore, marking a 13 percent YoY increase. This growth was primarily driven by the launch of 263 new outlets over the past year, resulting in a total of 2,184 stores.
KFC India alone contributed Rs 572.3 crore in revenue, reflecting a 5.3 percent YoY growth.
However, the EBITDA margin decreased to 14.1 percent in Q2, down from 16.3 percent a year prior, partly due to losses incurred from acquiring Sky Gate Hospitality, the parent company of Biryani by Kilo.
The company also highlighted a decline in demand and fierce competition from local eateries as contributing factors to the downturn, noting that urban consumption is just beginning to recover from a slow growth phase.
In April, the company announced partnerships with three international brands - New York Fries, Tealive, and Sanook Kitchen - to enhance its overall portfolio.
Furthermore, it reported robust revenue momentum from Biryani By Kilo and Goila Butter Chicken from the Skygate portfolio following Dussehra. The integration of Skygate with DIL remains on track, with expectations to achieve brand contribution break-even by March 2026.
Point of View
The financial struggles of Devyani International Limited highlight the challenges faced by the quick service restaurant sector in a fluctuating market. While the losses are concerning, the company's strategic initiatives, such as new partnerships and expansion, indicate a commitment to overcoming these obstacles. The upcoming period will be critical for assessing how well they navigate these challenges.
NationPress
06/11/2025
Frequently Asked Questions
What caused the losses for Devyani International?
The losses were attributed to reduced out-of-home consumption due to simultaneous festive periods and unseasonal rains in key regions.
How did the company's revenues perform despite the losses?
The consolidated revenues grew to Rs 1,377 crore, indicating a 13 percent year-on-year increase, primarily driven by the opening of new outlets.
What measures is the company taking to improve its situation?
The company has formed partnerships with international brands and is focused on integrating its acquisitions to boost overall performance.
