Sapphire Foods India Limited reported 5% growth in Pizza Hut same-store sales for the quarter ended Sept. 30, while the restaurant business’ EBITDA margin remained negative at 2.8%. The sales growth was the brand’s highest in seven quarters, but profitability remained under pressure.
Revenue rose 7% year over year. Sapphire executives said same-store transactions grew by double digits, while dine-in and takeaway also posted positive transaction growth. They cited value offers, late-night promotions, increased marketing and the Triple Spice Pizza launch as sales drivers.
Executive Director and CFO Vijay Jain attributed much of the margin pressure to energy inflation, which he said affected Pizza Hut more than KFC. Sapphire’s latest quarterly disclosure did not include a Tamil Nadu-specific breakdown, so it does not show how the state’s results compared with the company-wide figures in the September quarter.
Sapphire has highlighted Tamil Nadu as an example of its approach to the brand. In April, Whole Time Director and Group Chief Executive Officer Sanjay Purohit said the company’s dine-in-focused omnichannel strategy was producing double-digit same-store sales growth and an EBITDA delta in the state compared with the rest of India. In July, Jain said dine-in and takeaway there continued to outperform the rest of the country and that Sapphire had increased investment behind the brand in Tamil Nadu.
Devyani International Limited, another Pizza Hut franchise operator in India, reported a 2.2% decline in same-store sales for the quarter ended June 30. Its Pizza Hut revenue was INR 184 crore, and brand contribution was a loss of INR 4 crore. The results cover an earlier period than Sapphire’s and use a different profitability measure.
President and CEO Manish Dawar said Devyani was reviewing Pizza Hut’s product range and pricing, reassessing pizza quality, including dough, cheese and toppings, and retraining store staff. The companies have proposed merging Sapphire into Devyani, subject to regulatory and other approvals. They filed a joint application with the Competition Commission of India (CCI) on Sept. 10. Sapphire said the franchisees could decide on a common Pizza Hut strategy after CCI approval.
