KFC India operator Devyani's revenue jumps 49% on new store additions

(Reuters) - Devyani International, which operates the KFC and Pizza Hut restaurants in India, reported a bigger-than-expected rise in second-quarter revenue on Monday as it added hundreds of new stores in the country, sending its stock up about 6%.

Global consumer-facing firms such as Hindustan Unilever, the Indian arm of the UK's Unilever, and McDonald's are doubling down on the world's fastest-growing economy, despite a recent inflation-led slowdown in consumption.

Devyani on Monday also said it had signed deals with Malaysian beverage brand Tealive, Canadian fast-food company New York Fries and Singapore-based Thai and Asian food chain Sanook Kitchen to operate their restaurants in India.

 

"The franchise agreements definitely are a positive surprise," Elara Capital analyst Karan Taurani said, adding the launch of three more brands would boost Devyani's positioning on delivery platforms as well as revenue over the long term.

Store count for Devyani, which runs KFC, Pizza Hut and Costa Coffee stores in India, rose to 1,557 restaurants in the country from 1,298 last year.

It also has 364 stores in Nigeria, Nepal and Thailand.

The addition of new stores pushed its revenue higher by 49% to 12.22 billion rupees for the second quarter ended Sept. 30, just above the expectations of 12.20 billion rupees, according to estimates compiled by LSEG.

However, demand at its older stores was weak, with same-store sales at Devyani's Pizza Hut and KFC stores in India declining 5.7% and 7%, respectively.

Devyani's profit slumped to about 170,000 rupees ($2,014.89), from 333.5 million rupees a year earlier. Analysts had expected 182.4 million rupees, according to estimates compiled by LSEG.

Last year, it had a one-off gain of 139.9 million rupees.

Sapphire Foods, which also runs Pizza Hut and KFC restaurants, posted a surprise loss, while Burger King operator Restaurant Brands Asia booked a bigger loss. Profit at Westlife Foodworld, which runs McDonald's, slid.