Pizza Hut, KFC see 18% top line growth in Oct-Dec quarter

Fast-food major Yum! Brands, which operates Pizza Hut and KFC restaurants in India, saw strong sales growth for the sixth straight quarter (October-December), pointing to recovery in food services.

This is also the highest growth in six quarters for the two brands, indicating that their turnaround is on track, analysts tracking the market said.

For the OctoberD-ecember period, both KFC and Pizza Hut reported a system sales growth rate of 18 per cent for India, the quarterly results declared by Yum! Brands on Thursday show.

System sales growth is industry parlance for overall top line growth. Yum did not disclose same-store sales growth (SSG), which is basically sales growth for stores of one year and above, specifically for India.

At an overall level, however, Yum! did give a sense of same-store sales growth for the December quarter, saying international emerging markets (which includes India) saw samestore sales growth of 5 per cent for KFC. For developed markets (excluding the US), same-store sales growth was 3 per cent for KFC, the company said.

In Pizza Hut's case, fourthquarter SSG grew 1 per cent in emerging markets and declined 1 per cent in developed markets (excluding the US), the company said.

Yum! Brands is the third food service major in India after Jubilant FoodWorks, the operator of Domino's Pizza and Dunkin Donuts, and Westlife Development, which runs McDonald's stores in west and south India, to report a good set of numbers in the December quarter. SSG for Jubilant FoodWorks came in at 17.8 per cent for the December quarter, highest in nearly five years. In the June and September quarters, SSG of Jubilant FoodWorks stood at 6.5 per cent and 5.5 per cent, respectively.

Westlife Development, on the other hand, reported SSG of 20.7 per cent in the December quarter, the highest in the domestic fast-food space. This was its tenth consecutive quarter of SSG growth.

Specifically, Yum’s turnaround in India began in the September 2016 quarter, when it reported SSG of 6 per cent for Pizza Hut and 13 per cent for KFC.

The company bettered its performance for the quarter ended December 31, 2016, characterised by the high-value note ban imposed by the government, when it reported SSG of 9 per cent for Pizza Hut and 16 per cent for KFC. In the March 2017 quarter, sales growth fell to 6 per cent for Pizza Hut and 2 per cent for KFC, with the June quarter showing signs of recovery again.

This is the highest growth in six quarters for KFC and Pizza Hut, indicating that their turnaround is on track