Devyani International Experiences Slowest Income Expansion Since Launch Amidst Soaring Inflation

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Devyani International Faces Tough Quarter Amid Economic Challenges

The most recent financial reports indicate that Devyani International, India’s operator of esteemed brands like KFC and Pizza Hut, recently experienced its slowest quarter of revenue growth since going public in September 2021. Our sources revealed that the company’s revenue from its operations only rose by a mere 7%, reaching 8.43 billion rupees during the quarter concluding on December 31, 2023. Unfortunately, this was a significant drop from their projected revenue of 8.96 billion rupees.

Fighting Against Inflation

Many industry pundits have attributed this sluggish growth to the nation’s current high inflation rates. As the cost of living continues to escalate, Indian consumers are notably reducing their spending on luxury items such as fast food. Regrettably, even Devyani International’s various initiatives – comprising of introducing budget-friendly items on their menus and engaging in celebrity-endorsed marketing campaigns – have failed to persuade frugal customers back into their locales.

Economic Pressures Worsen

The company is also grappling with their competitors on the local scene, primarily smaller pizzerias that offer more affordable dining options. This growing rivalry has impacted other fast-food corporations as well, including Jubilant FoodWorks (responsible for Domino’s) and even Devyani’s Pizza Hut places. Adding to their financial woes, Devyani’s overall expenses have seen an increase of approximately 16% compared to the prior year. Consequently, their EBITDA margin shrunk from 22% down to a disconcerting 17.4%.

Profits Decline Amidst Challenging Market Condition

Further, Devyani’s consolidated profit took a significant plunge, falling by nearly 87% and winding up at a paltry 96.2 million rupees. Notwithstanding these concerning statistics, Devyani remains optimistic of a bounce back in the forthcoming quarters. As part of their recovery strategy, they envision expanding to 2,000 stores by the end of 2024.

Following the announcement of these underwhelming financial results, the company noticed an additional decline in its share values. After a drop of 6% in January, the shares fell by another 2.1%. This downward trend isn’t unique to Devyani, as other fast-food conglomerates in India, like Jubilant FoodWorks and Westlife Foodworld, have also evidenced disappointing profits, indicating a bleak outlook for the country’s fast-food industry.

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