After multiple quarters of weak sales, quick-service restaurants (QSRs) may see a turnaround in FY26, led by an urban recovery, sector experts and top executives said.
The fiscal stimulus measures announced in the recent Budget, focus on value meals and a strategy of not taking price hikes are likely to be contributors to growth in the next fiscal.
Experts also point to a low base effect, which will kick in from FY26, that could aid growth.
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“For the last ten quarters, we took no price hikes and that was a conscious decision we took. This has allowed us to keep things affordable for consumers and drive market share gains,” Sameer Khetarpal, MD & CEO, Jubilant FoodWorks, said in a media interaction.
This strategy is expected to continue into FY26, Khetarpal added, to ensure growth momentum continued for the company, which runs Domino’s Pizza, Dunkin’ and Popeyes restaurants among other brands in the country.
Sapphire Foods’ CEO Sanjay Purohit said the firm was expecting to see a positive shift for KFC and Pizza Hut in FY26, following two years of same-store sales decline (SSG). While the growth would be aided by a favourable base, the company was intensifying its focus on value offerings and introducing more products in Rs 99 price point, he added.
A look at the SSG numbers over the last few months for QSRs shows that companies such as Jubilant FoodWorks, Westlife FoodWorld, which runs McDonald’s stores, and Sapphire Foods, a franchisee for Pizza Hut, KFC and Taco Bell, are seeing a sales uptick from the December quarter of FY25. (See chart)
Analysts at Goldman Sachs say that the sales pickup is likely to continue into the March quarter of FY25 and through FY26, when the fiscal stimulus measures announced in the budget will kick in from the April-June period.
“There is a positive shift in demand for fast-food chains driven by improved affordability and a recovery in dine-in sales. This trend is expected to get stronger in FY26 as discretionary incomes improve following the cut in personal income tax rates,” Goldman Sachs said in its note on the QSR market.
Goldman Sachs also said that QSRs have reduced store additions over the last few quarters to focus their attention on demand generation.
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