Despite posting revenue numbers below estimates in the October-December quarter, quick service restaurant (QSR) operators remain bullish on expansion, betting on long-term growth prospects. The management of these firms remains optimistic about demand recovery and is aggressively pushing ahead with plans to add more outlets.
While muted same-store sales growth and rising operational costs have impacted profitability, QSR chains are accelerating their store openings, confident that market conditions will improve.
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Jubilant FoodWorks, which operates Domino’s, Popeyes, and Dunkin’, reported a significant increase in store additions, opening 130 new outlets in Q3FY25 compared to 73 in Q2FY25. Of these, 87 were Domino’s stores, with the rest spread across its other brands.
“We will continue opening new stores to enter new cities and strengthen our presence in existing ones,” said Sameer Khetarpal, CEO and MD of Jubilant FoodWorks.
Devyani International, which operates brands like KFC, Pizza Hut, and Costa Coffee, added 94 net new stores in Q3, up from 85 in the previous quarter. The company is on track to reach 2,000 stores by March 2025, two years ahead of its original 2026 target.
Similarly, Sapphire Foods, another major franchisee for KFC and Pizza Hut, accelerated its expansion, adding 54 restaurants in Q3FY25 compared to 23 in Q2FY25.
Industry experts believe that while profitability remains under pressure in the short term, margins are expected to improve as new stores mature. Store break-even timelines typically range from six months to two years, depending on the brand. For instance, a Domino’s store usually takes around two years to achieve profitability, while a Dunkin’ outlet reaches break-even in about a year.
“Established chains do not operate based on short-term market fluctuations,” said Bharat Birla, director at Anand Rathi Investment Banking. “India’s long-term growth fundamentals remain intact, with low penetration levels and rapid urbanisation in the next 20 cities acting as key drivers,” he added.
Experts also note that demand in tier-two cities and rural areas has remained relatively strong, while metro cities have seen a slowdown. However, there are early signs of recovery in urban markets.
Ravi Jaipuria, non-executive chairman at Devyani International, highlighted this trend, stating, “While overall consumer sentiment remained subdued, we witnessed some green shoots of recovery in metros and large cities during the festive season”.
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