The latest sector update report on Quick Service Restaurants (QSR) companies by brokerage house Antique Stock Broking revealed that the holiday season and sporting events did not lead to a recovery. Despite expectations of a strong sequential recovery in the third quarter due to various factors like a weak base and inflation impacting discretionary spending, QSR companies did not witness any material improvement compared to the previous quarter.
The report highlighted that customers’ down trading and increased competition continued to impact the pizza segment, and demand across QSR companies remained soft even during the highest revenue-generating week of December. To attract more customers, Domino’s and Pizza Hut introduced more promotions and reasonably priced pizzas, with Domino’s expected to outperform Pizza Hut due to its superior delivery model.
While KFC’s performance did not significantly improve and Westlife’s burger business was impacted by a high base from the previous year, Restaurant Brands Asia’s performance was expected to improve due to expanding its beverage portfolio. The brokerage recommended preferring Devyani International and Sapphire Foods over Jubilant FoodWorks, maintaining a SELL rating on the latter due to near-term headwinds in the pizza segment.
The report also noted that the major sporting event of the year, the Cricket World Cup, was anticipated to spur recovery, but foot traffic for QSR companies was negatively impacted after the World Cup and holiday season, as demand momentum could not be sustained. It is important for investors to seek advice from certified experts before making any investment decisions.
Disclaimer: The views and recommendations mentioned in the report are those of individual analysts, experts, and broking companies, not of Mint. The promoters of HT Media Ltd, which publishes Mint, and Jubilant Foodworks are closely related, but there are no promoter cross-holdings.