homebusiness NewsSlowdown in fast food sales: Pizza Hut parent will now double its stores in 4 years instead of 3
Slowdown in fast food sales: Pizza Hut parent will now double its stores in 4 years instead of 3
Sanjay Purohit of Sapphire Foods is confident that the competitive pressures in the Quick Service Restaurant (QSR) sector, particularly within the pizza segment, is only a short-term hurdle. He predicts a resurgence in demand over the next 12-18 months.
Sapphire Foods India, the company behind popular brands like Pizza Hut and KFC, is adjusting its expansion timeline, now aiming to double the pizza store count in four years, a slight shift from its previous three-year goal.
“We will slow down. We called out 3-4 years for doubling. Perhaps today on Pizza Hut, it will be four years and not three years,” said Sanjay Purohit, the Whole-Time Director and Group CEO of Sapphire Foods India, in an interview with CNBC-TV18.
Despite the competitive pressures in the Quick Service Restaurant (QSR) sector, particularly within the pizza segment, Purohit regards the current market dip as a short-term hurdle. He remains optimistic about a market upswing, predicting a resurgence in demand over the next 12-18 months.
While pizza has long been a favourite choice for many, its position at the top of the food hierarchy has of late been challenged by the emergence of various competitors and changing consumer tastes.
In September, Elara Capital pointed out that the pizza segment faces tough competition, and growth prospects may not be readily evident. In fact, when examining market share data from the past 3-4 years, it becomes apparent that the pizza category has ceded market share within the broader QSR chain industry, Elara stated.
However, JM Financial has listed the company among its top Diwali picks stating that the initiatives Sapphire Foods took for its two brands have started yielding tangible results.
Over the financial years 2019-2022, the company took various initiatives from optimising the menu to pricing and expanding its omnichannel presence to enhancing the value proposition and store economics. "The fruits of these measures are now visible with a decisive turnaround in Pizza Hut profitability and an even stronger KFC business," the JM note stated, estimating a potential upside of 21% in the stock.
Kotak Institutional Equities also gave Sapphire a ‘buy’ rating in October saying the shares are ready to surge after a 2-year flat trend. The brokerage raised the target price from ₹1,615 to ₹1,700 per share keeping them on par with industry counterparts.
Shares of the company are currently trading at around ₹1,307 apiece.
The company has a market capitalisation of ₹8,228 crore.
For more details, watch the accompanying video
(Edited by : Shweta Mungre)
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