Rs 99 meals bring customers back to KFC, McDonald's as QSR sales rebound

Value meals priced as low as Rs 99 are bringing customers back to quick-service restaurant (QSR) chains such as KFC and McDonald's, with repeat visits and higher spending per customer pointing to a sustained recovery in demand, according to senior executives at Sapphire Foods India and Westlife Foodworld. Management commentary following the companies' September-quarter earnings suggests that affordable meal offerings are helping restaurant operators attract price-conscious consumers, increase customer visits and improve sales at existing outlets after several quarters of subdued discretionary spending. At Sapphire Foods, which operates KFC and Pizza Hut restaurants, KFC recorded revenue growth of 26 percent, its strongest performance in 16 quarters, while same-store sales grew 14 percent. More than half of the same-store sales growth (SSSG) was driven by higher transaction volumes rather than an increase in average ticket size. "In terms of the repeat, yes, we are seeing repeat. Almost 60-70 percent, I would say, are repeat transactions from the customers who have come in for the first time, experienced this Rs 99 offer or the Rs 149 offer, and that is the heartening part," Sapphire Foods Chief Financial Officer Vijay Jain told analysts during the company's earnings call. "What we are also observing is that as they come in back to our stores, the ticket size is definitely on the rise for these customers," he added. A similar trend was visible at Westlife Foodworld, which operates McDonald's restaurants in western and southern India. The company reported a 16 percent increase in revenue to Rs 747 crore, while same-store sales grew 10.1 percent. "This quarter, we delivered our strongest performance in 13 quarters with double-digit growth in both guest count and same-store sales," said Akshay Jatia, president and chief executive officer of Westlife Foodworld. "Our Everyday Value platform (starting at Rs 99) continues to resonate strongly, helping drive guest growth and frequency," he added. This momentum has continued into October, with high single-digit SSSG. Analysts at Elara Securities expect an SSSG of 10 percent in the December quarter and have raised FY27 estimates of SSSG to 7.5 percent from 3.5 percent earlier, signaling a strong rebound. Value drives footfalls Sapphire Foods said its value-led strategy was especially effective in relatively underpenetrated markets such as Tamil Nadu. "The objective of the promotion and this entry value offers was to drive recruitment and drive transactions, and we are seeing a great success, something which we have not seen in the last several years," Jain said. "As we are able to drive this traffic, the positive SSSG, especially upwards of 5 percent helps us negate the gross margin impact, and eventually helps us deliver the flow-through and a restaurant EBITDA margin. So, we will be less concerned about where the gross margin is." CEO Sanjay Purohit said the company would continue to focus on affordability and marketing to support growth amid pressure on household spending. "This is in an inflationary environment. We believe that discretionary spending is likely to be constrained. Therefore, we are pushing growth through value as well as additional marketing," Purohit told analysts. McDonald's sees recovery Westlife Foodworld said its Everyday Value platform helped guest counts grow throughout the September quarter, adding the improvement was not dependent on increasingly aggressive discounting. The persistence of higher customer traffic is particularly encouraging for the company which has been working to rebuild demand following a prolonged period of subdued discretionary consumption. "We started seeing this momentum come from December onwards and we talked about achieving a double-digit guest count growth ... the heartening thing is that that momentum has continued till now, and that for us, is number 1 priority," Westlife Foodworld managing director Saurabh Kalra told analysts. The recovery is also becoming more broad-based. Westlife said the growth differential between its western and southern markets had narrowed following operational improvements in the south. Recovery gains momentum KFC and McDonald's improved performance suggests that the industry's recovery is gaining traction, though the extent to which higher customer traffic translates into sustained profitability remains to be seen. "At Westlife, Q2FY27 confirmed a resurgence on demand... its third straight positive quarter on guest count growth and broad-based gains across regions and channels," ICICI Securities analysts said in a note. The trend also appears to extend beyond the two chains. Jubilant FoodWorks, which operates Domino's Pizza in India, indicated in its quarterly business update that revenue was expected to grow over 11 percent in the September quarter. For the industry, the recovery comes at a time when inflation and pressure on discretionary spending continue to influence consumer behaviour. Restaurant operators are increasingly using affordable offerings to encourage customers to eat out more, while seeking to increase spending through repeat visits and additional purchases.