What is the potential number of restaurants possible in their respective regions - for both sapphire and devyani? I found this piece for Sapphire. Any info on opportunity size would be helpful.
Devyani International ( master franchise of KFC, PizzaHut, Costa Coffee ) - H1 / Q2 highlights -
Have opened 115 new stores in H1 taking the total store count to 1358. Company has stores in over 240 cities / towns in India
H1 sales @ 1666 cr, up 15 pc
Gross Margins @ 71 vs 70.5 pc YoY
EBITDA @ 332 vs 330 cr (margin @ 19.9 vs 22.7 pc )
Adjusted PAT - 93 vs 136 cr (adjusted for currency devaluation of Rs 61 cr in Nigeria business)
Brand wise sales breakdown -
KFC - 1025 cr, up 18 pc
Pizza Hut - 367 cr, up 6 pc
Costa - 67 cr, up 69 pc
Rest - others like Vango etc
New stores opened in H1 -
KFC - 50
Pizza Hut - 29
Costa Coffee - 34
Vaango - 01
Total overseas stores -
KFC - Nigeria - 38
KFC - Nepal - 22
Nigeria facing severe economic head winds. Company may have to support its Nigerian operations for some time to come (1-2 yrs)
Aim to reach 2000 stores by 2026 end. To open another 150 odd stores this year
Current stores breakdown -
KFC - 594
Pizza Hut - 539
Costa Coffee - 146
Rest - others like Vaango
Q2 is generally a seasonally weak Qtr. High food inflation also had a dampening effect on QSR industry in Q2
Seeing good demand on the days of big WC matches. As such, Q3 is a good Qtr
Company has formed a JV with RK associates and Hoteliers to tap the Railway modernisation plan of GoI by setting up new Outlets at the Station’s food courts
Company has announced a deal with PVR to Open Costa Coffee outlets at their premises. Contours of the deal are not fully known
Expecting an EBITDA margin uptick of 2-3 percentage points once the inflationary pressures are gone and consumer sentiment improves
Vaango currently contributes to 3 pc of sales
Yum brands ( the owner of KFC, Pizza Hut, Costa Coffee brands ) also spends on Marketing to help the company specially when the demand scenario is weak
Disc: hold a small tracking position, biased, may add more if the company performance improves in Q3/Q4
3 Likes
Coffee prices are expected to ease coming year: Coffee prices may ease in 2024 on higher supplies, says World Bank - The Hindu BusinessLine
This should help their Costa Coffee business.
Devyani will hold only 51 % in RD via a complicated structure, with remaining 49 % being held by Temasek. RD operates 274 KFC stores across Thailand, out of more than 1000 KFC stores there. So there are other KFC franchisees too - namely Central Restaurant Group (CRG) and QSR of Asia (QSA). The acquisition appears quite cheap, perhaps because RD has consistently made losses. So the challenge will be to turn around the business into a profitable one. Burger King went nowhere with their Indonesia acquisition and Jubilant Foods with DP Eurasia. In the short term, even with a 51 % stake, this will add considerably to Devyani’s topline but will hit profitability at a consolidated level.
8 Likes
“Increased competitive intensity in the pizza category and overall slowdown in mass consumption will continue to impact performance for Devyani International for the next few quarters, and recovery will take time,” said Sharekhan in its Q3 FY24 result update.(Fund houses take a bite of Devyani Int, analysts say not a yummy buy yet)
POTENTIAL RISK - Restaurants active with Zomato have increased to 48 times the total branded QSR stores in FY24. This number was 22 times in FY19. “With more restaurants partnering with food delivery platforms, we think consumers now have more options, leading to fragmented sales. This is likely playing a part in the weakness in ADS of the QSR industry besides the general weakness in demand due to elevated inflation,” said Kunal Vora, Head of India Equity Research at BNP Paribas in a report.
GUIDANCE - The local out-of-home consumption in Thailand is eight to nine times a week. This is way higher than in India, where out-of-home consumption is once every 35-40 days, said the company’s management in its Q3 FY24 conference call. KFC is the market leader in Thailand with 1,000 stores, it added.
The newly acquired 283 KFC stores in Thailand albeit have lower EBITDA margins now at around 15 percent and Devyani expects to turn it around to the 20-22 percent which is seen in India, said Abraham. Considering the average Thai citizen eats out once a day, while the average Indian eats out once a month, the overall fried chicken market seems larger in the former, thereby boosting Devyani’s overall performance, said the analyst.
2 Likes