Sapphire Foods Swings to Q3 Loss on One-Time Labour Code Charge Despite Higher Revenue

Sapphire Foods, the operator of KFC and Pizza Hut outlets in India, reported a third-quarter net loss after taking a one-time charge related to the country’s new labour codes, even as revenue continued to grow. The franchisee of U.S.-based Yum Brands posted a consolidated net loss of 47.90 million rupees for the quarter ended December 31, compared with a profit of 119.8 million rupees a year earlier.

Revenue from operations rose nearly 8% year-on-year to 8.14 billion rupees, but total expenses climbed 8.4% to 8.13 billion rupees, broadly tracking revenue growth. The company recorded a one-time charge of 80.26 million rupees linked to the implementation of new labour laws, which weighed on the bottom line. India’s fast-food chains continue to face intense competition from local eateries and cloud kitchens, prompting aggressive discounting. During the quarter, Sapphire introduced value offers such as a chicken burger meal priced at 99 rupees to support volumes.

Performance across brands was mixed. Same-store sales at KFC rose 1%, recovering from a 3% decline a year earlier, while Pizza Hut’s same-store sales fell 12% year-on-year, reversing a 5% rise last year. Sapphire added 31 restaurants in the October–December period, taking its total store count to 1,028. Peer Devyani International, another Yum Brands franchisee, also reported a wider quarterly loss earlier in the week. In January, the two companies announced plans to merge in a $934 million deal, a move set to create a major fast-food franchisee platform in India.

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