Quick service restaurants see 15-25% surge in sales this Diwali season

Quick Service Restaurants (QSR) are expecting a 15-25% jump in sales for the upcoming Diwali period against last year, and are innovating with menu options and value combos to attract customers after two years of lacklustre festivities due to Covid-19. The cash discounts, which were an ‘in’ thing till last year, as restaurants were banking on volumes to garner revenues, has given way to bargain product deals, and more of value combos and gourmet options coming in at good deals as restaurants find customers’ propensity to spend more on the rise.

Also Read| Festive sales: 60% growth expected during this year’s Diwali season, says CAIT

Restaurants are experimenting with tastes and innovating with different ingredients to cater to the changing mindset of consumer, who is more open to experimenting with their palates. Also, combos and deals where the customer gets more value for money are making a big appearance.

Good Flippin’ Burgers launched two limited time offers or LTOs burgers, as it calls it, in the past two months — a mutton burger THE LAMBO and Jack n’ Cheese, a jackfruit and cheese burger.

“We have received good response for both these innovations and we intend to keep experimenting,” said Viren D’Silva — co-founder, Good Flippin’ Burgers.

D’Silva is looking to close the financial year 2022-2023 with a 400% growth over last year in revenue.

The QSR segment has been making a comeback since the quarter ended June, and according to analysts, the strong momentum will continue into second quarter as well. Strong momentum is expected in the dine-in focused QSRs in the retail space in Q2FY23, according to analysts at Edelweiss Securities.

Also Read| Why you should avoid Digital Gold investment on Karwa Chauth, Dhanteras and Diwali 2022

For the retail space, the brokerage has estimated an increase of 30% in revenues on a year-on-year basis, which is 64% of the second quarter of financial year 2019-2020.

Neelam Singh, CEO at The Burger Company said, “The great thing this year is that the festive season has started little earlier. We are aiming for very high numbers considering the response in the last one week. We are expecting a growth of over 40% in same store sales and over 2X at the brand level since we have added many stores this year.”

According to QSR chains, due to increase in work from home and a hybrid work mode in play, the late-night orders have grown by 25% where burger has become the quick go-to food. At Leon’s, for instance, its breakfast menu has caught up well and contributed to almost 8% of the revenue.

Burgers as a category seem to be beating pizza. Restaurant Brand Asia (RBA), which operates Burger King, is expected to report a 530 basis points sequential increase in Ebitda (earnings before interest, tax, depreciation and amortisation) margin at 15.2%, driven by the benefit of higher sales, despite increase in costs due to store openings, analysts said.

On the contrary, Devyani International, the franchisee of Yum Brands in India that runs KFC and Pizza Hut, is expected to see a sequential decline of 100 basis points in operating margins this quarter due to inflation and new store openings. Similarly, for Jubilant FoodWorks, the master franchisee for three international brands, Domino’s Pizza, Dunkin’ Donuts and Popeyes is also expected to see moderation in Ebitda margins of about 60 basis points on a quarter-on-quarter basis due to high inflation and the impact of new store openings, an Edelweiss report said.