Burger King's India operator reports increased Q1 loss due to elevated costs

Restaurant Brands Asia, the operator of Burger King in India, has disclosed a more substantial first-quarter loss, attributing it to heightened raw material expenses and significant investments in expanding its store network.

For the quarter ending on June 30, the restaurant chain's consolidated net loss expanded to Rs 504.8 million ($6.1 million), marking a contrast from the Rs 475 million reported in the same period the previous year, as indicated in an exchange filing.

Total expenses surged by over 21 per cent, reaching Rs 6.72 billion. This escalation was primarily driven by a 26 per cent increase in the cost of materials consumed, attributed to the mounting prices of key ingredients such as cheese and vegetables.

Similar upward pressures on costs have also affected competitors, including Sapphire Foods India and Devyani International, franchisees of KFC, as well as Jubilant FoodWorks, the operator of Domino's Pizza.

New meal options introduced 

In response to heightened inflation and more budget-conscious consumers, Restaurant Brands Asia introduced new meal options starting at Rs 99 ($1.20) earlier this year. This strategy aligned with the broader trend of global chains in India emphasising more affordable offerings to cater to cost-conscious customers.

The company experienced positive revenue growth of 25 per cent, reaching Rs 6.11 billion, driven by the launch of new menu items and an expansion effort that saw the opening of numerous restaurants across India and Indonesia, where the company holds master franchisee rights.

Following the release of these results, shares of Restaurant Brands Asia exhibited a nearly 2 per cent increase. Over the June quarter, these shares demonstrated an upward trajectory of nearly 20 per cent. Notably, Restaurant Brands Asia also operates Popeyes stores in Indonesia under the umbrella of Restaurant Brands International.

(With Reuters inputs)