Pizza Hut In A Pickle? Indian Operator Sapphire Foods Halts Expansion Amid Weak Growth
In the second quarter of fiscal 2026, Pizza Hut's SSSG slipped 8% year-on-year, festering more from a 3% drop in the same quarter last year.
Sapphire Foods India Ltd., the Indian operator of Pizza Hut, has hit the brakes on the American fast-food joint's expansion plans.
The decision of the operator comes in the backdrop of weak same-store sales growth or SSSG as well as burden on the pizza joint's performance caused by poor unit-level returns, it said in a post-earnings conference call.
SSSG is a metric that measures the revenue growth of a retailer's existing stores over a year.
In the second quarter of fiscal 2026, Pizza Hut's SSSG slipped 8% year-on-year, festering more from a 3% drop in the same quarter last year.
During the call Sapphire Foods' management underlined that new store openings will remain halted till there is a rebound in SSSG and overall profitability.
Over FY25, the company opened 20 new Pizza Hut stores and noted contraction in the joint's footprint after net decline of one store.
"There has been a struggle with Pizza Hut. Last year, we opened 20 stores. This year, we have, so far, negative one. Unless we see a revival in the brand, growth coming back in terms of SSSG, we don't see any meaningful additions to the count," Sanjay Purohit, Whole Time Director & Group CEO of Sapphire Foods, said.
Apart from SSSG, pressure on footfalls and average order values deepened with average daily sales per store declining to Rs 42,000 from Rs 47,000 in the year-ago period.
Even as the restaurant count went up to 338 from 323, total restaurant sales fell 6% year-on-year to Rs 129.6 crore in quarter ended Sept. 30, FY26. Revenue also declined 6% on a half-yearly basis, reflecting stale consumer demand.
In its 2025 annual report, the company highlighted that in the case of Pizza Hut, there was an increase in marketing investments after the store performance dipped because of lower consumer pulls. The report mentioned that the investments exceeded levels that are contractually required by parent company Yum! Brands Inc.
Whereas, rival Dominos, operated by Jubilant Foodworks has been "outpizza-ing" the Hut by growing on the back of their fast delivery services, despite some strategic actions (such as increased value through free delivery and more cheese) causing a slow down, as per media reports.
One of the biggest franchises of Yum! in the subcontinent, Sapphire Foods operates close to 1,000 KFC, Pizza Hut, and Taco Bell restaurants across India and Sri Lanka.
