QSR Players Gain Market Share—Key Factors Driving Growth

In a recent analysis, Goldman Sachs and Citi have highlighted the shifting dynamics within the Quick Service Restaurant (QSR) sector. Both brokerages note that QSR players are gaining market share in the food delivery market, despite underlying weak demand. Strategic interventions and value initiatives have been pivotal in this recovery.

Goldman Sachs reports that QSR players have started to gain market share within the food delivery market. The growth gap between QSR sales and aggregators’ Gross Order Value (GOV) has been narrowing, particularly in 3QFY25. Even excluding Jubilant FoodWorks, which significantly outperformed its peers, the gap has narrowed meaningfully. This shift is attributed to QSR players’ improved performance in the delivery channel after several quarters of losing market share.

The dine-in channel has also shown signs of recovery, with QSR players experiencing a 4.2% year-on-year growth in 3QFY25. Westlife (McDonald’s South & West) led this recovery with an 8.9% increase in dine-in sales. However, Jubilant (Domino’s) saw a slight decline of 2.3% in dine-in sales, which was an improvement from the previous quarter.

Goldman Sachs highlights that improved affordability and value initiatives have been crucial in driving Same-Store Sales Growth (SSSG) recovery. QSR players have introduced several value offerings, such as Domino’s four-course meal at Rs 99 and McDonald’s McSavers 1+1 at Rs 65. These initiatives have helped mitigate the impact of high inflation and price hikes, leading to a recovery in demand.

Citi’s analysis indicates that Jubilant FoodWorks (Domino’s) continues to outperform its peers, reporting a 12.5% increase in Same-Store Growth (SSG). Other QSR players like Pizza Hut and McDonald’s also reported positive SSG, but at a lower rate. Domino’s was the only player to show year-on-year growth in Average Daily Sales (ADS), while others reported declines.

Despite the positive performance of some QSR players, Citi notes that consumer sentiment and demand trends remain weak. Companies have highlighted that there has been no significant improvement in consumer sentiment, which continues to impact overall performance.

Citi emphasises that strategic interventions have been key to Jubilant FoodWorks’ success. These include increased marketing efforts, competitive discounts on aggregator platforms, delivery fee waivers, and product innovation. The acceleration in the pace of Popeyes store expansion is also expected to drive further growth for Jubilant.