Consumers flock to value deals as quick-service restaurant chains log muted Q2FY26: Nuvama

New Delhi [India], November 24 : India's quick-service restaurant (QSR) chains witnessed another subdued quarter in Q2FY26 as value-seeking behaviour among consumers intensified, prompting companies to double down on promotions and low-priced offerings, according to a sector review by Nuvama Institutional Equities.

Muted discretionary spending, coupled with seasonal disruptions such as Shravan and Navratri, led to weaker same-store sales growth (SSSG) across most players, barring Jubilant FoodWorks, which continued its strong momentum with a 9.1 per cent increase. Restaurant Brands Asia (Burger King India) also posted a modest 2.8 per cent growth, while others reported negative SSSG.

The report noted that consumers "lapped up lower-priced offerings" as companies pushed aggressive value deals to sustain footfalls. KFC introduced a Rs 69 Chana Chatpata Burger, Pizza Hut rolled out Buy-1-Get-3 and unlimited pizza dine-in schemes, while Burger King intensified its "two-for-Rs 79/Rs 99" barbell strategy to drive transactions.

Despite demand weakness, delivery remained the primary growth engine, with digital penetration surging, dominating 75 per cent of revenues for Westlife Foodworld (McDonald's) and 91 per cent of transactions for Restaurant Brands Asia. Jubilant FoodWorks' own delivery mix touched 74 per cent as its free-delivery and 20-minute propositions reduced incentives for takeaway orders.

Margins, however, stayed under pressure for most companies as value-heavy product mixes diluted gross margins. Westlife Foodworld was an exception, reporting an all-time high gross margin of 72.4 per cent due to structural supply-chain efficiencies. Jubilant offset margin headwinds through improved productivity and operational leverage.

Store expansion remained on track across the sector. Domino's added 81 stores in India and expanded into 16 new cities, while Devyani International added 30 KFC outlets. Both Devyani and Sapphire Foods remained cautious about Pizza Hut's expansion amid persistently weak brand performance.

Nuvama noted that a revival in demand is the key sector variable to watch, adding that Jubilant FoodWorks is expected to counter any moderation in SSSG by accelerating store rollouts.

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