INDIA – American fast-food chain Burger King, in the second year of its India operations, grew 69% to post sales of Rs 237 crore during FY17 when most quick-service restaurants were struggling with stagnant sales.
In the 2016-17 fiscal, the company generated average sales of Rs 2.7 crore from each of its 88 outlets opened till March, while its rival Westlife Development, that runs McDonald’s in the south and west, posted average sales of Rs 3.6 crore from each outlet.
Burger King, however, notched up higher numbers than Jubilant FoodWorks (JFL), where average sales per outlet were at Rs 2.1 crore from both brands, Domino’s Pizza and Dunkin’ Donuts.
Burger King’s losses rose to Rs 62 crore during last fiscal, compared with Rs 38 crore a year ago, as the company doubled its store count.
Burger King, that now runs more than 100 stores in India, claims it is now profitable at both the store and company level.
“Our restaurant EBIDTA (earnings before interest, taxes, depreciation, and amortisation) has been positive since last July,” said Rajeev Varman, CEO, Burger King India.
“Sales grew mainly due to three reasons — all our burgers are grilled similar to an Indian-stye tandoor which is healthy, our focus on entrylevel pricing, and we offer the largest vegetarian menu within QSR.”
Burger King, that is popular for its Whopper burger, entered India in November 2014 when most quick-service restaurants were struggling with falling sales.
There was a slight revival last fiscal but the overall market continued to face challenges, compounded further by demonetisation announced in November last year which saw consumers reduce discretionary spending.
The 65-year-old burger chain partnered Everstone Capital in India, which holds a majority stake in the company through subsidiary F&B Asia Venture.
It has lined up $100 million for expansion over the next few years and expects to open at least 40-45 restaurants in India in the next few years.
“There’s a significant room to grow as the potential in each of the 28 cities where we are present remains high,” said Varman.
Leading quick-service restaurants have seen low same-store sales growth (SSG) since the past two years with consumers cutting back on discretionary spending.
In addition, the segment also saw the entry of global companies including Wendy’s and Johnny Rockets, offering customers a wider cuisine range.
For instance, Westlife Development grew SSG at 4% while Jubilant saw a 2.4% decline in SSG last fiscal.
Starbucks, the world’s largest coffee retailer, posted its slowest sales growth of 14% in India last year.