The growth of fast food restaurants in India is a positive sign for the fast food industry.
The earnings of the major fast food chains in India grew at a faster pace than the broader industry, with earnings per unit of sales rising to Rs. 8,000 in the June quarter from Rs. 7,000 the previous year.
In fact, earnings per sales rose to Rs 8,063 in the March quarter from 6,000 for the March last year.
While the growth of Indian fast food restaurant owners and franchises is very good, earnings have also been stagnant in the past two quarters.
The results have been disappointing to analysts who said that the earnings growth is a result of several factors, including the ongoing slowdown in the Indian economy, slowing foreign direct investment, the implementation of the Goods and Services Tax (GST) and a shift in consumers towards food.
However, some analysts said that these factors are not the main cause of the sluggish performance of Indian restaurants.
The slowdown in India’s economy has had a negative impact on the restaurant sector, said Raghuram Rajan, Chief Economist, ETNow.
This is a very large and growing segment of the economy.
It has also helped the growth in revenue which is also helping the growth rate.
In the long run, the impact of the slowdown on restaurant revenue will have to be evaluated.
Rajan said that he expects the restaurants to continue to grow.
The report also noted that the profitability of Indian restaurant chains has improved significantly in the last three years, adding that the sector is now profitable at a healthy rate.
According to the report, earnings grew at 7.3% in the April quarter, from 7.2% in 2016.
The growth of restaurant chains is positive in terms of growth in earnings per sale, as well as gross profit, which rose to 15.4% from 12.3%.
The report said that this year’s growth will be driven by the impact from the GST rollout.
The company said that revenue growth is expected to be above 15% this year, and above 20% in 2019.
While growth in sales is expected also to be positive, revenue growth will slow, as restaurants are forced to sell more goods to make up for lower demand from consumers.
This has also affected the profitability and gross profit growth of the restaurant chain.
The report said in the long term, it expects the gross profit to be below 20% for the next three years.