January 31, BENGALURU (Reuters) - Third-quarter statistics from local franchisees of Domino's and McDonald's showed that Indians are eating out less for pizza and burgers. Analysts noted that the stiff competition and inflation that is depressing demand will put pressure on these franchisees' revenues in the near future.

Westlife Foodworld, which runs McDonald's restaurants in south and west India, announced a larger-than-expected earnings decline, while Jubilant Foodworks, the company that runs Domino's restaurants, revealed a surprising decline in profits.

In an attempt to boost demand, quick-service restaurant (QSR) owners in the nation have tried everything from introducing more affordable menu items and offering larger discounts to reducing the cost of packaging, but they have not been successful in encouraging Indians to dine out more frequently due to rising inflation.

After several pandemic-ridden years, Indians started dining out more frequently, and the same enterprises were among the greatest winners during last year's festive season.

In addition to hurting company earnings, the demand drop following 2023's high base has caused negative same-store-sales growth (SSSG) as opposed to the typical 5%.

Karan Taurani, an analyst at Elara Capital, stated that although demand weakening "might be near the bottom," the industry is unlikely to regain former SSSG growth.

Amnish Agarwal, an analyst at Prabhudas Lilladher, also says that it is doubtful that the margins of the two companies will experience a "significant recovery." Taurani also says that increased competition from smaller players will maintain margins "strained."

Jubilant's revenue growth slowed for the seventh consecutive quarter, and its profit of 657.1 million rupees ($7.9 million) was down for the fifth consecutive quarter, far less than analyst projections of 902.6 million rupees.

Meanwhile, according to LSEG statistics, Westlife reported its first revenue decline in three years, and its profit of 172.4 million rupees was significantly less than analyst projections of 331.1 million rupees.