Devyani international Limited (DIL), the biggest franchisee of KFC and Pizza Hut in India, has indicated a net loss of 23.9 crore during the second quarter of FY2026 (2026) as compared to the loss of 4.92 crore during the second quarter last year. The announcement of the results on Thursday can be interpreted as a sign of increasingly severe challenges in the Indian quick-service restaurant (QSR) segment, as competition and the softening of urban consumption are putting pressure on profitability.
The loss could not stop Devyani International, and the revenue of the company grew 12.6% annually to 1,377 crore, which was facilitated by the active store expansion policy and consistent performance of the same-store sales in the key brands.
Diversifying the Store Network Drives Revenue
The company is still betting on long-term growth by networking expansion. Devyani International has been able to recruit 263 new stores in the previous year and has reached 2,184 store units as of September 30, 2025 in India, Nigeria, Nepal and Thailand.
Devyani is a franchisee of Yum!, which is the biggest. In India, there are brands that run top international QSRs such as KFC, Subway, and Costa Coffee.
As expansion contributed to the increase of topline, the cost of operations increased, leasing costs increased, and promotion discounts increased, which resulted in the broadened quarterly loss.
A Soft Landing on Urban Demand and Competition
The Indian QSR industry has been experiencing headwinds over the past few quarters. The low rate of discretionary expenditure on urban areas and high competition among international chains and local chains has strained sales volumes and the power of prices.
According to analysts, consumer footfall in high-street and mall properties has since the beginning of the pandemic, although spending per customer has returned to the pre-COVID levels, particularly in Tier-1 cities.
The management of Devyani stressed that the company is concerned with the efficiencies of its operations, the effectiveness of the channel of delivery, and the digital interaction to overcome the difficult environment.
Target Long-term Growth and Profitability
Devyani International is determined to follow its growth path, although there may be some short-term pressures. The company is looking towards further growth in the domestic and international markets even with the rising popularity of case-pizza restaurants and the current transition of the organized food service models in India.
The experts in the industry consider that the strength of the brands, innovativeness of the menu, and economic efficiency will be crucial factors that will assist players such as Devyani to recover profitability as the consumer sentiment normalizes.
Perspective: The Expansion versus Efficiency
With the QSR industry in India entering a competitive stage, the capacity to strike the right balance between growth and profitability will become a significant factor in Devyani. It operates more than 2,100 stores in four countries and has a good relationship with Yum! The company is one of the most powerful forces in the fast-developing Indian food service sector, brands.
Nevertheless, the way forward is going to involve greater cost management, smarter pricing, and better digital strategies to bring the growth in revenues into a lasting profitability.
Conclusion
The second-quarter performance of Devyani International is both encouraging and discouraging at the same time with increased revenues and decreased margins. The fact that the company kept growing further confirms its belief in the QSR potential in India, despite the fact that the rest of the industry has faced the challenge of low urban demand and escalating input prices.
With the consumer spending trends changing, the next few quarters will challenge the strength and flexibility with which Devyani can continue on the growth path and turn back towards profitability.
