Domino’s surges in H1 FY26 as fried chicken, pizza rivals see soft growth in existing stores

India's quick-service restaurant (QSR) sector delivered a muted performance in the first half of fiscal year 2026, weighed down by weak dine-in recovery, margin pressures, and subdued urban foot traffic.

Jubilant FoodWorks Limited, the master franchisee for Domino's Pizza India, stood out as the only notable outperformer amid widespread industry softness.

According to ICICI Securities, Jubilant FoodWorks posted the strongest showing in Q2 FY26 with 9.1% year-on-year like-for-like (LFL) growth for Domino's India, driven primarily by robust traction in the delivery channel.

Karan Taurani, Executive Vice-President at Elara Capital, noted that headroom for margin expansion and opportunities for menu premiumisation also supported Domino's performance during the quarter.

Jubilant FoodWorks' profit jumped 130% sequentially to Rs 194.5 crore in Q2 FY26 compared with Rs 84.3 crore in Q1. For H1 FY26, its net profit rose 132% YoY to Rs 289 crore. The pizza chain delivered an implied same-store sales growth (SSSG) of 7.6% YoY, although overall industry SSSG remained subdued due to weak dine-in recovery, soft demand, and widening performance gaps across QSR categories, Taurani added.

For instance, Devyani International (DIL), operator of KFC India, saw revenue dip from Rs 612 crore in Q1 FY26 to Rs 572.3 crore in Q2. SSSG also weakened from negative 0.7% to negative 4.2% quarter-on-quarter. However, Sapphire Foods, another major KFC operator, reported a significant rise in KFC revenue, up 92.2% QoQ to Rs 1,013 crore compared to Rs 527 crore in Q1 FY25. The fried chicken segment remained under pressure, with negative SSSG for both Sapphire Foods and Devyani International.

DIL's Chief Financial Officer Manish Dawar said the broader trends currently favour online food delivery. "There's a very strong traction behind delivery. We are making extra efforts to ensure our dine-in remains relevant because it is a more profitable channel. We are working to attract consumers into stores and strengthen dine-in as a robust business".

Within the pizza QSR category, Devyani's Pizza Hut recorded flat revenue of Rs 186 crore in Q2 FY26, while its SSSG also remained steady at 4.1%. Sapphire Foods' Pizza Hut business saw revenue decline 6% YoY to Rs 261 crore in Q2.

Sanjay Purohit, Whole-time Director and Group CFO of Sapphire Foods India, said Pizza Hut’s dine-in contribution improved compared to last year, supported by exclusive value-led offers such as Buy 1 Get 3, four-course meals starting at Rs 99, and Unlimited Pizza Fridays. These initiatives helped ensure that dine-in SSSG outperformed delivery during the quarter.

However, Purohit noted that muted discretionary spending and intensifying competition across food categories continued to weigh on the business. Seasonal factors such as Dussehra and Navaratri also had a dampening effect.

"Consumer discretionary spending has been constrained, and competition in food has increased significantly". However, he added that the GST slab revision could be a crucial trigger for industry revival. "A GST reduction will lower food prices across household baskets, leaving more money with consumers, which should eventually flow into discretionary categories".

Restaurant Brands Asia--the national franchisee for Burger King India's CEO Rajeev Varman echoed the same sentiments. Varman said SSSG will improve due to GST reduction. "I think we will have a good quarter this quarter, Q3.These initiatives from the government are long-term benefits that the entire industry at large and other industries at large will benefit," said Varman.

In Q2, Varman said the company’s sharp and sustained focus on driving dine-in traffic has begun to show results. “After 10 consecutive weak quarters of positive traffic SSSG, we can now be confident that our strategy is working,” he said. Varman added that the brand is seeing consistent improvement in both dine-in footfall and dine-in sales, driven by its barbell strategy. “We began this strategy with strong value offerings, and we continue to build on that approach to bring more people into our restaurants,” he noted.

Meanwhile, Westlife Foodworld, which operates McDonald’s outlets across West and South India and recently reported a strong quarter, said it will continue to pursue aggressive market-share gains.

CEO Akshay Jatia noted that most of the stores opened in the past six months have exceeded expectations, delivering strong initial performance.

McDonald’s posted a profit of Rs 28.9 crore in Q1 FY26, compared with a marginal Rs 3.6 lakh in H1 FY25. Notably, Rs 27.2 crore of this profit was generated in Q2 alone. Jatia said the chain expects 3–5% incremental contribution to same-store sales growth (SSSG) over the next one to two years, driven by its McDelivery platform and the rollout of 20-minute delivery of hot, freshly cooked food across select stores.

“We are setting an ambitious target to double McDelivery sales within the next two years. This initiative has the potential to unlock an incremental 3–5% contribution to system-wide SSSG over the same period,” Jatia added.