Restaurant Brands Asia: A Deep Dive into Q2 FY26 Performance

Restaurant Brands Asia Limited (RBA) has unveiled its Q2 FY26 financial and operational performance, showcasing a determined push towards growth and profitability across its India and Indonesia markets. The company, operating the Burger King and Popeyes brands, reported a consolidated revenue from operations of INR 7,034 Crore, marking an 11.2% year-on-year growth. Gross profit also saw a healthy increase, reaching INR 4,651 Crore, reflecting a robust 66.1% margin. Despite some regional challenges, RBA's strategic initiatives appear to be gaining traction, particularly in its core Indian market.

India Operations: A Recipe for Growth

India's performance stands out as a key driver for RBA, with the company reporting a revenue from operations of INR 5,687 Crore, a 15.6% year-on-year increase. This growth was fueled by both new store additions and a commendable 2.8% same-store sales growth (SSSG). The average daily sales (ADS) in India reached INR 119K. Gross margin for India improved to 68.3%, up 0.8% year-on-year, primarily driven by changes in menu mix and supply chain efficiencies. Restaurant EBITDA (Pre-IND AS 116) for India stood at INR 592 Crore, growing by 13.8% year-on-year, while Company EBITDA (Pre-IND AS 116) increased by 16.5% to INR 284 Crore.

The company's 'barbell strategy' in India, balancing value leadership with menu innovation, has been particularly effective. This approach has led to 10 consecutive quarters of positive dine-in traffic growth, a significant achievement in the competitive quick-service restaurant (QSR) landscape. Digital transformation is another cornerstone of RBA's strategy, with 91% of all orders now processed through digital channels. The Burger King app has seen a 70% growth in monthly active users, laying a strong foundation for future CRM initiatives aimed at increasing customer frequency.

Indonesia: Navigating Challenges and Strategic Adjustments

Indonesia's operations presented a more complex picture. Revenue from operations for Indonesia was INR 1,348 Crore, experiencing a 3.9% year-on-year decline. The gross profit margin, however, improved to 56.9%. While Restaurant EBITDA (Post Ind AS 116) showed a positive INR 57 Crore, the Company EBITDA (Pre-IND AS 116) recorded a loss of INR 170 Crore. This reflects the ongoing efforts to stabilize and improve the performance of both Burger King and Popeyes brands in the region.

Management highlighted that the Burger King business in Indonesia is moving steadily, with average daily sales showing improvement over the previous year. However, the Popeyes brand continues to be a challenge, prompting focused efforts to resolve awareness and scale issues. The company is experimenting with fast-casual dine-in formats and has made significant progress in reducing corporate overheads, achieving a 25% reduction in G&A over two years, with a further 10% reduction targeted for FY26.

Outlook and Strategic Clarity

RBA's management maintains a clear forward-looking strategy. For India, the company plans to open 60 to 80 new restaurants annually until FY29, aiming for approximately 800 restaurants. Gross margins are targeted to reach 70% by FY29, supported by ongoing supply chain efficiencies and menu optimization. A 1 percentage point reduction in utility costs is also anticipated, with new energy-efficient broilers being rolled out across all restaurants by early next year.

In Indonesia, the focus remains on resolving the challenges faced by Popeyes and improving the overall profitability of Burger King. The company is committed to reducing corporate overheads further and optimizing restaurant operations. The management's commentary suggests a disciplined approach to growth, emphasizing profitable expansion and operational efficiency over short-term gains. The positive October sales performance in India provides a strong indicator of improving consumer sentiment, reinforcing the company's confidence in its strategic direction.

Overall, Restaurant Brands Asia Limited is demonstrating strategic clarity and disciplined execution. The company's focus on digital transformation, menu innovation, and operational efficiencies in India, coupled with targeted turnaround efforts in Indonesia, positions it for sustained growth and improved profitability in the long term.