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KFC-operator India's Devyani's profit falls on expenses, demand slowdown

BENGALURU/CHENNAI, May 17 (Reuters) - India's Devyani International Ltd on Wednesday reported a 21% slump in fourth-quarter profit as the KFC restaurant operator saw a jump in expenses and inflation-hit consumers cut back spending on fast food.

Consolidated net profit fell to 607.2 million rupees ($7.4 million) for the quarter ended March 31, the local franchisee of U.S.-based Yum Brands said in an exchange filing.

Consumers in the world's most populous country have been slammed by high prices of daily essentials from milk to fuel over the last few quarters, forcing them to keep a tight lid on discretionary spending.

Meanwhile, its Pizza Hut stores are facing intense competition from local brands offering cheaper options and Domino's Pizza, operated by Jubilant Foodworks in India.

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Devyani, which is also the sole franchisee for the Costa Coffee brand in India, said total expenses jumped 32% from a year earlier.

Revenue from operations surged 28% to 7.55 billion rupees as it opened 66 new stores. However, revenue slipped around 5% from the previous quarter.

The profit slump at Devyani is in step with the performance of rival Yum Brands franchisee Sapphire Foods India Ltd and Westlife FoodWorld Ltd, the local operator of McDonald's, both underscoring the expenses and demand slowdown.

However, Devyani is hopeful of "a rebound in consumer spending in the second half of the coming fiscal," Non-Executive Chairman Ravi Jaipuria said, pointing to the "initial signs of inflation stabilizing."

Shares of Devyani fell as much as 8.6% after the earnings. They were last down 4.8% at 173.3 rupees. ($1 = 81.7800 Indian rupees) (Reporting by Yagnoseni Das in Bengaluru and Praveen Paramasivam in Chennai; Editing by Dhanya Ann Thoppil)