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MOSL: RETAIL (GROUND REALITY)-Cricket WC demand cheer – some noise but not a roar

RETAIL (GROUND REALITY): Cricket WC demand cheer – some noise but not a roar; pressure on SSSG in 1HFY20 likely to continue, dine-in remains tepid

 

• As companies gear up to announce their quarterly numbers after a fortnight or so, quick service restaurant (QSR) players will likely find it a bit tough to deliver high-single-digit or double-digit same-store sales growth (SSSG) in 1QFY20 due to a high base of comparison. We note that SSSG growth had ranged between 22-26% for key Indian QSR players in 1QFY19 (22% system sales growth for Pizza Hut, 24.1% for Westlife Development [McDonald's West and South region franchisee] and 25.9% for Domino's).
• Even as we expect the base effect to come into play, QSR players may have likely benefited from the ongoing Cricket World Cup (30th May'19 to 14th Jul'19) - a quadrennial event. Demand usually picks up for QSR players during mega sporting events as customers flock to watch the action. Against this backdrop, we conducted channel checks in western India to gauge how demand trends have been playing out over the recent past.
• Although the sample size of our channel checks is extensive enough to get a good idea of the demand trends, the conclusions might have limitations in that the sample size (a) represents a small part of the QSR store universe and (b) is region-specific, and thus, not indicative of country-wide trends.