Sapphire Foods India Ltd., the master franchisee for Pizza Hut in India and a key operator under Yum! Brands Inc., announced on October 24, 2025, that it is pausing expansion of the brand amid persistent weakness in sales and profitability. The decision comes as Pizza Hut grapples with an 8% year-on-year decline in same-store sales growth (SSSG) for the second quarter of fiscal 2026, ending September 30—a sharper downturn from the 3% drop recorded in the same period last year. This slump has contributed to a 6% reduction in total restaurant sales to ₹129.6 crore, despite a modest increase in store count from 323 to 338 outlets across India and Sri Lanka, where Sapphire manages nearly 1,000 combined KFC, Pizza Hut, and Taco Bell locations.

The challenging performance is underscored by a drop in average daily sales per store to ₹42,000 from ₹47,000 year-over-year, reflecting broader pressures on footfalls and average order values in a competitive quick-service restaurant sector. Sapphire's overall revenue for the quarter also fell 6% on a half-yearly basis, with Pizza Hut's unit-level returns failing to justify further investments. In fiscal 2025, the company had opened 20 new Pizza Hut stores, yet it ended the year with a net decline of one outlet, signalling early signs of contraction that have now prompted a full halt to openings.

Sanjay Purohit, Whole Time Director and Group CEO of Sapphire Foods, highlighted the brand's struggles during an earnings call, stating, "There has been a struggle with Pizza Hut. Last year, we opened 20 stores. This year, we have, so far, negative one. Unless we see a revival in the brand, growth coming back in terms of SSSG, we don't see any meaningful additions to the count." This cautious stance contrasts with the robust growth of Sapphire's other brands, like KFC, which continue to drive the company's portfolio amid shifting consumer preferences toward value-driven dining options in India's post-pandemic market.

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The expansion freeze could reshape Pizza Hut's presence in India, a market where the chain has historically competed fiercely with homegrown players like Domino's, which reported stronger SSSG in recent quarters. Analysts view this as a pragmatic move to prioritise profitability over aggressive scaling, especially as inflation and economic uncertainties weigh on discretionary spending. Sapphire plans to focus on operational efficiencies and menu innovations to revive SSSG, but meaningful store additions remain off the table without sustained recovery, potentially signalling a pivotal reset for the iconic brand in one of its largest international markets.

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