KFC India operator Sapphire Foods slips into loss on one-time labour charge

Feb 6 (Reuters) - Sapphire Foods SAPI.NS, the operator of KFC and Pizza Hut restaurants in India, posted a third-quarter loss on Friday due to a one-time charge linked to the country's new labour codes, even as revenue rose.

Sapphire, the franchisee for U.S.-based Yum Brands YUM.N, reported a consolidated net loss of 47.90 million rupees ($527,721.93) for the quarter ended December 31, compared to a profit of 119.8 million rupees a year earlier.

Revenue from operations rose nearly 8% to 8.14 billion rupees.

Its expenses increased 8.4% to 8.13 billion rupees, broadly in line with revenue growth, while the company took a one-time charge of 80.26 million rupees tied to the new labour laws.

Fast-food chains in India face stiff competition from local eateries and cloud kitchens, prompting companies to offer deeper discounts to shield their volumes.

Sapphire rolled out offers such as a chicken burger meal for 99 rupees during the third quarter.

Demand was mixed at some of its brands. Its same-store sales, which refer to sales from stores open for at least 12 months, at KFC rose 1% in the third quarter, rebounding from a 3% decline a year ago. Pizza Hut's same store sales, however, plunged 12% year-on-year, compared to a 5% rise a year earlier.

The company added 31 new restaurants in the October-December period to take the total to 1028 stores, as of December end.

Peer Devyani International DEVY.NS, also a Yum Brands franchisee of KFC and Pizza Hut restaurants in India, posted a wider third-quarter loss earlier this week.

Shares of the company were last down 1%.

In January, Sapphire and Devyani said they will merge in a $934 million deal, creating a fast-food franchisee powerhouse in the world's most populous country.

($1 = 90.7675 Indian rupees)