New Delhi: According to a recent report by Goldman Sachs, the increase in disposable income following the rate cuts announced in the Union Budget 2025 is expected to drive sales growth in the quick-service restaurant (QSR) sector starting from the first quarter of Financial Year 2026 (1QFY26).
The report noted that the QSR sector, which faced significant challenges due to high inflation and geopolitical tensions in the third quarter of Financial Year 2024 (3QFY24), is anticipated to see a rebound in sales growth throughout fiscal year 2026.
After experiencing a slowdown in dine-in sales growth, the sector is beginning to show signs of recovery. QSR operators have reported improved sales in areas affected by geopolitical issues.
Additionally, the report indicated that 3QFY25 marked a notable recovery in dine-in sales growth for QSR businesses, with a year-on-year increase of 4.2 percent, following several quarters of either negative or minimal growth.
The demand downturn in the QSR sector began in the second half of FY23, primarily due to high inflation and rising prices. This slowdown extended longer than anticipated, exacerbated by geopolitical challenges that emerged in 3QFY24. In recent quarters, most QSR companies have refrained from implementing significant price increases, which has contributed to improved financial performance.
Beyond inflationary pressures, the report emphasizes that geopolitical factors such as political instability, conflicts, and trade disruptions have adversely affected the performance of QSR companies in the past. However, the sector is expected to recover from a low base.
With this low base established, analysts forecast a positive trend in same-store sales growth (SSSG) for QSR operators beginning in 3QFY25, which is likely to persist into FY26.
The report concluded that the third quarter marked the onset of a cyclical recovery in QSR demand, fueled by enhanced affordability.
The report indicates that value propositions, including the launch of four-course meals by certain companies and various other initiatives, will persist in fostering order-driven recovery for the sector in the future, particularly as affordability has enhanced over the past eight quarters.
