Speciality Restaurants faces margin pressure; net profit down 24%, revenues up 14%

SAIF Partners-backed Speciality Restaurants Pvt Ltd has faced margin pressure for the three-month period ended June 30, 2013, reporting a decline in profit during the quarter over the year-ago period, the first such decline in profits since it went public last year.

The firm, which runs a chain of fine dining restaurants with brands like Mainland China, Oh! Calcutta, Machaan, Sigree, Flame & Grill, Haka, KIBBEH, Kix and Shack, and a confectionery brand under Sweet Bengal, saw revenues climb 13.9 per cent to Rs 56.65 crore in the first quarter.

However, its operating margins declined with faster rise in wages and material costs besides higher depreciation provision during the quarter.

Although tax expense and finance costs declined and the firm saw higher other income, its net profit declined 24.3 per cent to Rs 4.75 crore in the first quarter of FY14, from Rs 6.28 crore in the corresponding quarter last year.

Speciality Restaurant scrip last traded at Rs 121.55, up 0.66 per cent on the BSE in a strong Mumbai market on Tuesday. The company got listed in May 2012 with an issue price of Rs 150 a share.

The company has recently added some new outlets and currently has 87 restaurants (including franchise outlets) and 14 confectionaries.

Fast food chain Domino’s franchisee Jubilant FoodWorks also witnessed margins coming under pressure even with strong revenue growth in Q1.

(Edited by Sanghamitra Mandal)

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