After festive cheer, QSR demand slips again; FY26 estimates at risk
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India’s consumer discretionary recovery remains uneven despite the festival season and a GST rate cut, with quick service restaurants (QSRs) continuing to face weak demand and the benefits of lower taxes flowing more into pricing support than margins, according to a report by Elara Securities.
The brokerage’s checks suggest that QSR chains saw only a brief lift during October, when same-store sales growth (SSSG) rose 1–2% year-on-year on festival-led demand, before slipping again in November and December with a 1–4% decline. “The GST cut was positive, but it has largely been redirected into tactical price reductions to sustain demand rather than any material margin gains,” said Karan Taurani, executive vice president at Elara Securities.
With the first nine months of FY26 tracking below expectations, the report flags a challenging setup for the March quarter. The implied SSSG “ask rate” for Q4FY26 stands at about 5.3% year-on-year for the sector, which Elara sees as a tall order given the muted base and ongoing traffic pressures. “There is no major uplift or recovery visible in SSSG in Q3, and the Q4 ask rate looks steep,” Taurani pointed, adding that this could translate into a median revenue downgrade of about 2.4% for FY26 estimates across QSR chains.
The pain is expected to be sharper for burger and fried chicken chains, where Elara expects revenue cuts of around 3–3.3%. Pizza-focused formats remain under pressure as well, reflecting continued softness in dine-in and delivery demand. Within this landscape, Jubilant Foodworks is likely to stand out. The Domino’s Pizza operator is expected to post mid-single-digit like-for-like growth, while peers such as Devyani International and Sapphire Foods could see low single-digit declines, the report said.
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Elara reiterated Jubilant Foodworks as its top pick in the QSR space, citing margin levers, calibrated advertising spends and a favourable menu mix. “Jubilant has consumer-aligned trends with delivery salience of over 70%, which gives it an edge versus peers,” Taurani said. The brokerage added that any sustained margin improvement could trigger a rerating, given the stock’s valuation discount to food delivery platforms.
In contrast to QSRs, fast fashion appears to be holding up better. Trent’s Zudio chain has posted low single-digit like-for-like growth over the past two quarters, which Elara expects to inch up to mid-single digits in Q3FY26, aided by Diwali and Dussehra sales. Store additions remain aggressive, with the fashion portfolio likely to add 58 stores during the year, taking the total to 1,125 and driving nearly 29% year-on-year network expansion.
Overall, Elara sees the GST change as offering only a modest and phased tailwind to discretionary consumption. “The mild GST-led cheer is not enough to offset broader demand challenges,” Taurani said, suggesting that a sustained recovery in discretionary spending may take longer to materialise, especially for eating-out categories.