Are Restaurant Brand latest results good or bad?

Restaurant Brands Asia's latest financial results for Q2 FY26 reveal a complex picture characterized by significant revenue growth alongside persistent net losses. The company reported net sales of ₹703.43 crores, reflecting an 11.23% increase year-on-year and a modest 0.82% growth quarter-on-quarter. This revenue growth indicates a sustained expansion of its restaurant network and improved same-store sales.
However, the financial performance is overshadowed by a consolidated net loss of ₹58.60 crores, which widened by 39.72% from the previous quarter's loss of ₹41.94 crores. Year-on-year, the loss showed a slight improvement, narrowing by 2.61% from ₹60.17 crores in Q2 FY25. The operating margin, excluding other income, stood at 10.09%, down from 10.43% in the previous quarter but slightly higher than the 10.00% recorded in the same quarter last year.

The company continues to face challenges related to high fixed costs, particularly depreciation and interest expenses, which significantly burden profitability. In Q2 FY26, depreciation costs amounted to ₹96.93 crores, while interest expenses were ₹45.61 crores, collectively exceeding the operating profit generated during the quarter. This structural issue highlights the ongoing difficulty in achieving operational profitability.

Despite these challenges, Restaurant Brands Asia demonstrated positive operating cash flow of ₹350 crores for FY25, indicating that the underlying business model remains viable, even as accounting losses persist. The company's liquidity position has also improved, with closing cash of ₹534 crores as of March 2025.

In terms of evaluation, the company saw an adjustment in its evaluation, reflecting the ongoing operational challenges and the mixed performance indicators. Overall, while Restaurant Brands Asia shows potential through revenue growth and cash generation, the path to profitability remains uncertain, necessitating careful monitoring of future performance metrics.