Nestlé India's results for the quarter through June landed with numbers that are hard to find anywhere else in the food business right now: net profit up 47.9% year-on-year to ₹975.12 crore, revenue up 25.2% to ₹6,378.18 crore, and EBITDA margin expanding from 21.6% to 24.1% — nearly two and a half percentage points in a single year, on a company that was already large and already profitable. Every one of its four product divisions — confectionery, beverages, prepared foods, and milk and nutrition — grew in double digits, and exports rose 35.6% despite the geopolitical drag the company flagged in the same results.
The company's own framing credited GST 2.0, the tax reform that took effect September 22, 2025, for a meaningful share of that. The reform moved everyday packaged food — the Maggi noodles, KitKat bars and Nescafé sachets that make up most of Nestlé India's volume — from the 12-18% slab down to 5%, and that fed straight into shelf prices and, from there, into volume.
Walk a few hundred metres from the supermarket shelf to the restaurant counter and the same reform produced a visibly smaller effect.
What the restaurant chains actually reported
Jubilant FoodWorks, the Domino's Pizza and Dunkin' operator, reported revenue up 14.1% year-on-year for the same quarter, a solid number but nowhere near Nestlé's 25.2%. Sapphire Foods, which runs KFC outlets across India, did better on the specific metric that matters most for a restaurant chain: same-store sales growth of 5%, alongside 17% revenue growth — and notably, this was the first quarter in recent memory where Sapphire posted positive same-store sales growth across every one of its brand verticals at once. That's a genuine recovery signal, not a company in trouble. It's also a fraction of what Nestlé just posted, under a tax reform both companies are operating inside.
| Nestlé India (Q1 FY27) | Jubilant FoodWorks (Q1 FY27) | Sapphire Foods (Q1 FY27) | |
|---|---|---|---|
| Revenue growth YoY | +25.2% | +14.1% | +17% |
| Profit / margin signal | PAT +47.9%, EBITDA margin +2.5pp | — | Positive SSSG across all verticals |
| GST 2.0 role cited | Direct driver | Indirect, via pricing | Indirect, via pricing |
The gap isn't a story about one set of companies executing better than the other. Sapphire's own quarter was, by its own recent history, a strong one — the company had been posting flat or negative same-store sales through much of the preceding year, and a simultaneous turn to positive growth across its KFC, Pizza Hut and other verticals is the kind of quarter a QSR operator wants to report. It's a story about the two businesses sitting on opposite sides of a tax mechanic that GST 2.0 didn't touch the same way, even though both are, on paper, "food companies" operating under the same headline reform.
Why the same reform landed so differently
Restaurant food in India — dine-in, takeaway, delivery, the lot — has been taxed at a flat 5% with no input tax credit since the GST system's early years, and that didn't change in the September 2025 reform. A restaurant pays 5% GST on what it sells, but can't claim credit for the GST its suppliers charged on flour, cheese, packaging or anything else that went into the meal — that embedded tax is a cost, not a pass-through, baked into the menu price before a customer ever sees it.
Nestlé sits on the other side of that mechanic twice over. Its output tax fell from the 12-18% band to 5% — a direct cut on every pack sold — and because Nestlé operates under the normal GST input-credit regime (unlike a restaurant), any reduction in the tax its own suppliers charge on ingredients and packaging also flows through as a cost saving it can keep or reinvest, rather than an embedded cost it can never recover. A packaged-goods maker effectively gets the rate cut from both directions; a restaurant only gets whatever relief shows up in its suppliers' invoices, filtered through a system that was never designed to pass it on in full.
That's the mechanical explanation and it's a reasonably solid one, but it's worth being honest about its limits: neither Jubilant nor Sapphire's results disclosed a clean, quantified GST contribution the way Nestlé did, so this piece is reading a structural difference into results that don't break out the tax effect explicitly. What the restaurant chains did say explicitly was about pricing strategy, not tax mechanics — margin commentary from the broader QSR sector earlier this year noted that GST-related cost relief was "largely redirected into tactical price cuts across key menus to support volumes, rather than translating into meaningful margin expansion." In other words, even the relief restaurants did get, they mostly chose to hand back to customers as cheaper menu prices rather than bank as margin — a strategic choice layered on top of the structural one.
The part worth watching next
Sapphire's all-verticals-positive same-store sales growth this quarter, after a stretch of weak festive-quarter trading in late 2025, suggests the restaurant recovery is real even if it isn't dramatic. The open question is whether that holds through the current festive quarter — Navratri and Diwali both fall in October and November this year — or whether, like the auto sector's mass-market segment is already finding, last year's GST-transition quarter set a base that's hard to beat twice. Nestlé's next results, covering the quarter now underway, will show whether a 25% revenue jump was a one-reform pop or a new growth rate the company can sustain into a second year of the same tax regime.
