Travel Food Services Limited (TFSL) has announced the termination of its extended arrangement with Dreamfolks Services Limited for providing lounge access services, effective September 15, 2025. This development comes as a significant shift in the travel services landscape, potentially impacting both companies and their customers.

Background of the Agreement

The original Lounge Services Agreement between TFSL and Dreamfolks was executed on July 1, 2024, with an effective date of April 1, 2024. The agreement, which was set to expire on March 31, 2025, had been extended beyond its initial term. Under this arrangement, Dreamfolks acted as an aggregator for banks and networks, facilitating lounge access services for various lounges operated by Travel Food Services.

Reasons for Termination

According to the disclosure made by Travel Food Services Limited, the termination follows unsuccessful attempts to re-negotiate the commercial terms of the agreement. Despite efforts from both parties to reach a mutually beneficial arrangement, they were unable to come to a consensus.

Impact on Business Operations

TFSL has stated that the termination of the agreement with Dreamfolks will not have a significant impact on its business operations. The company has already taken proactive steps to ensure continuity of services:

1. Direct Engagement: TFSL, through its wholly-owned subsidiary Eliteassist Technology and Services Private Limited, has initiated direct engagements with banks and networks.
2. Enhanced Efficiency: The company views this change as an opportunity to enhance service efficiency for its customers.
3. Fintech Evolution: TFSL sees this move as a step towards embarking on a new phase in its fintech evolution.

Future Outlook

While the termination of this agreement marks the end of a business relationship between TFSL and Dreamfolks, it also signals a strategic shift for Travel Food Services Limited. By directly engaging with banks and networks, TFSL aims to streamline its operations and potentially offer improved services to its customers.

The travel and hospitality industry will be watching closely to see how this change affects the lounge access landscape and whether it leads to any innovations or improvements in customer service within the sector.

As the effective date of termination is set for September 15, 2025, both companies have ample time to adjust their operations and communicate any changes to their customers and partners. Stakeholders will be keen to observe how this development influences the competitive dynamics in the travel services market, particularly in the domain of airport lounge access services.

Travel Food Services Limited (TFS), a leading player in the travel food and beverage sector, has reported robust financial results for the first quarter of fiscal year 2026, demonstrating significant growth across key metrics.

Strong Revenue Growth

TFS reported system-wide sales of INR 7.15 billion for Q1 FY2026, marking a substantial 26.7% year-over-year increase. This growth was driven by a healthy like-for-like (LFL) growth of 12.5% and net contract gains of 10.1%. The company's consolidated revenue grew by 6.3% to INR 3.75 billion.

Profitability Improvements

The company's consolidated profit after tax (PAT) rose by 19.3% to INR 950.00 million, showcasing the robustness of TFS's business model. EBITDA margin improved by approximately 400 basis points year-over-year to the 38-39% range, while gross margin increased to 83%.

Operational Highlights

As of June 30, 2025, TFS operates 454 travel Quick Service Restaurant (QSR) outlets and 37 lounges, holding a 26% market share in travel QSR and 45% in airport lounges. The company has expanded its footprint both domestically and internationally, with new lounges in Malaysia and Hong Kong.

Brand Partnerships and Expansion

TFS continues to strengthen its brand portfolio, recently opening Nando's at Delhi T3 and announcing upcoming Gordon Ramsay concepts. The company is also in the process of mobilizing approximately 50 new units in FY2026.

Market Outlook

Despite temporary headwinds affecting air passenger growth in the latter part of the quarter, TFS management expects air passenger traffic to normalize by the end of the first half of FY2026. The company remains optimistic about growth opportunities in both the travel QSR and lounge segments.

International Expansion

TFS is actively exploring opportunities in the Asia-Pacific and Middle East regions, building on its recent successes in Malaysia and Hong Kong. The company sees international expansion as a key growth driver for its lounge business in the medium term.

Technology Initiatives

The company has developed a technology platform to facilitate direct tie-ups with banking and credit card network partners. This initiative aims to enhance customer experience, create tailored solutions for different consumer segments, and potentially improve margins in the long term.

Varun Kapur, Managing Director and CEO of Travel Food Services Limited, commented on the results: "Our strong performance this quarter, despite temporary headwinds, demonstrates the resilience of our business model and the exceptional efforts of our highly motivated team. We continue to focus on sustainable growth, efficient capital management, and consistent profit generation."

As Travel Food Services Limited continues to expand its presence in the travel F&B sector, the company remains well-positioned to capitalize on the growing opportunities in both domestic and international markets.