Jubilant Foodworks

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About the Company

Jubilant FoodWorks Limited is an Indian food service company based in Noida, Uttar Pradesh which holds the master franchise for Domino’s Pizza in India, Nepal, Sri Lanka and Bangladesh, for Popeyes in India, Bangladesh, Nepal and Bhutan, and also for Dunkin’ Donuts in India. The company also operates two homegrown restaurant brands called Ekdum! and Hong’s Kitchen. Jubilant FoodWorks is a part of the Jubilant Bhartia Group, owned by Shyam Sunder Bhartia and Hari Bhartia.

Q4FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The company had a poor quarter with revenue rising by 8.2% YoY and profits degrowing by 42% YoY on a standalone basis.
2. Like for like growth (LFL) stood at (0.6%).
3. Opened 56 new Domino’s stores, one new store for Popeyes & Hong’s kitchen, & net 3 store addition in Dunkin’.
4. Total 1,816 Domino’s stores across 393 cities in India.
5. App installs at 8.5 million and own asset contribution to delivery sales were at its highest ever level this quarter.
6. Domino’s Cheesy Rewards – The cumulative enrollment grew to over 13.6 million since its national launch in May 2022.
7. Dominos LFL growth was 0.3% & LFL ADS stood at 86,197.
8. Delivery: Dine-in split was 36.4:63.6.
9. Gross margins at 75.3%, lower by 160 bps year-on-year .
10. The EBITDA margin came in at 20.1%, lower by 490 bps year-on-year. 
11. PAT margin was at 6.7%.  
12. International markets
    1. In Sri Lanka, the company delivered system sales growth of 14.1%. The growth was driven by Dine-in and Takeaway channels. The Own app contribution to Delivery Sales was 70%. Opened one new store taking the network strength to 48.
    2. In Bangladesh, system sales grew by 51.6%, and opened four new stores taking our store count to 17. The Own app contribution to Delivery Sales was 83%, an increase of 16% points year-on-year

Investor Conference Call Highlights 

1. The management gave a comparison of its raw materials prices Vs covid levels as follows:- cheese prices have increased by 40%, flour prices have increased by 28%, and chicken and paper box prices have increased by 30%.
2. It expects cheese prices to stay elevated for the coming 2 quarters.
3. The company became the first food service company in India to surpass a turnover of Rs. 5,000 crores in the fiscal year ’22-’23.
4. The gross margin was at 75.3% which was driven by a series of timely interventions on the food cost line items, focus on data-led efficiencies in the operating model, and partially helped by deflation in some commodities.
5. Considering the significant change in the economic environment in Sri Lanka, the company has taken an impairment charge of Rs. 200 million in this quarter.
6. Domino’s LFL and SSG growth came in at 8.9% and 6% for FY23.
7. The company recently launched a 20-minute service guarantee in Bangalore owing to which, Bangalore became one of its fastest-growing like-for-like revenue growth cities in Q4 2023.
8. The company introduced and expanded the range of Pizza Mania where, the value range now has 13 offerings, starting at Rs. 49 & going all the way up to Rs. 169.
9. 44% of the new stores opening in this year were in the existing cities serving a white space while it opened 84 new split stores.
10. For Popeyes, the recent launch of the Hot & Messy range which offers fried chicken in two delectable sauces, is an example of its ability to Indianize the international offering and grow the bone-in-chicken category. The management also states that it will continue to cover the South systematically and look to spread out from there.
11. The company is building its largest multi-brand commissary in Bangalore. Once it’s fully scaled up, it would be able to serve more than 750 stores in the region.
12. The company filled a critical position in the leadership team with the joining of Mr. Sameer Batra as Chief Business Officer for Domino’s India.
13. The company is targeting: 200-225 new Domino’s India stores & 30-35 new Popeyes stores in FY24.
14. The management when asked about the negative impact of its inability to deliver the orders in 20 mins, said- “the margin don’t go down, and we do get more deliveries per hour from the same rider, right? And so riders actually should make more money because, see, the way this has happened is we have about 175 stores in Bangalore. We have only guaranteed 20 minutes when we believe the right time from the store to the customer location is about 7 to 8 minutes. So if you add 7 to 8 and 7 to 8 minutes of reverse leg, theoretically, you can do 4 deliveries per hour, right? And we are obviously not at 4. So there is huge headroom to be more efficient”. Further, they explained that this improves the net promoter score (NPS) leading to higher LFL growth.
15. The management is less affected by the source from which pizza is ordered as long as the customer is satisfied, however, it believes that it is able to give the best user experience through its own app.
16. The management is continuing with the store expansion spree as it believes that the demand slowdown is transitory & when the demand picks up or the sentiment picks up, it will be the fastest off the blocks, both in terms of driving the growth and also expanding the margin pool.
17. The company believes that the primary determent of margins rising for the company will be higher LFL growth.
18. The company’s Rs.49 offering is a big opportunity for introducing new people to its platform as well as up-sell & cross-sell its products.
19. The management explains the three pillars of the biz are consumer value proposition, product quality & delivery.
20. The company’s focus area to grow the Dine-in biz is 1) to have inviting stores, wherever the stores are older, 2) to have a better dine-in experience in terms of the staff being more courteous, being more proactive to customers, and 3) help the customer navigate inside the store, order quickly, & be efficient.
21. The management when asked about the reasons for the slow rollout of Popeye’s stores said- “we offer antibiotic-free chicken and fresh chicken, right, which is not frozen. So that takes time to build the back-end supply chain. Like for all our products, we want to fully have traceability and visibility from the origination point to the point when we serve the customers. We want to have a good control. That’s what takes time more than opening a store. Actually opening store is the easiest part, but fulfilling it, making sure the quality remains, it takes time. So you will see a faster pace of store expansion going forward.”
22. The management expects capex for FY24 to stand at around 700-800 Crs with around 250 Crs being incurred for investments in Mumbai commissary.
23. The company is planning to expand from the 4 delivery apps to the ONDC channel in the coming time.
24. The company is very bullish towards expansion in Bangladesh while it is cautious about Sri Lanka owing to the current macro-economic environment in the country.

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin Donuts and Popeye’s Chicken. The company has seen tough times with revenue rising by only 8% while PAT falling by 42% on a standalone level. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic about the future of Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s, tackling rising costs of commodity and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector, and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

Q3FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The company had a good quarter with revenue rising by 10.3% YoY and profits degrowing by 35% YoY on a consolidated basis.
2. Opened 60 new Domino’s stores & four new stores for Popeyes.
3. Added 76 new Domino’s stores and entered 22 new cities during the quarter. Total 1,701 Domino’s stores across 371 cities in India.
4. App installs at 9.4 million and own asset contribution to delivery sales were at its highest ever level this quarter.
5. Domino’s Cheesy Rewards – The cumulative enrollment grew to over 10.6 million since its national launch in May 2022.
6. Dominos LFL growth was 0.3% & LFL ADS stood at 86,197.
7. Delivery: Dine-in split was 37.5:62.5.
8. Gross margins at 75.5%, lower by 210 bps year-on-year and 70 bps quarter-on-quarter.
9. EBITDA of Rs. 3,125 million, an increase of 9.2% versus the prior year. The EBITDA margin came in at 22%, lower by 460 bps year-on-year and 230 bps quarter-on-quarter. 
10. PAT margin was at 6.7%.  
11. International markets
    1. In Sri Lanka, the company delivered system sales growth of 24.9%. The growth was driven by Dine-in and Takeaway channel. The Own app contribution to Delivery Sales was 53%. Opened seven new stores taking the network strength to 47.
    2. In Bangladesh, system sales grew by 43%, and opened two new stores taking our store count to 13. The Own app contribution to Delivery Sales was 79%, an increase of 14% points year-on-year
12. OLO’s contribution to delivery sales for India is 98.3%.

Investor Conference Call Highlights 

1. On the cost side, the company is seeing high inflation in dairy products like cheese as well as in wheat flour & wages.
2.  In Domino’s, revenue growth was order-driven
3. On Popeyes, the management states that “ India is the first market for Popeyes globally and the only chicken QSR player in India to move chicken marination in preparation to a centralized facility, which ensures consistent high-quality, high fill rates to the store, which significantly improves the consistency of taste visibly translating into higher repeat rates for the brand.”
4. During the quarter, the company closed two stores of Hong’s kitchen and relocate them to nearby locations that will offer both dine-in and takeaway.
5. The company is sunsetting its two businesses, i.e. ChefBoss and Ekdum!.
6. The company is making attempts to bolster its high value-for-money quotient with an intent to attract new customers to dine in & the launch of Everyday Value at INR49 as a dine-in-only promotion is a step forward in that direction.
7. The management on its 20-minute delivery proposition states that “Elevated consumer experience through reduced delivery time is globally proven to deliver better customer satisfaction and leads to increased frequency across Domino’s markets.”
8. The new CEO’s 3 core strategy framework is A)  build a multi-brand multi-cuisine foodservice organization B) Technology and data sciences & C) operational excellence.
9. The management At this stage would not like to take any further price increase and continue to drive value proposition because the focus will be more on bringing volume and growth back to the levels that they were anticipating.
10. The management states that it is not wedded to a number of store openings & will open new stores only if they expect the right payback of capital expenditure.
11. The management is very cautious while deploying capital for splitting the store since splitting the store is possibly the easiest decision to make & so to be more stringent & quality focused, if the store is not reaching capacity in the peak hours, then it doesn’t split the store.
12. The company says that its Rs49 offering will also have similar margins to its other products, & its current margins of 75% are a function of high inflation & should improve going forward irrespective of higher dine-in contribution provided cost inflation reduces.
13. The new CEO did about 500 customer interaction & 200 store visits to learn about customer expectations & gaps which needs to be plugged in.
14. The company is refraining from giving any guidance due to the uncertain commodity cycle.
15. The company is targeting a dine-in contribution of 40% as it also reduces the burden on splitting the store.
16. The demand trend continued to be weak in December & January.
17. The company believes that its 20-minute delivery & high gross margin even in its Rs49 product proposition is a structural advantage available to the company due to its scale & brand network.
18. The company doesn’t plan to cut its delivery charge & instead wants to focus on product innovation.
19. The company’s EBITDA margins target in the medium term is 23-25% Post IND-AS.
20. The depreciation for the current quarter involved one-time accelerated depreciation of the closure of Ekdum! & Chefboss which caused depreciation to rise by 20%.
21. The paybacks on investment are less than two years for stores in Tier-3 cities due to lower operating costs.
22. The company has identified close to 600 towns in India in the Tier-3 segment where the company has an opportunity to open stores in the future.
23. The company expects a very high capex in the coming 2-3 years for expanding its commissary in Bengaluru which will entail Rs250 Crs of investments & the majority of other capex will be targeted towards store expansion. The capex for the current FY will stand at Rs700 Crs.
24. The company is not seeing any margin pressure because of the cheesy-rewards program.

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin Donuts and Popeye’s Chicken. The company has seen tough times with revenue rising by only 11% while PAT falling by 35%. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic about the future of Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s, tackling rising costs of commodity and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector, and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

Q2FY23 Updates

Financial Results & Highlights

Detailed Results:

1. The company had a good quarter with revenue rising by 17% YoY and profits rising by 10% YoY on the consolidated basis.
2. Opened 134 new Domino’s stores in the first half and on track to achieve the store guidance of opening 250 stores in FY23.
3. Added 76 new Domino’s stores and entered 22 new cities during the quarter. Total 1,701 Domino’s stores across 371 cities in India.
4. App installs at 9.0 million and own asset contribution to delivery sales were at its highest ever level this quarter.
5. Domino’s Cheesy Rewards – The cumulative enrollment grew to over 7.2 million since its national launch in May 2022.
6. Served more than three crore customer orders in this quarter
7. Added the highest ever net new stores in this quarter
8. Dominos growth in revenue was 8.4%
9. Gross margins at 76.2%, lower by 200 bps year-on-year and 50 bps quarter-on-quarter
10. EBITDA of Rs. 3,125 million, an increase of 9.2% versus the prior year. The EBITDA margin came in at 24.3%, lower by 170 bps year-on-year and 30 bps quarter-on-quarter. 
11. PAT margin was at 9.3%.  
12. International markets
    1. In Sri Lanka, the company delivered system sales growth of 37%. The growth was driven by Dine-in and Takeaway channel. The Own app contribution to Delivery Sales was 71%, an increase of 7% points year-on-year. Opened four new stores taking the network strength to 40.
    2. In Bangladesh, system sales grew by 42%, and opened one new store taking our store count to 11. The Own app contribution to Delivery Sales was 75%, an increase of 11% points year-on-year
13. EV penetration in delivery fleet has reached 31% as against 19% by end of March 2022
14. Customer repeat rates for Popeyes stores are very healthy more than 30%
15. In this quarter, an overall enrollment of 7 million from loyalty program, roughly 1/3 of the company’s orders in September are coming from enrolled.
16. OLO contribution to delivery sales for India is 98%.

Investor Conference Call Highlights 

1. The management stated the Dine-in and Takeaway sales has shown strong recovery and they continue to see further opportunity for growth in this channel. 
2. On the demand side, the management stated economic activity remains resilient. They are witnessing a sustained revival in demand in the foodservice industry after the impact of covid over many quarters in last two years.
3. On the cost side, the management stated the inflationary headwinds continue to persist and is driven by food and energy inflation. Within dairy products, the prices for cheese which is one of key ingredient were at a price level not seen in last 10 years.
4. During the quarter, the company became the first QSR Company to launch menu innovation dedicated to East India. The company’s team worked with a panel of renowned chefs to create an amalgamation of pizza with authentic regional taste loved by the locals.
5. For the first time, the company combined authentic local flavours like Kasundi, Kosha and Malai on pizza. Similar regional menu innovation in form of No Onion and No Garlic range was launched in Gujarat in West India. 
6. The Board in meeting, approved a restructuring exercise with regards to international operations where all international operations will now be held in a step down subsidiary – Jubilant FoodWorks International Luxembourg. The exercise will result in simplification of structure without any change in ultimate ownership over the said subsidiaries.
7. The management stated Hong’s Kitchen is iterating the service and there is very steady growth in orders and also customer repeat rates. It’s truly building up of India’s First Chinese QSR brand. 
8. The management stated in the new onboarding journey, the company reduced the number of steps for a new user to reach the home page from five to one. 
9. Added two new stores in Popeyes, taking the network strength to 8 stores. The company is getting encouraging customer feedback and sensing the huge opportunity ahead, building pipeline and will step up store additions in H2, the management stated.
10. In Dunkin’, the company is pivoting to coffee-first and opened three new outlets with coffee cues, across Delhi, Noida and Gurugram till date with one new store added during the quarter. The initial response has been encouraging. 
11. The company had instituted two rounds of price increases, one earlier this year and one towards the end of last year. Currently, it is not looking at any further price increase.
12. The management stated because of the lower operating costs, profitability tends to be slightly higher and better in tier-three and tier-four cities.
13. The management stated store expansion is actually not having any negative impact on overall margins. What is causing an impact on margin and dilution in EBITDA is largely coming from commodity inflation, inflation not just in commodities, but across line, like very high level of inflation in fuel, minimum wages have gone up etc.
14. The company is seeing order growth and volume growth. But consumers are downtrading to some extent and also reducing item per order.
15. The management stated through loyalty programme, they are able to recruit more consumers, that will help drive growth and therefore pays back to the program. And the more important benefit is the frequency increase of existing customers, which again pays back to the program. The other benefit that they are seeing of the programs is that also the churn.
16. The management stated the company is not adding stores to drive delivery from 30 min to 20 min. The reason the company is opening more stores in the existing town is because of the growth opportunity in the white spaces which are already existing in these towns. So, there are two levels of growth. 
    1. One is of course as we have seen rapid urbanization in India, and therefore, the city peripheries will continue to grow. And therefore, enough and more white spaces still remaining in existing towns where we can open a domino store. 
    2. Second, the company has also been following a strategy of fortification in these towns. Whenever a store reaches a level of demand that it is not able to cater fully and the store KPIs start deteriorating in terms of the operational KPIs, the company look at splitting the store and open another store in the same vicinity. In most cases, when they split the store, the operating KPIs of the mother store becomes significantly better.
17. The management have already started seeing signs of some level of moderation and stabilization in input costs. If costs stays same for Q3, the margin profile in Q3 will be same as Q2.
18. The management believe by the end of this financial year, Dunkin’, Hong’s and Popeyes, will be ready to scale faster.
19. Out of 250 stores the company want to open, split stores are broadly 1/3 of the total stores.
20. The company has not seen any significant inflation on the rental side
21. The management stated there are two different playbooks. On Hong’s, they are building the playbook, on Popeyes there is an existing playbook that they are customizing to India. So, therefore Popeyes should be faster than developing grounds-up invention. 
22. Per store CAPEX have seen a marginal increase which is in line with inflation; the company has seen about 8% to 10% increase per store
23. The management stated overall, the company would be close to Rs.650 to 700 crores in terms of overall spend CAPEX this year, because 
    1. The company will continue to invest in store expansion
    2. The company is also building commissary and large part of investment about close to Rs.200 crores will go into new commissary that the company is building in Bangalore, 
    3. Some amount of investment in usual maintenance and digital assets that the company is building.
24. Digital agenda discussed by the management:
    1. Firstly, there is an element of digital applications to acquire new customers, engage them through loyalty programs, and make sure that they can track their orders – the full fulfillment, acquisition, and engagement piece.
    2. Second, what goes inside the store or in the kitchen also needs to be digitized and automated. How the company manage stores, inventory, point of sale systems, how the manpower and store manager is operating the store; There is big room to digitize those processes.
    3. Third, automation in production lines, in warehousing, where the company is using advanced robotics for storing and taking out materials. Of course, there is room to make sure the company’s logistics forward and the middle mile planning, that can be more data driven
25. The company is looking at opening Popeyes stores in two more cities in the South. One of them should go live in this quarter, and one more towards the end of Q4.
26. This quarter itself, the company has planned to launch more products. It should be in November itself.

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin DOnuts and Popeye’s Chicken. The company has seen impressive recovery post the pandemic and has seen FY22 revenues rise 31% YoY. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic on the future of the Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

Q1FY22 Updates

Financial Results & Highlights

Detailed Results

1. Consolidated Revenues in Q1 have increased by 44% YoY.EBITDA margins expanded by 49Bps YoY to 24.6%.
2. The company opened 58 new Domino’s stores along with 2 new stores each for Popeyes and Hong’s Kitchen.
3. Sales growth In Srilanka & Bangladesh stood at 83% & 49% respectively & opened one new outlet in both the countries.
4. GPM decreased by 52 Bps to 76.7% while PAT margins stood at 8.1%
5. Like-for-like (LFL) growth for the quarter stood at 28.3% YoY.
6. The company had 8.2 Mn app installs in Q1FY23.
7. Online ordering accounted for 97.7% of total delivery sales in Q1.

Investor Conference Call Highlights

1. The company came up with it own loyalty program-Domino’s cheesy rewards wherein the customer will be provided with a free pizza after every sixth eligible order.
2. The company’s srilankan operation has taken an impairment charge of INR 266 million in the quarter considering the crisis in the country.
3. The company launched a new product line- paratha pizza.
4. The company is on track to open 20-30 new stores of Popeyes in a quarter.
5. The company closed stores 9 stores in aggregate of Hongs,Dunkin donuts & Ekdum as it dabbled with a concept of DELCO where a single store outlet had all the three brands , but due to lack of good response in the form of expected revenues, company dropped the plan & shut these stores.
6. The management is focused on making Dunkin donuts a coffee first brand & thus repositioning it as Dunkin.
7. The management believes that because of acquisition of 100% in its Bangladeshi subsidiary, it expects the ramp up in the country to be quicker going forward.
8. The company took a price hike in April.
9. The management believes that product innovation helps in improving incremental consumption from existing customers coupled with classifying customers into several categories.
10. The company has sidelined its plan of national roll out of Hong’s kitchen for the next 2-3 quarters & focus extensively in driving store economics in the NCR region.
11. The company is piloting a concept of supplying buns and cookies through the HoReCa channel.
12. The management states that it saw delivery growth in QoQ & YoY basis mainly due to increased volumes.
13. The company saw strong growth in dine in & is now close to 100% pre covid revenues when it comes to dine in.
14. The management is confident of maintaining the current levels of profitability of close to 25% despite the inflationary environment.
15. The impairment charge in Srilanka is accounting related due to depreciation currency & increase in interest rates which led to fall of some past investments made by the company.

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin DOnuts and Popeye’s Chicken. The company has seen impressive recovery post the pandemic and has seen Q1FY23 revenues rise 41% YoY. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic on the future of the Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s, how will the cope up with increased competition coupled with inflationary environment and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

Q4FY22 Updates

Financial Results & Highlights

Detailed Results

1. Consolidated Revenues in Q4 have increased by 13% YoY. FY22 sales have seen an impressive 81% YoY growth.
2. EBITDA margins stood at 25%.
3. The company opened 80 new Domino’s stores along with 4 new Popeyes restaurants in Bengaluru & 1 new each for Dunkin’ and Hong’s Kitchen.
4.  Sales growth In Srilanka & Bangladesh stood at 80.6% & 44.5% respectively.
5. GPM decreased by 56 Bps to 76.9% while PAT margins stood at 10%
6. Like-for-like (LFL) growth for the quarter stood at 5.8%.
7.  The company opened 80 new Domino’s stores opened in Q4FY22 and 230 stores in FY22.
8. The company had 7.7 Mn app installs in Q4FY22 and 30.2 Mn in FY22.
9. The Company completed 100% acquisition of its subsidiary with an intention to further strengthen presence and scale of operations in the fast-growing and critical market of Bangladesh.
10. Online ordering accounted for 97.9% of total sales in Q4 with mobile orders accounting for 97.4%.

Investor Conference Call Highlights

• The Board approved the appointment of Sameer Khetrapal as the Chief Executive Officer and Managing Director.

• The management states that more than 70% of its orders are now being delivered in under 20 minutes.

• The management doesn’t expects a reduction in marketing spend in FY23.

• The management expects to differentiate its Popeyes brand by offering chicken sandwiches.

• The company expects Popeyes to have atleast 250-300 stores in medium term.

• The management doesn’t expect a big downside in margins of Dominoes segment for FY23.

1. 1. The management believes that popeyes stores are oriented more towards dine in based & it expects its profitability in medium term to be similar to Dominoes.

• The company will have a new expanded commissary in Bangalore, Mumbai, Kolkata, Ahmedabad and ramped up capacity in Mohali between FY23-24.

1. 1. The management is guiding for opening 250 new dominoes store in the coming FY.
   2. The company took a price hike of about 5% to 6% at a menu price level during the end of Q4 which flew through in quarter 4, and it had also taken another round of price increase towards early April, which was in the similar range.

• The management states that its branch expansion strategy isn’t margin dilutive & the new store payback is between 2 to 3 years.

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin DOnuts and Popeye’s Chicken. The company has seen impressive recovery post the pandemic and has seen FY22 revenues rise 31% YoY. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic on the future of the Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

Q3FY22 Updates

Financial Results & Highlights

Detailed Results

1. Consolidated Revenues in Q3 have increased by 13% YoY. 9M sales have seen an impressive 39% YoY growth.
2. When compared to pre-covid, Dominoes system sales recovered by 112.9%. This was attributed to recovery in Delivery and Takeaway channels by 128.0% and 148.2% while dine-in recovered by 71.4%
3. EBITDA margins stood at 26.6%.
4. The company opened 75 new Domino’s stores along with the first two Popeyes restaurants in Bengaluru & 1 new restaurant each for Dunkin’ and Hong’s Kitchen. This was the highest number of stores opened ever in a quarter for Jubilant.
5. Domino’s app downloads during the quarter stood at 8.2 million.
6. Sales growth In Srilanka & Bangladesh stood at 95.9% & 38% respectively.
7. Board of directors approved subdivision of equity shares from face value of Rs. 10 each to face value of Rs. 2 each.
8. GPM decreased by 70 Bps to 77.6% while PAT margins decreased by 30 Bps to 11.5%
9. Like-for-like (LFL) growth for the quarter stood at 7.5%
10. The company opened its 1500th store on 31st Jan 2022.
11. Online ordering accounted for 97.6% of total sales in Q3 with mobile orders accounting for 97.4%.

Investor Conference Call Highlights

1. The Company acquired 30.75% stake in Hashtag Loyalty Private Limited which operates an online food ordering platform – Thrive – for a consideration of Rs. 222.0 million.
2. The Company, through its wholly owned subsidiary Jubilant Foodworks Netherlands B.V., further increased its equity stake in DP Eurasia N.V. to 40.29% through a combination of Reverse Book-building process and direct market purchases
3. The company opened its landmark 1500^th restaurant on 31^st January, 2022 with total city coverage now standing at 322.
4. The company from the coming quarters will report LFL( which is same store sales growth of non split stores) instead of SSSG since it believes that it is a better indicator of company’s performance & further the ratio of split stores to the overall new stores opened in the last 7 quarters is 46%.
5. The management states that it is  looking to carve out areas of existing other stores and open up new stores which will add pressure on mother store revenues and mother store growth in the short term as these new stores play out And, these splits, are done to reduce the delivery times and ensure that it gets closer to its ambition of delivering 20 minutes across the country
6. The management states that the company’s fortressing strategy is allowing it to shrink delivery areas and reduce drive times as a result of which a significant proportion of delivery orders are now getting delivered in under 20 minutes.
7. This faster delivery has directly translated into a significant increase in our customer satisfaction or NPS numbers.
8. The management states that the entire India menu for Popeyes has no MSG and the chicken is antibiotics free. Further Popeyes has built its own in-house delivery fleet, with 100% of use of e-bikes enabling a zero-emission delivery experience
9. The management stated that Hong’s Kitchen has become one of the largest Chinese peers of QSR chains in the Delhi-NCR region.
10. The company closed 15 Dominos outlets in Q3.
11. The company saw relatively lower recovery in the current quarter due to various stores related restrictions like night curfew, 5% lower operational hours, dine-in being capped at 50%.
12. The company considers any store that is in the delivery area of a mother store and takes away orders and revenue as a split store.
13. The company was guiding to deliver 150 stores in the current FY however since it has already opened 150 stores by Q3 itself, so it plans to end the year with close to 200 store additions.

Analyst’s View

Jubilant Foodworks is the largest QSR player in India with the master franchise of Dominos. It also holds the licenses for Dunkin DOnuts and Popeye’s Chicken. The company has seen impressive recovery post the pandemic and has seen 9M revenues rise 39% YoY. It has also completed 1500 stores in India and has seen the most stores opened in a quarter ever in Q3. The company continues to focus on superior delivery times and shrinking operating areas to be able to deliver within 20 mins. The management is also very optimistic on the future of the Popeye’s franchise in India and is building a custom delivery network for this brand. It remains to be seen what issues will the company face in expanding Popeye’s and whether they will be able to compete in terms of delivery times with the other food delivery majors like Swiggy and Zomato. Nonetheless, given the strong market position of the company, the future potential of the QSR sector and the introduction of Popeye’s in India, Jubilant Foodworks is a pivotal QSR and food services stock to watch out for.

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