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Informist, Wednesday, May 14, 2025

By Sagar Sen and J. Navya Sruthi

MUMBAI/NEW DELHI – Jubilant FoodWorks Ltd. is experiencing inflation in some raw materials like cheese, oil, coffee, and flour, but the management believes the overall inflationary environment is benign. "There are a few commodities which have gone up, especially cheese, oil, and coffee. Flour has also gone up, but the (wheat) crop has been really good so expect some of the prices to moderate," the company's management said at a post-earnings call with investors and analysts Wednesday.

"The internal plan is to beat inflation through internal efficiencies, better utilisation of factories, lower logistics cost," the company said. "But (we) do see inflation in manpower, wages. But overall, the inflationary environment is relatively benign because oil prices have been stable, crude oil prices have been stable for a long time. The fuel has been stable. (We) worry less about inflation, what (we) used to two years ago."

According to data released by the government Tuesday, India's headline CPI inflation fell to a 69-month low of 3.16% in April because of a decline in food prices and the statistical effect of a high base. The last time inflation was lower than April's print was in July 2019.

The food services company reported a net profit of INR 494.62 million for the March quarter, up a whopping 93% on year. The net profit for the quarter was higher than analysts' expectation of INR 443 million. Sequentially, the net profit was up 20.5%.

The company's management said, "We are also committed to find ways to expand margins in the coming quarters... see no reason that we can't improve 200 basis points from here."

The Jubilant FoodWorks management believes investing in new brands has been the right strategy and growth will be evident over a period of time. "The drag that you see is largely on account of new brands and we have to invest in new brands. It takes 10-15 years to build a strong, successful brand. Once you do it, there is no looking back," it said.

In terms of new product offerings, the company said it is forced to ration chicken in certain pockets of the country to fulfil demand in other parts. "For chicken wings, chicken poppers, the bite range that we have, and the boneless fried chicken that we have launched, it is exceeding our expectation. Even a product which has been launched just four or five months (ago) is gaining more traction than we thought," the management said.

"We are iterating with options for lunch and we should launch very soon focused on the right set of markets," it added. "You will see the continued pace on product innovation very sharply targeting a certain occasion, meal hour, or set of consumers."

The company is also bullish on the dine-in consumer segment. The management said dine-in has two components--customers who eat on premises and those who come and take away food. Previously, takeaways were bigger than dine-ins, but that trend has been reversed, it said. With free delivery, there is no reason for consumers to visit the store for takeaways. "When some of these get corrected, dine-ins may come back and even surprise us. So we stay very optimistic about dine-in," the management said.

The revenue of the dine-in channel was flat compared to last year, the company said in a investor presentation.

Jubilant FoodWorks has franchise rights for three global brands--Domino's, Popeyes, and Dunkin'--with operations largely in India and also in Sri Lanka, Bangladesh, Turkey, Azerbaijan, and Georgia. The company also operates two of its own brands, the India-based Hong's Kitchen and the Turkey-based COFFY.

In terms of store expansion plans, the company said it will open 280 Domino's stores with a split of 250 in India and 30 in Turkey. "In COFFY, we plan to open 50 cafes and in Popeyes, we plan to open 30 stores," the management said.

On the global side, the management said operations in Turkey are "oblivious" to political changes. "They (Turkey operations) are not concerned about any geopolitical risk, whether it's tariffs or Russia-Ukraine or anything which is happening on the India-Pakistan border. The momentum in the core market and the consumer base in Turkey continues."

For the company's Turkey operations, the management said debt has almost halved from last year with the economy starting to pick up and inflation coming down. "Their cost of borrowing is down and we also look at refinancing options of the Turkey debt locally and hence overall it's a good story on performance... So Turkey will not be sitting on a high cost of borrowing starting this year, which is already a work in progress," it said.

Wednesday, shares of Jubilant FoodWorks ended 1.1% lower at INR 693.80 on the National Stock Exchange.  End

Edited by Rajeev Pai

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