JUBLFOOD - Jubilant Foodworks Limited Share Price

In the Q4 FY'25 earnings call, Jubilant FoodWorks management provided an optimistic outlook. They projected continued aggressive growth for Domino's and their newer brands like Popeyes and COFFY. The management reported a record achievement in group system sales nearing $1.1 billion, with over 230 new store openings in FY'25, resulting in a total of 3,316 stores across their network.

Key forward-looking points included:

1. Revenue Goals: Consolidated revenue for FY'25 reached Rs.8,142 crore, with the standalone revenue for Domino's India at Rs.6,105 crore, reflecting a 14.3% increase year-on-year. The management emphasized targeting further revenue enhancements.

2. Margin Expectations: Management committed to bridge the margin gap, aiming for a potential 200 basis point EBITDA improvement over the next three years, primarily driven by operational efficiencies and scaling back investments in less profitable brands.

3. Store Expansion: Plans include opening 250 new Domino's stores in India and 30 in Turkey for FY'26, alongside 50 new COFFY cafes and 30 Popeyes outlets.

4. Customer Engagement: They highlighted successful initiatives like free delivery and menu innovations which have spurred customer acquisition, leading to a significant uptick in new customer bases. They noted record high customer acquisition rates and improvements in repeat orders.

5. Competitive Strategy: Management stated their structural focus on enhancing delivery capabilities, exploring new menu options, and optimizing operational efficiencies through technology.

Overall, management projected robust growth based on their clear strategies and the structural advantages they believe will fortify their market position.

1. Question: What is your outlook from an industry standpoint, and your ability to gain market share as we head into FY '26?
Answer: I believe our structural focus on fast delivery and menu innovation will allow us to continue gaining share. We've expanded from four regions to seven and increased our store openings. With our primary market being largely unorganized, our focus on services like 20-minute delivery allows us to penetrate deeper. Thus, I'm optimistic about our growth trajectory while staying cautious about overall demand sentiment.

2. Question: Are you optimistic about the sustainability of dine-in growth?
Answer: Yes, I remain optimistic regarding dine-in growth. We've audited 500 dine-in-heavy stores with high customer satisfaction scores. Customer visits are increasing, especially during lunch, thanks to value offers. The dine-in has turned a corner as we focus on customer experience and store design, and improvements in product offerings should return diners back to our locations.

3. Question: Can you explain the gap between Domino's India and the standalone margin? What's the plan to bridge this gap?
Answer: The gap arises mainly from investments in emerging brands, particularly Dunkin' and Hong's. We've postponed expansions in these brands to focus on Popeyes, expecting to halve the negative impact over the next couple of years. These changes should improve margins, so we're confident in the trajectory moving forward.

4. Question: What are your thoughts on the HCCB transaction and its impact on Jubilant FoodWorks?
Answer: My passion remains in the food business, and we see growth opportunities at Jubilant FoodWorks. Funding for new investments has largely been secured, and details will be shared in due time.

5. Question: How do you view margin recovery and peak margin definitions?
Answer: The last peak margin around 26% isn't sustainable. We focus on growth rather than stressing margin expansion, which largely comes from operational efficiencies. I believe we can improve margins by at least 100 basis points moving forward.

6. Question: How do you evaluate potential geopolitical risks to Turkish investments?
Answer: We view markets separately and are seeing growth in Turkey regardless of geopolitical risks. The country's consumer base continues to thrive, showing solid performance with high profitability. I'm not concerned about external factors impacting our growth there.

7. Question: How do you plan to balance delivery costs against competitive pressures?
Answer: Delivery costs are indeed rising, but we have advantages like our own fleet, which leads to higher deliveries per hour. We strive to improve efficiency and leverage technology to manage costs effectively while ensuring service quality remains high.

8. Question: What is the plan for opening Popeyes stores in FY'26?
Answer: We aim to reach close to 100 stores and are focusing on marketing investments. We've planned to open 30 stores next year, with a strong geographical focus on North and South India, ensuring each store helps to build daily sales effectively.

9. Question: What is your guidance on same-store growth (SSG) for FY'26?
Answer: We typically refrain from providing specific SSG guidance, but I'm confident about our strategy's momentum and market position. While base effects will influence numbers, metrics like customer acquisition rates suggest we will continue to grow.

10. Question: What are the anticipated inflationary pressures on commodities like cheese and labor?
Answer: We expect inflation, particularly in cheese, oil, and coffee prices. Still, our plan involves covering costs through operational efficiencies, and we feel manageable inflation rates going forward, especially as some commodity prices stabilize.