JUBLFOOD - Jubilant Foodworks Limited Share Price

During the Q1 FY '26 earnings call, management expressed a positive outlook for Jubilant FoodWorks, highlighting strong performance despite a challenging demand environment. The management stated, "We expect the demand environment to improve quarter-on-quarter going forward."

Key forward-looking points included:

1. Store Expansion: The company added 71 net new stores in the quarter, increasing its total to 3,387 stores across its operating markets. This expansion aligns with its long-term strategy and reflects confidence in brand performance.

2. Financial Performance: Consolidated revenue for the quarter was INR 2,260 crores, marking a 17% year-on-year growth and a significant like-for-like growth of 11.6% for Domino's. Additionally, group system sales reached INR 2,671 crores, driven by strong consumer engagement.

3. Profitability and Margins: The pre-Ind AS EBITDA margin improved year-on-year, and consolidated PAT grew by 59.8% with strong profitability reported in the Turkey business, which generated INR 519 crores in revenue with a 9.4% PAT margin.

4. Innovation and Product Offering: The success of new product launches, such as Lunch Feast and Big Big Pizza, contributed to consumer engagement. Management noted a fantastic response to these offerings, emphasizing continual menu innovation.

5. Digital Engagement Growth: The digital ecosystem saw 15 million monthly active users, up 21.5% year-on-year, with loyalty members increasing to 37 million, a 48.6% growth rate, showcasing the effectiveness of their digital strategy.

6. Market Confidence: Management reiterated their commitment to operational efficiencies, focusing on cost reductions and improving long-term value delivery, stating they are on a path to capture further market share while maintaining quality and affordability for consumers.

Overall, management remains optimistic about the company's performance trajectory, emphasizing disciplined execution, innovation, and growth readiness.

1. Question: "What is really holding us back from taking a price hike now?" Answer: Yes, Percy, calibrated price increases are occurring in select areas. We prioritize growth and penetration to build a strong store franchise. Currently, our order growth is slightly outpacing our like-for-like growth in value terms. This is the time for throughput expansion, and while I receive many proposals for price hikes, we'll trigger them strategically when the timing is right.

2. Question: "How has customer behavior changed for those enrolled in the loyalty plan?" Answer: Our loyalty asset growth is impressive, with increased frequency in orders. Customers earn free pizzas after six purchases, and those who are loyal see significant engagement. I can share qualitatively that loyal customers, who order more, are driving higher average order values, confirming the effectiveness of our loyalty initiatives in enhancing engagement and retention.

3. Question: "How do you think about LFL growth hitting high bases in upcoming quarters?" Answer: Yes, bases are important. However, we've driven double-digit growth through innovation, digital investments, and operational excellence. While we'll face base effects, our focus is on penetration and maximizing asset utility. We expect to maintain growth as we're not solely reliant on base effects due to multiple strategic factors in place.

4. Question: "What is driving the dine-in versus delivery divergence?" Answer: The trends show a global shift towards home dining, exacerbated by COVID-19. Ease and value in delivery are key drivers. While our on-premise growth combines both dine-in and takeaway, dine-in has seen a resurgence. Our customer offerings, such as value meals, appeal to both dine-in and takeaway customers, helping drive growth in both areas.

5. Question: "Can you share thoughts on the slower pace of Popeyes store additions?" Answer: The slower pace in Popeyes store additions is an aberration. We're targeting the right locations and have opened stores in Mumbai, signaling healthy pipeline growth. Our strategy for Popeyes focuses on delivery infrastructure and team building, aligning with our longer-term growth objectives as we aim to scale effectively across key regions.

6. Question: "What can you tell us about gross margin decline in recent quarters?" Answer: The gross margin decline is due to strategic launches, such as Big Big Pizza, which exceeded our expectations. Extended promotions during the IPL also contributed. We're proactively adjusting pricing strategies, particularly in chicken products, while focusing on operational efficiencies to improve gross margins moving forward.

7. Question: "What is the expected impact of technology investments on profitability?" Answer: Our technology investments aim to improve operational efficiencies and enhance gross margins through smarter pricing and targeted customer engagement. While the investments will affect depreciation, they will streamline store operations, leading to better capital productivity and improved gross margin performance in the medium term.

8. Question: "What updates can you provide on Popeyes' progress and profitability?" Answer: We've made substantial progress with Popeyes by focusing on team building, delivery logistics, and unit economics. We're enhancing marketing efforts and refining our core value proposition. The advancements in our execution and delivery infrastructure are setting the stage for growth, and we're optimistic about profitability improvement as we expand.

9. Question: "Can you discuss the potential reduction of the drag from emerging formats on overall margins?" Answer: Yes, we intend to significantly reduce the drag on margins from emerging formats, mainly Popeyes, within the next 12 to 18 months. We're focusing on improving unit economics and stopping unproductive expansions while refining our strategies to yield a more favorable impact on overall profitability.