JUBLFOOD - Jubilant Foodworks Limited Share Price

During the earnings conference call held on May 20, 2026, management provided an optimistic outlook despite facing near-term headwinds. Key points included:

1. Store Expansion: Management plans to open approximately 230 to 250 new restaurants within the year, emphasizing a shift towards more delivery-focused, smaller-format stores (600-700 square feet) to adapt to changing consumer preferences.

2. Sales Growth Target: The management reiterated its long-term Sales Growth target of 5% to 7%, supported by a strategy to prioritize volume growth over average order values. The average minimum order value was reduced from Rs. 149 to Rs. 99 to attract more customers.

3. Gross Margins: The gross margin improved by 100 basis points to 75.5% for the quarter, attributed to better management of operations, introduction of premium products, and reduced wastage. The management expects this margin expansion to be sustainable.

4. Inflation Impact: Management highlighted multiple cost pressures including energy costs (projected impact of 100-120 basis points on margins), labor inflation due to minimum wage increases across several states, and commodity inflation. They anticipate some margin compression but remain confident in achieving long-term targets.

5. Long-Term Profitability: Management aims for a 200 basis point improvement in margins over the next two years, leveraging growth and operational efficiencies while navigating through current inflationary challenges.

6. Market Share: Affirmation that Domino's has gained market share in the QSR space, evidenced by internal studies and Nielsen data, further supports confidence in ongoing expansion and brand building.

These points reflect a management team that is optimistic about growth potential amid competitive pressures and cost challenges.

Question 1: "If I look at even the 2-year CAGR, there has been a deceleration from 9% to 6% from Q3 to Q4. Can you provide more clarity on this?"

Answer: Yes, the quarter-on-quarter variation can be noise. We focus on our annual growth, which remains around 7%. While dine-in has faced challenges, delivery continues to thrive. A key reason for the decline in average order value was our strategic decision to lower the minimum order value from Rs.149 to Rs.99, which was aimed at expanding market share and acquiring new customers. Hence, I'm not overly concerned about the deceleration from 9% to 6%.

Question 2: "How do you view store additions given the current competitive dynamics?"

Answer: Domino's has effectively gained market share, enabling us to expand aggressively. Our focus remains on maintaining healthy metrics from newly opened stores. Considering current strategies, we plan to open approximately 230 to 250 restaurants this year, mainly focusing on delivery and carryout formats to adapt to market needs.

Question 3: "Can you comment on the trends of discounting this quarter and whether your growth and margin goals can be achieved simultaneously?"

Answer: Growth is our top priority, and we aim for volume metric growth. Lowering order value does introduce headwinds for margins, but since over 50% of costs are fixed, driving growth enhances margin potential. The addition of new brands such as Popeyes and Dunkin' will initially impact margins, but I remain optimistic about sustaining both growth and margins over time.

Question 4: "What are the near-term headwinds you expect?"

Answer: We've acknowledged competition is intensifying. Inflationary pressures are affecting inputs, particularly energy and labor costs. We've had to take calibrated price hikes to manage these, while also optimizing our operations to maintain margins. Our outlook remains cautious yet proactive in addressing these challenges.

Question 5: "What is the expected impact on margin from potential inflationary pressures?"

Answer: We're witnessing significant inflation across energy, labor, and commodities. Specifically, energy costs are likely to exert a hit of roughly 100 to 120 basis points. We're striving to mitigate this through improved operational efficiencies and waste reductions, but we do expect some compression in margins in the near term.

Question 6: "Can you clarify on any rollback of price increases taken in April?"

Answer: There hasn't been a rollback of price increases. Any local variations in pricing are likely due to store-specific discounts or adjustments. Overall, our pricing changes have been well-calibrated and strategically planned after careful evaluation.

Question 7: "Given market dynamics, how do you anticipate performance in the coming quarters?"

Answer: The longer-term goal remains a sales growth of 5% to 7%. We experienced growth in Q1, exceeding Q4's performance. Although there will be near-term margin pressures from inflation, our initiatives are designed to stabilize and improve performance over time.

Question 8: "What does the potential for margin recovery look like in light of inflation?"

Answer: It's challenging to predict the exact duration of margin pressures due to inflation, which is volatile at present. However, we believe that our strategic initiatives will facilitate recovery beyond this inflationary period, allowing us to reach our margin goals over the next two years, including a target of 200 basis point improvement.

Question 9: "What measures are being taken to prevent system downtimes like those during the World Cup?"

Answer: The report of our systems being down is inaccurate. We experienced minimal downtime that was swiftly resolved. Our systems are generally stable, and we're continuously improving our technical infrastructure to avoid any substantial disruptions in the future.

Question 10: "Could you discuss structural margin levers for Domino's in the next two years?"

Answer: Growth through like-for-like performance, improved gross margins via operational efficiencies, and product innovations are our main levers. The expansion of delivery formats and continual renegotiations for better leasing terms are further strategies we are employing to enhance growth and margins effectively.