Jubilant Foodworks regaining appetite for expansion

Firm to continue with store additions as focus shifts from revival to growth

Jubilant Foodworks (Jubilant), which runs the Domino’s chain of stores, signalled a recovery in its December quarter results, with revenues back at pre-covid levels.

Led by an uptick in convenience sales, the company’s revenues came in better than estimates.

The sharp 64 per cent uptick in takeaway and 18.5 per cent growth in delivery business gave a fillip, while dine-in sales continued to be sluggish, recording just 41 per cent recovery.

The company highlighted the restriction in capacity at 50 per cent. The management believes that the removal of restrictions and normalcy would inevitably lead to higher dine-in sales, going ahead.

Jubilant continues to outperform its closest listed peer, Westlife Development, which operates the Mcdonald’s restaurant chain.

While Jubilant’s revenue growth was little changed compared to the year-ago level, Westlife had reported a 25 per cent decline over the year-ago quarter.

Though the recovery helped the company report an improvement in operating profit margins, which were up 243 basis points (bps) year-on-year (YOY) to 26.4 per cent, this was lower than estimates.

Margins were 30 bps lower than the September quarter, given the increase in food inflation and dairy prices. Input cost inflation is expected to persist in the near term.

In addition to this, employee costs rose 6 per cent YOY and surged over 31 per cent on a sequential basis, given the order volumes, increased headcount in the technology segment, as well as special incentives to employees.

The company highlighted that at 7.4 million, it had its highest application downloads in a quarter and has now launched a hindi version of the same.

In comparison to the muted store additions over the last three quarters, the company added 50 more outlets in the quarter, taking the total to 1,314 units at the end of the quarter.

Jubilant indicated that it would continue to increase the pace of additions going ahead, as it shifts focus from recovery to growth.

While the stock corrected by 2 per cent following the announcement of results, it has gained 23 per cent over the last three months. Given the recovery and growth plans, investors with a long-term horizon can add the stock to their portfolios on dips.