Jubilant FoodWorks Q1 Results: Profit Tumbles 74.3%, Margin Contracts

Jubilant FoodWorks Ltd., the operator of Domino's Pizza and Dunkin' Donuts, saw its first quarter profit decline, missing estimates, as it grappled with high costs and rampant inflation continued to weigh on demand.

The consolidated net profit of the country's largest food service company fell 74.3% year-on-year to Rs 28.9 crore in the quarter ended June, according to a stock exchange filing. That compares with the Rs 80.47 crore consensus estimate of analysts tracked by Bloomberg.

Jubilant FoodWorks Q1 FY24 Highlights (Consolidated figures, YoY)

• Revenue up 6.3% to Rs 1,334.5 crore, as against a Bloomberg estimate of Rs 1,367.78 crore.

• Operating profit declined 9.3% to Rs 275.8 crore, as compared with a Bloomberg estimate of Rs 281.4 crore. 

• Margin at 20.6% against 24.23% on higher expenses, in line with estimates. It was, however, higher by 97 basis points sequentially.

• Total expenses rose 13% to Rs 1,248.74 crore during the quarter.

• Raw material costs rose 10.4% to Rs 323.2 crore during the quarter.

"Our strategy of customer-first and technology forward has started to yield positive results," said Sameer Khetarpal, chief executive officer and managing director of the company.

"Decline in ticket size was arrested, app installs and loyalty enrollments reached a new peak, and we executed efficiently to expand Ebitda margin," he said, adding that he remains confident in the company's strategies to overcome the slower growth phase and emerge stronger out of it.

Domino's revenue from the delivery channel, which comprises 64.3% of sales, rose 8.4% year-on-year. "The growth was order-led, partially offset by a decline in ticket," the company said.

Revenue in dine-in segment, which accounts for 35.7% of sales, was flat.

The average daily sales of mature stores came in at Rs 81,049, up by 2.7% sequentially.

During the quarter, the pizza operator reported a decline of 1.3% in like-for-like sales over the previous year. This marks the second consecutive quarter of decline as price conscious consumers are tightening their belts amid inflation.

Surging food prices have left the low and medium income households with little money to spend on discretionary categories like dining out, while the wealthier continue to spend on items like luxury homes and SUV cars whose sales are touching new highs.

The company opened 30 stores in the country during the quarter.

With the addition of 23 new stores and the entry of one new city, Domino’s has expanded its network strength to 1,838 stores across 394 cities. The company plans to add 200-225 new Domino’s stores in fiscal 2024.

Four Popeyes stores were opened, and the brand entered Manipal and Coimbatore, taking the network tally to 17 across four cities. In Hong’s Kitchen, the total store count stands at 15, two of which were opened during the quarter. Just one new Dunkin' coffee-first stores were opened. Nine out of 21 Dunkin’ stores are now as per the brand's new coffee-first identity.

The enrollment to the loyalty programme–Domino’s Cheesy Rewards–grew by 23.5% versus the prior quarter to 16.8 million and the loyalty order contributed 48% in June 2023. Consumer engagement, according to the company's investor presentation, remains elevated with all-time-high quarterly app downloads at 10 million, up by 22% over the previous year.

Shares of Jubilant Foodworks rose 4.6% on the BSE after the results were declared, as compared with a flat benchmark Nifty 50. The stock fell 5.52% on a year-to-date basis, while it tumbled 13.64% in the last one year.