Jubilant Foodworks Limited — Q3 FY25 earnings call

Call held 12 Feb 2025

Management summary

Jubilant FoodWorks delivered a strong Q3 FY25, primarily driven by exceptional performance in Domino's India with robust LFL and order growth. Strategic investments in customer acquisition, product innovation, and free delivery led to significant revenue growth, though impacting gross margins. Emerging brands like COFFY showed strong store expansion, while international markets like Sri Lanka also contributed positively. The company remains focused on balancing growth investments with margin improvement.

Highlights

  • Consolidated revenue of ₹21.5 billion, up 56.1% YoY.

  • Domino's India LFL growth of 12.5% YoY.

  • Domino's India order growth of 33.8% YoY.

  • New Customer Acquisition grew by 55.4%.

  • COFFY surpassed 150 store mark in Turkey.

  • DPEU Revenue crossed ₹5 billion, up 9.5% QoQ.

  • Sri Lanka revenue up 65.4% YoY to ₹213 million.

Concerns

  • Gross Margin at 75.1%, lower by 160 bps YoY due to higher food costs, inflation, discounting, and delivery charge waiver.

  • Standalone EBITDA margin of 19.4%, lower by 145 bps YoY.

  • Domino's Turkey LFL growth at -3.2% on a base of 18.9% LFL in Q3FY24.

  • COFFY Turkey LFL growth at -2.6% on a base of 27.7% LFL in Q3FY24.

  • Muted overall demand scenario.

Key financials

  1. Consolidated Revenue 21.5 Bn +56.1%YoY
  2. Standalone Revenue 16.1 Bn +18.9%YoY
  3. Standalone EBITDA 3.1 Bn +10.6%YoY
  4. Standalone EBITDA Margin 19.4% -1.5%YoY
  5. Domino's India LFL Growth 12.5%
  6. Gross Margin 75.1% -1.6%YoY

What they filed

Q1 FY27: revenue up 13.7%, net profit up 6.4% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue1,955 2,151 2,095 2,261 2,340 +20%2,429 +13%2,499 +19%2,570 +14%
EBITDA396 402 392 438 476 +20%484 +20%485 +24%504 +15%
Net profit67 43 49 94 195 +191%73 +70%82 +67%100 +6%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • DPEU Markets (Turkey, Azerbaijan, Georgia)
    7.5 Bn System Sales5 Bn Revenue23% EBITDA Margin (9M FY25)7.2% PAT Margin (9M FY25)-3.2% Domino's Turkey LFL Growth-2.6% COFFY Turkey LFL Growth
  • Sri Lanka
    213 Mn Revenue
  • Bangladesh
    173 Mn Revenue

Guidance & targets

Profitability

  • Gross Margin Improvement Profitability · next two to three quarters · High confidence 100 basis points
    I think internally we are targeting the 100-basis point improvement of gross margin, right, in the next two to three quarters, right, that's what we are planning to do.

    — Sameer Khetrapal

  • Domino's India Pre-Ind-AS-116 EBITDA Growth Profitability · YoY · High confidence mid-teen growth
    Domino's India Pre-Ind-AS-116 EBITDA registered mid-teen growth yoy despite free delivery and growth investments.

    — Sameer Khetrapal

Revenue

  • Popeyes Revenue Revenue · future · Medium confidence ₹1,000 crores
    I have already put in a team that will carry it from here to Rs. 1,000 crores.

    — Sameer Khetrapal

Capacity

  • Popeyes Store Count Capacity · future · Medium confidence 100 stores
    we can open 100 stores as long as we get those 100 locations.

    — Sameer Khetrapal

  • Domino's Store Count Capacity · next three, four, five years' timeframe · High confidence 1,000 stores
    They have a list of 1,000 stores that they want to open whatever in the next three, four, five years' timeframe, right.

    — Sameer Khetrapal

What to watch in Q4 FY25

Gross Margin Improvement

next two to three quarters
Current 75.1% (Q3 FY25)
Target Progress towards 100 basis points improvement

Why it matters

Key to overall profitability and demonstrating leverage from growth investments.

I think internally we are targeting the 100-basis point improvement of gross margin, right, in the next two to three quarters, right, that's what we are planning to do.

Risks & concerns

  • Gross Margin Compression

    medium

    Gross Margin down 160 bps YoY to 75.1% due to higher food costs, inflation, sharper discounting, and delivery charge waiver, viewed as an investment for growth.

    Management acknowledged

  • Competitive Intensity

    medium

    The competitive intensity continues to be strong along with inflationary pressures in the market.

    Management acknowledged

  • Muted Overall Demand Scenario

    medium

    The overall demand scenario is muted, but the company's strategies are enabling it to outperform the market.

    Management acknowledged

  • Hyperinflation Accounting in Turkey

    low

    Turkey's hyperinflation accounting leads to quarter-on-quarter aberrations in reported financials, making 9-month numbers more representative of underlying performance.

    Management acknowledged

Q&A highlights

7 direct, 1 evasive
Dine-in performance vs. delivery Direct
I will not say it is not responding, it is actually responding. Our in-store lunch average weekly orders are highest in the last two and a half years.

Addresses concerns about the effectiveness of dine-in initiatives, with management providing a positive update on recent performance.

Asked by Tejas Shah

LFL recovery vs. margin expansion Direct
See, the overall demand scenario is muted, right? So, I think with that, we have taken four conscious calls to expand ahead of the market to get a market share and acquire new customers.

Explains the strategic trade-off between aggressive growth (LFL recovery) and margin compression, highlighting investments in customer acquisition and value offerings.

Asked by Tejas Shah

Popeyes scaling up and location strategy Direct
I think there is a huge headroom driven by one large competitor in this space. I think it's purely about execution. So, India is a 70% chicken eating market... we just have to find the right location, that's all.

Clarifies the strategy for Popeyes expansion, emphasizing optimal location selection and market potential rather than product market fit issues.

Asked by Tejas Shah

Gross margin trajectory and drivers Direct
I think internally we are targeting the 100-basis point improvement of gross margin, right, in the next two to three quarters... The reason is very simple on gross margin actually, it is, we did not want to lose share, but we have gained share, as you can see from the numbers.

Provides specific guidance on margin improvement and explains the strategic rationale behind current margin levels (market share gain and investment).

Asked by Jignanshu Gor

International business profitability and hyperinflation accounting Direct
Turkey goes through hyperinflation accounting, right. There are a lot of inflation adjustment accounting entries which happen, so quarter-on-quarter we will see some increase, right. And hence Sameer alluded to the nine months number which is more representative on how the underlying performance of their business is.

Clarifies the accounting complexities affecting reported international profits, especially for Turkey, and advises using 9-month numbers for a clearer underlying performance.

Asked by Percy Panthaki

Mature store numbers decline Direct
Yes, Aditya, it always happens. In quarter one we have the highest number of store count. It progressively comes down by quarter four. In quarter one again of FY '26 you will see a higher store count.

Explains the seasonal/cyclical nature of store count additions, reassuring that the reported decline is an expected pattern.

Asked by Aditya Soman

ADS strategy continuation and market consolidation Direct
The growth is definitely muted, right, for the industry and listed players and the large players, to me, are actually doing better than some of the unlisted and smaller medium chains. There is a big question mark on dark stores... And that consolidation opportunity to me is sooner than later.

Management confirms aggressive market share strategy and predicts market consolidation, indicating potential benefits for larger, well-capitalized players like Jubilant FoodWorks.

Asked by Devanshu Bansal

Delivery mix and profitability on own app vs. aggregators Evasive
Yes, I will not answer that question because I am here to serve customers so we refrain from giving mixes.

Management avoids disclosing specific channel mix or profitability differences between own app and aggregator platforms, a key area of interest for analysts in the QSR space.

Asked by Latika Chopra

2 min read 6 chapters

Detailed narrative

Strong Q3 Performance Driven by Domino's India

Jubilant FoodWorks reported a strong Q3 FY25 with consolidated revenue reaching ₹21.5 billion, a 56.1% year-over-year increase, including organic growth of 19.4%. This was significantly boosted by Domino's India, which achieved its highest-ever sales, driven by a 12.5% LFL growth and an impressive 33.8% increase in order growth. New customer acquisition for Domino's India surged by 55.4%, indicating successful market penetration strategies.

Strategic Investments Impacting Margins

The company's gross margin stood at 75.1%, a 160 basis points year-over-year decrease. This compression is attributed to higher food costs, inflationary pressures, sharper discounting during peak periods, and the waiver of delivery charges. Management emphasized these are strategic investments aimed at gaining market share and acquiring new customers, with a target to improve gross margin by 100 basis points over the next two to three quarters.

Popeyes and Emerging Brands Expansion

Popeyes continued its network expansion, with a focus on achieving desired unit economics and payback periods. Management expressed confidence in Popeyes' growth potential, aiming for ₹1,000 crores in revenue and planning to open 100 stores in optimal locations. COFFY, another emerging brand, achieved a significant milestone by surpassing 150 stores in Turkey, positioning itself among the top five cafe brands in the region.

International Market Performance

The DPEU markets (Turkey, Azerbaijan, and Georgia) recorded system sales of ₹7.5 billion, with DPEU revenue crossing ₹5 billion for the first time, marking a 9.5% quarter-on-quarter growth. Despite Turkey's LFL growth being negative at -3.2% (on a high base), the 9-month DPEU revenue reached ₹14.3 billion with an EBITDA margin of 23.0% and PAT margin of 7.2%. Sri Lanka showed significant turnaround with revenue up 65.4% YoY to ₹213 million, driven by same-store sales growth.

Digital and Delivery Leadership

Jubilant FoodWorks continues to leverage its digital capabilities, with nearly 14 million monthly active users (MAU) on the Domino's India app and app installs growing 28.6% YoY to 12 million. The company's rider management platform supported 46,700 monthly active riders in December, enabling 20-minute delivery. This digital and delivery focus is considered a strategic moat, contributing to market outperformance and managing variable peak loads.

Dine-in Performance

Despite the strong focus on delivery, management noted that dine-in performance is also responding positively, with in-store lunch average weekly orders reaching their highest in two and a half years. Initiatives like the ₹99 four-course meal available only inside stores during lunch hours have been successful, leading to customer queues in many locations. The company expects further improvement in dine-in over the next quarter or two.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Consumer Services earnings calls