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Jubilant Foodworks Has A Problem: Buyers Aren’t Digging In
Domino’s Pizza chain added 23 new restaurants in the quarter – the lowest in 20 quarters.
07 Sep 2016, 08:58 AM IST 
An employee takes a customer’s order at a Domino’s Pizza outlet, operated by Jubilant Foodworks Ltd. (Photographer: Prashanth Vishwanathan/Bloomberg)
Jubilant Foodworks reported disappointing quarterly earnings for the first quarter of the financial year 2016-17. Its revenue grew 6.6 percent to Rs 609 crore but net profit declined 31 percent to Rs 190 crore. So what went wrong this quarter?
The absence of any pick-up in discretionary demand put the company’s financial performance under pressure. This is clearly evident in two data points.
- Firstly, the company’s same store sales contracted by 3.2 percent, the first decline in 6 quarters.
- Secondly, the Domino’s Pizza chain operated by Jubilant Foodworks, added 23 new restaurants in the quarter, which is the lowest in 20 quarters.
Dunkin Donuts, another chain operated by Jubilant, still has a negligible contribution to its revenue. And so, it comes down to the pizza business to drive growth at the company in the foreseeable future. If Domino’s Pizza store expansion is slowing down, won’t investors question the company’s growth prospects?