Jubilant Foodworks —which operates Domino’s restaurants in India, posted revenues of `5,654 crore in FY 2024 and expanded the pizza chain’s footprint to 2,000 stores across 421 cities — might have a problem in its hands. And they go by the moniker homegrown upstarts.
Analysts say local pizzerias and regional chains now constitute over 30% of the `8,300-crore pizza market in India. Five years ago, that figure was below 15% and these small and regional pizza players are gaining share by eating into the share of bigger rivals.
Today, the pizza market has more than 15 players that have close to 100 outlets each in regional clusters. Some of them, like La Pinoz, have more than 600 outlets and many of them are opening new outlets with local franchisees. On their part, these franchises are growing in order value by piggybacking on aggregators such as Swiggy and that is hurting Domino’s. “Earlier, pizza as a category was seen as a premium play versus other fast food categories in terms of profitability and ebitda margins, but now that is not the case,” says Karan Taurani, senior vice-president and research analyst at Elara Capital, adding that the company could invest enough to devise its own fleet.
Indeed, in a recent interview to FE, Sanjay Purohit, group CEO & whole-time director, Sapphire Foods, a franchisee for Pizza Hut in India, had said competitor intensity was hurting Pizza Hut sales.Also as a fast food rival points out, the pizza market appears to be mirroring a trend apparent in the fast-moving consumer goods industry in general, with food inflation and the need for more options driving consumers to cheaper and new alternatives. “Now that these local operators are piggybacking on aggregator apps such as Swiggy and Zomato, the benefit of fast delivery has largely been diluted,” Taurani says.
The battle continues
But Domino’s is the largest fast food chain in India for a reason. It is trying to fight out competition by cutting delivery time from 30 minutes to 20 and by adding new stores with pre-Covid aggression. Sameer Batra, president and chief business officer, Domino’s India says that in the medium-term the company will multiply its store count by two till it reaches the magic figure of 4,000 outlets. “We believe we have the opportunity to do so, especially because outside of the US, India is Domino’s’ biggest market,” he says.
The company is going whole hog, introducing the brand to as many tier-2, 3 and 4 cities as possible before new categories such as fried chicken gather pace. “We’re in places such as Dadri, Sultanpur, and even Budaun along with several spots in Bihar and we have seen strong success in these stores as people like to come and dine in to celebrate special occasions,” Batra says. He emphasises that the pizza chain’s offerings are priced for every audience group — from a plain vanilla pizza starting at `49 to a gourmet one priced around `900.
But how much pizza can you consume? As per Batra’s estimates, food services in the country represent a `41-trillion industry, of which `1.2 trillion is organised. Of the `1.2 trillion, pizza constitutes only `8,300 crore, and Domino’s accounts for a majority of this chunk. “Our job, thus, is not to gain market share but to expand it. We have to take pizza to a large number of people, and have them eat it from just three times a year to at least four,” he says.
To amplify its efforts, the company launched a rebranding exercise some time back complete with a new slogan (“It Happens Only with Pizza”), new packaging and by rolling out new ideas such as a four-course meal for `99, free delivery on even the smallest orders and heart-shaped pizzas on Valentine’s Day. The company even had special offers during the recently concluded Indian Premier League for people stuck at home and says it received a “strong response and didn’t end up cannibalising its outdoor sales”.
That apart, the brand has renewed focus also on the quality of ingredients to be one-up on local competition. Batra says Indian consumers will never compromise on food, especially if that item is patronised by younger members of a family. “We have the best cheese, don’t use preservatives, and keep all our food antibiotic-free. Quality is critical,” he says. The company gets around 68% of its revenue from delivery and 32% from dine-in and takeaway so it is working to expand its 20-minute home delivery offering, first rolled out in Bengaluru, to the rest of the country. “This also ensures that the quality of the pizza is better and it is served piping hot to the customers,” Batra sums up.