Domino’s India franchisee Jubilant FoodWorks on Friday posted a near twofold growth in its June quarter profit to Rs 56 crore despite food inflationary pressures. However, the numbers still came in below the Street estimates of Rs 65 crore.
Q1 revenue rose nearly 45% year-on-year to Rs 1,933 crore, ahead of Street estimates of Rs 1,608 crore, as the retailer offered value meals to shore up topline.
High food inflation has prompted consumers to cut back spending on eating out, considered discretionary in nature. Retail inflation, which has hovered around 5% throughout the June quarter, has also put pressure on quick service restaurants (QSRs) owing to an increase in input prices. The company’s costs in Q1, for instance, rose 34% y-o-y as prices of essential ingredients such as vegetables, chicken and cheese increased sharply.
Despite this, the retailer managed to grow earnings before interest tax depreciation and amortisation (Ebitda) in Q1 by nearly 39% y-o-y to Rs 383 crore, ahead of Street estimates of Rs 330 crore for the period. But Ebitda margins declined 90 basis points to 19.8% in Q1 versus 20.7% reported a year ago.
To spur overall demand, Jubilant offered free home delivery and value meals such as pizzas priced at Rs 99 in Q1. The initiatives coincided with the holiday season as well as cricket tournaments such as the annual Indian Premier League (IPL) and the T20 World Cup, which were held during the quarter.
The retailer’s like-for-like sales — a key same-store sales metric — at its Domino’s stores grew 3% versus a decline of 1.3% in the year-ago period.
Burger King’s India operator Restaurant Brands Asia has posted a narrower first-quarter loss as offers and discounts helped shore up earnings. Sapphire Foods and Westlife FoodWorld, which run Pizza Hut and McDonald’s outlets, have reported a bigger-than-expected decline in profit amid weak demand.
