Jubilant FoodWorks Ltd, which operates Domino’s Pizza and Dunkin’ Donuts outlets in India, on Wednesday reported a 1.4% drop in second-quarter net profit as expenditure jumped because of higher rental costs and raw material prices.
Net profit fell to Rs21.6 crore in the three months ended 30 September from Rs21.9 crore a year earlier. Sales rose 13.3% to Rs665.4 crore from Rs587.3 crore in the same quarter a year earlier.
Raw material costs jumped 19.6% and rental expenses rose 19.7%, resulting in a 14.1% rise in expenditure in the quarter, hurting profitability.
Jubilant FoodWorks reported 4.2% growth in same-store sales during the quarter, indicating a recovery in consumer spending. Same-store sales, or sales from stores that were open for at least a year, are a key parameter that indicates the health of fast food companies. Same-store sales in the previous quarter had declined 3.2% year-on-year.
Jubilant’s rival Yum Brands, owner of KFC, Pizza Hut and Taco Bell, earlier this month said same-store sales rose 13% at KFC outlets in India and 6% at Pizza Hut India during the quarter. Yum Brands reported a decline in store-level sales for past 11 consecutive quarters.
“We are pleased to share JFL’s improved performance for the quarter, driven by new product innovations such as the launch of Burger Pizza, positive response on pizza mania extreme and continued investments in restaurants,” Jubilant FoodWorks chairman Shyam S. Bhartia and co-chairman Hari S. Bhartia said in a joint statement.
The firm had sharpened its targeted marketing, they said, and was using predictive analytic tools that helped top-line growth.
“Going ahead, we believe we have a great business that we are very excited about and a very solid infrastructure for continued growth,” the Bhartias said.
During the September quarter, 54% of Jubilant’s online orders came from mobile apps, up from 41% in the previous quarter, the company said in its results statement.
Jubilant added 32 Dominos stores during the quarter, taking the total store count to 1,081, and shut 5 Dunkin’ Donuts outlets.
“Our key strengths of innovation, technology and superior reach across regions, have helped JFL deliver positive results in an environment that is pressured by constrained consumer spends,” said Ajay Kaul, chief executive-cum-whole time director at Jubilant FoodWorks.
“With our ROI-centric approach towards expansion of restaurants for both our brands, we have successfully grown our network at a healthy pace,” Kaul said.
The promoters of HT Media Ltd, which publishes Mint, and Jubilant FoodWorks are closely related. There are, however, no promoter cross-holdings.