NEW DELHI: Jubilant FoodWorks Ltd (JFL), which runs the Domino’s Pizza and Dunkin’ Donuts restaurant chains in India, on Wednesday announced its foray into fast casual Chinese dining with the launch of Hong’s Kitchen restaurant in Gurugram.
Hong’s Kitchen will be the Noida-based Jubilant FoodWorks’s first own restaurant brand and the third overall in its portfolio of brands. The company operates more than 1,200 stores in 271 cities. Hong’s Kitchen has opened its first restaurant in Eros mall, Gurugram, the company said in a press release.
Chinese food is the second-largest cuisine consumed outside home in India with large organised brands such as Speciality Restaurant’s Mainland China, Asia Kitchen, Azure Hospitality-backed Mamagoto, and Yo! China already present in the market. That apart, scores of local restaurants and street-side vendors sell variations of Chinese meals to Indians.
With this launch, JFL hopes to address the gap between local food stalls and the more pricey food chains serving Chinese meals.
“While Chinese food is the second largest consumed cuisine in the country, there exists a vast gap between street vendors and premium fine-dining restaurants," said Pratik Pota, chief executive of JFL. “Hong’s Kitchen, with its fast casual format, will address this vast, unaddressed market through great-tasting and affordably priced Chinese food that’s customized for Indian tastes."
“Key thing to watch here will be pricing, new store openings, capital expenditure per store, ad spends and delivery. In the first few years, any new chain makes losses. However, Jubilant already has huge economies of scale in terms of sourcing and real estate and hopefully will try to occupy gaps between street food and fine dining offerings," said Abneesh Roy, senior vice-president, Edelweiss Securities. JFL’s move to expand beyond pizzas and donuts comes at a time when the company has seen an improvement in its business. By 2018, the company shuttered half its Dunkin’ Donuts stores in India. In the year before, it spent ₹100 crore in a product revamp for its Domino’s brand. For the third quarter of 2019, the company reported a 46% jump in net profit at ₹96.5 crore. Revenue for the company rose 16.8% to ₹929 crore in the same period.
During the quarter, the company also achieved a break-even for Dunkin’ Donuts.
As of 2017, India’s food services market was estimated at ₹3.38 trillion according to a 2017 research report by Ficci and Technopak. By 2022, the market for food services in India is expected to reach ₹5.52 trillion.
With growing instances of Indians eating out of home or ordering in, analysts who track the sector say there is scope for innovation around food and service in Chinese cuisine. “While a lot of companies participate in the Chinese restaurant market in India, there is always scope to offer better menu and address any convenience loopholes that might exist," said Ankur Bisen, senior vice-president, retail and consumer at Technopak.
Shares of JFL fell by 1.64% to close at ₹1,327 on Wednesday.
The promoters of HT Media Ltd, which publishes Mint, and Jubilant FoodWorks are closely related. There are, however, no promoter cross-holdings.