Release Date: January 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Jubilant Foodworks Ltd (BOM:533155, Financial) has crossed the milestone of a 2,000-plus store network in India, indicating strong expansion.
- Delivery channel performance is significantly ahead of pre-COVID levels, driven by consumer preference for convenience.
- Highest ever ticket size in the last nine quarters achieved without any price increase in the last six quarters.
- Cheesy Rewards program has seen a 102% year-on-year increase in enrolled customers, now at 21.5 million.
- The newly commissioned Jubilant Food Park in Bangalore is expected to enhance back-end efficiencies with a payback period of four years.
Negative Points
- Observed softer demand post-Diwali and in December, indicating potential volatility in consumer spending.
- Dine-in sales have been under pressure, with a negative like-for-like growth of 2.9% in the last quarter.
- Despite festive season boosts, performance was subdued on non-occasion days.
- Inflationary pressures continue to impact mass discretionary consumption, affecting overall demand.
- The current slowdown appears cyclical, reflecting broader economic challenges and impacting the foodservice industry outlook.
Q & A Highlights
Q: Can you provide more quantitative details on the loyalty program and its impact on market share?
A: Sameer Khetarpal, CEO, explained that the loyalty program has 21.5 million members, with a significant number having earned free pizzas. The program has increased customer stickiness and market share, particularly in the online segment. The frequency of orders has improved, although it has been flat in recent quarters due to a softer demand environment.
Q: How do you measure market share in the pizza category?
A: Sameer Khetarpal, CEO, stated that market share is measured through publicly listed companies' reports, data from aggregators, and internal tracking. Jubilant FoodWorks has gained market share across all these metrics.
Q: What is your assessment of the dine-in segment's performance and future outlook?
A: Sameer Khetarpal, CEO, noted that dine-in has been under pressure globally, with a shift towards delivery. However, dine-in remains significant, especially in Tier 3 and Tier 4 cities. The company is investing in improving the dine-in experience and reimagining stores to drive growth.
Q: Have you considered a cloud kitchen model for store expansion?
A: Sameer Khetarpal, CEO, mentioned that the company prefers the DELCO (delivery and carryout) store model over dark stores. DELCO stores offer better payback and visibility, allowing customers to carry out orders while maintaining low costs.
Q: What is the status of down trading in the pizza category, and how is the premium segment performing?
A: Sameer Khetarpal, CEO, reported that down trading has declined, with the highest ticket size in the last nine quarters. The company has relaunched the Viva Roma range of gourmet pizzas, which are performing well. Efforts are being made to target discounts more effectively and explore price corrections for premium offerings.
Q: How do you plan to expand Popeyes, and what are the financial contours of this expansion?
A: Sameer Khetarpal, CEO, outlined that Popeyes' expansion is based on market demand, store economics, supply chain capabilities, and operational readiness. The company aims to be in the top 30-40 cities within 12-18 months. Financial details will be shared as the store count approaches 100.
Q: Why has EBITDA not returned to pre-pandemic levels despite store expansion?
A: Sameer Khetarpal, CEO, attributed the lower EBITDA to negative like-for-like growth. Had the growth been positive, EBITDA would have naturally improved. The company is focused on driving like-for-like growth to enhance profitability.
Q: What are the criteria for entering new cities with Popeyes, and what is the current financial performance?
A: Sameer Khetarpal, CEO, explained that the criteria include market demand, store economics, supply chain capabilities, and operational readiness. The company is confident in the product and plans to expand to top 30-40 cities within 12-18 months. Financial details will be shared as the store count increases.
Q: How do you measure the success of the Cheesy Rewards program?
A: Sameer Khetarpal, CEO, stated that the success is measured by the positive like-for-like growth in the online channel and increased ticket size. The program has driven customer stickiness and reduced churn rates. The base of customers earning free pizzas is growing.
Q: What is the rationale behind the current store expansion strategy?
A: Sameer Khetarpal, CEO, explained that the expansion is focused on white spaces and new cities. The company has reduced the number of split stores due to lower like-for-like growth. The expansion strategy is driven by demand signals and the need to serve customers effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
