Jubilant FoodWorks Limited Q4 FY22 Earnings Conference Call Insights

Key highlights from Jubilant FoodWorks Limited (JUBLFOOD) Q4 FY22 Earnings Concall

Management Update:

• JUBLFOOD said it opened the highest ever 80 new stores in a quarter for Domino’s India and entered 17 new cities, thereby enhancing its reach to 337 cities. The company added that it intends to continue with this new phase of network expansion and plan to open around 250 new stores in FY23.

• Business in Sri Lanka, despite challenging macro and high inflation, JUBLFOOD registered system sales growth of 80.6% during 4Q22 and opened 3 new stores. In Bangladesh, system sales grew by 44.5% and opened 1 new store.

Q&A Highlights:

• Nihal Jham from Edelweiss asked about the recovery in the dine-in and the delivery channel separately for 4Q22. Pratik Pota CEO said the company had a strong recovery and strong growth in 4Q22. The growth in delivery was on the back of a strong order growth. In dine-in, JUBLFOOD saw a strong and sustained growth and saw a sequential improvement.

• Nihal Jham from Edelweiss asked about the 2-3 key factors to be part of the new CEO’s KRA. Hari Bhartia Co-Chairman replied that the company has built a very strong digital backbone, and want to continue to build on that. So one of the agenda for the new CEO would be to focus on multi-brand, multi-country approach, but bring technology to solve productivity, and use digital to have better interaction with customers.

• Vivek Maheshwari of Jefferies asked about the demand environment in the context of macro high inflation. Pratik Pota CEO replied that as of now, JUBLFOOD recognize that there are inflationary pressures, but the company is not seeing it yet translate into any constriction of demand.

• Vivek Maheshwari of Jefferies asked if the new stores opened in FY22 of 230 stores had any impact on margins in these inflationary times. Pratik Pota CEO replied that the company has not seen a material impact on margins of the network that it is expanding.

• Vivek Maheshwari of Jefferies asked that being lost time due to COVID, if JUBLFOOD is seeing a material change in the store expansion trajectory in brands beyond Domino’s in next 1-2 years. Pratik Pota CEO replied JUBLFOOD is choosing to prioritize both Domino’s and Popeyes for network expansion in FY23. For Hong’s Kitchen and Ekdum also JUBLFOOD is planning to increase brand awareness and unit economics respectively.

• Percy Panthaki from IIFL asked about ad spend as a percentage of sale for FY22, with it being higher than normal for FY21. Pratik Pota CEO said that ad proportion was higher than avg. in FY21, which got corrected in FY22. JUBLFOOD does not expect to have any reduction in marketing spend in FY23.

• Percy Panthaki from IIFL enquired that in Popeyes, how many stores does it expect by the end of FY25. Pratik Pota CEO replied that without putting a target for FY25, in the medium term, JUBLFOOD expects Popeyes to have at least between 250 to 300 stores, and it will have a national presence in the medium term.

• Percy Panthaki from IIFL asked about overall company margins for FY23. Pratik Pota CEO answered that the company does not expect to have any impact on margins in FY23 on a trend line basis.

• Latika Chopra from JP Morgan asked about inflationary trends on wage, raw material and rental. Pratik Pota CEO said that the company is seeing inflation trends continue in 1Q23 as well on commodities. JUBLFOOD is seeing some pressure on labor and on manpower, nothing that is unmanageable. On rentals, JUBLFOOD is yet to see material pressure on rentals.