Jubilant Foodworks, which operates the country’s largest pizza and restaurant chain, said it expects safety concerns to drive consumers more and more towards bigger brands as it prepares for a major expansion over the next two years.
The company said it will plans to open at least as many stores in the current financial year as it did last year, and short of any major flare-up in COVID-19, will go well beyond last year’s number.
The chain added 134 new Domino’s restaurants in the year ended March, but also closed 109 existing ones, mostly due to the impact of COVID-19 and long-term viability considerations.
It said it would like to go beyond the 134 figure in the current year, and in fact faces a ‘problem of plenty’ as far as opportunities for new stores are concerned due to rising demand for home-delivered food.
At the end of March, the company had 1,360 Domino’s outlets, which handle more than three quarters of all the pizzas delivered in India.
There are Domino’s outlets in 293 towns and cities in India. At the same time, pointed out CEO Pratik Pota, there are 700 cities with a population of 1 lakh and above in the country.
Even a market like Bangalore, where the chain already had a whopping 100 outlets as of three years ago, has seen a 15% increase in store-count since then, he pointed out.
“There is significant room for us to grow Domino’s stores in existing markets — metros, Tier 2 towns and where we have 1 or 2 stores,” Pota pointed out, adding that new towns too beckon the chain. “We entered eight new markets last year and we believe that there is opportunity for us to enter many many more towns.
“There’s also room for us to expand our network in channels — on education campuses, travel and tourism etc. Therefore, the runway we see for Domino’s in the country is very very strong. We plan, therefore, to grow our network aggressively in the next few years.”
Jubilant Foodworks has been seeing strong growth in demand for its home-delivered pizzas over the last one year as traditional restaurants and outlets remain shut. It is also, by some margin, the most affordable brand in the pizza market.
The company’s total sales rose 15% during the first three months of 2021 compared to Jan-Mar 2020, with delivery sales up 27% and takeaways up 74%. This is despite a 33% fall in dine-in sales.
Even during the peak of this year’s lockdown in May, the company saw a 47% growth in delivery sales compared to pre-COVID times, even though takeaways were down 44% as customers could not walk into outlets due to restrictions.
NEW BRANDS
Buoyed by its success in the pizza segment, Jubilant Foodworks has been trying to establish itself in other areas.
An attempt to diversify into donuts, with the help of American brand Dunkin Donuts, has not yielded the kind of success that many expected. The company is also trying to expand in the Chinese food market with Hong’s Kitchen.
However, Jubilant Foodworks is now focusing on two slightly less exotic segments — chicken and biriyani.
Pota said EkDum — the biriyani chain launched around six months ago — and Popeyes, the chicken franchise from the US, are expected to contribute strong growth over the next two years.
Chicken accounts for around two thirds of the total meat consumption in India, and the company estimates total market at more than Rs 4,000 cr. More importantly, it is growing at a mouth-watering 17-18% every year.
However, unlike the pizza segment, the market for chicken already has well-entrenched players, including KFC, McDonald’s and a host of local brands and chains.
But the company is banking on some disruptive and innovative marketing from its US partner Popeyes to crack open the market, and will also leverage its learnings from the pizza business, especially given that it will also be a delivery-focused model.
“Popeyes has disrupted the US market on account of their innovation, and very very stand-out digital marketing,” Pota explained, calling them thought leaders in the category.
“Our partnership with Popeyes will help us build a large, profitable and rising business in India and South Asia and could become a very important engine of growth for us in the future.”
Pota, however, refused to give any projections on store openings: “We intend to open the first store this financial year and scale up the network over the next two years.”
He said that the company has an agreement with Popeyes for opening a certain number of stores. “But you know from our Domino’s experience that that ends up being the minimum threshold,” he pointed out, speaking at an investor event. “We are aggressive about store expansion and therefore that number ends up being just a working number.
“We’ll be building the network out aggressively, after proving the model and making sure that we have the right [] and economy established on Popeyes.”