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Jubilant FoodWorks to pump in Rs100 crore in Domino’s Pizza

LiveMint logoLiveMint 08-08-2017 Sounak Mitra

New Delhi: Jubilant FoodWorks Ltd, which operates Domino’s Pizza and Dunkin Donuts outlets in India, on Tuesday said it will spend about Rs100 crore to refresh products for Domino’s Pizza chain, change its packaging and go for a new marketing campaign in the ongoing financial year 2017-18.

As part of the product refresh, Domino’s will make pizza using softer crust, add more toppings and more cheese. It has also changed the sauce to a new one which is made from imported Californian tomatoes with added herbs, the company said in a statement.

This is the biggest ever upgrade for Domino’s in India since the American pizza brand entered this market in 1996.

Jubilant FoodWorks had, in early 2017, said the company will work on a new strategy to drive sustainable, profitable growth. As part of the strategy, the company wanted to cut costs, improve products offering, add more value-for-money products and make customer experience better by using technology.

“We believe that the vastly improved product will help drive frequency among existing customers as well as attract new ones and, thereby, expand the Domino’s franchise and help growth in the market,” said Pratik Pota, chief executive officer, Jubilant FoodWorks.

Following the announcement, Jubilant FoodWorks’ shares jumped 5.4% to close at Rs1,333.25 apiece on BSE on Tuesday.

In the past few quarters, Jubilant FoodWorks has shut down unprofitable stores to improve profitability. In the April-June 2017 quarter, it closed down five Domino’s outlets and added 13 new ones, taking the total store count to 1,125. “We will continue to reduce inefficiencies and shut down unprofitable outlets,” Pota said.

The new strategy has already started showing results. In the quarter ended 30 June 2017, Jubilant FoodWorks reported a 6.5% growth in same-store sales—highest in two years. Same-store sales is a measure of the revenue growth at outlets that have been open for at least a year.

During the quarter, the company’s operating revenue grew 11.5% to Rs678.8 crore from Rs608.9 crore in the same period in 2016-17.

For Dunkin Donuts, said Pota, the company plans to cut down losses by half in 2017-18 and reach the break-even point in 2018. Jubilant FoodWorks currently operates 55 Dunkin Donuts outlets.

Not just Jubilant FoodWorks, other companies with quick service restaurants chains in India have shown good growth during the April-June quarter.

Mumbai-based Westlife Development Ltd, which operates the American fast food giant McDonald’s outlets in south and west India, registered a 8.7% growth in same-store sales in the quarter ended 30 June 2017—the highest since the quarter ended 31 March 2016.

Yum! Brands Inc, the fast food company that owns KFC, Pizza Hut and Taco Bell, last week said its system sales in India grew by 9% for KFC and 8% for Pizza Hut in the quarter ended 30 June 2017. This is the fourth quarter in a row the company has reported growth. Yum! measures growth through system sales growth, a similar metric like same-store growth that is determined on sales at outlets that have been open for at least a year.

The promoters of HT Media Ltd, which publishes Mint, and Jubilant FoodWorks, which runs Domino’s, are closely related. There are, however, no promoter cross-holdings.

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