Building for the long-term

Our success has always been based upon our ability to evaluate the environment in which we operate, look ahead and prepare ourselves to seize opportunities to deliver profitable growth, now and in the future.

We would like to put the spotlight on two of our guiding principles in the journey:

• Delighting consumers with incessant focus on value and innovation.
• Taking a long view and making proactive investments to continuously fortify our operating model.

These guiding principles have held us in good stead in all these years. The JFL operating model is honed by a built-to-last culture and an unwavering financial discipline, which have set into motion a virtuous cycle of profitable growth, while building a unique assemblage of strengths for your Company.

These strengths comprise our resilient and robust pan-India supply chain, digital and data capabilities, business development capabilities and other support functions. The combination of these shared strengths are huge assets for us, which will help us transform into a multi-brand and multi-country food service organisation.

To our mind, the opportunity landscape is so large, that driven by the entrepreneurial zeal, we collectively feel that we have just begun. Take for instance the pizza market. The global pizza market is valued at $120 bn and is growing. Within it QSR is $81 bn. Within it, US alone is $40 bn, while the Indian pizza market is at $0.9 bn and even the total organised QSR market in India is under $2.5 bn. We will therefore continue to make investments for the long-term growth and health of the business.

Performance – Constant Rebalancing

The Company’s performance during the year was a tale of two halves. As the Covid pandemic waned, there was a surge in demand for out-of-home consumption in the first half. However, post the festival season, there was sudden deceleration in demand as rampant inflation started exerting pressure on discretionary consumption.

On the cost side, we witnessed broad-based inflation across categories during the year. To help you better appreciate the impact of inflation on some of our key ingredients, if we index the prices to pre-Covid levels, in FY’23, the cheese price has increased by 40%, flour price by 28%, chicken and paper box prices by 30%. The cheese prices, which were already at a decadal high in the second half of the fiscal year, are expected to remain elevated in the coming quarters as well.

We faced a choice in how to react to these challenges. In this moment, like in the past, we sided with our guiding principles. As consumer’s discretionary income remains under pressure, we are channelising our efforts to pursue order-led growth by further strengthening our value offerings. The launch of a new range of Pizza Mania for example, will help us enhance category recruit and in future we would be able to upgrade them and benefit from higher customer life-time value.

It is important to highlight here that the strength of our sourcing and unique-commissary model lends us the ability to bolster value offerings, without negatively impacting our gross margins. Therefore, even in challenging times like these, we will continue to make investment decisions in the light of long-term considerations, which will help us serve our consumers the highest quality food offerings at affordable price points.

We are delighted to share with you that our largest commissary in Bengaluru will be commissioned in August. The state-of-the-art facility would be able to serve more than 750 stores in the future. All the workstreams to commission another mega commissary in Mumbai next year, are progressing well. The CAPEX for both the commissaries is estimated at Rs. 5,200 million, but their lasting benefits will be realised for decades.

At Rs. 50,960 million, our Revenue from Operations increased by 17.7%. The Domino’s LFL and SSG growth stood at 8.9% and 6.0%, respectively. The EBITDA stood at Rs. 11,592 million, and EBITDA margin at 22.7%. Our Profit after Tax and before exceptional items was Rs. 4,029 million and margin came in at 7.9%.

Our track record of generating strong free cash flow continued in the year. We are happy to share that the Board of Directors of the Company has recommended a dividend of Rs. 1.2 per equity share of the face value of Rs. 2 each amounting to Rs. 791.8 million, subject to shareholders’ approval at the Annual General Meeting.

Strategic Portfolio Management

After a lot of internal deliberations and careful review, we have decided to wind down the operation of our RTC brand – ChefBoss – and scale down the network of Ekdum!. We want to focus our attention and resources on doubling down on Domino’s and scaling up Popeyes, while working on unit economics delivery of other emerging brands – Dunkin’ and Hong’s Kitchen.

Popeyes has received overwhelming response from Indian consumers. In the last one year, nearly one million guests in Bengaluru and Chennai have tried the iconic Popeyes menu, suitably adapted to cater to the diverse taste palates of Indian guests.

In Hong’s Kitchen, we have seen remarkable progress with further enhancement in taste, improvement in repeat rates, increase in orders and record high NPS.

In Dunkin’, during the quarter, we unveiled a new restaurant design in India as part of Inspire brand’s global coffee-forward evolution. The entire brand overhaul reflects our intent to be young-at-heart, go-to coffee destination. The coffee retail category is constantly expanding, and Dunkin’ will continue to innovate fast and will strive to serve the best coffee and bakery products to our consumers.

In Sri Lanka and Bangladesh, we continue to deploy the emerging market playbook for Domino’s with cuisine localisation, offering the best value to consumers, unmatched delivery credentials and best-in-class digital assets. During the year, in Sri Lanka, we managed the business well, despite the prevailing macro-economic scenario, while adding 13 stores and taking the network tally to 48 stores. In Bangladesh, after fully acquiring the local subsidiary, we stepped up the pace of network expansion and enhanced the network to 17 stores.

Jubilant for All

‘Jubilant for All’ symbolises how we work to create enduring value, which delights not only consumers but all the stakeholders in the process through sustained profitable growth. We have tried to depict the subset of such sustainability measures through what goes behind delivering a hot and fresh pizza to consumers in under 20 minutes.

Sustainability is deeply embedded in our multi-stakeholder business model, as a key tenet of generating long-term value. We are delighted to present your Company’s first Integrated Report, along with the Business Responsibility and Sustainability Report. We have also shared the multi-year, time-bound goals, anchored around Food, Planet, People and Communities and Governance. The Sustainability and CSR Committee of the Board is responsible for overseeing and guiding our sustainability strategy, performance and its implementation.

We would also like to welcome Mr. Amit Jain who has joined our Board in July as an Independent Director. He is currently the Chairman of Loreal India and also the Chairperson of Modern Marketing Association(MMA) India. His wealth of experience and knowledge of the consumer sector would be of immense benefit to the Company.

The Board acknowledges that perpetual efforts and continued progress towards enhancing the implementation of sustainability principles is the only way we intend to traverse, while charting our journey of sustained profitable growth.

With warm regards,