Jubilant Foodworks

(ishandutta2007) #22

McDonalds east and north franchise partnership with Connaught Plaza Restaurants has been terminated.

The three new proposed contenders are:

  • Westlife Development Ltd-already managing McDonald’s south and west
  • Jubilant Food-Dominos’ and Dunkin Donuts’ franchise.
  • Speciality restaurants-mainland china’s owners.

I think Westlife Development will get the contract as they already do it for south and west but I am curious wouldn’t it be conflict of interest if Jubilant Food gets it as Dominos in someway compete with McDonald.

(Varij) #23

Yesterday macquarie capital & equirus have increased price target on jubilant food based on their channel checks of this quarter.

I think they have also missed one important trick which the whole market is missing-COST SAVINGS. Just look at the remuneration difference (Rs 10 cr)between the new CEO Mr Pratik pota & Old CEO Mr Ajay Kaul. Further there has been layoff in the middle management too. And to add to that the delivery boys are now employed flexibly i.e. part time only during the peak hours in the evening and on the weekends.All this can translate into an EPS increase of Rs 10-Rs 12 which translates into Rs 500-Rs 600 share price even if we give only 50 time EPS .
All n all I think it can be a great play to participate into the great Indian Consumer story!

(ishandutta2007) #24

Where is the 10CR difference that you are seeing. Ajay Kaul’s total compensation was 10Cr that too 6Cr is just stock options?

(Varij) #25

Mr Pratik Pota total compensation is Rs 1.16 cr…
So to be precise the Actual difference is 9.7551-1.1668 crores= Rs 8.5833 crores.

(Bheeshma Sanghani) #26

Results are out


Admirable show however driven by increased efficiencies and better cost management coupled with sales growth.


Another example of a company with an established competitive position and of course a high PE to go along with it.


Their newer pizza crust is quite nice. It is much softer and even the edges are quite soft and edible unlike earlier. I haven’t been ordering Dominos in quite sometime due to Swiggy/Faasos taking up most of my business but I see that they have changed things up and I can vouch for the fact that I am seeing more deliveries in the locality lately.

Apart from the softer crust, they have realised the sweet spot for deliveries and now have relatively cheaper pricing compared to earlier (Medium crust pizzas for 199 vs 299 and above earlier). Faasos almost always had cheaper food in comparison and they have been burning cash and posting losses for years now. So to see that they are able to compete with Faasos at cheaper pricing, with tastier offerings (at just 1% drop in their gross margins) and still improve their EBITDA margin is interesting.

Disclosure: No interest.

(Chirag) #28

As an ex-Dominos customer here are my 2-cents. I am not invested but I hope my comments provide some insight into the mind of a regular pizza eater.

Do note that I will not be focusing on the quality of the pizza, as it can be subjective, but rather only on the price .

My deal with my kid is to get her a pizza once every 2 weeks and few years back Dominos was my goto place. Those were the days when Dominos had amazing offers! Buy 1 get 1 free. 20% off. etc. And it made sense.

Then in the recent years, those deals disappeared. And during the same time, once, my kid commented on their thin-crust pizza as being 'card-boardy". Note that we were regulars and hence could immediately notice the drop in quality.

So we switched from Dominos to Tuscano. (Tuscano is a Italian restaurant in Bangalore). At the face of it one would say, one cannot compare Dominos with a fine dining restaurant like Cafe Tuscano. And that is exactly my point!!! And here is the comparison:

As of today, if I order a large Veg Extraveganza from Dominos then it will cost me 519 Rs (after tax). And similar “rich” pizza from Cafe Tuscano costs me 590 Rs (after tax and after the 10% discount they give for take away orders). For 70 Rs more, we eat a better pizza from a gourmet restaurant.

Things are even more skewed if you consider pizzas from a well rated mid-level cafe like Cafe Pascucci, that serves amazing wood burnt pizza for 25% less than Dominos.

I feel Dominos needs to bring back their “good deals” if they want their old customers to come back!

(ishandutta2007) #29

Do you know how were they able to give such offers yet maintain good margin in past ?
Now they don’t give such offers yet margin has disappered.

(ishandutta2007) #30

Here the bet is not on getting old customers back which I believe is going to be difficult with so many food delevery startups and other pizza restaurants popping up in every metro. But the bet is on its expansion in tier 2 and tier 3 cities. Remember only 10% of indian conumers live in metros. India has about 30 odd tier 2 cities and about 700 odd tier 3 cities(any district headquarter can be considered a tier3) where the choices are limited.

Disc: Invested about 3% of portfolio

(Bheeshma Sanghani) #31

I have a different view on Jubilant . As we all know Jubilant did a product rehaul. In its press release it mentions the key changes -

The improvement to its pizzas include a new soft and tasty crust, more and bigger toppings, more cheese and a new herbier tomato sauce made from imported Californian tomatoes.

These changes are also reflected in the increase in the COGS.

I believe what Jubilant did was increase the “Umami” quotient in its pizza. Umami is the fifth basic taste after sweet, salty, bitterness and sourness ( there are only 5 known basic tastes disovered so far).

Umami is responsible for the savory or meaty feeling one gets which would biologically not be possible without the presence of gluatamate sensing receptors on our taste buds which respond to only gulatamic acid present in the food consumed. We all know MSG - Monosodium Gluatamate.

Umami was discovered in 1907 by a japanese scientist.

The foundation of pizza is tomato and cheeze ( if aged better ). Both these are one of the few ingredients that contain very high amounts of glutamate. Combining it with other ingredients containing high amounts like mushroom one can control the amount of Umami.

As unlikely it is both Tomato and Cheeze share a flavour compound called 4­methylpentanoic acid which allow them to pair effectively to deliver Umami.

Please note that mozarella cheeze relatively contains low glutamate compared to other cheeze and hence mozarrela is conspiciously reduced and in some cases completely absent in the new product rehaul.

The food scientists at Jubilant have done their research well. The big insight is that Pizza is essentially a mechanism to deliver Umami effectively.



(Bheeshma Sanghani) #32


Dominoz Overhaul

(Bheeshma Sanghani) #34


Mixed opinion on whether its the right move. My sense is that they need a Chief Food Scientist not a Chief Digital Officer. Chief technology officers steeped in the startup & entrepreneurial culture do more harm than good in my view. I hope they scope out his role properly.

(ishandutta2007) #35

Dominos is loosing market share to the food delivery startups(like zomato, foodpanda, justeat, tinyowl, fasoos etc). Inferior technology is one the reason for that. This move may be to combat that.

(Bheeshma Sanghani) #36

(Bheeshma Sanghani) #37

(aashish2137) #38

Jubilant has more than doubled in the last 1 year. While I don’t take this away from the Company, the valuations are way beyond the competitive landscape that Jubilant operates in. Remember, a tiny mistake by lazy/ disgruntled employee anywhere in the country will take a massive hit on the brand value and it is very difficult to salvage that. Take the case of CCD employee slapping a customer or Nestle maggi fiasco.

In addition to that, QSR is full of start-ups which offer a varied menu with similar delivery time as Dominos/ Dunkin. On top of that, CPRL has agreed to resume operations of all McDonalds it closed last year.

What is Jubilant’s USP here? I am a potential Jubilant customer and in terms of food and service, I prefer locally made thin crust pizzas and Burger King over Dunkin. The only time I prefer ordering from Dominos/ Dunkin is when we are working late at night and need to order something that we can eat on our workstations.

(Bheeshma Sanghani) #39

Good set of results from Jubilant - growth on all parameters esp SSG which up by 17.8%.


(Bheeshma Sanghani) #40

Please find enclosed herewith Press Release dated March 6, 2018 titled "Jubilant FoodWorks announces Joint Venture with Golden Harvest to launch