ValuePickr Forum

Jubilant Foodworks

(Chandragupta) #85

It’s the attitude my friend, it’s the attitude.

Even Tatas came under heavy criticism when they introduced royalty. But at least the Tata name is well known across the country, has some reputation. So they had some takers for their argument.

Jubilant is not Tata, as Mr. Bhartia will discover tomorrow.

(Varun) #86

The royalty notice stands withdrawn.

However, I think the damage has been done. The amount was too small… they could have done it in a better way… they do not withdraw salary. They could have taken salary, performance based… no one would have an issue but royalty for no brand???

If they want to take royalty for Jubilant as a brand then they have to show that they can sell on name of Jubilant. No one outside stock markets know them as Jubilant Foodworks, everyone says Domino’s Pizza… Never heard anyone say let’s eat Jubilant’s Pizza…

Disc: Not Invested

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(bsahni) #87

The intention of Promoter may be not a wrong one but the way they chose to convey is really not appreciated & does not go well with me in specific.

I always have a fascination & ground rule to be associated with Quality businesses with ethical Managements & 80% of my conviction on a business is on the Jockey & in this case it is on Mr Pota, the way he drastically changed the fortunes of Jubilant Foodworks, after his arrival, around 2 years which is clearly visible in past straight 6-8 Quarters.

Within a short span of 8 hrs there comes 2 Press releases to the exchanges which clearly challenges my own conviction.

Business may still do well, no doubt but I prefer to be sleeping peacefully.
Also it demonstrates either the Independent Directors did not do justice initially by questioning the Promoters on this immature & hasty decision making & both the boards (not 1 only)-Jubilant Foodworks & Jubilant Lifescience first approved the decision.

Later for just a meager amount of 8 odd Crs (on FY 18 Consolidated Sales Basis) as a royalty payment proposed to start from FY 20 (i.e April 2019) Promoters realize (after wiping off 850 Crs of MCap in a single day) their mistake & revert the decision by releasing another Press Release to exchanges to at least contain the further damage it would have continued today as well.

They would have done it more transparently by either taking the Salary or may be announcing any Performance Linked incentive or bonus for themselves which would have been well accepted by Markets & would have not raised an iota of credibility loss or doubt in minds of Investors, who were on a selling spree & brought it down during the Market to a level of 13% at one time, with still some recovery at closure.

(parkhi_nazar) #88

Do you think Tata versus Jubilant is the right comparison? Tata is the brand name consumers see, buy, and trust. For Jubilant, the equivalent is “Dominos”. Why should the company pay for the Jubilant name?

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(Chandragupta) #89

Agree to everything you have said, except on one point.

I don’t think promoters need any performance-linked incentives. Those things are okay for professional managers, who have no long term commitment to the company and are vulnerable to poaching by competitors. Promoters already have enough privileges, and if the company does well they are themselves the biggest beneficiaries, more than anyone else. At the most, they may draw a salary as you have rightly pointed out, if they are active participants in the management of the company.

We shouldn’t forget that Promoters’ cost of ownership in the company is a fraction of what outside investors pay. The Dividend Yield– which may be 1-2 % for outside investors could be easily 100 % or more for promoters.

When I analyze a company, I give a low score on Promoter Quality if the promoters are taking home profit linked incentives or ESOPs.

(gautham1) #90

Recently they replaced Coca-cola with Pepsico as their beverage partner. (If I am not wrong, India is the only place where dominion’s has something other than coca-cola as the partner). I noticed something very interesting in a domino’s store a few days ago. Pepsico products in a Coca-cola refrigerator !. I guess these refrigerators are given by the respective beverage companies. I wonder how coke will react if they see this :slight_smile:

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Poor corp governance written all over. Even raw material supply may be a source of promoter making money. They took minority shareholders for a ride in Jubilant industries too.

(Kumar Saurabh) #92

I came across this group while researching on HMVL 2 years back. Some of my posts on HMVL are available on respective thread n few on Hitesh Jee’s page. Was not comfortable with the family group both on wife side as well as husband side (the jubiliant group and shobhna bharitiye group ). HMVL is a classic case study from wife’s kitty (shobhna bhartiye group). No wonder why husband should not show few of his own tricks :grin::grinning:.

(Darkwanderer79) #93
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(Ranga Kiran) #94
(Bheeshma Sanghani, PhD) #95

One can look at the website of Hongs Kitchen at -

(anujg1711) #97

Visited the store of Hong’s Kitchen in Gurugram yesterday, below are the observations.

It is based on a QSR concept.

Ambience is good enough.

Price Point - It is budget friendly.

Location - Is located in a mall facing the main road, easily visible. The theme color (greenish)is really catchy.

Online listing and deliveries - They will also be listed on various food delivery platforms within a week.

Unlike Domino’s they have separate serving style for dine in and take away (nice quality and designs).

Few unique points
Make your own bowl concept (the customer can choose from various options of base, sauce’s, veggies and toppings) is also offered.

They are offering many dishes in their menu, compared to few other QSR Chinese chain with limited menu.

The kitchen has separate stoves for veg and non veg

Other points
Total employee count of the store is between 15-20 and they work in two shifts.





(nil_71) #98

I see a lot of similarity with Subway…

(Chandragupta) #99

This is a very positive development, and realizes the Option Value embedded in the stock price all this while. Chinese has a much wider appeal, so is a better segment to enter into than other categories such as Burgers, Coffee Shops etc. Competition will be primarily against the unorganized sector – the local restaurant round the corner and not Mainland China types, as media reports have wrongly claimed. Margins will be wafer thin, so this will primarily be a volumes game. The challenge for the company will be how to communicate (without explicitly mentioning) that Hong’s Kitchen is “brought to you by the makers of Domino’s Pizza” and this is not just another new Chinese restaurant. Let us see how soon the company scales up. Interesting times ahead!

(Bheeshma Sanghani, PhD) #100

Some reviews as well

While reviews need to be taken with a pinch of salt - in my view a vast majority of Indo-chinese consumed is on the streets because it was born there and the street is where its home is.

If the thesis is taking market share away from the unorganized sector - it is going to be a herculean task and not going to end well in my view.

I think they are replicating the dominos playbook with indo-chinese food and havent changed the format. They should have changed the restaurant format - because that is the root cause for most restaurants failing. A smaller format - 500 Sqft serving a limited menu and large portions at comparable prices to the local street - would have been far better and more suited instead they have gone for a 5000 sqft with an exhaustive menu at a higher price point (relative to street)

The other format that would have had a shot at working is cloud kitchen. Indo-chinese is a perfect match for this format. Given their vast experience with online food delivery, knowledge of local ordering behavior and relations with food delivery partners, it comes as a surprise that they couldnt innovate on the format.

I am happy that they are looking at more categories to get into but its disappointing to see lack of innovation and differentiation.


(AM648) #101

To me this is a bit of a negative, dont forget that payout ratio of Jubilant is pretty low which means that they are like to steer cash away from Dominos to make this expansion. Would have been happier for that capital to continue in Dominos instead of now facing the risk of a new untested format.

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(Vijay) #103

Bakshi’s anti fragility lecture seems apt for Jubilant. The pizza industry no longer may attract the premium pricing as it has already attracted too many to compete for the slice.

Visited a store in Chennai which serves four 5" pizza’s for under Rs. 120. That’s incredible value and undercuts Domino’s pizza mania range which is pretty low on choices. The store I visited (Oyalo) seems to have a chain of such restaurants (both dining and online).

(Bheeshma Sanghani, PhD) #104

Hi @Uservijay

The competition in this space has increased dramatically in the past few years. The move by jubilant to extend the every day value platform to a single pizza instead of two is evidence of that.

Given the competitive intensity maybe its time to re evaluate jubilant. The recent actions by the promoters have certainly created doubt in my mind as to whether they have the best interests of the minority shareholders in mind.

Due to this doubt , I have exited my position completely. No longer comfortable.


(rkoti) #105

Do people pay for pizza or the Dominos brand? There is even more intense competition in the US but the brand is able to do very well there.
The quarterly reports show healthy growth, the delivery pie is expanding and it helps creates bigger market.
Besides competition, are there any other reasons for concern?

(Bheeshma Sanghani, PhD) #106

Not connected specifically to pizzas but to the overall fast food industry.

The resounding success of the Beyond Meat IPO and a read of its prospectus gives you an idea about the fast moving changes occurring in this area. Plant based meat has gone mainstream but the supply side is yet to be fully formed. As the Beyond Meat prospectus indicates - they currently acquire a majority of their yellow peas from Roquette - a french co. You can read more about what it does here.

The broader point is the rapid change in eating habits occurring worldwide nested in the overall movement towards a more natural lifestyle.

The Beyond meats prospectus is a good read

With Regards