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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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.
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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 
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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.
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 
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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.
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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!
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Some reviews as well
https://www.zomato.com/ncr/hongs-kitchen-sector-49-gurgaon/reviews
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.
Best
Bheeshma
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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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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).
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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.
Best
Bheeshma
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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?
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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.
https://www.roquette.com/the-pea-in-motion/
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
https://sec.report/Document/1655210/000162828018014471/beyondmeats-1.htm
With Regards
Bheeshma
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FCB Ulka bags the creative duties for Dominos Pizzas.
https://www.exchange4media.com/announcements-news/fcb-india-bags-dominos-creative-duties-96551.html
Excellent data, and thanks for it. But one has to interpret with care.
Given that aggregators are a recent concept, data is bound to show Domino’s losing relative market share in searches, especially till the aggregators reach a “steady state” of penetration. Also note that one can order Domino’s pizza from Swiggy (not sure of Zomato) as I usually do, so the two are not mutually exclusive. One should also probably add up the results of Dominos & Domino since at least some people may hit the enter key before typing the last ‘s’ (and Google Trends excludes searches with apostrophes, so it would exclude any search for Domino’s, which is another point to note).
All this is not to say that Domino’s should ignore the threat from Swiggy & Zomato, but only that the situation may not be as alarming as the data makes it out to be. The two are not perfect competitors or alternatives for Domino’s. I have also seen that many a start-up begin with a bang and then lose their way once it is time to show profits. The aggregators have expanded the overall food ordering market, but I don’t think their growth has come at the cost of Domino’s.
More importantly, in the long run I think the threat to Domino’s comes from the perception that pizzas are “junk food” and hence unhealthy. The world is becoming more and more health conscious and Domino’s’ communication should be targeted at dispelling this notion. This is also the reason I am positive on the recent foray into Chinese food, as Chinese suffers from no such handicap and opens up a completely new market to grab.
(Disclosure: Invested)
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Burman Hospitality (of the Dabur fame) is the master franchise
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