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Mumbai, India

A bottom up investor primarily focused on small and mid caps listed on Indian stock markets. Following a growth at a reasonable price philosophy.

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Contributor since: 2022








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Jubilant Foodworks: The QSR Giant

Jubilant Foodworks is the undisputed leader in the Indian QSR space. A slew of recent happenings like Mr. Pratik Pota's abrupt exit, decision to stop reporting SSSG, fortressing strategy have left the investors spooked and time will tell how the company emerges out from this.

Jubilant Foodworks Limited (JFL), part of the Jubilant Bhartia Group, is the largest food service Company in India. The Company operates two international brands, Domino’s Pizza in India, Sri Lanka and Bangladesh, and Dunkin’ Donuts in India. It has the exclusive rights (Master Franchise) for India, Nepal, Bangladesh and Sri Lanka for the Domino’s Pizza brand.

In 2019, the Company ventured into Chinese Fast Casual segment with its first home-grown brand Hong’s Kitchen. Through the launch of Ekdum!, JFL has ventured into Indian cuisine like biryani, kebabs, Indian breads and much more.

The Company has also signed an exclusive Master Franchise and Development Agreement (MFDA) with PLK APAC Pte. Ltd., subsidiary of Restaurant Brands International Inc. (RBI), to own and operate Popeyes restaurants in India, Bangladesh, Nepal and Bhutan. Popeyes offers chicken sandwich, Veg Burgers, Rice Bowls, Wraps, Signature Chicken etc.

The Food Services Industry

The food services market in India has evolved considerably over the last 3 decade due to changing consumer consumption patterns that have seen an increase in tendency to eat out. A noticeable shift began in 1996 with the opening up of QSR restaurants such as McDonald's, Pizza Hut and Domino's Pizza, followed by Subway, KFC, Burger King, Haldiram's, Moti Mahal and Taco Bell, among others.

The food services market can be divided into unorganized, organized standalone and chain –

Unorganized Segment – It includes roadside eateries and dhabas which have been the most common eating out option.

Restaurant in Hotels - A full-service restaurant with premium interiors, specific cuisine specialty and high standard of service mainly present in premium Hotels. E.g., The Great Kebab Factory, Bukhara etc.

Organized Segment – It consists of Standalone restaurants across all formats with less than 3 outlets and Chain format which has 3 or more outlets across all formats.

The Chain segment of the organized market includes Cafes, Quick Service Restaurants (QSRs), Casual Dining Restaurants (CDRs), Frozen Dessert/Ice-creams, Fine Dining Restaurants (FDRs) and Pubs/Bars.

QSRs are restaurants focused on speed of service, affordability and convenience. They lay strong emphasis on takeaway & delivery with minimal table service. QSRs are usually present in Malls, high streets, popular markets, office complexes, airports, educational campuses and multiplexes.

The food services market in India was estimated at 4,236 billion in FY 2020. The share of unorganized market/ organized standalone segment/ chain market/ restaurants at hotels stood at 59%/28%/10%/3% respectively. Over FY15-20, the growth of 18% CAGR in the chain segment has outpaced every other segment.

Evolution of the Chain Food Services Market

Effect of Covid on the Industry

The covid 19 led lockdown led to a >50% contraction in the food services industry with restaurants in hotels being most affected. The chain segment degrew by 42% during FY21, considerably less than other segments. Chained QSR segment was the first to recover even as restrictions began to ease as these players had modelled deliveries, drive-through and Over the Counter (OTC) pick-ups into their business long before the present crisis. Among the QSR players, those with a higher share of dine-in in total sales were most affected.

Organized QSR Segment

The organized QSR segment is one of the fastest growing industries in India and is expected to clock in a CAGR of 20% over FY20-25. This is one of the reasons we are seeing aggressive expansion guidance of a number of QSR players.

Growth in the chain market is expected to be driven in the next five years by an increase in presence of international brands, strengthening of back-end infrastructure, acceptance of new cuisines, changing lifestyles and aspirations and the emergence of entrepreneurial ventures in these segments.

Due to COVID, consumers have become more cautious towards hygiene and safety issues. This change in habit of consumers is being leveraged by chain QSRs. They are targeting to meet all the requirements of consumers in the new normal, from high food quality and service standards to superior processes or delivery capabilities, resulting in enhanced market share.

Composition of Chain QSR Segment

The Indian chain QSR sub-segment is dominated by burgers and sandwiches, with a market share of 31%, followed by pizza, with a market share of 26% and chicken, with a market share of 15%. The majority of companies within these formats are international brands. The remaining 25% of the market share in the chain QSR sub-segment is split between small national and regional companies offering Indian ethnic cuisine, Chinese cuisine and other types of cuisine. The international QSR chains present in India have tried to strike a balance between their flagship offerings and eating habits of the domestic population.

The organized QSR segment has tremendous scope to expand in tier 2 and tier 3 cities. Their outlets, as well as revenues, are concentrated in metro cities. As of March 2021, 56% of Domino’s stores were located in top 8 cities while the same figure for McDonalds and KFC was 72% and 60% respectively.

JFL, a Dominant QSR Player

JFL is the largest QSR player in India with a diverse portfolio of brands. It holds the Master Franchisee of Domino’s Pizza which allows it to set up Domino’s pizza outlets anywhere in India and some neighboring countries of India in exchange of royalty fees paid to Domino’s for the use of brand name. The Master franchisee puts Jubilant at an advantageous position when compared to its peers Devyani/Sapphire who operate Yum Brands’ Pizza Hut/KFC, as the later are not exclusive franchise operator. They have to set up stores in a specified geographical area with further limitations on the type of stores each franchise operator can set up. JFL had a network of 1495 Domino’s pizza stores as of Dec 2021 with 75 stores opened in Q3FY22 (net addition of 60 as 15 stores were closed). It covers a total of 322 towns/cities through this network. 2021 (CY) was the year when JFL opened the highest number of Domino’s stores (200). It had earlier guided for store addition number between 150-175 in FY22 which it revised to 200 following steller openings during Q2FY22 and Q3FY22. JFL has also increased the target/potential number of stores it sees itself opening in India from ~2000 to ~3000.

JFL has the largest market share of the chain QSR segment by number of outlets (18.4% in FY 2021). This has been a result of aggressive marketing, an attractive value proposition and a strong home delivery network. They are followed by Subway, KFC, McDonald's, Pizza Hut and Burger King. In terms of sales, JFL has the largest market share of the chain QSR sub-segment by revenue followed by McDonald's, KFC, Subway and Burger King and Pizza Hut.

Diversifying Brand Portfolio to Enhance Runaway for Growth

Besides Domino’s Pizza, JFL also has the master franchise of Dunkin Donuts. Dunkin’ Donuts, a subsidiary of Dunkin’ Brands, is a leading global baked goods and coffee chain. JFL launched the first Dunkin’ restaurant in Delhi in April 2012. Dunkin’ Donuts sells a large variety of donuts and more than a dozen coffee beverages, as well as an array of bagels, breakfast sandwiches, burgers, tea and other baked goods. Dunkin donuts has never really clicked with the Indian consumers and JFL has been trying to curtail the loses over the years by experimenting with different strategies such as smaller store sizes, but the store economics has not turned out right and JFL has resorted to frequent store closures. As of Q3FY22, total store count for Dunkin stood at 29 with one store opened during Q3.

Hong’s Kitchen

JFL entered into Chinese cuisine with a homegrown brand - ‘Hong’s Kitchen’ and launched first restaurant in Gurugram in March 2019. The brand stands for Chinese food customized to Indian preferences at an affordable price. It serves authentic Chinese delicacies like noodles and gravies along with starters range as well as desserts and beverages. JFL has revamped the menu with expansion of the momo’s section, launch of soups, new products by the name of Chef’s Special Orange and Dynamite. Through the ‘Incredibles@99’ range, JFL is looking to strike a balance between the unorganized food joints and premium fine-dine restaurants serving the Chinese cuisine.


JFL announced the launch of Biryani, Kebabs and Curries under the brand - Ekdum! In Dec 2020 in an attempt to establish a presence in the Indian cuisine segment. The menu offerings are extensive and bring together an assortment of multiple biryanis (localized variants), kebabs and starters, curries, breads, bowl meals, desserts and beverages. The Indian cuisine segment, especially Biryani is highly unorganized and the organized end of the Indian cuisine segment is expected to grow at a CAGR of 37% between FY20-25.

In Popeyes We Trust

In March 2021, JFL announced agreement with Restaurant Brands International Inc. (RBI), to develop, establish, own and operate hundreds of Popeyes restaurants in India, Bangladesh, Nepal and Bhutan. The first Popeyes flagship store was opened in Koramangala, Bangalore in Jan 2022. Popeyes has built its own in-house delivery fleet with 100% of use of eBikes.

Popeyes was founded in 1972 and has been one of America’s most popular and fastest growing Chicken brands. The success of Popeyes lies in its traditional and unique technique of hand breading, battering, and marinating its fresh chicken for 12 hours in bold Cajun seasonings.  The Popeyes India menu features the signature Cajun flavored, world-famous Chicken Sandwich. The Indian menu also features an array of vegetarian options. It also has Rice Bowls and Wraps as part of the wholesome meal options to ensure all guests enjoy the Popeyes Cajun experience.

With Popeyes, JFL is looking to compete with the leader in the chicken QSR space, KFC. Incidentally, the first KFC outlet in India was also started in Bangalore. 

International Presence

JFL’s master franchise agreement with Domino’s allows it to open Domino’s pizza stores in Sri Lanka and Bangladesh while its recent agreement with Restaurant Brands International Inc allows it to open Popeyes stores in Nepal, Bangladesh and Bhutan. As of Q3FY22, Domino’s Sri Lanka had 32 stores while Domino’s Bangladesh operated 8 stores. In Sri Lanka, the company delivered its highest ever system sales in a quarter with a YoY growth of 95.9% during Q3FY22. Bangladesh system sales also registered a growth of 39.5% YoY.

The prospects of the Srilanka business are not good at the moment as the Srilankan economy is amidst an economic crisis. The tourism sector which is the backbone of Srilankan economy got badly affected due to Covid and now it is facing aggravated inflation along with depleting foreign reserves. Srilanka has to make good of its foreign currency borrowings and also pay for imports of essential commodities on which it has vast dependency. All this with a $2 billion exchange reserve and double digits inflation. JFL’s actions regarding the Srilankan operations will be a key thing to watch in coming quarters.

How did the Technological and Delivery Moat Come into Being?

JFL has been a pioneer in introducing technology-based offerings and it was the first QSR chain to launch its App in 2012, something followed by KFC and Pizza Hut in 2014. The share of online ordering has been increasing at a rapid pace over the last few years, something JFL envisaged a long time ago. JFL has made digital investments to personalize promotions, payment, and the ordering experience. In FY21, the company launched a Hindi version of its app, and is also adding support for other languages in its app to personalize user experience. The share of online ordering (OLO) in Domino’s delivery sales stood at 98.4% in FY21.

Food aggregators sector (likes of Swiggy, Zomato) has grown at a rate 100% during the period from FY 2016-20 and COVID induced lockdown saw an even more accelerated expansion of the sector. JFL however has not relied on the aggregators for delivery and has created its own digital and delivery asset. This is because pushing the company’s own app and delivery has allowed JFL to create a stronger brand connect with the customers. A customer logging in to a food aggregator to order a Pizza might see a plethora of other options for prospective restaurants to order from, as well as different cuisines to try based on suggestions and nudges. This reduces the potential for a brand like Domino’s to grab the customers’ mindshare. The ease of listing on aggregator platforms significantly reduces the entry barrier making it difficult for food services businesses to stand out in the crowded space and this is exactly what JFL has tried to avoid.

How Important was Pratik Pota’s Presence?

Ajay Kaul stepped down as the CEO of JFL in March 2017. Last few years of his decade long stint with JFL were very challenging. SSSG was largely flat to negative between FY14-17, EBITDA margins had contracted by 8% during the period and PAT had halved. This was when Pratik Pota joined JFL as the CEO. The very next year JFL reported SSSG of 14% and 15%, a year after that. This was possible due to a slew of changes brought forward by the new CEO. FY18 was a transformational year as the company introduced several changes.

JFL rolled out a new approach in the form of ‘Every Day Value’, where customers were offered a standard affordable price every day instead of deep discounts on select days. From April 2017, under Every Day Value, two medium sized Pizzas were available from 199 each. This led to the company’s move from Buy One Get One offer and increased the footfall, driving overall uptake. A super value menu, with select items, was offered at low price points, starting @49 in small cities. This also established the company’s “Value for Money” proposition.

JFL also brought changes in product quality and drove all round product upgrade. The new pizzas introduced offered a softer and tastier crust, new tomato sauce made from imported Californian tomatoes, and more cheese and toppings. The packaging was revamped to an attractive blue and white color to highlight the changes. Operational initiatives to rationalize costs further ensured a successful turnaround under Pratik Pota’s helm. Thus, Pratik Pota’s influence and changes he brought cannot be overstated enough. His abrupt exit is a cause of concern for the company as the scaling up of all the other brands under JFL’s portfolio is still to be done. At the same time, it is not as if no suitable replacement can be found for Pratik Pota. The management has found Pratik Pota once, they might be able to find the next one too. Who the company ropes in for the role of CEO is a key thing to watch.

Strategic Investments

During FY21, JFL acquired 32.81% stake in DP Eurasia N.V, an LSE listed public company with the exclusive master franchisee for the Domino’s Pizza brand in Turkey, Russia, Azerbaijan, and Georgia. The total outlay for the acquisition was 24.8 million GBP. DP Eurasia N.V operated 809 stores (607 in Turkey, 188 in Russia, 10 in Azerbaijan and 4 in Georgia as of Dec 2021. After Russia’s military attack on Ukraine, DP Eurasia N.V has ruled against further investment into the Russian operations and it won’t be accepting royalty payments from the market. It has not, however, exited from the market unlike its QSR peers. DP Eurasia's share price is down ~40% YTD.

JFL also invested 92 crores in Barbeque Nation Hospitality (BNHL) for a 10.76% equity stake in the company, which fell to 9.72% after the IPO of BNHL. BNHL operates under the Casual Dining model which is different from JFL’s bread and butter QSR model. The idea behind the recent investments and how JFL plans to take these forward remains to be seen.

Tackling the Inflationary Headwinds

Companies have witnessed tremendous inflationary pressure over the past few quarters across employee expenses, commodity cost pressures etc. JFL is no exception to this however, it has implemented several measures to protect the margins. Important among these have been variabalisation of pay of delivery partners and rent negotiations. Delivery partners of the company are now paid on flexi working hours and pay per delivery basis instead of fixed contracts. Such measures however can increase the employee churn.


Sales have grown at a CAGR of 11% for the past 9 years. There has been consistent YoY increase in sales except for FY21. TTM sales are up 29%. Gross Margin % has been ~75% over the years but improved to 78% in FY21.

EBITDA has grown at a CAGR of 16% for the past 9 years while EBITDA margins have fluctuated from 19% in FY12 to 9.5% in FY17 to 23.6% in FY21.

PAT has grown at a CAGR of 7% over the past 8 years. Cash conversion has been very healthy with CFO/PAT consistently being greater than 100% with average last 10-year CFO/PAT of 200%+. CFO/EBITDA has also been fairly well with an average figure of 88% over the last 10 years.

On the balance sheet side, JFL has operated debt free over the years and the borrowings you see on Screener from FY20 onwards is the lease liabilities. Fixed asset turnover has been rangebound between 3-4x over the years however fell below 2x during FY20 and FY21.

JFL has a negative cash conversion cycle with negligible receivables and significantly lower inventory days in comparison to payable days. This essentially means that the suppliers are financing the company’s operations and it is a sweet spot to be in for JFL.

ROE/ROCE have been healthy although they were on a declining trend from FY12 to FY17. Post FY17, both improved before dipping in FY21.



I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.


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