By Ananta Agarwal and Praveen Paramasivam
(Reuters) -Domino’s India operator posted a quarterly profit that almost tripled from a year earlier on Thursday, as demand for its affordable pizzas and combo deals stayed strong, bucking the broader slowdown in the fast-food industry.
Jubilant Foodworks has stood out as a rare outperformer in an environment where fast-food chains have struggled for over a year to attract consumers amid fierce competition from rivals and only a tentative recovery in urban spending.
The Domino’s franchisee has cut costs and driven volume through discounted meals, app-based delivery fee waivers and 20-minute delivery in key cities, prompting rivals to take cue and sharpen focus on delivery.
Jubilant logged 9.1% like-for-like sales growth in the second quarter, while Pizza Hut operators Devyani International and Sapphire Foods posted same-store sales declines of 4.1% and 8%, respectively.
Noida-based Jubilant reported a profit of 1.86 billion rupees ($21.16 million) for the September quarter, compared to a profit a year ago of 640.5 million rupees.
Profit from continued operations, however, climbed 54%.
Revenue from operations rose 20% to 23.4 billion rupees.
“October has been a very good month for us … was ahead of our plans,” a Jubilant executive said on an earnings call, shortly after the company said in a press release it expects a “promising” second half of the fiscal year.
Jubilant is also betting on India’s tax cuts to boost sales in contrast to Devyani’s projection of consumption tax cuts having a minimal impact.
“Through multiple initiatives of the government, be it interest rates coming down, income tax rates coming down and (consumption tax cuts) … demand for eating out will only go up,” the executive said.
While Jubilant’s efforts have powered demand, they have also capped margin expansion.
Jubilant’s September-quarter EBITDA margin contracted by four basis points.
($1 = 87.8950 Indian rupees)
(Reporting by Ananta Agarwal in Bengaluru and Praveen Paramasivam in Chennai; Editing by Mrigank Dhaniwala)
