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| New dough for Jubilant | | Dunkin Donuts is coming to India. Can the Bhartias repeat the success of Domino?s pizzas? |
| Ranju Sarkar / New Delhi Aug 26, 2011, 00:32 IST |
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 After a good run with Domino’s pizzas, the Bhartia-family-promoted Jubilant Foodworks is working to bring Dunkin’ Donuts to India by the first half of 2012. ‘‘We would like to participate in the all-day part food and beverage market, which, though largest, is very fragmented today,’’ says Jubilant Foodworks CEO Ajay Kaul.
But will Indians like to have donuts for breakfast? Dunkin says besides donuts, it also offers coffee, beverages, muffins and hot sandwiches (the last one in markets like the US). Localization of course will be a must, as McDonald’s experience suggests
Kaul agrees and says these will be localised to a large extent. Jubilant has done a lot of alterations with Dunkin’ global menu team in Boston, and worked out options that will be relevant for India. Besides Jubilant’s focus on all-day menu, there are two other elements to the Dunkin’ story: coffee and beverages; donuts and bagels.
Dunkin’s is the largest coffee player in the US in terms of cups consumed—that’s why it says ‘America runs on Dunkins’ — a campaign it’s been running for five years. Dunkin’s coffee and beverage portfolio is very strong, it is a world leader, and Jubilant hopes it will bring leadership to India. But the Indian cafe market is still small, estimated at Rs 500 crore per annum, though research suggests that the cafe culture could explode.
Harish Bijoor, a brand strategy specialist, estimates that India would have 5,400 cafes by 2015, up from 1920 today. ‘‘What we have seen is version 1.0 of the cafe revolution. So far, we are just scrapping the tip of the iceberg of opportunity,’’ says Bijoor. Jubilant believes the market will grow exponentially in future and wants to ride on it.
Globally, there are sit-in cafes, stand-up cafes, and on-the-go cafes. Bijoor says Dunkin’ is more of an on-the-go kind of player, where customers can grab a donut and coffee and have them on the way. He feels that Jubilant could do with small format stores (500 sq ft) as large format (800 sq ft, 1500 sq ft) stores are not very viable.
Donut is an unexplored category in India, which has done well in several countries like Malaysia, Thailand, Indonesia and Philippines. ‘‘Indians have a sweet tooth. There is no reason why it would not do well in India. It is an unexplored territory, Dunkin is a leader in this category. So, that’s an opportunity for us,’’ says Kaul.
Jubilant plans to have the first Dunkin store by first half of 2012. In five years, the plan is to open 80-100 stores.
The first 20-odd stores will be signature ones to be located in malls and high streets as it is a footfall-driven model and not a delivery-driven model. Interestingly, Dunkin is positioned as the middle-class man’s coffee in the US. ‘‘What attracted us to Dunkin is not this positioning, but the fact that it can be a mass brand. It is not operating in a niche. We can grow it like we have done it with Domino’s,’’ says Kaul.
He draws the analogy of pizzas. It started as a seemingly costly product, and people could not afford it. But with Pizza Mania (Domino’s low-priced, entry-level pizzas), it has become everyman’s food. Today, Dominos has 392 stores, and this year it plans to add 80 stores. ‘‘We want to do something similar for Dunkin Donuts,’’ said Kaul.
What makes him believe that it could be mass brand? ‘‘It is not operating at some top-end niche. Even in markets it has become big, price-wise, it operates at a lower level, lower than some of the other coffee players who are upper end at the niche,’’ Kaul says. Yet, Dunkin Donuts will have marginal impact on the performance of Jubilant Foodworks in the short run—by the time it launches the first Dunkin store, Jubilant will have 458 Domino’s outlets by March 2012 across the country.
So, growth for Jubilant will continue to be driven by the Domino’s business. With 392 stores in 93 cities, it commands a 50 per cent share of the pizza market. A few changes in the business have helped it grow the category. First, it reinforced its delivery centric message in 2004 with an offer—delivery in 30 minutes or take your pizza free—which caught consumers' attention and created a flutter. To widen the market, it introduced entry-level pizzas in 2008 for Rs 39, which grew volumes 20-25 per cent.
It also began tweaking its delivery-centric model to bring in a dine-in focus, more in tier-II and tier-III cities where people prefer to eat out with families. So, the last 200-300 stores Domino’s has opened are bigger, which can take up to 100 people. All this is helping Domino’s grow at 46-47 per cent in the last six years, and improve operating margins from 12.6 per cent to 19.1 per cent. Hence, many people will keep a close watch if Jubilant Foodworks can replicate its success in pizzas with donuts.
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