Jubilant FoodWorks Q3 results: PAT falls 35% to Rs 42.9 cr, revenue up 56%

Jubilant reported profit of Rs 42.91 crore ($4.94 million) for the quarter ended December 31, compared to a year-ago profit of Rs 65.709 crore

India's Jubilant Foodworks reported a nearly 35 per cent decline in quarterly profit on Wednesday, as the Domino's Pizza franchise's margins were dented by higher expenses amid accelerated store expansion and elevated food costs. 

Jubilant reported a profit of Rs 42.91 crore ($4.94 million) for the quarter ended December 31, down from a year-ago profit of Rs 65.709 crore. 

Weary of persistently high inflation in rent and food costs, budget-conscious Indian consumers have been gravitating towards bargain deals. 

Jubilant, like other quick service franchises in the country, has launched value meals to increase footfall in its restaurants and rake in more orders via delivery apps. 

The company has launched smaller pizzas priced at around a dollar and lunch combinations for less than two dollars. It has also been waiving delivery fees on its app orders. 

As of November last year, the company had not raised prices on its items for at least two years, despite cost inflation, to gain market share. 

While these measures have aided topline growth, profit margins have suffered. 

Revenue from operations for the third quarter rose about 56 per cent to Rs 2,551 crore. 

Same-store sales increased 12.5 per cent year-on-year at its Domino's restaurants In India. They had declined 2.9 per cent the previous year. Average daily spend in older restaurants rose 12.5 per cent to nearly Rs 86,000. 

However, expenses surged 59.3 per cent year-on-year fuelled by higher sequential store expansions and higher wage and food costs, dragging the core profit margin in the quarter down 163 basis points to 18.7 per cent from last year. 

Compared to 73 net store additions in the second quarter, Jubilant added 130 new stores in the third. Of these, 67 were Domino's stores in India. 

Rival Sapphire Foods reported an 18.1 per cent rise in quarterly profit, with same-store sales at its Pizza Hut restaurants in India increasing 5 per cent. 

Jubilant's shares ended 3 per cent lower after the results.