Jubilant FoodWorks Limited Q1FY27 Earnings Conference Call

Key Financial and Operational Highlights

Domino's Performance:

  • Reported Like-for-Like (LFL) growth of 2.5% for Q1 FY27.
  • This growth was achieved on a high base of 11.6% LFL growth in Q1 FY26.
  • Management expects Q2 FY27 LFL growth to be better than Q1 FY27.
  • The company is maintaining its guidance of 5%-7% LFL growth for Domino's.
  • Delivery remains the dominant channel, constituting 76% of the business.

Popeyes Performance:

  • Achieved exceptional LFL growth of 45% in Q1 FY27, a significant acceleration from 9.2% in Q1 FY26.
  • Management attributes this growth to three key factors: a superior product (better marination, fresh chicken), strong brand building with product innovation (e.g., 6 flavors of wings), and excellent execution on store openings.
  • Popeyes is described as the company's "second growth engine."
  • Seven cities have achieved Average Daily Sales (ADS) above INR 100,000 for the full quarter.
  • The next key goal for the brand is to achieve EBITDA profitability.

Financial Metrics and Margins:

  • Gross margin for the quarter stood at 75.5%.
  • The company maintains its target of a 200 basis points EBITDA margin expansion.
  • Approximately half of this expansion (100 bps) is expected from Domino's through efficiencies and the other half (100 bps) from the scaling and profitability of emerging brands, primarily Popeyes. Progress on this target is stated to be on or ahead of track.
  • Personnel costs increased by 12% year-on-year on a standalone basis and 15.6% on a consolidated basis. Improved store productivity (orders per hour) helped mitigate the per-store impact despite wage inflation.

Cost Inflation and Price Actions:

  • The company faced significant cost headwinds, estimated at ~200 bps, primarily from:
  • LPG prices (~120 bps impact).
  • Labor cost increases due to new labor code notifications and minimum wage hikes across 14-15 states.
  • Inflation in commodities like cheese, oil (mostly imported), and chicken.
  • The company took calibrated price increases (totaling ~1.5-2% during the period) and drove operational efficiencies (reducing waste, supply chain efficiencies) to offset these headwinds, resulting in a net quarter-on-quarter EBITDA margin contraction of ~20 bps.
  • Management stated there is room for further price increases if cost inflation persists or worsens.

Capital Expenditure (Capex) & Capital Allocation:

  • Capex guidance for FY27 is maintained at INR 750-900 crores, consistent with the previous couple of years.
  • The profile of capex has shifted:
  • Increased focus on new store expansion for both Domino's and Popeyes.
  • Investment in upgrading existing Domino's stores to improve the dine-in experience.
  • Continued investment in technology as a key differentiator.
  • Supply chain investments are stated to be "materially down" from previous peaks.
  • The company emphasized a focus on maximizing Return on Capital Employed (ROCE) and earnings per share (EPS) over simply maximizing free cash flow. Free cash flow turned positive in FY26.
  • Capital allocation decisions include not investing in the Hong's brand and exiting the Dunkin' coffee business to focus capital on higher-ROI opportunities like Popeyes.

Dine-in Strategy for Domino's:

  • A new dedicated channel team has been established under a new leader to focus on dine-in and takeaway.
  • The strategy is based on three pillars:

1. Improving basics of service: speed, product quality, accuracy, and store experience.

2. Driving traffic through specific offers: "Best Deals Ever Wednesday" (in-store only) and partnerships with payment players/aggregators.

3. Developing a differentiated menu focused on solo occasions with tickets below INR 250.

  • The initial goal is to stop the decline in dine-in/takeaway LFL sales and eventually hold them flat, which would help overall LFL growth exceed guidance.
  • Early success has been seen in reversing trends on Wednesdays.

Demand Environment and Consumer Sentiment:

  • Management described the underlying demand environment as "strong," citing positive indicators like car sales and GST collections.
  • The challenge is stated to be delivering growth profitably, not a lack of demand.

Other Business Updates:

  • The Mumbai food factory was commissioned in March 2026, with some parts yet to be fully commissioned.
  • The company has supply chain capacity built for up to 5,000 stores.
  • Popeyes' average order value is stated to be higher than Domino's, which is typical for the chicken category.

Participants

Management Present: Mr. Shyam S. Bhartia (Chairman & Director), Mr. Sameer Khetarpal (CEO & MD), Ms. Suman Hegde (CFO), Mr. Apar (Head of Investor Relations).

Analysts Participating: Kunal Vora (BNP Paribas), Vivek M. (Jefferies), Tejash Shah (Avendus Spark), Jignanshu Gor (Bernstein), Latika Chopra (JP Morgan), Nihal Mahesh Jham (HSBC), Amit Sachdeva (UBS), Aditya Soman (CLSA).