Jubilant Foodworks Ltd
NSE:JUBLFOOD
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Jubilant Foodworks Ltd
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Ladies and gentlemen, good day and welcome to the Jubilant FoodWorks Limited Q3 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you and over to you, sir.
Thank you and welcome to Jubilant FoodWorks' Quarter 3 and 9M FY '21 earnings conference call for investors and analysts. We are joined today by senior members of the management team, including Mr. Shyam Bhartia, Chairman of Jubilant FoodWorks; Mr. Hari Bhartia, Co-Chairman of Jubilant FoodWorks; Mr. Pratik Pota, CEO of Jubilant FoodWorks; and Mr. Prakash Bisht, CFO of Jubilant FoodWorks. We will commence with key perspectives from Mr. Bhartia. Thereafter, we will have Mr. Pota relating his views on the company's performance and strategic perspectives on growth. After the opening remarks from the management, the forum would be open for question and answers. A cautionary note, some of the statements made on today's call could be forward looking in nature, and actual results could vary from these statements. A detailed statement in this regard is available in Jubilant FoodWorks' quarter 3 and 9M FY '21 results release and earnings presentation, both of which are available on the company's website under the Investor Relations section. I would now like to invite Mr. Bhartia to share his views with you. Thank you and over to you, sir.
Thank you. Good evening and a very warm welcome to everyone present on the call today. I hope all of you are safe and in good health. The external environment continued to offer operating challenges. While the festive season brought in fresh triggers for consumption, concerns about safety and restrictions on operations in many markets continued to be a drag on the overall business recovery. Under continued challenging conditions, I'm pleased to share the result of quarter 3 FY '21. We delivered an extremely strong quarter. We have successfully steered the business to full recovery, and now our focus is on growth. This is on the back of a positive demand traction, largely driven by strong delivery and takeaway sales. Dine-in continued to remain slow, though there was an encouraging sequential improvement. We opened a total of 57 new stores, including 50 Domino's stores, which is the highest-ever store addition in the quarter. This should serve as an indicator of our confidence about the future growth. As committed, we remain on track to open 100-plus Domino's stores this financial year and are likely to exit with a number of over 110 stores. We are often asked the question on the total potential for Domino's stores in the Indian market. Our present assessment shows that in the medium term, there is a potential to open more than 3,000 stores. Our international business delivered a strong performance with encouraging sales recovery and profitability for a third consecutive quarters. We opened 1 new store in Sri Lanka. We are confident that we now have the right economic store model which we can scale up. Also, in our markets in Sri Lanka and Bangladesh, we see a clear potential of more than 150 stores in the medium term. Towards the end of last quarter, we announced an investment of INR 92 crores in the Barbeque Nation Hospitality Limited for an equity stake of 10.76%. Barbeque Nation is a differentiated casual dining brand of scale with great unit economics and solid execution across a well-spread-out network. We are confident that the investment will create value for our shareholders. During the quarter, we entered the Biryani segment through the launch of our brand Ekdum! This was done after successfully piloting the Biryani segment over the past few quarters. Our strategy here will be to offer widest variety of choice to customers and stay true to our value-for-money proposition. We have continued to delight on product innovation front with the launch of The Unthinkable Pizza. We were the first to pioneer this innovative offering in India. Our recently introduced range of pasta pizzas and pasta stew have received heartening response from our customers. Our investments to strengthen digital infrastructure have continued. Domino's launched a Hindi version of its app, which is going to be a significant enabler for ordering. Going forward, we will continue to add other language support to our app to make the experience even more personalized and seamless. This dovetails well with our objective of driving robust growth from our own assets. Notably, the quarter recorded the highest-ever app downloads for Domino's at 7.4 million. Bold initiatives on the cost front continue to yield positive outcomes and resulted in efficient operating performance. Overall, we are happy with the performance last quarter. As the economy bounces back and vaccinations become more widely available, I'm confident that our lineup of brands will deliver an even better performance. Our fundamental strengths in delivery, growing delivery capabilities, varied product offerings and deeper understandings of our consumers will help drive growth for us in the future. Lastly, I must thank all our employees who have worked through this tough COVID environment, our delivery boys, our staff at the stores and, of course, at the back end, people who work tirelessly in our commissaries on a 24-hour basis to make sure that our stores are in operation. And we worked very hard on making sure that all our people are safe, and we make sure that we deliver in a safe manner to our customers. I would now request our CEO, Pratik Pota, to continue the discussion by sharing his perspectives.
Thank you, Mr. Bhartia. Good evening, everyone, and thank you for taking all the time to be with us. One of the important things that's underlying JFL's response to the crisis has been the agility and the boldness with which we've developed a playbook to work around COVID and to restore the business quickly back to normalcy. And towards that, I'm happy to share that JFL registered a near 100% recovery in Q3 FY '21, and we are now shifting gears to focus on growth. Revenue from operations at INR 10,572 million registered a sequential growth of 31.2%. Domino's witnessed a 100.3% sales recovery versus last year backed by continued growth momentum in delivery and takeaway channels, which grew by 18.5% and 64.3%, respectively. Notwithstanding the sequential improvement, the dining channel remains sluggish with a sales recovery of 41.6% versus last year. EBITDA at INR 2,786 million grew by 9.9%, and EBITDA margin at 26.4% increased by 243 basis points year-on-year. Profit after tax at INR 1,250 million grew by 20.6%, and profit margin at 11.8% was up 205 basis points year-on-year. Our cash position stood further enhanced. Total cash and cash equivalents, bank deposits and investments showed an increase from INR 8,278 million at the end of quarter 2 to INR 9,517 million at the end of quarter 3. Let me now call out some of the highlights of last quarter's performance. We opened a record 57 new stores last quarter. We expect to open more than 110 Domino's stores this financial year. We believe that the QSR segment will see significant growth in the time ahead. And towards that, we will be dialing up the pace of new store opening next year. We were early movers on investing in digital, and this continued to drive growth for us last quarter. A strong focus on driving our own assets led to a record number of 7.4 million apps installed in Q3. We also saw a strong increase in traffic to our own assets as also a significant increase in the active user base. During the quarter, we launched Drive-N-Pick, our new initiative that offers customers a safe convenient way of ordering. It simulates the conventional drive-through experience, wherein customers can place an order online and pick it up in the store from within the safe confines of their cars or their bikes. The early response to this initiative has been encouraging, and we believe that this will be an important element in driving the relevance and the use case for the takeaway channel in the future. We launched The Unthinkable Pizza last quarter. It was India's first plant protein-based product. This has seen an extremely encouraging response from customers. Our new range of pasta pizzas and pastas have also done extremely well. Our international business continued to show a sequential improvement. Both countries delivered a positive EBITDA last quarter, and we opened one new store in Sri Lanka. Hong's Kitchen delivered an encouraging performance in Q3. Delivery sales and takeaway recovered completely, whereas dine-in showed encouraging sequential progress. We opened 2 new stores last quarter. JFL entered the Biryani segment through the launch of Ekdum! In addition to biryani, our menu comprises kebab, curries and bread. Biryani, as you know, is one of the largest categories in the country, but one that is highly fragmented with very few national brands. We believe Ekdum! can play an important role in growing the organized Biryani segment. The early response to the launch has been encouraging, and we will be extending the brand across other parts of Delhi-NCR soon. Our focus on driving efficiencies and productivity helped us deliver strong operating margins after absorbing the significantly increased marketing spend. Specifically, we delivered productivity in energy costs, housekeeping, reduced wastage and cost of delivery. Towards the end of last quarter, we agreed to invest INR 92 crores for a 10.76% stake into Barbeque National Hospitality Limited. This is an investment in a well-managed business where we believe in the potential of the format and the strong execution capabilities. To sum up, in the face of continued challenging conditions, we delivered a strong all-around performance with 100% revenue recovery for Domino's, improved margins, record new store openings and entry into an exciting, new category. With that, I would like to stop and hand over to the moderator for questions from all of you. Thank you.
[Operator Instructions] The first question is from the line of Manoj Menon from ICICI Securities.
A very good performance, I must say, given the conditions. One question on the quarter and the short term and a couple of ones, if I may, on the long term. When you look at global trends and the mobility, et cetera, at least one auto analyst has been writing and talking about, it does appear that largely, the mobility is back. So I just wanted your perspectives on the less than 50% recovery with dine-in in that context. Is there something else which is at play as a trend? So that's point number one. Point number two, the -- is there any thoughts on a super app given that you have multiple brands currently, Domino's, Ekdum!, Hong's Kitchen, et cetera? Is there -- is it feasible in the next 3 to 5 years? And finally, please, just a straightforward understanding on the BBQ investment. Is it financial or strategic?
Manoj, I'm sorry. Can you repeat your third question, please?
The Barbeque investment, is it financial or strategic?
Sure. Well, thank you, Manoj. Let me start by answering your first question about timing. I think as we all know, the COVID case load in India and across town has been reduced significantly, and therefore, the anxiety around the going out has been mitigated significantly. And I think you talked about mobility data, et cetera. I think that bears it out. I think that -- and that reflects very clearly in our strong recovery in dine-in and in takeaway. I think on dining channels specifically, the constraint is more supply than on demand. And you are aware, Manoj, that even today, our capacity in dine-in is constrained at 50%. So we are required to operate only at 50% capacity. And that is what has held back the recovery for dine-in significantly. However, as you are aware, very recently, as recently as earlier this week, multiplexes have been allowed to operate at 100% capacity. And therefore, we are hopeful that a similar relaxation would also be forthcoming for restaurants. And when that happens -- and of course, with all the COVID SOPs being followed diligently, once that happens, we see dining demand coming back very strongly. And I think that has been one big factor that has held back recovery in the dine-in channel specifically. That's your first question. On your second question, look, I think right now, our focus is on ensuring that we build all our brands individually. These are strong, independent propositions. Domino's, of course, is a powerful platform on which we are strengthening. Hong's Kitchen and Ekdum! are new brands with exciting promise and exciting potential, and we are strengthening our digital capabilities and our digital marketing on both these brands. So that is our primary focus right now. Talk about super app, et cetera, I believe, is slightly premature. Our focus is on building these banks. On Barbeque Nation, as you're aware and as Mr. Bhartia called out in his remarks as well, this was an investment we made in the business because we believe strongly in the format. It's an extremely well-run business. It's a differentiated proposition. And therefore, we took and did an investment in the business. And we believe that this is going to be value accretive to our shareholders. It will not in any way distract JFL management team because this would be independently run by the existing management team of Barbeque Nation.
Understood. The first one was absolutely clear. And good luck -- yes, I think more regulatory changes should help us drive faster growth. Good luck for that.
Thank you, Manoj.
The second is actually on -- yes. The second one actually on the super app. I think -- 30 seconds, actually. The reason I ask this question is because there is a property there in Domino's. There is a franchise there. there is a certain pool which you already capture currently. I was only trying to understand that. Is there an opportunity to incubate in a much, much faster and efficient way given that you only have those [ eyeballs ]? That was only context I was trying to understand actually. Because I -- while -- and -- or if I understood your statement correctly, you're basically saying that let all the brands come and stand on its own feet and then it is probably potential at some point in time. I was thinking that there's a way to do it -- accelerate it. Is there any legal angle, contractual angle there which -- problem still today? So that's one. The -- on the Barbecue bit, sir, if I understood correctly, it is more from a financial point of view for learnings, some kind of maybe the other family aspects. That's what I understood from your commentary.
Look, Manoj, on your first point, I think independent of the point about legal, et cetera, I think the larger point is that our new brands need to stand for themselves. They need to carve out unique -- their own differentiated constituencies and consumer franchises and to build that and to stand for something. And having done that, then each of these brands can play off each other. So I think right now, like I said, any talk of anything bigger than these brands is a little early. And I would say maybe that might be a little misplaced. I think the focus has to be maniacally on building these 2 brands separately. The Chinese QSR space is vacant. There is no brand. The biryani space is highly fragmented, and there may be 1, 1-1/2 national brands. So both these brands independently have a role to play in building their franchises within the category, yes? On the Barbeque Nation, again I request Mr. Bhartia to add to what I said earlier.
Yes. On the Barbeque Nation, I'll only add that it's very difficult to define whether it is strategic or financial because we do understand the food business and we believe in what they are doing. But as Pratik rightly said, that it is not taking away any time from us because we believe they have a strong management and a good strategy to grow the business. So it is one of those rare businesses of scale which has achieved good numbers, good profitability. So we believe that they will do well.
[Operator Instructions] We take the next question from the line of Latika Chopra from JPMorgan.
My first question was on margins. There are various parts here. If you could just elaborate on how are you looking at gross margins going ahead in the context of what you're seeing on COGS, inflation and on promotional intensity. And also, employee and other expenses have seen a significant increase sequentially. Is it linked to this record 50 new store adds that you saw in Q3? Or is there something more here? Or should we now look this as a new base for employee costs and other expenses? I know there are some marketing expenses sitting here. And also, with this 110-plus new stores this year, plus even at an accelerated pace next year, how should one think about the balance that you would want to maintain between revenue and margins? So that's the first question.
Well, Latika that's a long first question. But no, thank you. Thank you for asking the questions. Let me dissect your question to the 2 or 3 parts that you spoke about. One was on gross margin. The other one was on people costs. And the third one you spoke about was as we go for -- what is the balance, if any, that we would want to strike between store additions and margins. Anything else?
Yes?
Yes. And so let's start with the first one. So on the gross margins, as you know, there has been some softening vis-à-vis last quarter. And fundamentally, that's on account of increase in inflation, increase in rate inflation for vegetables, for onion and capsicum. A marginal increase in dairy prices. That is what has led to an increase sequentially with the last quarter in our food cost. Vis-à-vis same time last year, of course, as you're aware, the gross margin has expanded significantly, and that's on account of the dairy prices fundamentally being lower than the same time last year. So that's the reason you're seeing -- going forward, there will be some inflation that you will see play out on dairy as the dairy prices become a little harder. But that will be the cycle that it'll follow, as it does every year. I think last year fourth -- dairy was very, very benign in contrast to the year before that. So you will see some of that easing out in the quarters to come. On the people cost specifically, what is -- Q2 to Q3, the reasons for the increase in people costs are fundamentally 3, and 2 of them being the most -- more salient. The one, of course, is that -- the fact of orders and of revenues and of volumes increasing Q2 to Q3. That has led to a significant increase in our people costs. The second big reason is that I think, and Mr. Bhartia talked about it in his opening remarks also, our teams across the organization have done an outstanding job of delivering great performance in the fact of very, very difficult and challenging world during COVID. So we have recognized that and we have looked at a special incentive and increased incentives for this exceptional performance. And that is -- will cost. That is, I think, an additional item in our people cost. And there are some costs on account of increased headcount in strategic areas like technology. So that -- those are the 3 reasons that have driven the people cost higher versus last quarter. Whether this is the new normal or not, hard to tell because there will be some pushes and some pulls. We believe that certainly, the people cost will not be higher than this level, but time will tell how the pushes and pulls will play out. Your third question was about store additions versus operating margins. I think -- if I may say, Latika, I think that question, I may not agree with the way it's been framed. It will not be an -- it's not been or discussion. It has to be an and discussion. Because you've seen the way we've scaled up our stores this year as well. So I don't think -- I think as long as we have a very robust process of identifying the right stores, making sure that we enter these stores in -- or sort these stores into the right catchment areas, make sure that we have the right store economics, the right store format, I think the discussion has to be growth and profitability. It cannot be growth or profitability, yes? And Prakash, if you want to add to that please, please chip in. Prakash, you're on mute. Prakash you're on mute.
So Pratik, can you hear me?
Yes. Yes, yes.
Yes. No, I said that you have covered it adequately. I have nothing more to it.
The next question is from the line of Percy Panthaki from IIFL.
Congrats on a good set of numbers. I have 2 questions. Let me put both of them upfront. So first question is see, you have a pretty strong equity both in delivery as well as dine-in. But I would argue that your equity as well as market shares within the dine-in space is probably better or higher than what you would have in the -- sorry, in the delivery space is better than what you would have in dine-in. So as people start moving out of their houses and stop ordering in, they start dining out. Do you think that's a little bit of a negative for you? Because when they are, let's say, ordering in, because Jubilant has a higher sort of brand equity or market share in the ordering-in space, you benefit from that kind of an activity. But when people start going out, the competition there is tougher. So I understand there is still a recovery in your dine-in portion which is pending, and that should give some headwind -- oh, sorry, tailwind, but I would still like to pose this question to you. That is one. My second question is on Ekdum! and Hong's Kitchen. Can you give some idea as to how you would like to grow this brand in terms of either the number of stores that you will add next year? Or if that's too granular, can you sort of give us a flavor on what the opportunity could be 5 years from now?
Thanks for the question, Percy. Let me start with your first question, about the dine-in reopening and whether that could be actually a headwind for us. I actually like to sort of disagree a little bit, Percy. I think the strength of our model has always been that while we've been known as a delivery expert, we've also had a significant share of our business come from dine-in for a variety of reasons. Number one, we have ubiquitous access at 1,300 stores. We are within access and reach of most consumers, 5-, 7 minute-drive from their home, across multiple formats, whether it was earlier food courts or mall stores or high-speed stores or in corporate parks or -- et cetera, et cetera. So we have access, we have variety of formats, number one. Number two, we have very, very affordable product. And we are easily accessible. There is no intimidating sort of facade. And the way we are approached by consumers -- entry barriers are very, very minimal. So when dining reopens, we see, in fact, our dining revenues that we had pre-COVID coming back strongly. And as I said in a response to Manoj's question, I think the constraint right now is not consumer demand, it's the supply and the supply constraints that we're operating under. And all the data and all [ planning ] that we've done shows us that as that gets relaxed, dine-in will come back. So I would not underestimate the strength that the Domino's has in dine-in. On Ekdum! and on Hong's, which was your second question, Percy, I think, like I said, Ekdum!, of course, is very, very young. It's just about a month old. Hong's goes back a little longer. We have been very enthused with the response in both the brands. In Hong's, as I mentioned earlier, we've had full revenue recovery in delivery and takeaway and very strong recovery overall. We are seeing a strong growth in orders. We are seeing a wide acceptance of a value range which is called Incredibles. And encouraged by that, we opened 2 new stores last quarter. This model of product, of price of store format, we believe, is playing and putting a large vacuum in the market between affordable -- between casual dining and streetside eateries, affordable eateries. So this QSR Chinese space is something that we want to build out. And all evidence that we've garnered in the last 1.5 years tells us that we are on to a good thing. So the plan would be to scale up Hong's over the next year and beyond. Ekdum!, like I said in my opening remarks, very, very sort of early start but very encouraging start. And again, we believe that we can scale the brand up first across Delhi-NCR and in other markets thereafter. We don't yet have a number for you in terms of the store potential, and we don't have a specific sort of outlook. But it stands to reason that the promise is very exciting because both of these, biryani is the #1 food in the country and Chinese is the #2 cuisine in the country. So the potential will be very, very exciting.
But in Hong's, will you see an acceleration of store opening versus what has been in the history?
I would say yes.
The next question is from Vivek Maheshwari from Jefferies.
Am I audible?
Yes, Vivek. Please go ahead.
Oh, sure. My first question is on the system sales growth for Domino's. So we have seen November being 6% higher and then a bit of a pullback in December and then an improvement in January. It's purely a function of the micro market dynamics and whatever the localized lockdowns or restrictions. Is that about it? That's the key reason?
So Vivek, that's a very good question. You're absolutely right, the recovery that we saw in momentum in November was constricted a little bit in December purely on account of restrictions in operating laws and some constraints that we worked under, yes? But that was the main reason.
Got it. Got it. Got it. And the other bit is on your investment in Barbeque Nation. Just wanted to know -- I know quite a few questions had been asked, but do you also get a Board seat? Or can you just share some more final details beyond what you have already spoken about?
I think the details we have already shared about the Barbeque Nation. Regarding the Board seat and all, I think these are matters which are between company and Barbeque Nation.
The next question is from the line of Jaykumar Doshi from Kotak.
Yes. My first question is on Hong's Kitchen. Have you optimized store-level operations over the past 2, 2.5 years? And what is the work that you've done on standardization, level of automation and training of -- training for chefs? If you could sort of elaborate or share your learnings with us. Second is on Ekdum! Do you think -- or would you agree that it is perhaps easier to scale and the time that you may need to perfect the product and operations would be much less than what it has taken Hong's Kitchen? And finally, an update on ChefBoss. And what's the road map from a medium-term perspective?
Thank you for the questions. Let me start with your first question about Hong's. And that's a really good question. And one of the, I think, very interesting learnings we've had in the last 1.5 years on Hong's has been exactly that, which is: How do we standardize the food? How do we scale our staff? How do we simplify operations to reduce the level of skill required? How do we take the complexity out of the store and take as much of it at the back end as possible? Where can we do automation in our kitchens to make operations more smooth, more seamless and therefore more scalable? So we've done a lot of work on that. And we could -- I know we could take a long time speaking about it. But I think it's in areas like these where our supply chain strength and the network that we have plays a huge role and offers us a good scale advantage and will allow us in future to scale up much faster, because we are able to take a lot of the complexity out and take it at the back end into the commissary. So that is one big area of work that we've done. We have also, in the last 1.5 years, refined our training playbook, our hiring playbook and our training playbook. And of course, as you can imagine, in this brand, this was a -- this playbook had to be created ab initio. So we had to work from scratch and create this playbook. And a lot of work has happened in doing that. So we now have a set of guidelines and SOPs and simplified store-level processes which we believe we can scale the brand up with. So that's been the learning and the journey over the last couple of years. On Ekdum!, while it is, again, early days, I think potentially, the same journey will happen in Ekdum!, albeit it'll happen a little faster for 2 reasons. One is, of course, that we have the advantage of learning on Hong's behind us now. Also, biryani is a little bit more amenable to standardization as a cuisine. In Chinese, as you imagine, there's a whole lot of -- some amount of skill required in wielding the wok and so on and so forth, which is less so in the case of biryani. So to that extent, yes, scale would happen a little faster -- does proceed a little faster than potentially -- possibly in Hong's. So that's as far as Ekdumic concerns. On ChefBoss, we've had a good start. You're aware that we launched in the month of August. We've had a good start. We completed distribution on all online channels where available. We had very strong and very good, encouraging feedback from customers. Healthy repeat on these platforms, and we are now looking to expand the range and potentially scale up in other channels in the future.
The next question is from Sunita Sachdev from UBS Securities.
When -- I just have 2 questions. When you compare the consumer in the pre- and post-COVID world, I think the big difference is in digital adoption of the consumer. And your opening remarks also told us that your own app has grown from strength to strength, and you're also adding a lot of digital capability. Could you help us with some color or numbers in terms of percentage of orders on your app versus aggregators versus dine-in? Or any other color in terms of bill sizes maybe on your app versus aggregators? If you can share, it will help us to understand this new digital capability that you're investing in. That's the first question. And my second question is around Hong's Kitchen and Ekdum! Enough has been asked on the call already, but I just wanted to understand in terms of how do store economics work in any of these -- or these 2 formats versus Domino's. And what is the client mix difference that you would expect versus Domino's and dine-in versus delivery? Any color on this as well.
Thank you, Sunita, for the questions. I think -- like you said, I think there has been a very interesting consumer behavior change post COVID and whether there's adoption of digital channel or indeed adoption of delivery. We have seen that grow significantly. Delivery as a habit for us was much more prevalent in the larger towns. We have seen that spread to the small towns as well. And I think as that happened, our early investment in strengthening our digital assets, in building a strong technology platform and moving and building something that was auto-scalable, I think, has really worked for us. And you've seen the way our app installs have gone up and the way our digital assets have performed. I think, without giving numbers, it'll be fair to say, Sunita, that the contribution of our own assets to delivery revenues, which was already very high pre COVID, has jumped up even more so in the period post COVID, number one. Number two, our -- we are seeing that our highest-frequency customers and the most loyal customers come to us -- have always come to us and have come to us more so post COVID from our own app. The third area and as well slightly different behavior that we are seeing post COVID is that we are seeing a whole lot of new consumers come to us first through the app. In the pre-COVID behavior, a lot of them came to us through dine-in and some through aggregators. We are seeing a significant change in the share of new customers coming to us from our own assets. This is a very, very encouraging behavior that we have seen. So then, the customer who comes to us on our own assets is stickier, is a higher-frequency customer and a more loyal customer. I hope that answered your questions, Sunita.
Yes. I mean you did give us a little bit of color. But to ask the question straight, I mean, what is the proportion of your business now from aggregators versus before?
Yes. Sunita, I appreciate the question, but we don't give these numbers out. I just want to underline the point I made that the mix and the weight of orders coming from our own assets has increased significantly compared to the pre-COVID time. And that's what gives us the comfort that -- whether it's in terms of traffic, whether it's in terms of app installs, whether it's in terms of active users, stickiness, frequency of transactions, our own assets do much, much better than aggregators, yes? And I'm afraid we don't give out specific numbers, but the weight has moved decisively in the favor of our own assets. On your second question, that's a really, really good question on Hong's and Ekdum!, how -- the economics versus Domino's, and I think what we are seeing -- and like I said, it's obviously slightly earlier days for Ekdum! as compared to Hong's, but conceptually what we are seeing is that the algorithm will be a little different for these brands as compared to Domino's. We might see a slightly lower gross margin because the food cost is a little higher in these cuisines. But at the EBITDA level, we will not see significant difference between Domino's and Hong's or Ekdum! once they acquire scale. So the economics will not shape up very differently, but the contours of the period might be a little different as compared to Domino's. That's one. The second is on the weight between the channels pre COVID -- because post COVID, obviously dine-in has been constrained. Pre COVID, we saw very good, robust mix in Hong's between dine-in and delivery. Takeaway was, of course, a little muted, as indeed it was for the entire category, but there was a good, healthy balance between dine-in and delivery. And of course, delivery has become a predominant share of the mix now along with takeaway. As dine-in comes back, we expect the overall revenues will be incremental of dine-in.
The next question is from Amit Sachdeva from HSBC.
Congratulations on a good set of numbers and recovery in this challenging time. If I can -- sorry if I'm go back -- going back to Barbeque Nation. And I know you don't want to share too many details, but I'll just follow with one small question on the sizable stake of 10% a bit more. Is there some sort of still collaborativeness that's part of your thinking? Or it's pure opportunistic? Somebody gave the money to survive the crisis, and you saw it's a good brand and you took advantage? Or is the larger strategy of actually acquiring assets because many restaurants are cash strapped and they may be good brands in the past? Why not take control of such brands and sort of develop it in a larger strategic sense? And was it just these opportunities? I'm just thinking from a pure strategy point of view rather than just this transaction point of view that there was probably a good wind of opportunity to acquire some more larger brands that -- with a controlling stake. What's the sense? So I'm -- what I'm asking is, is there a -- collaborativeness or capability sharing still possible with Barbecue and more longer-term arrangement? Or why not other acquisitions, too? Is this strategy change? If you can sort of help us understand that.
This is Hari Bhartia. As I stated earlier, it's a very well-run operation.
Sure.
They have done well in the past pre COVID. During the COVID, obviously, being a major casual dining brand, they had -- of course, the sales went down. But we believe they had a strong recovery. And the brand, in terms of their operations, is very well run with a good management team. Understanding the food business, we felt that as an independent opportunity, it's a good opportunity to invest.
Sure.
Presently, we don't see us growing the -- acquiring more shares or participating in the management. We see that it is well run. And well, your question's around synergy or are there other opportunities, but that would be dealt on an arm's-length basis, that if we feel we can -- it can add value in any manner, now that is something for that management to consider and for us to see if it is useful for us to support in that direction. But as of now, we believe that they will see a strong recovery and it's very well run. So I would say we understand the business. To that extent, it is strategic. We believe it is going to give us good return. To that extent, it is financial.
Sure. That's very helpful, Mr. Bhartia. Really appreciate That. Sir, very quickly, if I may ask about Ekdum! Like a lot of questions had been asked on Ekdum! already, so I will not go repeat them. But just want to understand, what sort of customers are you targeting as a part of this? And what sort of value proposition it will obtain? And would it be more just a delivery kind of format, quick and where people are looking to in quickly? Or is there something else that is a larger concept being designed out of it? And I would stop saying this more delivery-oriented brand, but if I'm wrong, kindly correct me. And how do we see -- as somebody asked what should the economics will be, would that be same high gross margin as Domino's is? Or the way -- the margins will be lower and it's more throughput-driven business?
So Amit, thank you. Thank you for the question and thank you for your wishes. Let me start by sort of distilling the Ekdum! proposition that we tested with consumers before we launched and that indeed we've rolled out in the market. Ekdum! will have and has a variety of biryanis. In fact, we have 20 biryanis in our portfolio, the widest range that any brand is giving. We also have a range of kebabs, curries, bread. So there is a variety that the menu provides consumers. All of it is given in very innovative, easy-to-use and in eco-friendly packaging. We don't use plastic at all. So it's very, very friendly, very convenient. And it's microwave friendly also. It can be reheated. The food is made in open kitchen, and that's a very important differentiator. We will not run cloud kitchens. We will not run dark kitchens because the customer needs to see and needs to trust the brand and needs to see for herself. So all our kitchens are open kitchens. The customer can come in and inspect the kitchen. We also have a very strong value-for-money proposition. Our prices start at INR 99. And a customer can really -- so a portion for one is very, very affordable. We also have very affordable combos as well. So it's a very sharply positioned brand. The relevance of biryani and of this food is going to be across channels. Of course, it's relevant in delivery. And of course, we know that biryani is one of the largest segments in delivery. So therefore, there's certainly relevance there. It has great relevance in takeaway, but there will also be a relevance in dine-in. The stores that we have launched as of now, Amit, the 3 stores, because we launched them in the time that we live in right now, are more delivery/carryout-focused stores. But over time, they will serve all formats and all channels. There will be stores that are full-service stores, which will provide an experience to customers. They'll have the brand visibility, they'll have prominent facades and they will serve dine-in customers as well in addition to takeaway and delivery. So we see this relevant across channels, not just delivery.
Sure.
As I said earlier, the response has been very, very encouraging whether it's on brand name, whether it's on the quality of food, whether it's the packaging, indeed on the -- on quality of delivery and quality of service that we've been providing. I think the task for us now is to scale up the brand in terms of the store footprint and also drive -- increase the spend on marketing and drive brand awareness and therefore drive trials. So that's the objective, and that's the way we are driving it right now.
Sure.
If I can add to what Pratik just said. While delivery is a very important channel, as you have seen in Domino's, we have spent a lot of effort in building the takeaway and carryout channels. Now both in Ekdum! and Hong's Kitchen, whenever we have built even delivery and carryout stores, if you visit the store, it has very transparent kitchen. So you can very clearly see how the food is being made. So it's an experience to even go and visit and carry out. And this is a -- there's a worldwide phenomena where our customers love to visit the store and pick up the food. And we are starting to see this channel growing very strongly even in India. And if you deliver an experience even in the way the food is being made, and I think that will be a differentiating factor from a dark kitchen, where you don't see anything, how the food is being made. So I would say, as Pratik said, that while we -- as of now during the COVID period we focused on delivery and carryout in both the brands, in opening new stores, but dine-in would certainly get added in the future.
The next question is from the line of Abneesh Roy from Edelweiss.
Yes, sir, congrats on very good numbers. And I've been dining... [Audio Gap] plant-based protein. So during bird flu, did you see a significant impact on the non-meat portion? So there was a big shift either to veg or to the plant-based protein? And any plans of taking this to, say, Hong's or Ekdum! or even Sri Lanka or Bangladesh?
Thank you for the question and thank you for the wishes. So on The Unthinkable Pizza that we launched, I think it was, as you know, the first plant protein product in the country, riding on the wave which has seized the world. And we brought this first to the country. We got a lot of trials. We got a lot of good reference from consumers. And it's done well for us. The bird flu, when it hit us, the question that you asked is right, that there was -- the way bird flu impacted and played out was in 2 parts. The first one was we did see a drop in non-Italian mix. But it was compensated. We did not see a drop in orders. The mix shifted from non-veg to veg. You're aware, Abneesh, that our predominant mix in Domino's is a vegetarian one. So when there was the headwind on account of bird flu, consumers quickly changed their behavior and moved to vegetarian if there was a concern. We saw this impact more visible in North and partly in the West, with little or no impact in the South and the East. As you're aware, South and East are much larger, non-veg markets for the country than North and West. So the impact was more localized in the North, a little bit in the West. Not a national one. To your question about plant protein, can we take it outside India or outside Domino's? The answer is absolutely yes. These are early days in the plant protein category space, and we will be watching it very closely. We now have the capability of making this play across categories. So that's something that we'll be looking at very, very closely.
Right. Second question is in terms of Domino's stores. So you have opened 50 new stores. But in the previous quarter, you have closed 100 stores. So my question is, are most stores, these 50, the replacement for the 100 which got closed? Second, if I compare to Q1 versus Q3, number of cities is still 3 down. So which are the 3 cities where you have made an exit and not yet entered?
That out of syllabus, question, Abneesh. I have to give the cities exactly, which ones we exited. As you're aware...
It's not a strategy issue [indiscernible]? Not a...
No. No, no. No, no, it's not a strategy issue. The strategy is not to exit cities or markets. The strategy clearly is to grow and add more stores. Let me take you back to Mr. Bhartia's opening remarks where he spoke about our assessment being that this country can take more than 3,000 Domino's stores. The demand for Domino's stores and the potential for Domino's stores, we see clearly in existing markets, markets like Mumbai, Delhi, Bangalore, et cetera, where we already have a large footprint, where we believe we can fortress these markets even more, improve the quality of service, the speed of delivery, et cetera, and make them -- and make a Domino's neighborhood in this area -- in these markets. So that's clearly one opportunity that we see. We see an opportunity for us to expand our presence in cities where we have either 1 store so we can open the second one, or where we have 2 stores, we can open a third one. And just to give you an example, there are more than 180 cities where we only have 1 store. So we can -- we see -- we can clearly add one more store and so on. And of course, we see the potential for opening Domino's stores in completely unserved, virgin locality, virgin markets. So this is an exciting phase in terms of Domino's expansion. The 105 stores that we shut in Q1 and Q2 were for reasons which were linked more to COVID and the immediate headwinds that we saw on account of dine-in constriction rather than a view on the fundamental potential in the future. Let me try and tell you which towns I exited -- that we exited. I think one of them was Shoolagiri, which is a town in Tamil Nadu between Bangalore and Chennai near -- on the highway. We exited in [indiscernible] and Ambaji. And I think we also exited Talegaon.
Great. And sir, one small follow-up. So Drive-N-Pick is something which McDonald's did a bit of learnings from there and -- because you're actually delivering to that person, to that customer. So eventually, would you charge a convenience charge that's the way you charge for delivery?
So Abneesh, our Drive-N-Pick has 2 features. The first 1 is that you can use the app completely to place an order. You can schedule a delivery time. You can do it within 15 minutes or you can set up an advanced delivery, advanced pickup order. And of course, you can complete the transaction online. So there is no cash exchange required. And of course, like you said, we deliver the product to the customer's vehicle, the car or the 2-wheeler. There is no -- there are no plans right now of charging any convenience fee for this channel. We believe that the takeaway channel is a channel we need to encourage and nurture and build. That is a channel where we have incremental occasions that can be played or built out. And it's also a channel that is, from a cost point of view, the lowest cost and the customer is the lowest-cost customer, right, cost to serve, because he doesn't use the store assets, he doesn't use our delivery manpower, he comes and picks up the food from the store. So we have to make this process and this experience as smooth and as friction free as we can and not impose any barriers that can come and constrain the growth of this channel. So there are no plans to impose any convenience fee on the channel right now.
We'll be able to take one last question. We take the last question from the line of Sujay Kamath from CLSA.
Hi. Can you hear me?
Yes. We can hear you.
Yes. Hi. So my question is between pre COVID and post COVID, how has the average ticket size of your delivery progressed? And if I could put in one more small, little question. I see that over the last 1 year, your app downloads have grown by about 60%. But can I get a sense of how your monthly active users have progressed over the last 12 months?
Sure. Sure, Sujay. Good -- those are very, very good questions. I think on delivery BPO and delivery size ticket, we have seen a very significant and very encouraging increase on account of 3 reasons. The first reason, of course, is that there is an in-channel increase with more -- with customers staying at home and, therefore, larger group sizes. That led to an increase in the ticket itself. So there was greater attachment of side, of desserts. People wanted to sort of go for more premium pizzas because going out wasn't an option. So they want to make the moment and make experience a little bit more memorable. So there was increase in quantity, upgrading on account of that. So that clearly helped. The second reason why delivery ticket went up was, of course, because we introduced a delivery charge post the first quarter. So both of those reasons actually led to a significant increase in our delivery ticket, which obviously helped us compensate for the slightly lower than 100 recovery in orders. So the order count was still lower than 100, but the ticket being higher helped us compensate. The good news, of course, is that now the delivery orders also had come back to growth, and it's no longer a -- and no longer a handicap, no longer a barrier. On your very, very important question about app downloads versus active base, I think we are very happy and very sort of pleased to see that not only have we had a significant increase in installs year-on-year. That has translated completely into both growth in monthly active users As also the growth in overall active base over last year. So it's not just installs, it's actually active users and monthly active users as well.
So, I mean, if I got your answer right, you're saying that the average ticket size was probably upwards of 20% year-over-year this quarter versus pre COVID. Is that fair to say?
No. No, that's a number that you sort of used, Sujay. I wouldn't say that. All that I would say is that the number was strong, and it was that recovery in delivery over the last 3 quarters has been led by ticket. Orders have now come back along with ticket.
Thank you very much. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Thank you, everyone, for taking time out today and being with us. To conclude, having now returned to last year's revenues, we are shifting the narrative from recovery to growth. Looking ahead, we believe that the foodservice category is poised for a period of hyper growth driven by upgradation, preference for trusted brands, omnichannel adoption and digital ordering. As JFL, we are ready to lead and participate in this growth and believe that we have the right strategy and all the necessary capabilities to win in this brave, new world. We hope we've been able to answer and respond to all your queries. And of course, should you have any further questions, please feel free to reach out to investor team, and we'll be happy to respond. Thank you. Have a good evening and stay safe.
Thank you very much. On behalf of Jubilant FoodWorks Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.