Jubilant Foodworks Ltd
NSE:JUBLFOOD
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Jubilant Foodworks Ltd
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Ladies and gentlemen, good day, and welcome to Jubilant FoodWorks Q4 and FY '21 Earnings Conference Call. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I would now like to 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 4 and Full Year 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. Ashish Goenka, CFO of Jubilant FoodWorks. We will commence with key thoughts from Mr. Bhartia. Thereafter, we will have Mr. Pota sharing updates on JFL's progress and his perspectives of the strategic imperatives. After the opening remarks from the management, we will have the session open for question and answers. A cautionary note, as always, some of the statements made on today's call could be forward-looking in nature, and actual results could significantly vary from these. A detailed statement in this regard is available on Jubilant FoodWorks' quarter 4 and FY '21 results release and earnings presentation, both of which are available on the company's website under the Investor Relations section. With that, I would like to invite Mr. Hari Bhartia to share his views with you. Thank you, and over to you, sir.
Thank you. A very good evening to everyone. I hope you and your loved ones are continuing to stay safe and healthy. The external environment in quarter 4 for the most part saw a sustained improvement over the previous quarter. After quarter 3 FY '21, we had recovered 100% of our previous year's revenue. Quarter 4 FY '21 saw a healthy return to growth. This was driven by strong growth in delivery and takeaway channels, though the dine-in channel still trailed the pre-COVID levels. Continuing our focus on aggressive store expansion, we opened 53 new stores during the quarter. This included opening 50 new stores of Domino's. As a result, we opened a total of 134 new Domino's stores in FY '21 against our initial plan of 100. We also opened 4 new stores in our international markets, which is 3 in Sri Lanka and 1 in Bangladesh. During the quarter, we announced an investment in DP Eurasia through the acquisition of our wholly owned subsidiary, Jubilant FoodWorks [indiscernible] Food Systems Cooperative for approximately GBP 24.8 million. [indiscernible] is a beneficial owner of 32.81% of equity in DP Eurasia, one of the largest Domino's franchises, which is a category leader in Turkey and a strong challenger in Russia. With this investment, the company intends to try and replicate its best practices in the new geographies of Turkey, Russia, Azerbaijan and Georgia through active Board participation. The company also acquired exclusive master franchise rights to operate and sublicense the iconic Popeyes brand in India and the neighboring countries. Popeyes will be an exciting addition to the company's portfolio of brands and is expected to become one of the key drivers of growth for us in the coming years. As the quarter was coming to a close, as you know, the country saw a sudden surge in COVID cases from the second half of March. The company and the group mounted a series of initiatives to support our employees and their families through this unprecedented crisis. A cross-functional task force was prepared across the group that extended medical and other assistance 24/7 to all those who were in need. We set up several COVID isolation centers across the country and also established oxygen concentrator banks in key towns. Swift action in arranging for hospital beds and oxygen helped save many lives. We also rolled out a set of ex-gratia benevolent benefits for the families of employees that we lost to the pandemic. This included up to 2 years of salary payout, continued medical cover for the family and support to the children's education. We also mounted a massive vaccination drive for our employees and their dependent family members in partnership with leading hospitals. More than 14,500 employees have been vaccinated with the first dose already. More than 480 store teams across 50 towns have been 100% vaccinated with the first dose, thus ensuring enhanced safety for themselves, their families and, of course, our customers. As the COVID case flows increased significantly in April and May, various state governments started responding by localized lockdowns and night restrictions. However, despite the reduction in operating hours and the impact of restrictions in dine-in, as you must have seen, our sales recovery in Domino's in April and May were strong, led by delivery in growth. So -- and of course, we expect June to be better. Finally, before I end, I must say that we have been truly inspired by the way our team members have, despite all the challenges, managed to keep the business going through the pandemic and continue to serve our customers and our communities. They have truly done us proud. With this, I would now request our CEO, Pratik Pota, to continue this discussion by sharing his perspectives.
Thank you, Mr. Bhartia. Good evening to all of you joining us today. I hope and pray that all of you and your families have been safe through these really trying times. So I'm pleased to report on our performance for Q4 FY '21, wherein we continue to improve sequentially and deliver the growth over the previous year. Revenue from operations was at INR 10,259 million, a growth of 14.3%. Domino's delivered a 14.8% sales growth during the quarter, backed by continued growth momentum in delivery and take-away channels, which grew by 28.7% and 76.9%, respectively. Dine-in recovery improved sequentially over the previous quarter, but was still significantly lower versus the previous year at 64.4%. EBITDA, at INR 2,492 million, grew by 47%. And EBITDA margin, at 24.3%, increased by 542 basis points year-on-year. Profit after tax, at INR 1,043 million, grew by 396%. And profit margin, at 10.2%, was up 782 basis points year-on-year. The company had liquid funds equivalent to INR 6,024 million by the end of Q4 FY '21 in the form of cash and cash equivalents, bank deposits and investments. I will now share some of the highlights of the last quarter. We opened 50 new Domino's stores consecutively for the second quarter and added 8 new cities, taking the city count to 293. As a result, we entered FY '22 with a larger and more optimized store network than when we started last year. We saw a strong recovery in the delivery and takeaway channels. Within delivery, our own assets grew significantly faster than aggregators. Delivery growth was strong across all town classes, with the smaller towns growing faster than the Tier 1 towns. Investments in digital and technology remains central to our strategy. And during the quarter, we introduced a machine learning-based model of personalized ranking to substantially enhance the preorder experience. A host of other improvements during the quarter were made to our digital assets to further minimize time taken to order, enhance user experience, reduce friction and target higher conversion. Our app installs were 6.1 million last quarter. Our international business saw a strong performance with both countries being EBITDA positive last quarter. Having turned the business around in Sri Lanka, we opened 3 new stores in the country and have now equaled our earlier high number of stores in the country at 26. We rolled out an updated set of digital assets, including the app in Sri Lanka that is already leading to an increased conversion and a significantly higher online ordering contribution to delivery sales. We opened one new store in Bangladesh. We remain very positive on the opportunity for profitable growth and network expansion in both these markets. We opened one store each for Hong's Kitchen and Ekdum! during the quarter. These were both small delivery carryout-focused stores. We were pleased to see the Hong's Kitchen orders grow at a healthy pace in quarter 4 and revenues returned to pre-COVID levels. It was still early days -- and we were focused on refining our product, pricing and overall proposition based on customer feedback and also on strengthening our store level operating processes and workflows. We remain committed to scaling up both these brands in a calibrated manner. We announced 2 significant investments during the quarter. DP Eurasia is a large Domino's business in Turkey and Russia, and our investment and consequent Board presence will allow us to transfer our learnings and share our best practices to these markets. We also signed an agreement with Restaurant Brands International for the master franchise rights of Popeyes for India, Bangladesh, Bhutan and Nepal. The chicken category is underpenetrated, and we believe that Popeyes will create excitement and help drive market expansion. As the company continues to grow and expand both organically and inorganically, we are building organizational bandwidth and capacity to drive these aggressive growth objectives. Towards that, we have created a new role of Chief Business Officer for Domino's India. This role will have end-to-end responsibility for Domino's in India from strategy to execution. I'm delighted to announce that Mr. Rajneet Kohli, the [indiscernible] Head of Operations, has moved into this new role as President and Chief Business Officer for Domino's India. Rajneet's replacement as Head of Operations for Domino's has also been promoted and selected internally. Mr. Amit Maheshwari takes charge as Operations Head for Domino's India. We've also promoted Mr. Avinash Kant Kumar as the President of the Integrated Supply Chain Network for JFL. We are fortunate to have an extremely capable talent pool that is the right combination of organic talent room from within and top talent onboarded from outside. I'm happy to announce another such addition to our leadership team. Please join me in welcoming our new CFO, Ashish Goenka, who has replaced Mr. Prakash Bisht. Ashish comes to us with a rich experience and proven track record from Nissan, Unilever and Airtel. We're also pleased to welcome Mr. Gaurav Pandey as the new Business Head for Popeyes. Gaurav has come to us from EQL, where he spent more than 16 years. And Gaurav has already begun building a strong team for Popeyes in India. While we are pleased with our performance of last quarter, what has given us even more energy and inspiration is the manner in which our employees came together in response to the savage second wave of COVID. Teams of volunteers worked 24/7 selflessly and tirelessly in providing health to employees and families in need. And to them, we owe a huge debt of gratitude. As Mr. Bhartia said earlier, we have initiated a pan-India company-funded vaccination drive for all our employees and their dependents and happy with the progress made so far. Owing to the second wave and the localized restrictions that were imposed, operating hours reduced considerably in the month of April and May. Despite that very challenging operating environment, the system sales recovery for Domino's in April and May was 94.4% and 87.7%, respectively, when compared to the respective months of FY '20. The strong delivery recovery helped mitigate a large part of dine-in and takeaway downside. Dine-in was shut pretty much in the month of May. In summary, we are happy with our all-round performance in Q4 FY '21. We look forward to driving an even stronger performance and aggressive growth in the quarters and the year ahead. With that, I would like to call upon the moderator to initiate the question-and-answer session.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss.
Congrats on numbers and the acquisition. My first question is on the recent data leak which happened. So you are an expert in delivery, and OLO has been increasing. So my question is, was there any temporary impact of this in terms of apps getting diluted or customers getting a bit wary on ordering online? And any learnings from this why this has happened? Because 18 crore orders were available on the web in terms of number, address, previous orders and all that. So clearly, that was a big [indiscernible]. So any learnings on how this can be prevented and what's the way forward?
Thank you, Abneesh, for the question. No, I think the data breach incident that happened to us in the month of March, wherein a hacker attacked one of our servers and was able to extract data. I think we moved quickly to contain the attack, contain the breach and avoid the spread. And therefore, we were able to prevent any operational impact on the business, nor was any customers' BII compromised. We moved immediately to have a global forensic agency onboarded very quickly. And they did a deep dive to identify possible causes and also recommend mitigation and strengthening plans. We also moved very quickly to file a complaint with CERT and also with the cybercrime cell. When the data leak happened, we also got an injunction from the Delhi High Court to ensure that ISPs blocked the URL where this data had been posted. We are also working, Abneesh, with leading security firms from across the world to do a complete scan and the comprehensive assessment of our security environment, also that of our partners'. And we will be implementing world-class security solutions and systems. And more importantly, we'll be ensuring that we stay updated through benchmarking periodically. And like I said earlier, there was no impact on our business or on operations either during the period of the data leak, nor subsequently. We haven't seen any impact in terms of either app deletions or customers moving away from delivery. And as you saw in the month of April and May, we are seeing, if anything, improve delivery growth led by online. But you can be sure that this is a moment of learning for us. We have not taken this lightly. And we will be ensuring that we implement the most rigorous security systems to prevent some recurring ever in the future.
Sure. That's helpful. My last question is on DP Eurasia. So we have not seen many Indian consumer companies build scalable, large, successful businesses in Turkey and Russia. So what was the thought process here? Second, what happens to the balance stake you're about around 33% stake? And any key learnings or any key success practices which you have already identified which can be taken there?
No, thank you, Abneesh. I think we talked about this in our media communication as well, the rationale for investment in DP Eurasia and Mr. Bhartia spoke about in his opening remarks as well. DP Eurasia is one of the largest master franchisees for Domino's Pizza globally. They have a very strong leadership business in Turkey and exciting challenges and position in Russia. And on account of 22.8% investment that we made in DP Eurasia, we have 3 Board seats in the company. And we have been using and we intend to use our Board presence to offer our insights, to offer our learnings and to share our best practices from India with them. We'll, of course, use to learn from them in turn and bring some of those learnings into the Indian market. So -- and it's a very exciting business. They, of course, are independent listed companies, so I would invite you to look at their published results to look at the performance. But we're happy with our stake in DP Eurasia, and no plan to increase it further as of now.
Just one follow-up here. So are there synergy benefits in terms of sourcing any meaningful opportunity available in those?
Probably still early days yet. Like I said, we have a Board position. We do not get involved in operations. So it's early to comment on whether there are any operating synergies as of now. But in case there are, of course, we will look at leveraging those.
The next question is from the line of Manoj Menon from ICICI Securities .
Great performance in times like this. I've got just 2 questions, not necessarily related to the current business environment or anything of that sort. One, Pratik, I just wanted your longer-term perspective on the relevance of Popeyes brand for India. While I completely get the chicken opportunity, but when I look at the global experience as well, is that what Popeyes is known for? Just wanted to hear from your thoughts because in my understanding, it is -- the brand stands for multiple things and not necessarily just chicken. Correct me if I'm wrong. So I'm just maybe speaking as a consumer. So that's one. What's the longer-term realistic opportunity for a brand which is just a few thousand outlets globally, so that's one, in India? The second, there are some chatter concerns at a global level on the gig work, the employee policies, et cetera, which happened about 6 months back which had a certain ESG connotation to it. And it has definitely affected some of the European companies and some of the global companies. There are 2 ways of looking at it. One, when I look at Jubilant, given the fact that most of the employees are on your roles, it may not be necessarily applicable for you. But just wanted to get your thoughts on both these aspects, [indiscernible] you currently.
Thank you, Manoj. Thank you for your question. And let me answer the first one to begin with on Popeyes. I think the way to look at the Popeyes opportunity is to size and look at the chicken opportunity in the country. So within the Western QSR market, chicken is one of the largest segments of the pizza category. Chicken is more than a INR 4,000 crores segment in India, and it's been growing very, very strongly. And if you look at the last 7, 8 years, we had a strong double-digit CAGR, more like 17%, 18%. And we believe looking at all the consumer data points that there is even now a significant opportunity to grow the category much faster into much larger size. Given that India is largely non-tech market and poultry contributes to 2/3 of the meat consumption in the country. Despite that, actually, the per capita consumption in India of poultry is far lower than even peer markets like Indonesia or like Thailand or any other market in the neighborhood. So that's the market opportunity. So coming to your question on Popeyes, Popeyes is a brand that is focused on chicken and in the last couple of years have disrupted the chicken segment in the U.S. on account of the successful innovation and very, very standout business marketing. The Chicken Sandwich that they launched shook up the entire category and established Popeyes actually as the market leaders in the market. I believe that our partnership with Popeyes will help us build a large, profitable and a vibrant business both in India and South Asia. And of course, we believe in Mr Bhartia's remarks, will become a very important engine of growth for us in the future. Yes, so that's your first question, Manoj. The second question on the gig work and what are the implications for us as GSL, I think 2 or 3 things. Like you rightly said, a dominant part of our workforce are people who are on our road for the -- we converted them from being fixed, whole or part time to be completely variable last year, as you're aware. So a bulk of our workforce, a large majority is our own employees, and this doesn't apply to us. But that said, I think using a gig talent pool remains an option for anybody whose business model is variable, whose revenue model is variable. It also serves to either to an employee cohort, to a talent cohort prefers to bring [indiscernible]. So that remains an opportunity for us to evaluate and leverage. Without -- and as you're aware, the new proposed [indiscernible] in circulation also proposes some fallback and [indiscernible] for the workforces there. So I think there is a middle ground here where we can potentially work with a big workforce and good in a way that's sustainable and that's [indiscernible].
Understood. So just an observation or a just quick follow-up, if I may, on the second aspect was what we wrote today morning as well that in our FoodTech Report was, look, the new labor codes are more conducive for the gig work in India, honestly, given the -- what the riders earned much, much more than their Western counterparts, et cetera, probably they are much more satisfied. So I don't think there is an issue in India per se. But the only context was maybe there is an ESG angle there which you may want to take it back to the Management Board, et cetera, to just look at it from a medium-term point of view. And the second aspect also here is that maybe this is a competitive advantage. That was my observation there because given that you're probably only the large -- 1 of the -- or rather the only large player who actually employ most of your riders on your roles. But at the same time, just one comment from your side that I do remember in June last year, you're actually variabilizing some of your costs. So that is only the reason I asked that. Is there any implication for you? Because is there a thought process to, let's say, move away from the current [indiscernible]? That's all I just wanted to know.
No, just a response that I would like to give on your comment about our workforce. And you're absolutely right. The fact that we have a strong operations talent pool in our stores who are our employees and who've grown with us over the years, that's a big source of strength for us. And we do not intend to value [indiscernible]. So even as we moved it to a variable model, we have ensured that we increased, if anything, our system for engaging our employees, ensure they were able to groom our talent from stores. So our riders who intend to build a career -- a longer career with us, we groom them, we get them inside the store, we train them on our store processes, on the make line, and they go to be shift managers and store managers and further on. So that's a big talent pool for us, and that's a big source of growth for us for talent, and we intend to make sure we strengthen that. There is no way we want to compromise on that. So you're absolutely right. That's a big source of advantage for us, we're cognizant of it, and we'll be doing whatever we can to strengthen that even as we drive efficiencies in the way we manage our workforce.
Got it. Got it. I have a couple of more questions. I'll come back in the queue. Good luck.
Thank you, Manoj.
[Operator Instructions] The next question is from the line of Vivek Maheshwari from Jefferies. As there is no response from the current participant, we take the next question.
Okay. Just one question for the moderator. You may want to have somebody check the line because Manoj also had a problem earlier. If you just want to check, I hope there's nothing wrong with the line.
Sir, the line is unmuted from our end.
Okay.
The next question is from the line of Percy Panthaki from IIFL.
Congrats on a good set of numbers. I actually will restrict my question only to one because it's a rather voluminous one, and it has a couple of 2, 3 subparts. So the question is mainly about the store opening opportunity. You have mentioned in the past that Domino's has a 3,000 total store kind of opportunity, so basically almost or be more than doubling from the current level. But if you could just break that down into a little bit of granularity, especially how many stores you plan to open in FY '22? And also, this total 3,000 store opportunity, approximately over what time period do you think you can realize that? That is part one. Part two is on Bangladesh. We have been having an opportunity to open stores here since many years, but we are really subscale here. It's like 15% of India's population, so it's a huge opportunity. So what really stops us from opening many more stores in this geography? That is the second part. And third part for Ekdum! See, kebab and biryani is a very, very sort of well-known, well-established model as far as the industry is concerned. Unlike QSR type of Chinese which you are doing in Hong, and therefore, there is some experimentation with the business model you have to do, we take them, there are other players who have already discovered and established a business model, and you just have to more or less sort of roll out stores there. So any reason why we cannot go very aggressive in Ekdum! and open sort of significantly large number of stores or at least open cloud kitchen so that we can serve at least a significant large population of urban India to urban in the -- through Ekdum! in the next 5 years? So these are the 3 subquestions that I have on the store opening opportunity.
No, thank you. Let me start by responding to the first one on the Domino's store opportunity. We are very excited with the potential for Domino's in India. We believe that there is significant room for us to grow Domino's stores in existing markets, networks such as Mumbai, Bangalore, Delhi, et cetera, in the Tier 2 towns and all towns where we have 1 store or we have 2 stores. We also have a clear opportunity for expansion into new markets. We entered 8 markets last year. And we believe that there is headroom for us to enter many, many more towns. There's also room for us to expand our network in channels, in education campuses, travel and transport, et cetera. And therefore, the runway that we see for Domino's in the country is very, very strong. And we intend to therefore grow our network aggressively over the next few years. I think it will be difficult for us to give a prognosis about the number of stores for this year because while we have the intent of rapid expansion, we also are cognizant of the constraints that we see on the ground right now and that we experienced in the month or months of April and May. And therefore, given the uncertainty around COVID, we're not putting the number out right now. But it would be fair to say that will be opening at least as many stores as we opened last year in FY '22. We're obviously trying to open more. So that's on Domino's in India. On Bangladesh, we recognize that we have an exciting opportunity that lies ahead of us. It's a large market, like you said, where we believe the pizza category is underpenetrated. There's room for us to grow the category both in terms of getting new users, also driving frequency. It's a category also where the digital ecosystem is just growing right now, it's young and it's growing, and we've gotten on the ground floor on that. So we absolutely intend to open more stores in Bangladesh. Unfortunately, in the last 15 months, as you're aware, I think the expansion has been sort of timed by COVID. But once that abates, we will go on rapid expansion in Bangladesh as well. And on Ekdum!, I think that we are absolutely aware of the fact that the Biryani segment, Biryani, et cetera, segment is a large segment, is growing rapidly, and it's a market where we believe we have a right to succeed. So we will be expanding growing the network for Ekdum! accordingly. Remember that income is just about 6 months old in the country, just under 6 months actually, of which about 4 months were impacted by COVID, if not all. And therefore, we have to ensure that when we make it, we make taking into account all the learnings and resolving the model completely and making sure that we get the proposition drive, the economics right, so they can scale up quickly. You're aware from the Domino's experience that we can -- when we need to expand and grow rapidly, which we will do. We'll do that in a calibrated way. And we will do that keeping in mind the learnings that we got many years ago from the Dunkin' expansion.
Okay. Understood. My question on Ekdum! was just because you mentioned in your opening comments as well that it's going to be a calibrated expansion. So it seemed to me that, I mean, it might get stretched over a longer period of time versus experimenting for 1 or 2 years, getting the business model right and then really exploding the number of stores. So it seems to be the former rather than the latter from your commentary.
Sure. Appreciate it. Thank you for that question.
[Operator Instructions] The next question is from the line of Latika Chopra from JPMorgan.
Two questions from my side. First is if you could share your full expansion or your business model for Popeyes. Any targets in mind from 3, 5 years, if you could share because you talked about you are setting up a strong team there. The second question is on the margin outlook, if you could give us some thoughts on how are you seeing the business on the raw material side, delivery charges will come in the base from June onwards. Do you see potential for margins for the core Domino's business to move up from [indiscernible]?
No, thank you, Latika. Thank you for your questions now. So let me answer your Popeyes question to begin with. In addition to what I said earlier for Popeyes being potentially a very strong brand and a big driver of growth for us in a category that's growing rapidly and that has a long runway to grow. I think also what research in segment interesting is the fact that it also allows us to play across channels. It's a category that will have a strong play in dine-in and takeaway, also in delivery. Chicken is a food that, like pizzas, [indiscernible] holds up well in delivery. And we believe that, therefore, Popeyes will also be an omnichannel business with a strong delivery buyers. It will also be a digital-driven brand, as all the brands now. We intend to open our first store in this financial year. And of course, we intend to scale up the network progressively over the next few years. We have an agreement with Popeyes for a certain number of stores and a commitment for a certain number of stores. But you know from our Domino's experience that, that ends up being the threshold, we end up exceeding. We are aggressive about store expansion. And therefore, that number ends up being just a notional number. So we will be building the network out aggressively after proving the model and making sure that we have the right store level economics established on Popeyes. So that's your first question. On the margin, as you know, in this quarter, we had a slight impact on food cost, the food cost increase versus -- sequentially versus last quarter. And this was the impact of inflation on cheese prices versus quarter 3. We also saw an increase in edible oil prices, albeit the impact of that was much lower. So there was impact on the food cost of these 2 inflationary items mitigated partly by a reduction in wastage. As we look forward, we believe that between potential inflationary headwinds that we might see and our own mitigation plan, we do not expect a big headwind on food costs or indeed on inflation in the year ahead.
Sure. And do you think on an EBITDA margin level, do you see a big drag in the new investments you're doing? I don't know how aggressive you go on the other format over the next 3 years.
Okay. So your question, Latika, was about drag on EBITDA margins, and I lost you after that. Please repeat it again, please.
So my question was on the EBITDA margins. You have moved up nicely over the recent years, right? You basically ended the year with 3.5% EBITDA margins. So I was just wondering with the such an aggressive store expansion plan for Domino's and the new investments you're doing, how do you see the overall EBITDA margins moving ahead? Do you see [indiscernible] business? Yes.
Yes. I hear you earlier properly. But to answer your question very, very clearly and unambigiously, we are looking at an aggressive expansion of our network. You've seen that our margins over the last 3 years have held up and improved, if anything, despite the fact that we haven't taken any price increases and despite the fact that we've gone back to rapid network expansion. Going forward as well, we do not expect a growth in our store network or indeed the expansion of our portfolio to other brands to lead to margin dilution.
The next question is from the line of Ashi [indiscernible] from Emkay Global.
Am I audible?
Yes.
Pratik, just on the expansion opportunity and the plans, your comments mentioned about driving hyper growth through innovation and portfolio innovation. So I mean you did comment on stepping up the expansion plans, but could you give any indication for next year's plans for Domino's and the other formats?
So actually, like I said in my response to an earlier question, we are focused on driving network expansion both on Domino's and other stores, other brands aggressively. We believe that post-COVID, the category structure will fundamentally change, which will allow the organized sector to grow faster. We allow for a for bigger brand play to be even higher because it will navigate towards trusted, credible, safe brands. The category become truly omnichannel. Delivery will become a much larger part of the mix even in smaller towns. Digital channels will stay large. All of these are areas where we have significant strength. So we expect growth to be strong in the years to come both for the category and for our business. Towards that, we'll be expanding our network. Unfortunately, given where we are right now in the environment, where there are operational on ground controls and restrictions and constraints in the pace of expansion, we are not able to give a specific commitment on the number of stores right now. But like I said, we'll be at least opening as many stores as what we opened last year and aiming for a higher number, subject to on-ground permissions permitting.
Got it. Got it. And could you also give out what's the minimum store opening target for Popeyes over the next 3, 5 years, whatever is there in the agreement?
No, Ashish, like I said, we have obviously have an agreement with Popeyes, but those numbers are more the minimum threshold. We are going for a much more aggressive number on Popeyes because we believe in the potential of this category. So no specific number to share as of now.
Okay. One last small question is if you can indicate if there are any price hikes you have taken or any change in delivery charges that one may look at.
So there are no changes in delivery charges or indeed any price hikes in the last quarter.
The next question is from the line of Rahul Arora from Nirmal Bang.
Just wanted to get a slightly medium-term outlook, Pratik, say, if you're looking out 5 years from now on the company, what percentage of your revenues roughly would be non-pizza?
I'm sorry, what -- how many years and for [indiscernible]?
Looking out, say, 3 to 5 years, what percentage of your revenues would be non-pizza now that we're diversifying into other aspects? What would these contribute to a percentage of our revenues 3 to 5 years from now?
No, got it. Got your question now. I think the exciting part about our business is that we see headroom for growth across all our brands, across all our portfolio brands. Whether there's Domino's in India or indeed it is a new brand, which obviously have a very low base and therefore obviously aggressive growth in the years to come, or if it is the Popeyes business or indeed the ChefBoss range or our international markets, Bangladesh and Sri Lanka, all of these businesses have an exciting potential for growth. And we intend to invest in growing these, like I said earlier, in a calibrated way and in the pursuit of what we believe is the hyper-growth opportunity. That said, it would be hard for us to put a number to how the mix will change. Domino's obviously remain a large part of our business, but we will see the new businesses acquire critical mass and scale over the next 3 years.
And you would look to leverage digital in a material way for them as well as you are doing for your pizzas right now?
Absolutely. So you have 2 foundational capabilities that we leverage across all brands. One of them is supply chain, where we will be using a supply chain strength and a commissary network to support our new brands and allow them to grow faster and to scale up faster. And the other 1 is digital, like you asked, where our digital capabilities will support all our new businesses.
Fair enough. Just 1 quick one, while it might be early days yet, Pratik, would you be able to sort of throw some light on how profitable the new ventures are vis-a-vis the core pizza profitability, say, the Chinese or the Biryani, if you were to compare them at a gross or EBITDA margin level, how do you see the profitability scaling up vis-a-vis the pizza business? Are they pretty much in line, more profitable? And do you see beverages playing a major role for you going forward in any way?
I think if I may replan the question a little bit, it would be an unfair comparison because given the scale difference between Domino's and other brands and given the vintage experience that we have for Domino's and the new brands. Let me retain the question to say that do we see the margin profile for these new brands be any different from Domino's, the answer is no. I think structurally speaking, all our new brands, whether it is Popeyes potentially or indeed Hong's and Ekdum!, which you're already seeing on the ground, you see them absolute, we have a similar margin profile to Domino's.
And would you be looking at beverages in any way, Pratik, as a push going forward?
Absolutely, beverages remain an important part of our product mix. And both in delivery and in dine-in, you will see us growing and investing in beverages going forward.
The next question is from the line of Sunita Sachdev from UBS Securities.
Just as you shared a little while ago the chicken market sizing opportunity, could you also share with us the size and the growth that you've seen in the pizza markets over the last 5, 6 years?
Sure, Sunita. Thank you for your question, and I hope you've been well. Yes, we see, as I mentioned earlier, a large opportunity for the chicken market. The pizza category as well, we have grown the category and we've grown our market share in the last 3 years. And we expect that to continue going forward. We have retained a large share of the pizza market over the last 4 years despite the growth and arrival of many more competitors, despite the addition of many new players across the country and despite the growth of delivery led by aggregators in the pizza market. So our market share has grown, our revenues have grown, and we've grown the category as well. And we expect that to continue going forward.
No, no, my question was in terms of market size, you shared the chicken market is INR 4,000 crores. How big is the pizza size opportunity in India? And if you could break that up into volume versus pricing in terms of what has happened in the last 5, 6 years.
So Sunita, if you look at the chicken -- the pizza market size, our revenue and our market share, 70% will give you the total market size. And if you look at your other question about volume size, I think the really encouraging part about the last 3 years performance has been the fact that our growth has come on the back of expansion in orders, expansion in customers and growth of frequency as well. Our pricing, as you know, has been just not there. We haven't taken pricing in the last 3 years, stay for a very small correction that we made. So there has been no pricing that we've taken. And our growth has been fueled by orders, fueled by delivery within that and within that by our own assets. So the business is fundamental to become structurally better over the last 3 years, and we've grown on the back of order count and new customer acquisition. As market leaders, Sunita, we are cognizant of our responsibility of growing the category and not scrapping for just for market share. And the last years, I think what's worked well for us is that we have grown, the category growth.
Sure. My second question is on delivery. I mean I know there is -- now it's going to be in the base. Delivery obviously gets charged to revenue, so it obviously has a level of -- a job of inflating to some extent the same-store sales growth. So going forward, what really is your outlook for same-store sales growth given that the 3, 4 percentage points will be lower given that delivery will be in the base?
So Sunita, you're right. I think starting next month onwards, we start seeing delivery charges come in our base. But our growth will be driven on the back of order growth coming back. If you look at our comments for last quarter, we were happy to see order growth come back in quarter 4 after the first 3 quarters where our recovery was driven more by the ticket and the bill value. We were happy to see a recovery of orders in quarter 4 at an aggregate level. So as we look ahead, we see growth continuing on delivery, strong growth on delivery. We see strong growth continuing on takeaway, and we see the dine-in channel come back. Dine-in plays to a very important occasion of socializing of people getting together and celebrating. And we believe that once the immediate concerns on COVID abate, when vaccination is done at scale, dine-in will come back. Going forward, we see delivery and takeaways consumption holding up and the dine-in recovery giving us that impetus to overall order count. And therefore, we expect orders and order growth to drive our revenues going forward.
All right. That's a really optimistic outlook. Just a small comment on the side. I know this is not a question. You guys do give us download -- app downloads every quarter, the number of app downloads every quarter. But I noticed your investee company in Eurasia provides a percentage of revenue that comes from their own app. It would be nice if you could also provide percentage of delivery, the percentage of order value coming in from your own app, that will be really helpful.
So thank you for that, Sunita. It will be evaluated. Thank you.
The next question is from the line of Tejash Shah from Spark Capital.
My question also pertains to app first. So the lifetime addition that we would have done on apps till last March, we have actually added 70% of that user this year itself. So what is your read on this momentum? Is it more pandemic led or you are seeing any structural change in the momentum here? And second question here is that what is the profile of the app using customer? Is he or she much more profitable than a non-app user customer of ours?
Thank you, Tejash. Thanks for the question. On your first question on app downloads and on the app -- the expansion of app base -- app install base, I think that's -- that has been an outcome of a very clear and a very concerted strategy of driving our own assets disproportionately. We have increased our investment on digital marketing and performance marketing over the last 1 year. And while we have had that going even earlier, post COVID, we increased that significantly. We in fact doubled our performance marketing spend last year versus the previous year, number one. Number two, we've ensured that the most attractive offers for our customers are on our own app. So if a customer is looking for the best possible offer, you'll get that on our own app and not on any other platform. Number three, for a customer who is a medium or a high PBT customer of Domino's, the most intuitive and the most seamless customer experience actually comes on our own app. It is much faster, the number of steps to ordering are much lower, the friction is much lower, and that has led to a much larger segment of our high-frequency and medium-frequency customers ordering from our own app versus aggregators. So this is the second part of your question, our own asset customers and own app customers are higher frequency customers. They stay with us longer. They were higher ticket size than aggregator customers and, therefore, have a much longer, much larger lifetime value than others. So our most valuable customers engage with our on own assets.
Sure. Second and last question is went to pandemic last year, now we are seeing many earlier dine-in only formats have also developed capabilities of deliveries in the last 12 months. And now we are hearing that even NRI is planning to launch its own food delivery app. So post pandemic in a normalized world, how do you see competitive landscape just on delivery part versus pre pandemic era?
I think clearly, post pandemic, the delivery market has grown faster. And I think through third quarter of last year, most restaurants realized that delivery was here to stay. Of course, our category in our business, we know that for a longer time now. But for many other categories, including casual, et cetera, I think the penny drop movement came toward the second half of last year. And I think everybody realized that this was a fundamental consumer behavior change. But even as dine-in would resume over time, delivery was here to stay. And which is why a lot of brands are investing in driving their own assets and on the digital stack. In our case, of course, you're aware that we've been investing in digital for many years now and has been a big reason for our success. I think what will drive delivery, what's always driven delivery has been ease of ordering and a smooth end-to-end customer experience. Given the fact that we have our own digital assets and we also have our own last mile delivery system that we control, we believe that we provide the best delivery experience to our customers. And delivery will remain, has always been and will remain a source of competitive advantage for us.
The next question is from the line of Prasad Deshmukh from Bank of America.
Pratik, so 2 questions. Firstly, now that we are scaling up in 3 new categories -- 3 new brands rather, what will be the new organizational structure? It looks like you guys are appointing Chief Business Officer, so officers for each one of them. So just wanted to understand what the new structure will look like.
In the new structure, we have the Chief Business Officer for Domino's India reporting into me. The Head of Operations and the Head of Marketing report into the Chief Business Officer of Domino's India. Other than that, there is no structural change. The business heads for the new brands, for Popeyes and for international and indeed the other functional head is reporting to me as they have been doing in the past as well.
Got it. And second question is on operational synergies. So in terms of these 2 brands being added to the portfolio that is Ekdum! and Popeyes, what kind of sharing of resources is possible when they are scaled up especially from a sourcing perspective and the store operations perspective?
So yes, I think one of the advantages that we have as Jubilant FoodWorks is that we have some very basic foundational capabilities that we've developed over time on Domino's and which we can replicate and to support the new brands as well. Clearly, supply chain is one area where our sourcing capabilities, our manufacturing and settled kitchen capabilities, our vendor partnership that we've pulled over the years, all of these will become big possible strength for the new brand. And of course, the new partnership that we will be able to tie up and learning that we will have. But the foundation of our supply chain will be something that will work well for a new brand, number one. Number two, the fact that we have now over the years built a very strong digital backbone with a very strong digital team and growing digital capabilities, these capabilities will also be used to support all our new brands. And again, that's an area where Our legacy friends and Domino's can support growth and customer experience in our new brands. That's number two. Number three, the capabilities that we've acquired in Domino's of hiring current [indiscernible] in our stores, deploying talented, training them, supervising them, growing them and grooming them, again, that capability is something that we will replicate in the new brands. That said, you also have to grow and acquire new capabilities, learn about new categories, learn about innovation in these categories. And that we will do and we are doing by investing in building dedicated teams for these new businesses. So the new brands going forward in new businesses will be a great combination of dedicated, focused teams which are only that brand remit on their agenda, supported by cross-functional team and help replicate best practices from other brands and from Domino's.
So just to clarify, so these are also commissary-driven brands.
That's right. We will go over time to be commissary driven brand, absolutely, both of them.
The next question is from the line of Jaykumar Doshi from Kotak Securities.
My first question is, could you please share your thoughts on pricing lever? We have not taken any price increase in the past 3 years other than the introduction of delivery charges. And so how should we think about it from the next 3-year perspective? Are you more open to take price increase irrespective of how RM price environment is? And because when we benchmark Domino's prices versus other pizza brands especially on the delivery platforms, there is a significant gap or Domino's has a decent value to competition today. So if you could share your thoughts on pricing lever.
So Jaykumar, thank you for your question. And your observation is accurate and spot on that over the last few years, we've been very, very -- we haven't taken price increase. And today, our prices are lower and advantaged from a consumer point of view vis-a-vis most of the brands in our category. We believe that by not taking pricing and challenging ourselves to peak costs out to drive margins has led our business model stronger, more robust and more future-ready. That's the first point. The second point is that in the post COVID era, where the recessionary incomes have been challenged and will be challenged, we know that we'll be facing an extremely value for money conscious consumer. In any case, Indians are driven by value for money and very, very price conscious. And we believe that going forward as well, if anything, that expectation will increase. That said, we recognize that we have headroom in pricing, and we have a gap with vis-a-vis competition. So as and when the need arises, if inflationary headwinds come our way or if we believe there's an opportunity, pricing has been and it always remains a valid lever for us to drive revenue.
I have one more question. You mentioned a couple of occasions that you can leverage the digital capabilities of Domino's to replicate and support the new brands. So are there any restrictions from Domino's? And can you use the same platform sales framework that you're using for Domino's up for other brands as well or there will be some thoughts there?
So Jaykumar , I think what I meant when I said sharing best practices is about using our knowledge on technology, which is not brand-specific, which is a platform knowledge about technology, about new customer experience, about the UI UX, learning and so the learnings on supply chain side to drive our new brand. Domino's will be evolved off completely from a user experience point of view and an asset point of view, but the learnings will be used to drive our growth in the new brands.
Mr. Doshi, does that answer your question?
Yes, that's all.
The next question is from the line of Aditya Soman from Goldman Sachs.
My first question is on volumes. You indicated that you saw some volume growth. So could this be sort of overall volume growth for the number of pizzas sold? Any sense you can give us on that?
Aditya, your question was about volumes, is that right?
That's correct. So I mean you indicated that you returned back to volume growth, so would this be sort of overall volume growth? Because I mean, if I do my just -- if I think of the math, I mean, obviously, once we remove the delivery fee, it doesn't seem to suggest a huge amount of volume growth.
So Aditya, the volume that I was referring to was to order volume growth. We grew in orders vis-a-vis same time last year in quarter 4.
Understand. That's very clear. And secondly, in terms of -- I mean you just answered the previous question. But can you have a super app of sort, where you can on a single app have all your brands? Or that's not possible?
So Aditya, I think our focus right now remains on driving a strong set of digital assets for Domino's and for each of our new brands individually. And that is the primary focus because each of these brands are distinctive unique brands with different customer franchises, and we intend to therefore make sure that we have strong assets by themselves. Potentially, can we have super app, hypothetically, I guess we could. But as of now, our focus is on developing our own assets individually for these brands because they are different segments with different customer cohorts, and we have to make sure that we are relevant for each one of those.
And the footprint is completely different. And the footprint of the brand is very much different right now.
Yes. No, I understand that fully. I mean I'm just thinking from, let's say, 5 years out when some of these are sizable, could you have some sort of a super app, but I think your answer sort of clarifies that. That's it from my end.
The next question is from the line of Karan Taurani from Elara Capital.
My first question is in terms of any kind of risk you believe are there in the new business initiatives, specifically with Hong's Kitchen and Ekdum! Biryani given the kind of product they are right in terms of standardization and the kind of [indiscernible] sources, everything put together. So any kind of risks you can highlight there and how do you plan to mitigate that?
So Karan, your question was about any kind of risk did you say?
Yes, any kind of risk in terms of business execution or in terms of scale for these businesses and how do you plan to mitigate the same.
Got it. Thank you, Karan. As you said, each of these brands have a unique set of challenges. They have a different set of products, different processes, different set of vendors in some cases and differential challenges in terms of standardization and ensuring consistency. Our teams are working on making sure that we have the processes put down and ironed out, and we're happy to see the progress we've made already in Hong's Kitchen and, more recently, in Ekdum!. Despite the fact that you don't have a standard set of guidelines to follow like we do, for example, in Domino's, our team have encouraging progress in putting down those SOPs, refining them, making sure that we're able to give a consistent experience to our customers. Do we see a risk there? No, we do not see a risk, but that's definitely a work stream that is a new one for us and that's what we're working on.
Right. And the second question would be in terms of trend reversal. Of course, this year, you did see outperformance versus the industry because of your exposure to delivery. Now probably, say, when a unlock happens in a big way, footfall come back in malls, high street put together. Do you expect maybe 2 or 3 quarters of further performance because of the shift towards the players which are heavy in terms of dine-in? That's one. And within that also, what about the share in terms of this organized players gaining? Do you believe that, that is sustainable over medium to long term as well? Or these are just COVID trends, and again, the numbers have basically come back ably for the smaller and the other players as well?
So Karan, actually, I would see this a little differently in your question. I think if you look at our May performance, which we've called out in our release, despite the fact that dine in was pretty much shut completely, despite the fact that there were strong mobility restrictions which impacted the take-away channel, we have delivered an 88% recovery, which tells us the amount of slack that delivery has picked up by itself. Number one. Number two, we are seeing dining restrictions getting slowly revoked. And as, again, as the sentiment improves, as people get vaccinated, you would see the dine-in channels start coming back. We had, if anything, will give an incremental tailwind to our revenues rather than take away from an overall recovery. Like I said earlier, dine-in plays towards different occasions compared to delivery. And as dine-in restrictions are removed, we will see that come back -- see the channel come back in the future. Indeed, if you look at the last quarter, quarter 4, you saw the dine-in recovery play out very clearly. We had a strong recovery in quarter 4 at 64%. And outlook on that, March was even stronger. So our data in the past has shown us that when supply constraints are revoked and are removed, the demand comes back. And we expect the same trend to play out in the future. And that's what gives an excitement. We believe strongly that the delivery habit that's been adopted in many new towns and town classes by customers, for the larger part, that delivery habit will endure. And as dine-in restrictions go away, we should see dine-in come back as well. And that gives us confidence that we will see strong growth in the future. Number one. Number two, on your question around the organized brand share, it's a very fundamental trend that we are seeing and that we have seen for the last 1 year across multiple categories, not just in food service, that the bigger brands are getting preferred and are gaining in share as a result because consumers want the conviction and the certainty in the safety of brands, good quality standards, standards they can take almost as did. That trend will continue. And we will see strong brands and big brands, credible brands have greater momentum. We don't expect that to reverse.
Yes. But just an exponential gain this year because of COVID because clearly standalone strong, smaller chains has scaled down, they still remain to be short. I mean the entire about still 20% of the restaurants may [indiscernible] even more still remain to be shut. So just trying to get that this exponential share which you've gained this year or maybe in the last 6 months,for the organized players, is that kind of sustainable? Or you could see some trail pattern reversing on that as well?
No, we do not expect to see the situation normalizing in any way impacting our market share. I do not think so at all. We're actually very excited by the good process that lie ahead, and we don't expect to see any impact on market share, quite the contrary.
Right. So on a side, of course, the market share gains would be there, but maybe you have a year wherein because of the exponential gain in one year, in that particular year, you'll say probably FY '22 or second half of FY '21, that gain would not be as compared to pre COVID because the other restaurants are opening up and the competition increases, something of that sort. I mean, that's not expected from organized payers.
Karan, I will repeat what I said, which is that we do not expect the situation being normalized, leading to any adverse impact for us, not at all.
Pratik, if I can add, this is Hari Bhartia, what we saw during pandemic is even in the small town, the habit of delivery has been consistently growing. Now delivery, once it grows and once people become habitual to delivery, even in smaller second- and third-tier towns, it tends to stay sticky, tends to stay. It doesn't go back to the original level fully. That's what we believe. So I think the post COVID environment has actually, during the COVID, we had opportunity to show our delivery prowess to customers who were not -- who were mostly coming to the stores to experience dine-in. So I think to us, we believe it opens up more opportunities. People who were not digital, were not ordering digitally started ordering digitally in the smaller cities also. So I think it's a good habit. Today, we see, Pratik can tell you, we have almost everything coming digitally to us. All orders, almost 95%, Pratik, if I'm correct.
That's at 98%, absolutely.
98%, yes. So I think post COVID environment is only giving us more opportunities.
Ladies and gentlemen, we take the last question from the line of Sheela Rathi from Morgan Stanley.
Thank you, Mr. Bhartia, for making the comment to the last question. Just a question there. Do you think going ahead, from a strategy point of view, you believe that the new store additions will be more in newer cities because that's where you think that the tailwind will be there? I mean my question is that, on an incremental basis, do you think that new cities will be the big driver of the growth for Domino's?
No, thank you for the question, Sheela. I think the really encouraging and exciting part of the Domino's opportunity that we see ahead of us is that we see ample headroom to grow our store network both in existing towns and in new town. Let me give you examples of Bangalore to just illustrate the point. 3 years ago, we had less than 100 stores. And as we speak today, we have more than 150 stores in Bangalore. And Bangalore is one of the fastest-growing markets for us. We see the same opportunity for us in every market, market after market, whether it's Delhi-NCR or Mumbai or Kolkata or a Hyderabad or Chennai, I could go on. We see a lot of headroom for growing our store network in all of these markets, in coming closer to our customers, in coming closer to our communities, producing drive time, increasing, improving speed of delivery. So that will -- that's a big opportunity for us. Equally, like you said, we also see opportunity in opening stores in towns where we don't have a presence right now. So for example, we are present in 293 towns. There are almost 700 towns in this country with a population of more than 1 lakh. So clearly, we see headroom for us to grow the network, to expand the network by entering many of these towns. And that's what makes our growth prospects so exciting, that we have almost so to speak a problem of plenty. We have opportunity to expand both the new towns in new channels and in new town and existing towns.To the moderator, I just have one request. We had in the beginning [indiscernible] we couldn't hear. If he is there, we could take one last question.
Let me just check, sir, allow me a minute, please. Mr. Vivek Maheshwari has disconnected.
Okay.
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to the management for their closing remarks.
Thank you, and thank you, everyone. We appreciate the time that you spent interacting with us today. I hope that we addressed all your questions and very comprehensively. And with that, if you think we haven't answered the questions or any areas that you have a clarification that we need to provide, please get in touch with the IR team, and we'll be happy to engage and to clear those out. Thank you so much. Stay day, and good evening.
Thank you. On behalf of Jubilant FoodWorks, this concludes this conference. Thank you all for joining. You may now disconnect your lines.