Global fast-food giants are fumbling their attempts to satisfy Indian appetites — McDonald’s is losing its mojo, Starbucks has cooled off, and KFC is stuck in neutral.
But one name is rising like a perfectly baked crust: Jubilant FoodWorks, the operator of Domino’s Pizza in India.
Jubilant is pulling off a near miracle in today’s inflationary world: it has managed to keep profit margins sky-high without raising prices.
That’s no small feat, especially when budget-conscious customers and food delivery apps are helping small eateries boom.
The stock is at a three-year high, leaving Devyani International and Sapphire Foods, which run KFC and Pizza Hut, respectively, far behind on the market’s 2024 leaderboard.
Read more: The ‘Make in India’ champ that beat Nvidia in 2024
Eating everyone’s lunch
Akriti Mehrotra, a research analyst at broking platform StoxBox, says Domino’s is faring better than KFC and Pizza Hut due to its larger footprint and early investment into delivery services. “Domino’s is more of a delivery play compared to others.”
That’s perhaps helping margins? Jubilant is chasing 75% gross margins this year, compared to rivals struggling to crack 70%. Revenue growth? A hefty 31%.
Jubilant’s momentum could push its stock up 12% in the near term, with low downside risk, HDFC Securities analyst Nagaraj Shetti tells MONIIFY.
Even Jefferies just gave it the coveted label of a “high conviction buy.”
Read more: The Dalal Street deceleration is real. What’s next for Indian stocks?
The Jubilant recipe
- Pocket-friendly pricing. Jubilant ditched delivery fees on its app and launched a 99-rupee ($1.20) meal option, even as inflation soared.
- Cheesier bites. Think molten cheese volcano pizzas and flavored Cheese Bursts. Quirky, but customers are devouring them.
- Partner power. Switching from Pepsi to Coca-Cola meant a bigger drink lineup, while desserts took center stage.
According to Kotak Institutional Equities, these moves are helping Domino’s grab market share even in weak demand conditions.
Crust overcooked?
The competition isn’t sitting back with folded napkins, though. Rival operators of brands like KFC, Pizza Hut, and McDonald’s are firing back with cheaper menu options, though macro headwinds are hitting them harder.
Sapphire Foods posted a surprise loss, and McDonald’s operator Westlife Foodworld saw profits drop. Burger King operator Restaurant Brands Asia also turned in a loss. All three had muted revenue growth.
Read more: Mahindra’s a rare bright spark in sluggish auto market
Thanks to Swiggy and Zomato, launching food startups is also easier than ever. Cloud kitchens and niche players like Third Wave Coffee, Wow! Momo, and Rebel Foods — backed by venture capital — are eating into the market.
The pizza operator has proven to be the standout story in India’s fast-food sector. It’s still navigating stiff competition and changing consumer habits, but for now, it’s delivering on its promise — and then some.
Jubilant has set the table for growth in India. Can it keep serving up wins?
Edited by Thyagu Adinarayan. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
