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India is Domino's 2nd-largest market after US, says Jubilant

Business Standard:  August 12, 2015

Mumbai: India is Domino's Pizza's second-largest market after the US, according to the FY15 annual report of the Indian franchisee, Jubilant FoodWorks.

In a just-released annual report, Jubilant said the pizza chain's store count more than doubled in FY15 to 876 from 378 in FY11. The company has not reported its first quarter numbers for FY16. While the Indian market was still less than a fifth of the US in number of stores (US market has more than 5,000 Domino's stores), it still was ahead of the UK, Australia and Canada, the annual report said.

Interestingly, much of this growth in store count came against the backdrop of a marked slowdown in discretionary spends. While Jubilant saw a rebound in same-store sales growth (SSG) for two successive quarters in FY15, the company said for the full year, SSG remained flat at 0.05 per cent versus 1.6 per cent seen in FY14. SSG is the growth coming from stores that have been in business for a year or more. It is a key indicator of a retailer's performance.

Four years ago, Jubilant's SSG was in the high teens as consumer sentiment remained high and eating out as a habit grew. From then to now, analysts said, the slide in SSG has been dramatic for most food retailers, including Jubilant. Rivals such as Westlife Development, franchisee of McDonald's in the west and south of India, and Yum! Brands, which owns Pizza Hut and KFC, have seen a decline in SSG for the June quarter. The decline for Westlife was five per cent, while it was two per cent for Yum! Brands, analysts said. But most food retailers continued to add stores with the hope that sentiment might pick up.

The Indian food services market was estimated to touch Rs 10 lakh crore in the next five years from Rs 6 lakh crore now, a growth of 66.67 per cent.

In the last four months of FY16, Jubilant alone has added 35 stores to its Domino Pizza chain, taking the overall count to 911. Dunkin Donuts, the other brand for which Jubilant is a master franchisee in India, added six stores in four months of the current fiscal, taking its overall count to 60. The plan is to steadily ramp up numbers of the two brands, Jubilant had indicated in the past, a point it reiterates in its FY15 annual report as well.

Rivals such as Yum! Brands are also keeping their momentum going as far as store launches go. The company is expected to add over 280 stores to its existing count of about 714 in a bid to take it to 1,000. While the company has set a target of 2015 to do this, analysts expect the company to achieve this in the next few years. Westlife has already said that it plans to add 175-250 stores in the next three to five years to take its McDonald's store count to over 500 from the current 375.

Further, the project cost of the 11.4-km Versova-Andheri-Ghatkopar route surged to Rs 4,321 crore from Rs 2,356 crore. The Reliance Infrastructure (R-Infra) arm Mumbai Metro One Pvt Ltd is the Metro operator.

As far as Navi Mumbai airport is concerned, the state-run City and Industrial Development Corporation (CIDCO) expects to receive a request for proposal (RFP) from qualified bidders, including GMR Delhi, the GVK-led Mumbai International Airport Ltd, the Zurich Airport with Hiranandani Developers, and MIA Infrastructure of France along with Tata Realty. CIDCO hopes to award the contract by December-end for the Rs 15,000 crore airport project.

Gupta said he has appealed to the Maharashtra government to terminate PMC contracts awarded to Louis Berger during the Congress-NCP rule. Further, he has urged the government to blacklist Louis Berger from all future contracts. He added this is necessary, especially when the US-based company on its own had admitted to paying bribes in Goa.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.