Covid-19 pandemic pushes Jubilant FoodWorks to diversify operations | Business Standard News

Clipped from: https://www.business-standard.com/article/companies/covid-19-pandemic-pushes-jubilant-foodworks-to-diversify-operations-121040300054_1.html

Analysts say shift to organised biz will bring more consumers to restaurants

Jubilant FoodWorks, the master franchisee of Domino’s Pizza and Dunkin’ Donuts in India, has forayed into the biryani segment

Jubilant FoodWorks, the country’s largest food services player, is betting on new categories at a time when rivals are keeping their attention firmly on their existing operations amid a raging pandemic.

In the past six months, Jubilant FoodWorks, the master franchisee of Domino’s Pizza and Dunkin’ Donuts in India, has forayed into the biryani segment, expanded its Chinese food chain Hong’s Kitchen and invested in Barbeque Nation, a kebab chain. It will also bring Popeyes, an international chicken fast-food brand, into India and neighbouring countries as part of development and franchisee agreement, it said last week.

“Chicken is one of the fastest-growing categories in India. Popeyes will be an exciting, new addition to our portfolio and is expected to become one of the key drivers of growth for us in the coming years,” Shyam Bhartia, chairman, Jubilant FoodWorks, said.

In contrast, both Westlife Development, which runs McDonald’s restaurants in the west and south of India, and Burger King India, listed peers, are seeking to add more stores of their core burger chains, taking advantage of the low rentals across cities to lock properties quickly.

Westlife Development operates 304 outlets, which it proposes to take to 500 by FY23. Burger King India, which listed in December 2020, has said it will open 700 restaurants by December 2026, up from 268 outlets now.

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Jubilant FoodWorks, which runs over 1,300 Domino’s Pizza stores in India, has a strong new-store roll-out plan for Domino’s Pizza in the country. It will add over 110 new stores in FY21, it said in a recent investor call. The entry into new segments, however, is intended to hedge its risks, sector experts said.

Abneesh Roy, executive vice-president, research (institutional equities), Edelweiss, says a diversification exercise will allow Jubilant FoodWorks to tap more consumers as they shift from unorganised to organised food service operators. The entry into new areas is also intended to partake of growth.

“Pizza is just one segment within food services. There are many more cuisines and food choices that consumers have. Jubilant is tapping those segments to partake of overall growth,” he says.

Analysts at brokerage Motilal Oswal say the domestic food services industry, estimated to be Rs 4.2 trillion in size, is expected to grow by 9 per cent over the next five years. Of this, the quick-service restaurants (QSRs) have been the fastest growing and will remain so for the foreseeable future.

QSRs are expected to grow at the rate of 19 per cent over the next five years, driven by affordability, aspirational and well-known brands and benefits of scale and sourcing among other factors, Motilal Oswal said. “In the post-Covid world, where 30-40 per cent of restaurants are expected to shut down permanently, QSRs are likely to emerge stronger and are well placed to gain share from unorganised players,” the brokerage said.

Industry sources say Jubilant FoodWorks may not stop here. The company could look at getting into South Indian cuisine, a big food segment in India, in the future. The sky is clearly the limit for the company.

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