Emerging Market Insider

Jubilant Foods: Capitalize on Growth of American Food Franchises in India

By on December 1, 2012
Jubilant foods

Jubilant FoodWorks is a food-service company that serves as India’s exclusive franchisee of Dunkin Donuts and Dominos’s Pizza. The company is engaged in the business of operating and running these fast food outlets across the country.


The food services industry in India right now has a good amount of potential, given that the penetration in the overall food industry is still very low. Many new competitors are entering the sector, while the existing players are trying to rapidly. The industry has also benefitted on from gradual change in preference from traditional formats, to more new and innovative retail. This change in consumer preference should translate   into   increased consumption.

According to Euromonitor, the Indian consumer food service industry has immense scope to grow from its current estimated value of $80 billion. There’s also significant headroom for expansion as the current per capita consumption in India remains low at less than 1/3rd of the level seen in other Asian countries.

The following are some additional factors that should serve as a growth catalyst in the medium term:

Rising Middle-Class and Disposable Income:The Indian middle- class is expanding with growing disposable incomes. According to McKinsey Global, number of households in the middle-class category in   India   in   2005   was   14.5   million   and   is   expected   to grow to 64 million by 2015 and 100 million by 2020.

Changing food habits:  Growing exposure to global influences is driving a trend in the Indian consumption habits, and consumers are seeking new experiences. Also, there are changes in culinary tastes and dietary patterns due to demographic shift towards more nuclear families.

New economic centers in tier II/III cities: Growth in India today is not concentrated and restricted to tier I or the metropolitan areas. The growth is also likely to be more evenly spread with tier II & III cities, as they have become attractive destinations for a variety of businesses. This presents a key opportunity for future growth due to rising income and increased awareness in these markets. The company has been focusing on opening new stores in several tier II & III cities and has received a good response.

Increasing  presence  of an organized  food format: The food industry has continued to see a shift towards getting more organized—such as home delivery, casual dining restaurants, fast food services, and food courts. A lot of this has to do with expanding food options, hygiene, and convenience.


The company’s introduction of new products, rapid expansion in new cities through new stores, aggressive and innovative marketing, and emphasis on customer service resulted in a good fiscal year for the company. Based on consumer preferences and feedback, they will continue to innovate and evolve constantly.


The food industry in India continues to see the entry of several players, both in the organized as well as unorganized food sector. The market also is seeing a growing presence of several international chains. In terms of competition on the overall level, the company is being challenged by all segments of the food market. With respect to Domino’s Pizza,  the  company  competes  with  many  national  as  well  as international pizza players such as  Pizza Hut, Papa John’s, Smokin Joe’s and Pizza Corner. The increase in competition may lead to pressure on the pricing strategies, demand, and possibly overall growth, translating into potential loss of market share.

With  respect  to  the  company’s  plans  for  Dunkin’  Donuts,  the company tends to face competition from existing players in the café format or all day part food format, and currently sees limited competition in this segment. 

Market Share

Jubilant is the market leader in the organized pizza home delivery segment in India, with over 70% market share. The company’s management and product development program has enabled the company to achieve a strong position in the marketplace. 


The momentum in the business growth was largely driven by good same store sales growth.  At the end of FY2011, the company had 378 stores across India; with 72 of those stores being new openings. The company has a presence in 90 cities, 21 of which were entered in FY2011.



For FY2011, the company reported a 60.33% increase in Income to Rs. 6,802.71mm, compared to Rs. 4,243.02mm in FY2010.  The sales growth was largely driven by enhanced penetration of the Domino’s Pizza network, opening of new stores, improved same store sales growth and new product offerings.


The company recorded EBITDA at Rs. 1201.68mm (margins at 17.72%), compared to Rs. 655.94 mm (margins at 15.47%) in FY2010.   The 2.25 percent increase in margins is mostly attributable to the healthy improvement in sales and an efficient cost management system.


The company reported profit before tax at Rs. 924.29mm (PBT margins at 13.63%) for FY 2011 in comparison to R330.49 million (PBT margins at 7.80%). This growth was primarily due to higher EBIDTA

Profit after tax went up to Rs. 720.01mm (PAT margins at 10.62 %)  in  FY 2011  in  comparison  to  Rs. 329.70mm (PAT margins at 7.78%) in FY2010.

Business drivers

Going forward, the company plans on sustaining its level of dominance in the industry with its flagship brand, Domino’s Pizza, as well as its efforts to introduce Dunkin’ Donuts in the Indian market.


The plan is to continue to increasing its presence in the country, as well as focus on developing its operations in Sri Lanka. In India, with a current network of 378 stores across 90 cities, the company plans to continue to expand its store network into existing cities and tap opportunities in Tier II and Tier III cities. For FY2012, than plan is to launch around 80 new stores, all backed by growing consumer demand. The first Domino’s Pizza store in Sri Lanka is expected to launch in July.

Dunkin Donuts

Looking forward, the company seems to be most focused on its recent association with Dunkin’ Donuts.  The Dunkin’ Donuts model will localize its offerings to consumer likings in order to create a unique menu. Over the years, Jubilant has developed an all-round   operating expertise including in-store planning, store operations, logistics, human resources, product development and marketing.

The company plans on rolling out the Dunkin’ Donuts in a phased manner, with the initial focus being primarily on metro cities.

The eventual target is to roll-out around 80-100 stores over a span of 5 years.


Consumer spending

A primary influence for the company’s business model is  the demand for its products by the consumer. Changes in consumer preferences, economic scenario and levels of discretionary spending are major influencers for the Company’s growth.

Dependence on its master franchise agreement

There is a heavy reliance on the company’s agreement with Domino’s International with respect to its business operations. The term of the Master Franchise Agreement continues until December 31, 2024 and is further extendable for a period of 10 years, subject to the fulfillment of certain conditions. The right to terminate operations is held by Domino’s International, and if exercised, the Company will have to terminate its business activity.

Raw material costs

The Company’s business activities involve the usage of raw materials including cooking oil, flour, cheese, meat products and vegetables.  Therefore, the company is also susceptible to increases in food costs as a result of factors including general economic conditions, seasonal fluctuations, weather conditions, demand, etc.


The company looks to continue to scale, mostly through various initiatives including expanding Domino’s Pizza’s network, menu expansion, and enhanced brand identity. I think that there are several drivers in the food industry that will end up playing out well for Jubilant. Demand looks good with the evolving nature of the Indian consumer, presenting opportunity for continued expansion. The management team seems to have strong capabilities and strengths, which will allow the company to take advantage of the opportunity that is in front of it.


About Nauman Ahmad

Nauman Ahmed is currently a research assistant at the financial research and publishing company StreetAuthority. Prior to StreetAuthority, he worked at Nomadic Capital Partners as a Summer Analyst, where he performed fundamental analysis on emerging market economies. He is a graduate of the McCombs School of Business at the University of Texas at Austin where he received a B.B.A. in Finance.
  • http://www.americanfranchisedream.com/ AmericanFranchiseDream.com

    I also think that Indian people just love actually American food franchise. And, Dominoz Pizza is really an amazing franchise brand from America.

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