Domino’s India Operator Jubilant Foodworks Reports Decline in Quarterly Profit Amid Rising Costs
Jubilant Foodworks, the exclusive franchisee of Domino’s Pizza in India, has reported a nearly 35% drop in net profit for the third quarter, ending December 31, 2024. Despite a 56% increase in revenue, the company’s overall profitability was impacted by higher wage costs and rising raw material prices, including essential ingredients like vegetables and meat. The company’s profit stood at ₹429.1 million ($4.94 million), a significant decline from ₹657.09 million in the same quarter last year. This downturn is primarily attributed to increased operational expenses, which surged by 59.3% year-over-year. Despite the revenue boost, these higher costs eroded the company’s margins, with the core profit margin shrinking 163 basis points to 18.7% compared to last year.
The decline in profit also reflects a shift in consumer spending habits, as many Indian consumers cut back on dining out due to persistently high food inflation. To combat this trend, Jubilant Foodworks, like other fast-food giants such as Burger King operator Restaurant Brands Asia, has introduced value meals and promotional offers to attract price-sensitive customers. To retain and expand its customer base, Jubilant Foodworks has implemented multiple pricing strategies, including no delivery fees on app-based orders to enhance convenience, smaller-sized pizzas priced at approximately ₹80 ($1) to cater to budget-conscious consumers, and lunch combo meals for under ₹160 ($2) to encourage midday purchases. Furthermore, despite rising food costs, Jubilant Foodworks has not raised prices on its menu items for the last two years. This move aims to maintain affordability and gain a larger market share in the competitive QSR (Quick Service Restaurant) segment.
While these initiatives have helped drive top-line growth, they have come at the expense of profit margins. Jubilant Foodworks continues to navigate rising expenses while ensuring customer satisfaction with competitive pricing and promotions. As the Indian fast-food market evolves, companies must balance cost management with customer-centric strategies to sustain profitability and growth. Jubilant Foodworks’ latest financial results highlight the challenges fast-food chains face in India, including inflationary pressures and shifting consumer behaviors. With a strategic focus on affordability and value-driven offerings, the company remains committed to retaining market share and driving revenue growth despite declining margins. Moving forward, investors and industry analysts will closely monitor how the company adapts to these market dynamics while ensuring long-term sustainability.
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