Jubilant FoodWorks Ltd has reported a 40% slump in third-quarter profit as higher expenses outweighed a rise in orders at restaurants run by the Indian franchisee of Domino’s Pizza and coffee chain Dunkin’ Donuts.
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The company’s shares fell 8.8% to a more than eight-month low of 444.1 rupees after the results were released.
Consolidated profit for the October-December quarter declined to 803.6 million rupees ($9.82 million) from 1.34 billion rupees a year earlier, the company said.
Revenue rose 10% to 13.32 billion rupees, driven by a growth in orders for Domino’s.
“Historic high inflation resulted in margin compression,” Jubilant’s Chief Executive Officer Sameer Khetarpal said.
Higher costs of cheese and vegetables contributed to a more than 18% increase in Jubilant’s total expenses.
Jubilant FoodWorks has been expanding aggressively over the last few quarters to smaller towns and cities in the country, which further weighed on its profit margins.
The company, which also has franchise rights for Popeyes outlets in the subcontinent, opened 64 stores in India during the quarter, entering 16 new cities.
Dine-in and take-away form a significant portion of topline in India, Domino’s second-biggest market after the United States – where it is a delivery-first business.
Analysts say the American pizza chain has more than 70% share in India’s pizza market.
Earnings margin before interest, taxes, depreciation and amortisation fell to 22% from 26.4% last year.
Also Read: Top Food Processing Companies in India 2022.
Rival Westlife Foodworld Ltd, which runs McDonald’s restaurants in west and south India, posted a 74% jump in quarterly profit.
In July last year, Reuters reported that Jubilant FoodWorks had considered taking some of its businesses away from food delivery apps Swiggy and Zomato.
Jubilant FoodWorks Limited is an Indian food service company based in Noida, Uttar Pradesh which holds the master franchise for Domino’s Pizza in India, Nepal, Sri Lanka and Bangladesh, for Popeyes in India, Bangladesh, Nepal and Bhutan, and also for Dunkin’ Donuts in India.