Ladies and gentlemen, good day and welcome to Jubilant FoodWorks Limited's Q2 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Apaar Saraswat. Thank you, and over to you, sir.
Thank you so much, Rayo. Welcome to Jubilant FoodWorks Limited's Quarter 2 FY 2026 earnings call for investors and analysts. We are joined today by senior members of the board and the management team, including the Chairman, Mr. Shyam Bhartiya, the Co-Chairman, Mr. Hari Bhartiya, the CEO and MD, Mr. Sameer Khetarpal, the Turkey Business CEO, Mr. Aslan Saranga, and the CFO, Ms. Suman Hegde. We will commence with the key thoughts from the Chairman, followed by remarks from the CEO and MD. After the opening remarks, the forum will be open for Q&A session. A cautionary note before we move ahead: some of the statements made on today's call would be forward-looking in nature, and the actual results could vary from such statements. We will also share the replay and transcript of the call on the company's website under the Investor Relations section. I would now like to invite Mr. Hari Bhartia to share his views. Over to you, sir.
Thank you, Apaar. Good evening, everyone, and thank you for joining us today for our Quarter 2 FY 2026 earnings call. We are pleased to report another quarter of well-rounded performance, driven by robust top-line growth across all markets. Our India business has delivered industry-leading revenue growth and a steady operating margin. Our Turkey business continues to demonstrate strong performance. It is also profit accretive to the group on a year-on-year basis. We are seeing improving sales on the back of a strong franchise network and portfolio innovations. We continue to expand our network footprint with a run rate of approximately one new store per day, and we have added 93 stores during Quarter 2 across brands and markets. We now operate close to 3,500 stores, out of which close to 2,500 stores are Domino's.
In terms of our performance during the quarter, our consolidated revenue from operations increased by 19.7% year-on-year to INR 23.4 billion. This is on the back of a consistently strong like-for-like growth in Domino's India and Turkey, and large network expansion. Domino's India delivered a strong 9.1% like-for-like growth despite the early onset of Navratri this year versus last year. Through judicious cost control measures and continuous improvement in productivity, we have demonstrated sequential improvement in EBITDA and PET margins. On a standalone basis, our pre-index EBITDA margins have improved during the last two quarters, up by 37 basis points versus the same quarter last year. We continue to drive innovation in our product portfolio. Following the successful launch of Big Big Pizza and Chicken Burst, we introduced Four Cheese Sourdough Pizza in Quarter 2, which has received exceptional customer feedback.
Going forward, we remain focused on delivering value to our customers. This has been possible because of the strong foundation that we have built with technology, supply chain, delivery capability, and most importantly, our talent and people. We have been building a future-ready organization, one that combines scale with agility, innovation with discipline, and growth with resilience. Thanks to this, we are starting to adapt artificial intelligence in our technology platform to improve productivity across all our functions. You'll be happy to note that Domino's launched Cheezilla with a breakthrough campaign ad created entirely by artificial intelligence. Finally, in the conclusion, I would like to add that we are extremely delighted with the steady top-line growth across all our markets. Our India business continues to grow ahead of the market while also witnessing a consistent improvement in operating margin and PET margin.
Our Turkey business is consistently delivering value accretion with robust pipeline growth and healthy PET margin. Sri Lanka and Bangladesh businesses are also witnessing strong growth. Overall, our strong performance and the momentum generated in the first half, we believe, has set Jubilant FoodWorks for a very promising second half. With that, I will now like to invite our MD and CEO, Sameer Khetarpal, to provide more details on our Quarter 2 FY 2026 performance.
Thank you, Mr. Bhartiya. Q2 was yet another dream quarter. Domino's across geographies had strong positive like-for-like growth, with India growing at 9.1%, Turkey at 5.6% adjusted for inflation, and Sri Lanka at 81%. Popeyes also grew double-digit SSG. In the quarter like-for-like, due to like-for-like growth, we gained market share, expanded store footprint, and improved margin simultaneously. Domino's India delivered a positive like-for-like growth seven quarters in a row and is now serving in 500 cities, serving customers in 500 cities. India business as an entity continues to deliver double-digit top-line growth led by strong order volume increase. The revenue from operations increased 15.8% to almost INR 17 billion. Domino's India saw strong growth of 15% year-on-year and revenue growth of order growth of 15% year-on-year and revenue growth of 15.5%. Like I said, like-for-like growth was 9.1%, and delivery like-for-like growth was 16.5% year-on-year.
Delivery channel revenue growth continues to be over 20%, demonstrating the lasting effectiveness of our free delivery initiative. Just to remind, it was launched five quarters ago and relentless focus on speed of delivery. JFL's network expansion is ahead of our internal plan. It aligns with our internal expectation of growth in the QSR market and our ability to gain incremental market share. In Q2, we expanded the store network in India by 88 stores over the previous quarter, out of which there were 81 new Domino's stores. YTD number for Domino's is now 149 in the financial year. During Q2, the footprint for Domino's network expanded by 16 new cities, taking the service to 500 cities. Along with this, we opened eight new Popeyes stores, out of which four were in Mumbai, marking the entry of Popeyes into the western part of the country.
Product innovation continues to be an important growth lever. During Q2, we launched Sourdough Pizza and Breads, a new product form which is already gaining traction among customers. It follows the launch of Big Big Pizza, Chicken Burst, and our Flavor Burst that were launched in the previous three quarters. For us, Popeyes is equal to bold flavors. To build on the reputation of the most flavorful chicken brand, team at Popeyes launched Flavor Burst burgers. Digitally, in Q2, we achieved a major milestone. Our tech teams launched an ad monetization platform on Domino's app, through which iconic brands like Apple, Tata Neu, and Flipkart, which have adopted the service, get more eyeballs and almost nearly 15 million monthly active users that come on the app. The app traffic grew 28%, and loyalty member base rose to more than 40 million.
On the profitability front, the pre-index EBITDA margin of India business has seen an improvement year-on-year and on quarter-on-quarter basis through improved operating leverage and productivity gains. The team has been able to maintain a very tight cost control throughout the supply chain, which is highly commendable. The business in Turkey exceeded our plans. Post-IES 2029, Domino's LFL came in at 5.6%, reflecting a strong growth momentum driven by orders. The business reported INR 5.9 billion in revenues and a PET margin of 10.4%. Coffee, as a brand in Turkey, is ramping up with compelling proposition and strategic pricing. We added five new stores for coffee during the quarter and now operate 172 cafes. On a consolidated basis, revenue from operations grew 19.7% year-on-year to INR 23.4 billion and reported EBITDA grew at 19.5% to INR 4.8 billion.
Post-INDEX, interest costs declined by 23.5% year-on-year, largely due to efficient refinancing of the acquisition debt in Turkey. Consolidated PAT from continued operations grew 53.7% year-on-year, which validates our strategic capital deployment and relentless focus on execution. To summarize, deeper focus on the three brands across Turkey and India as geographies, consumer-first product launches, and tech-forward approach continues to power our growth across all markets and brands. We see momentum carrying forward in Q3 2026, with sales in October beating our internal plans. I now request the moderator to commence the Q&A session.
Sure, thank you very much. We will now begin the question -and -answer session. Anyone who wishes to ask questions may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to only use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Vivek M aheshwari from Jefferies. Please go ahead.
Hi, good evening, Sameer and team. Am I audible?
Yes, Vivek. Please go ahead.
Perfect. My question to you is, we have seen how your peers have reported in the last few quarters. Obviously, your FSS numbers or LFL numbers have been very good, but there was also an element of base. As the base gets reset from December quarter, what number of LFL you will be happy about or that you are targeting at this point of time?
Yeah, nothing. Great question. Vivek, it is how we build our internal plans. We want the India business, Domino's business, to grow closer to 15% year-on-year. That's what internally we target. Now, roughly 5%-7% should come from like-for-like growth, and we should increase 7%-10% on the store expansion. Together, if you really see, the number can vary from 12%-17%, the upper end and lower end of the ranges. That's how we model. Within 5%-7% like-for-like growth, there should be 1%-2% improvement in pricing or mix. That's how we model, and about 3%-4% in terms of underlying volume.
Got it. And just a follow-up to that, Sameer, while the base of, in case of, let's say, delivery is going up, your dining still has a low base. So do you, and I mean, this quarter was flat on a year-over-year basis. Do you envisage that will pick up as we go forward now?
Yeah, I think the work on delivery took time to scale, time to build, and therefore we feel good about how delivery is growing, and we believe there is more juice over there. The work on dining or in-store is very much underway. For example, the INR 99, the renowned value meal that we launched for dining between 11:00 A.M. and 3:00 P.M. is giving us the joy. We have expanded that to delivery at about INR 150 during lunch hours. Long story short, there are several initiatives which are in works to increase on-premise sales, and very soon we'll be launching our offerings during that, plus the focus on lunch. Lunch, as a percentage of sale, dining and takeaway, as a preferred channel, is much higher during lunch hours versus dinner hours, where delivery is much higher.
I see. Okay. The second point is, on the GST bit, you were not a direct beneficiary, but there was an input side benefit. Can you just elaborate on what exactly was the quantum benefit, and what have you done with that, let's say, saving or whatever?
Yeah, I think our internal estimate, see, we were at a 5% regime. We continue to be at a 5% regime with no input tax credit. Having said that, we are thankful to the government to bring down the GST on some of the input, like the ingredients like cheese and sauces that we get from 12%- 5%. Therefore, the weightage of that in our mix is about 50 basis points in terms of margins. The purpose of this initiative is to expand consumption in India, and we have passed on this selectively deeper into our products. For example, in Big Big Pizza, we had taken the price increase to INR 899. We have brought it down post-GST reduction to INR 799.
On selective products, we have taken some deeper cuts, but at the moment, to drive consumption, especially also during festive period, we have passed it on to the consumers.
Okay, sure. Lastly, Sameer, when we look at GST cuts, obviously, it's not that the customer will be using the same money in the same category. Do you think that we have seen, in case of autos, a pickup in demand? Do you expect categories like yours should also benefit now in coming times?
100%, Vivek. I mean, if Diwali was an indicator, I think while the auto sales boomed, pizza also was eaten in abundance. I genuinely believe, see, the consumption is good for us, and through multiple initiatives of the government, be it interest rate coming down, income tax rates coming down, and also GST benefits, ultimately, it will boost consumption. I'm quite hopeful, and we are seeing that in places also, the demand for eating out will only go up.
Got it. Sameer, wishing you and your team all the very best. Thank you.
Thank you, Vivek.
Thank you. The next question is from Jay Doshi from Kotak. Please go ahead.
Hi, thanks for the opportunity. Just continuing on Vivek's question, just following up. One is, in the 45 days so far, is the growth trajectory ahead of your estimate of 5%- 7%, or in line? How does it make you feel about the rest of the quarter? Second is.
Okay.
Sure, please go on.
Go ahead, Jay. I'll try and answer first.
Second question is, see, last year, you had double-digit LFL for the last four quarters, and you saw a certain margin expansion at a pre-index level. This year, for the next four quarters, that LFL growth you are targeting would be lower. In that case, how should we think about the YoY margin expansion trend for the company over a four-quarter period, not quarter to quarter? The last question would be, could you sort of give us some sense of progress of Popeyes, especially on ADS trends in unit economics?
Yeah. I'll try and answer all the three questions, but I may ask you to remind one of them if I forget. Jay, like I said, October has been a very good month for us. It continued; it was ahead of our plans. Having said that, last year, Diwali was at the last day of October, and the momentum post-Diwali, which exists because of Bhai Dooj and Chhatpujha and Gujarat, all of those will come into the basis in November. At the moment, I continue to be confident about the numbers the way October has gone. December was, again, a very high base for us. I fully understand the intent behind the question that this is the quarter that will really prove our growth hypothesis. At the moment, I remain very confident , looking at how October has gone.
I'm not giving you a particular number , saying yes or no to it, but we are ahead of our plan. The margins, see, there were two interventions which were there on the margins. One was free delivery. As a result, delivery mix continued to increase in our portfolio. That was one headwind. For the first time, we are beginning to see the ticket size increases, which augurs well from the margin standpoint. The second headwind was that we launched certain products with very aggressive pricing, which were cheesy. Therefore, to counter that, we launched more premium products like Sourdough Pizza, which come in at higher margin. We believe now we are shifting mix, which was driving volumetric growth, towards mix that is driving more ticket sizes. Therefore, I do expect margins to improve.
I think we stand by our guidance that we have given or that what someone gave during investors there that we should improve 200 basis points. That's what we are.
Over three years.
Over three-year period. That we are very confident achieving, and you are beginning to see some bit of it reflecting in the coming quarter, and we will do more in the current quarter. The last piece on Popeyes, very delighted with the double-digit growth. The product is now truly being loved by many customers. Performance in Mumbai has totally surprised us, exceeded all expectations. Bangalore and Chennai continue to grow on ADS, very, very strong performance. As a result, underlying profitability is also improving. Again, we will come back. Once we reach 100 stores, we will give a full color on how it is. At the moment, we are focused on getting to 100 stores. In terms of ADS, in terms of profitability, the goal for the team is to hit the industry average ADSes and beat the gross margins that are there in the industry.
We know we have a very scalable platform that we know how to open stores. We can open stores very quickly. We are not far from that goal.
One last, if I may, could you sort of also talk a little bit about your market share in pizza? There was a phase where you were losing market share to maybe the likes of La Pinoz's. If you can sort of comment a little bit on that.
Yeah, no, I think it's a great question. Internally, unlike FMCG, where AC Nielsen or Kantar do a very detailed job of GT and MT, we have to rely on our own databases and internal sources. I think from some of the listed players, you can compare the number of stores open and the average daily sales. We have disclosed our mature store ADS upwards of INR 82,000, INR 83,000. That number you can compare. This is on a base of nearly 1,700 stores that we have disclosed. I was in the Western market last week. I went to quite a few stores of competition, including the names that you are taking. We are materially ahead in terms of number of stores opening and also the ADS per store. Our internal estimate suggests whatever between 65%-70% market share, we continue to be there and growing.
Same news we also get from the aggregators to the extent they share the news. I think the opportunity to me is there is a growing opportunity on the premium end of the pizzas, which is more gourmet, wood-fired, Sourdough. Therefore, I believe the team has done a great job of bringing in a Sourdough Pizza into the mix. That is the fastest growing subcategory, and now we are playing over there too. We are very happy with the results. In fact, we are surprised by the uptake in tier two, tier three cities of a product like this. We thought it is more metro, but we are very surprised by how India is consuming.
Thank you very much and good luck.
Thank you, Jay.
Thank you. The next question is from Percy Panthaki from IIFL Securities. Please go ahead.
Hi, sir. Again, just a question on the margin. I know you have given a guidance of 200 basis points over three years, but just wanted to understand it in a little more granular fashion in terms of what are going to be the drivers to this 200 basis points. Because in the last three, four quarters, also, we have had several sort of positive initiatives which should have driven the margins but have not. Going ahead, what would be the margin drivers?
Yeah, no, I think for sale, first, like to correct that the last few quarters have not driven. I think you do not see the Domino's P&L. It has driven. There is a drag of new businesses, and we have three new businesses like there. We have corrected that also, by the way. You will see sharper correction over there in the coming quarter. Having said that, I want to say Domino's margins have been improving.
Overall also, it has improved.
Overall also, right? Overall also, it has improved, and Suman can give more details. The breakup was very simple. We have to recover 100 basis points from gross margin through mix, through other procurement initiatives. That is one. If we grow 5%-7% consistently, the leverage is coming in, at least in rental lines. Other lines will also come. Very calibrated, we have taken price increases. That is flowing through. The other cost line items that we track internally, like G&A cost, supply chain cost, that is beginning to give us a lot of leverage. There is far more juice over there. Again, Percy, it is the conscious choice that we have taken place to get growth. Some of these initiatives, like I said, are more policy decisions that we can take. We have chosen not to do. We have chosen to invest in growth.
We can open nearly 1,000 stores in the next three years. We will be materially a very different business, and we have not added cost at the center. We have not added cost in our supply chain. Our payback periods for new stores is only improving because we are getting more margins. You have to think of a business, take a three-year view, and then you model the P&L. You will see the results.
Understood. Yeah, that's all from me. Thanks a lot.
Thank you, Percy.
Thank you. The next question is from Nihal Mahesh Jham from HSBC. Please go ahead.
Yes, hi Sameer. Good evening and congratulations on the strong performance. I had three questions. The first one was, again, on margins. That last quarter, you mentioned there were three reasons, primarily because of which your margins had got impacted. There was obviously the aggression on Big Big Pizza offers on chicken and also the extended IPL. The expectation somewhere was that at least on a GM perspective, the improvement from Q1 to Q2 would be much better off given a lot of these one-offs sort of normalized. Even you took a price hike for most of the quarter for the Big Big Pizza. Just wanted to understand that did you have to keep the activation going, or where is it that it was invested back?
I think, see, there is, I think there was largely, see, firstly, we executed on those initiatives. On Big Big Pizza, we did take a reversal in terms of pricing to pass on the GST benefits, though it was almost end of the quarter. There is some inflation that we've been hit on the cheese prices because milk prices post the Maharashtra election has really shot up. Having said that, we will continue to improve gross margins this quarter.
Got that. Second bit, again, on the OpEx side, if you could just highlight the initiatives which have led to this kind of a reduction in the cost space, and how do we see that sustaining?
Yeah. I think there are four initiatives over there on the operating cost cycle. One is our supply chain cost. We are driving massive automation, and the higher sales per store is getting leverage over there. That is one straightforward piece. Second is we have launched initiatives on store manpower and the delivery cost. Those are yet to, in fact, kick in. Store-level productivity, we have gotten a lot, but on the delivery side, we are beginning to frame our initiatives. Third is I have been the most hated employee in the company from a G&A standpoint. I track it like a hawk, and in fact, we are beginning to get G&A productivity and G&A leverage.
I would say these are the broadly three initiatives, plus there are ongoing initiatives in terms of electricity, LPG, store-level consumable cost management, which I am not naming. Similarly, on Popeyes, there is a massive drive to improve gross margins. Look at various because the stores are building their playbook. We have controlled wastages. We have controlled oil consumption. We have controlled product wastages. We are sourcing better. As we gain scale, that margin will, I believe, and the business grows, that margin will grow. Lastly, insourcing. A lot of the seasoning that you get along with pizzas is manufactured at Bangalore. Those capacities we are adding on. The Popeyes marination now is we had outsourced it. Now we have insourced it.
Other stuff like that is also there, which because we have the commissaries and the scale, without adding CapEx, we are actually bringing some of these pieces inside.
Final question just coming to that. Despite launching the 99 menu more than a year back, what ails the growth in the core dynamic, leave apart some of the business that we have shifted to delivery, which was takeaway? What's the core issue there? Are you looking at more than 250 store ads in Domino's given you've added 140 in first half? Thank you.
Yeah. If I just see, you have to think of the customer ordering in three ways. One is the most known, which is the delivery where I sit at home and I order in. Second is I go to a store, which is called delivery, and eat at a dining and I eat there inside the store. It is a dining experience outside the home. Third is I come to the store, I do not eat there, but I get it packed and take away to my home or any workplace that I eat. Delivery, I mentioned, grew more than 20%. Dining grew 14% last quarter, and takeaway declined by 19%.
That business, we know, the takeaway business will continue to decline for the very simple reason we are giving 20-minute and free delivery. The incentive for the customer to come to the store and do a takeaway is less. Delivery, we know once the basis gets corrected, we have invested in our stores in terms of look and feel, service, and also our product is best experienced when it is fresh out of the oven. We believe that dining will be able to plow back and takeaway once the basis gets corrected. Ninety-nine, of course, during lunch hours, are held. Confident about that. We have several initiatives. We will not leave that because we are a neighborhood store, and there are occasions when either it's impulse purchase or a value offering like INR 99 will draw footfalls to the store.
Just on the store ads, if we can kind of.
Store what? Sorry, I missed that.
You've added 140 stores of Domino's.
Yeah. I think it's a, see, it is less about the guidance. We are committed to about 900 stores, like we said, in the three years. That target doesn't change. In terms of store adds, we may grow a little faster, but see, we want to make a fundamental shift in ops. If you see our track record, we opened most number of stores in Q3 and Q4. We want to open most number of stores in Q1 and Q2 because we are not in the business of opening stores. We are in the business of operating stores. Once, the more stores you open before Christmas, big days, Dussehra, Diwali, that is when you get more sales. There is no upward revision of our store opening. I think what the guidance that we have given, we will stick by the guidance.
If we do end up opening more stores because the return on investment is making sense, we will go ahead and move.
Thank you.
Thank you. The next question is from Avi from Macquarie. Please go ahead.
Yeah, hi, sir. Just one question on Turkey. Is there seasonality in the margin profile or not? Hence, how should we look at it from a pulley perspective? That's the only question I have.
Let me take that, Avi. No, there's not really any seasonality per se. Of course, quarter one for Turkey is a minor seasonality from a growth perspective. Quarter one is big for them. It's post-Ramadan. It is also when the holiday seasons are up. That's where you can see some leverage benefits coming through in margins. Otherwise, they have fairly standard margin profile at an EBITDA level. The only thing that can impact it, and we have to look at it in the census given it's a hyperinflation economy, there are a couple of accounting adjustments that happen. There's something called monetary gain loss where your balance sheet gets restated. Depending on how much inventory they are holding at a certain point in time and how that gets revalued into the P&L, there could be some seasonality impact of that.
From an underlying business performance, there's not much of a seasonality impact on EBITDA margins.
You got it, Suman. Suman, my question is more from first half, second half, because the base year or FY 2025, we saw very sharp variations. I just wanted to understand what that was, the way things are because we only have four quarters of performance to compare. Hence the question. I feel that.
You talk about PAT margin?
EBITDA margin. EBITDA margin. I get you. Operating performance should be first half is a better metric to look at it from a full year perspective. Is that the right takeaway? Is that?
Yes. Yes, it is. Like I said, last year, because we were also coming the year, if I look at the calendar year for 2024 of Turkey, they started at a very high inflation level and at very high stock levels of inventory because the prices were increasing every week, literally, on their commodities. Hence, they were sitting on very high inventory levels, which kind of gets flashed into the P&L. You saw a lot of up and down in the P&L in the last calendar year. This year, they had a more steady state of inflation. We have not seen that much of an up and down in terms of their margin, EBITDA margin profile. Last year, also FAT margins saw a bit of an up and down because of some tax-related reasons in the country dynamics.
You should not see any of those variances going forward. It will be more steady state going forward on EBITDA margin.
Perfect. Thanks a lot, Suman. Thanks a lot.
Thank you. The next question is from Tejash Shah from Avendus Park. Please go ahead.
Hi, Sameer and team. Thanks for the opportunity. Some of you called out two interventions that impacted margins earlier, free delivery and then more focus on value launch. Somewhere, this initiative has also helped us to unlock demand and deliver robust LFL versus industry. Now, on this base to deliver LFL, which should be healthy, would you need to unlock more benefits, or is the current status good enough in terms of consumers' value proposition?
No, I think Tejas h great question. I think this is a constant balancing act the team has to do. I think there are three vectors. One is you have to open new stores in new cities in white areas, so that drives organic expansion, I would say. Second, when you open those stores, you get the leverage on the fixed cost in terms of supply chain and also the G&A cost. That is good for us. The second is the you mentioned on this to drive same-store growth. We have several levels and initiatives that are there. Innovation, we believe, should drive. On the free delivery side, there are a few things in our back pocket that we do not think we need to pull in those. If we get growth constrained, then we will, of course, go hell for leather for growth.
We are unapologetic about our growth plans. The third piece is margins. We are in the business of generating free cash flows, so that has to come. Therefore, from that perspective, we know our growth story, especially the promise of the accuracy of delivery, the service of our 100% mozzarella cheese and high-quality products at a great value. That core flywheel is working for us, and therefore, we have to expand margins to fuel our expansion ambition. It is a constant balancing act, and the teams have to juggle all three balls in the air and balance them every day. Sorry for a philosophical answer.
No, no. I got my answer. Sixth commentary, and your enthusiasm also on the call today is QSR this season. First of all, what's your read on the demand on ground? Is it largely our micro efforts or bottom-up efforts which is helping us to gain market share? Second, are you seeing any divergence in demand in areas which are IT sector-dominated , especially centers of IT park and other areas?
Yeah. Of course, see, you have to—the customer in India or anywhere in the world is very discerning. If you see learnings in the U.S., and you look at top brands which are doing well, Domino's, of course, came with 5% SSG in the last quarter in the U.S. There are other brands like McDonald's, Wingstop, which are doing well. They're very value-focused, great service, very consistent there. Even in China, it's not that all brands are growing at the same SSG. There is a huge divergence between there. Overall, as income levels go up, consumptions will go up, and we see it there. Therefore, self-help coupled with the government initiatives of driving consumption, we believe Domino's is very well placed. So is Popeyes, by the way.
There are no lotteries that way that everybody will grow at the same pace. We will have to differentiate and use self-help initiative. That's the short answer over there. On the tech side, I think the sentiment is low. Therefore, some of these geographies , which are highly dense IT services zones, like in Bangalore and Hyderabad or Gurgaon, have grown lesser. This has been compensated by growth somewhere else. Not that our business is so skewed towards these sectors. The other sectors like energy, auto, services, those are growing. We are well spread out as a brand.
Thanks. That's all from my side.
Thank you.
Thank you. The next question is from Devanshu Bansal from Emkay Global. Please go ahead.
Hi, Sameer. Thanks for taking my question. Sir, I noticed that there are some tweaks to your packaging charges. If you see the delivery bill size, that has been about a 2% dip in Q2. I wanted to check on both fronts whether actually we are making some changes to the packaging charges and what is leading to this 2% dip in the delivery design.
Sorry, your voice is not very clear. Which decline are you talking about, 2%? If you can point to the metric and the from to, please.
Yes. I'm pointing to dip in bill size for delivery channel because order growth is higher than the revenue growth. From that, I'm calculating that there is a dip of about 200 basis points in delivery channel bill size.
Yeah. I think the short answer over there is the delivery growth, it is becoming an acquisition channel for new customers. New customers typically start at a lower price point. We have grown very handsomely in our new customer acquisition rate. Earlier, if I go back like three or four years ago or pre-COVID, the majority of our new customers actually were dine-in and takeaway customers. That was the largest channel of new customer acquisition. Today, Domino's app is the largest channel for new customer acquisition. Therefore, from that perspective, new customers come in at a lower average ticket size. We are seeing no dilution in the repeat rates. Any customer that we acquire, on an average, is repeating three times in a year. That repeat rates have not changed.
On the other hand, it has marginally increased only. When we have to look at the lifetime value and any dilution in BPO, I would say, is baked into the plan. We have launched initiatives on pricing and mix changes to drive the ticket size growth. Packaging charges, they have remained more or less static. We have tinkered around in a few places, but nothing structural that I want to report here.
Understood, sir. Second question, Sameer, we have been investing in terms of new innovations, expansion. Even now, we're part of the R&D LFL. Still, the LFL has seen some dip, though it is industry-leading. If we were to compare our performance with ourselves, what is the headwind here that has impacted us? Also, are these new launches, which are many over the last three or four quarters, also leading to some complexity in the kitchen? These were the two questions.
The second answer is no because we have to reduce complexity, and we have to take out products if the customer satisfaction and customer repeat is not there. That's a constant exercise. Teams do it very religiously every quarter. You will see, and some of the initiatives give a high initially, then they don't sustain. Therefore, we will also see if we have to rationalize those. Like I said during our investors' call, we are thinking of platforms. Cheese is a platform. Whether it is Volcano Pizza, Cheese Burst Pizza, Chicken Burst, we know cheese drives salience. We want cheese. When customers think about eating cheese, they should think about Domino's. That's how we are building that platform. There are other platforms. The platforms are growing.
We believe platforms, to come back to your question number one, I think it is, to me, I am not worried about any trajectory. I think if you look at the basis, you will get your answers on what it is and adjust it for a little bit of Navratri here and there. Actually, we are on the money completely. No alarms, no questions. We have to build a business that grows 5%-7% LFL consistently. On top of it, we add 8%-10% of store growth. That is how we should think about the business.
Fair enough. Just last one, if I can squeeze in. You mentioned about this ad revenue stream. So Sameer, what is the scale of the opportunity that we are targeting, and how will this get recognized in the P&L going forward?
I'll let Suman answer how she will recognize this in the P&L. I think my first goal is to build an awesome product, tech capability that the users of this service love it. We launched this with ICICI, then got HDFC, then got Tata Neu, then Apple and Flipkart Minute. I think because we have a very large monthly active user base, and almost 60% of the customers actually come to the rider tracking page, and they keenly watch where the rider is, and it's a very emotive page and track page. We have built a certain set of tools and properties. My ambition would be to get at least 50 basis points from the revenue to flow in from the revenue. It will take time. It's not going to happen. At the moment, I'm just celebrating the launch by the tech teams.
Suman can answer how she is recognizing it in the revenue.
Devanshu, just to clarify, are you asking where will it reflect in the P&L? Is that the question?
Yes, Suman.
It will come in as it is other sources of revenue. Typically, it will get reflected when it comes to significant size and should then become visible as well in other operating revenue. That is normally where we park some of these initiatives. Hence, overall revenues of the company will go up to that extent.
Got it. Got it.
Thank you.
Thank you.
The next question is from Sabyasachi Mukerji from Bajaj Finserv. Please go ahead.
Yeah. Hi. Thanks for the opportunity. My first question is on the demand environment. I know it has been asked multiple times, but sorry to harp on it. I mean, how do we see the demand panning out, especially after this GST rate cut? Though we are not a direct beneficiary, but still some customer sentiment, consumer sentiment across geographies, if you can highlight. Also, do we intend to kind of roll back the delivery waiver, or is it too far away? Do not even think of it right now.
I think demand, I can only talk about Domino's, right? I don't have an industry view, and I would love the analyst community to maybe write more about demand because you speak with more companies and have a much wider perspective on the market. When I look very narrowly on Domino's, there is enough and more demand for pizzas which are high quality in cheese, freshly baked, and delivered free, and provide a great customer experience. From that perspective, there is enough and more demand. I'm actually surprised by the uptake of Sourdough Pizza in Tier 2, Tier 3 cities. I would have never imagined that. Therefore, it is indicating the demand does exist in India for a brand like Domino's. The second question was on—I missed the second question. Delivery charge. No, there is no plan to roll back.
However, we will continue to tinker with packaging charges as experiments and see where there is the sweet spot. That is one piece that the team is experimenting very heavily to find opportunities. The second, of course, is the product. At some point, we have to bring it into the product pricing, but without losing the value proposition. We are also, like I said, we had taken some price increases last quarter, and we will continue to look for those opportunities.
Sorry, what has been the pricing action last quarter?
Like I said, we have taken price increases in cheese, Volcano Pizza. We have increased packaging charges in a few places. Some other products also, we have gone and increased the pricing.
On a blended portfolio level, what could be that quantum of pricing action?
Yeah. I'm not disclosing that. My apologies for that. Yeah, I think, again, we have to look at the business model per se, right? This 5%-7% SSG LFL coming from 1%-2% of price and mixed actions.
Understood. Sameer, my second question on the store additions. We have been adding stores and also entering new cities. Domino's is now available in 500-odd cities. Which are these new cities, let's say 16-odd cities we have entered last quarter? Which are these cities? What are the typical store sizes? Are we entering with smaller store sizes? I mean, what is the strategy over here?
Yeah. No, I think it is horses for courses, right? Some of the cities that we have entered are Siwan in Bihar, Amroha in Uttar Pradesh, and Dibrugarh in Assam. Again, if you ask me where these cities are, I will struggle to pinpoint it exactly on the map. What we obsess about is, I think, three things. Number one, there has to be a customer base. We map the household, household incomes, number of pings we receive on our app. There are several customers who are in these cities, and they have downloaded the app, and they get a no service. That is the second thing we look at. Third thing is we obsess about the ROIC. Typically, these cities have much higher penetration of dine-in because we are the first organized QSR to enter these cities.
Our store sizes have been around 1,200-1,500 sq ft, more closer to 1,500 sq ft in these cities.
Understood. Last question, if I may. This is just a clarification on the said guidance of 200 basis point margin improvement over three years, FY 2028. But this is on a base of FY 2024, if I'm not wrong. On the presentation, it was mentioned. That means that we have now to catch up 300 basis points rather than 200 basis points from the current level. Am I correct?
Why would you? We would not look at a quarter-on-quarter number if that is what we are looking at. Yes, firstly, it is on FY 2024 levels of numbers. We said a minimum of 200 basis points is what, that is the bare minimum we will increase. It is not like if more is coming, we will stop the flow. I am just trying to understand, when you say from the current level, are you looking at the quarter number? Are you looking at the year number? Which number?
Suman, I'm looking at H1 numbers. So H1, we are somewhere around 19.29.
I think you should look at full year to full year numbers, right, that we would need to increase on because there is a bit of seasonality in our margins. You would also have realized in quarter three, given the high growth base on seasonality, it is there. Yes, we still stay committed to the number on what we have quoted that we will see those improvements come through. Just keep a long-term view because we also do not manage the business for quarter by quarter. We are clear on where the.
Absolutely. Just a clarification, that 200 basis points on FY 2024 base. That's what I heard.
Absolutely. Absolutely. Exit FY 2024. I think we called out the metrics also very clearly on how we believe this will shape out. Of course, the EBITDA margin improvement will be upward of 200 basis points and plus. Across Domino's, there will be strong growth on margins coming through. We will see the profitability improve on our emerging brands as we go through as well. If you recall, in FY 2024, and we had called that out, we almost had a 200+ basis points of drag on account of the emerging brands, which we expect to significantly almost bring down to half or below as a proportion. We know where also we believe these numbers will come through on. There is a bit of a back-endedness on that, but confident of delivering to the projection and the commitment.
That's very great to hear. Thanks, Suman. Thanks, Sameer and team. Wish you all the best. Thank you.
Thank you.
Thank you. Next question is from Gautam Rathi from CWC. Please go ahead.
Hey, hi. Thanks for taking my question. Just two of them. The first one, can you just help me understand this INR 415 crore of investments in H1 into fixed assets or CapEx? Can you give me some more color? What are store investments, tech investments, back-end?
We do not break that up, Gautam. I think where we have set off in the past also is a large part of our investment base is now, of course, shifting to store investments. It is very little, so it is between store and tech investments that are fewer now. The majority of our investments are now going into, because our supply chain investments that we have done, and we said there is a large cycle that was there. With our last big investment on commissioning, which is the Mumbai one, which will get commissioned by this quarter or early next quarter, we will be done with a large supply chain cycle of investments. Predominantly, it is based on store and technology capital.
Suman, is it fair to assume that there would have been some investment in the commissioning in the first half? I'm not asking you to break that up. Just trying to understand because if we just do a back-of-the-envelope, half of it seems to be explained by the stores. We're just trying to understand, is there has to be a component of the back-end in this first half, right?
Yes, yes. There is some amount of investment in the back-end as well in the store commissioning. I'm just saying that it is not the material component of what you're talking about, the H1 number, right?
Yeah, the H1 number.
Yeah. Of course, there is, but it is not material. I can assure you. It is not a material number. The materiality of the number sits on two accounts. One is our store CapExes, which is quite significant. The second is tech. The third is in terms of our existing stores where we continue to put in maintenance CapExes to ensure stores are up and running to support the high LFL growths that are coming through. As growth increases and LFL comes in, we do realize a large component, given we have our own delivery network, comes on bikes. A large part to support the growth has also gone behind putting in more bikes on the ground. That is also a large part of our investment, which is over and above store investment. Yeah. Those are three big components. Commissioning is very, very minimal.
Got it. And just one small one. In the mix of the dine-in, right, how long before the takeaway part comes into the base?
I don't know. I mean, to be very honest, we can't track it like that, right? We, in fact, want takeaway to also grow. I think all channels have to grow. Somebody asked a question, therefore I gave a breakup, right? From that perspective, what we care about is to be present on all channels. Delivery, takeaway, aggregators, ONDC, right? Our own app. That's the endeavor over here. I think I will, I don't know if there is an internal calculation that floats how long will it take. What is important is our customers coming to the store and are they liking the product and the experience? The answer to that question is yes. There are a few places that we are obviously, we need to take the feedback and correct it.
Got it. Thanks. Thanks a lot.
Thank you so much.
Thank you very much. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Yep. Thank you.
Thank you, everyone, for joining the call and for your patience listening. As Apar said in the beginning, you will find the transcript and the earnings recording on our investor relations link on our website. Thank you. Have a good evening.
Thank you so much. For any other questions, please reach out to the investor relations team. Thank you.
Thank you very much. On behalf of Jubilant FoodWorks Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.