Ladies and gentlemen, good day and welcome to Jubilant FoodWorks Limited Q4 and FY 2026 earnings conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Apaar Saraswat, Head of M&A and Investor Relations, Jubilant FoodWorks Limited. Thank you, and over to Mr. Apaar Saraswat.
Thank you, Neeraj. Welcome to Jubilant FoodWorks Q4 and FY 2026 earnings call for investors and analysts. We are joined today by senior members of the management team, including our Chairman, Sir Shyam S. Bhartia; our Co-Chairman, Sir Hari S. Bhartia; our CEO and MD, Mr. Sameer Khetarpal; and our CFO, Ms. Suman Hegde. Please note that this earnings call is scheduled for a duration of 45 minutes and will commence directly with the Q&A session. Along with the financial results, we have also released a letter.
Sir, sorry to interrupt you. We are losing your audio. Can I request to come closer?
Neeraj, am I audible now? Is it better?
Yes. Yes, this is better.
Okay. Thank you. Please note that the earnings call is scheduled for a duration of 45 minutes, and we will commence directly with the Q&A session. Along with the financial results, we have also released a letter to our shareholders, in which we have shared our outlook and have already answered certain pertinent questions about the performance. Hence, the participants are requested to limit the scope of discussion to only strategic questions and count of questions to only 2. If you wish to seek any accounting clarification, kindly get in touch with the investor relations team later. A cautionary note before we move ahead, some of the statements made on today's call will be forward-looking in nature, and the actual results could vary from such statements. I will now hand over the call to moderator to begin the Q&A session. Thank you.
Thank you very much. We'll now begin with the question and answer session. The first question is from the line of Nihal Jham from HSBC. Please go ahead.
Yes, sir. Good evening, Sameer and team. You have highlighted in detail about the like-for-like performance. I just had 1 question to it with 2 sub-parts that, if I look at even the 2-year CAGR, there has been a deceleration from 9% to 6% from Q3 to Q4. Even if you bifurcate it both for dine-in, which is anyway sitting on a low base, so that is not the case. Even with delivery that is, say, fallen from 28% Y-o-Y growth to 10%. If you could just give more clarity and detail about the sequential deceleration. I understand the long-term 5%-7%, but the sequential deceleration and both the subsegments.
I think, sir, again, see, quarter on quarter is more noise, Nihal, right. It's therefore what we should look at is a full annual number, which actually for two years have been closer to 7%, right. I think the double click on dine-in is more important, right. I think delivery continues to grow strong, right. That's number one. That is our strength. We continue to have very strong operating metrics. We continue to see strong like-for-like growth. There are two underlying headwinds which are there. We've called out dine-in takeaway, and second was the average order value drop. The average order value dropped because we have very consciously moved to match the competitors on the minimum order value of INR 99.
Just to recall, our minimum order value was 149 rupees. To gain market share, to make sure that we are building a business for longer term and acquire new customers, we have very consciously taken a call to reduce minimum order value from 149 to 99. As a result, there was a drop in the average ticket size, and that is the subtext to it. Therefore, I'm not too worried on the variation of 9% to 6%. The real challenge to solve is over there is the dine-in and takeaway sales.
Understood, Sameer. The other thought is that how was the, you know, discounting trends this season, during this quarter? To your dual goal of 5% to 7% growth and the 200 basis point margin improvement, can they be achieved simultaneously?
Yes, I think great question, right? From a priority standpoint, we prioritize growth. From a growth standpoint, we prioritize volumetric growth because we are building a business for the long run. You're absolutely right. If you drop the minimum order value, it puts additional headwinds towards margins. We believe in our business where more than 50% of the cost is fixed cost, growth is the biggest driver of margins. Hence I continue to remain, like, optimistic about driving both growth and margins. Just to remind you, there is a drag of new businesses like Popeyes, Hong's and Dunkin', and we have taken very conscious calls to focus on few areas and drive profitability. That drag or dilution is actually ahead of the plan.
Again, I continue to be optimistic on achieving both growth and margins.
Sure, Sameer. I have more questions. I'll just come back in the queue. Thank you.
Thank you, Nihal.
Thank you. Next question is from the line of Avi Mehta from Macquarie Capital. Please go ahead.
Hi, team. First of all, you know, must compliment you on the shareholders letter. It was extremely nicely done. I just had two questions. First, Sameer, on this, you know, the outlook as we speak, you have cited that there are some near-term headwinds. There is competition that has changed. Wanted to understand how do you look at store additions in this context, and whether what is the pace that you would be more comfortable with, as we go forward? Would be the first question, and I'll come to the second later.
No, Avi, I think the, if I just cut the noise from the all what's happening, right, there is one truth, that Domino's has gained share. It has gained share in the category, it has gained share in the QSR space. We have a separate panel of 50,000 customers run by Nielsen. They are also indicating that we have gained share, and we have gained share materially in pizza as a category. This allows us to expand more aggressively. This allows us to penetrate more and invest more in brand building, right? From a store addition standpoint, I also check how the new stores that we have opened are doing. From all accounts, right, the store addition expansion is not a worry.
We should open someone like similar, like about similar to about 230 to 250 kind of restaurants this year.
You mentioned in the letter.
Okay. Okay. No, where I've come from, Sameer, maybe I'm just clarifying on this question. It was not on the quantity, but also on the type. As we can see, you know, delivery is where the growth has been. Does that, you know, require a reset in the way we look at store additions? Does that mean we kind of look at change in CapEx? Hence that's where I was coming from. That was the underlying question. I'm sorry for not clarifying.
No problem, Avi. See, we are constantly calibrating and learning, right? If you look at our go-to model in large metros is actually a delivery carryout store, right? Unless and until it is a mall which is suited, like if there is a food court or something. We are opening more delivery carryout stores, which are about 600, 700 square feet. When I joined the company 4 years ago, there were lot of store approvals we were giving, which were 1,500, 1,600 square feet. Don't do that even in tier 3, tier 4 store. We have also resized and remodeled our kitchens to be more efficient and put more seating space.
Sir, sorry to interrupt. We are losing your audio.
We are constantly calibrating our store format, store model, and as a result, our CapEx per store has actually reduced year-on-year and, in fact, almost nearly 3 years in a row, by 20%.
Yeah.
Right? It has come down by 20%. We are constantly calibrating that. There are places where in fact we also realize that we need to add more seats. We are also doing that. That's a constant exercise, Avi at, in our, in the company.
Got it. Got it, sir. Just, you know, to follow up on, you know, some bookkeeping questions and particularly on the gross margin. You know, you've seen a very healthy sequential margin expansion at the gross margin side, and the drivers of it seem to be more stable and sustainable. Does that mean that we should kind of look at this 75.5 as the more steady state run rate as we go forward? That was the first part. The second part is if you could also give us just what is the inflation levels that we are looking at in the input costs so that we can better understand the near-term margin pressures. That's all from my side.
Avi, we had actually mentioned, if you recall, in our earnings call about three or four earning calls ago that we'll improve the gross margin, right. This was a conscious choice we had taken. For example, we had taken calibrated price increases in Volcano Pizza. We had worked on our cost. We have reduced wastages materially. We launched Big Pizza, launched Sardo Pizza. We launched some of the other more premium products. By a conscious effort of wastage reduction, premium launch of premium products, mix changes and calibrated price increases, we have increased the margin. That bit has happened.
In terms of inflation. I think, sir, it is one number it is at least I don't have a very good handle on at this stage because the numbers are moving very quickly. We've been hit the most in the energy cost, all right, which is very real, where the cost of LPG has increased, cost of PNG has increased. That is one additional calibration that we have to do in our system between electric ovens and gas-based ovens. We are doing that. That is the biggest piece which has been hit. If tomorrow war were to die down and things would go back to normal, we also know that the energy prices are at an all-time high elevated level, so it can also come down. It can work on both sides.
I think there is an inflation. We're entering an inflationary, at least near-term inflation pressure is high. To what extent, it's been very hard to calibrate, Avi. The energy is definitely to the tune of 100 to 120 basis point. That's it. We are already beginning to see come into the P&L.
Sorry, sir. I'm sorry, I missed you. You said 100-120 basis points hit from energy, right?
That's correct. That's correct.
The price increase is around 1.2%. That should kind of help that offset.
We are taking price increasing, right?
Yes. Energy is, but also there are a couple of other things. Commodities, I think we all wait to see how it plays out in this right now. Some amount of commodity inflation has come, but as you would all well understand, covering the consumer sector, that if, you know, petrol, diesel prices go up and as logistics cost goes up, across the board commodities will see further inflation. We are also trying to model that, but we'll have to wait and watch. While we continue to drive, of course, efficiency with RN. The other big headwind which has been coming our way, and again, something we'll have to see how it materializes as consumer inflation goes up in the market, is wage inflation. Right? That's also hit us. About 11 states have already increased minimum wages as the fiscal year started.
Plus the labor code also brought in further headwinds on the labor inflation. Those are the two inflation which are already in. If I look at it, back to your question on saying, you know, 120 BPS on energy, we have taken 120 BPS of pricing. All of the pricing, of course, doesn't flow through into the margins to that extent. You know, lesser one flows through. We also have other headwinds. We do believe that in the near term, there might be some compression. Coming back to your point on structural improvements, they continue to will stay the course.
Wastage reductions, improvement in mix and looking at the premium part of our portfolio, looking at productivity and better scale benefits on sourcing, that will continue to flow through and hopefully help mitigate some of the inflation coming our way.
Got it. Any more ranges that you could kind of give us on labor? That's the only, you know, probably request if possible or not.
On labor?
On labor, you said 10-20, 15 basis points or if I remember, 10-20 basis points impact from the labor code. I'm just trying to appreciate the extent of the impact.
Yeah.
It doesn't seem large. That's where I was coming from.
No.
Is that understanding correct? Yeah. Sorry.
That's labor code. I'll help you out with that. You know, there are a few things on labor costs which are coming our way. One is, of course, labor code and absolutely right, it is up to 20-odd BPS. The minimum wage increases that we've seen across some of the states that have already gone live or the 29, 11 have announced, and we'll wait and see some more. That's another 20, 30 BPS which is there. Even the delivery mix headwind, right? We sat at 76% delivery mix on that, and that's another inflation headwind on the labor cost. There are three or four elements to it which takes it higher than the 30 BPS only on account of the labor code which we had indicated in the past.
Got it. That's all from my side. I'll come back in the queue if there are other questions. Thank you very much.
Thank you. Next question is from the line of Dhruv Luthra from Bernstein. Please go ahead.
Oh, hello. Yeah, thanks for taking my question. My first question is, through some of our channel checks, we saw that you took some price increases in April, which have been rolled back. Could you walk us through what you observed during the period that led to the rollback?
There has been no prices which has been rolled back in April or anything. I think our price increases are very calibrated after 14 to 16 weeks of strong experimentation. I think I can't recall something that has been rolled back.
No, we haven't rolled back anything. Is there any specific instance which makes you say that, Dhruv?
Yeah, we should.
Yeah. My, so some of my order history, so, in April, the garlic breadsticks, a INR 10 price reduction I saw in May versus my order in April.
That will be very store-specific and discounting specific. We do a lot of this recalibration of prices. At an overall level, there's not any of that changes that have happened.
Okay. There is no rollback.
Yeah, it depends on the time you're ordering. No, no rollback. We don't anticipate anything like that.
Okay. Okay. My next question is, as you mentioned, that we are seeing inflation in some of the raw materials, milk price has gone up, and with petrol and diesel going up. How should we think about SSSG and margins, going forward?
SSSG, we've given a commentary already, right, on Q1 and the longer term. For the annual number, 5% to 7% remains. The Q1 we've already given is better than running, better than Q4. And in terms of margins, actually we are modeling ourselves growth. There is, the things are changing very rapidly. One spoke about the three elements where there is inflation, i.e., energy cost, labor, and commodity, right? In all three counts we are seeing, what we are doing is to, of course, first tighten our belts and not pass on everything to the consumer, and the resultant we'll have to pass on to the consumer after doing a thorough calibration of price increases.
Okay. Okay. Yes. Thank you so much.
Thank you. Next question is from the line of Aditya Vikram from DB Securities. Please go ahead.
Hi, Shamir. The optimism doesn't fade, the numbers are saying something else and the way the story is panning out in terms of the war and everything, along with the margin pressure. If I see your results this time around, right, the cost of goods, purchase have slowed down drastically from Q3 to Q4. I just wanna know if that is sustainable because I'm assuming January, February would have been very good for you in terms of the raw material inflation. However, from March onwards it would have started giving you jitters, right? Do you see similar trajectory in the month of April and May as well?
I thought we I mean, the I think gross margin is sustainable. I think we answered that before. There was no such I think your assumptions are incorrect when you say January, February, and March. I don't know where you have the data from. At least in our P&L it doesn't say that.
Okay. In terms of the margin, right? We already read the shareholders letter that there would be short-term margin pressure. Are you seeing I understand that one of the aspect of this is war and how the global economy pans out in terms of the energy cost and everything. Do you see margin pressure for next couple of quarters or just one or two quarters at best and then all the initiatives which the company is taking will get us back to 20%+ margins?
Aditya, I think at this point in time it's very difficult for anybody to anticipate, right? Every day the inflation numbers change. We do hope that it'll stay only for the next couple of quarters. You know, if you guys have ear to more of the industry players, I'm sure you'll have a better view on that. Very difficult to predict. Can't really give you a guidance of that sort at this time.
I think the broader story is the Domino's is gaining share. The 5%-7% is what the business we are building. If we do that, we have enough levers to get back to the margin that we wanted, that we had predicted.
See, Sameer, I understand that and I completely appreciate the honesty behind all the statements which you are making, right? The Q4 like-to-like growth is only 0.2. I'm hoping that Q1 wouldn't be that much, right? That is well understood, right? However, only if you provide some calibrated view about margins, right? Only we can actually go ahead and reprice any inputs which we have at our end, and that is why the question around that, right? Q4 cannot be a benchmark. A 0.2% like-to-like growth is not a benchmark. Q1 you will definitely do good, right? If for the entire year like-for-like growth has, like one of the other participant pointed out, Q3 to Q4 has been lower, obviously because of LPG issues.
LPG also now there are news floating around that LPG there is a shortage, so you will see significant cost on that front. That is precisely the why the reason of the questions around that, right? If the company hasn't calibrated it yet it might be a good idea if the company can come back and at least give some guidance on the margin front because every other competitor of yours have said the same. They have given some margin guidance which is off from where they are, right? With Jubilant we expect the transparency to be very high considering how the company works and performs.
Aditya, I would like to correct on that. I think it's a long question, but we have said there's gonna be short-term margin pressure. We've been quite transparent on what's the kind of inflation, margin pressures we're seeing on energy. We have also talked about labor. Commodities we're seeing muted right now. I think at this stage any company that we are speaking, and we also track all the companies and competitors, I think it'll be very hard-pressed for anybody to say what will be the kind of inflation that will hit, right? Of course we've internally calibrated our numbers, but the way the dynamics of the market are moving we're having to recalibrate our numbers every 2 days, right? Of course we have been transparent.
There are all the structural initiatives on getting the margin, you know, expansion going then. In our note also we have said the long-term margin guidance on 200 BPS holds and we'll try as quickly to get to that, you know, elevated number. Short-term pressures exist now. Will it be for a quarter, 2 quarters, 3 quarters? I think at this stage is anybody's guess, right? I don't think that takes away from the fact that of course the management is more concerned on ensuring that they keep calibrating this to do judiciously what needs to be done on pricing, on cost austerity measures, and to ensure that we still manage our consumer franchise, right? I hope that answers the question, if there's more detail on cost of goods purchased we can take it offline.
No. Sure, sure. Absolutely. See, that's what I'm saying, right? you are not able to quantify whether it's for one quarter, two quarters, three quarters, right? That does not give enough clarity and it has nothing to do against you whether you are calibrating it or not.
It's just that how the market dynamics are and then pricing pressure, competition, and everything. I'm just reading the shareholder letter, and which is why I'm asking because it doesn't give enough visibility. Either we go ahead and say that the initiatives will do this, and will help us gain X amount versus Y amount is on the cost side, right? Any which ways, I'll take this offline with the other participants as well. Thanks so much for answering.
Thank you.
Thank you very much. Next question is from the line of Karan Taurani from Elara Capital. Please go ahead.
Hi. Thanks for taking my question. My question was pertaining to the cost inflation, right? From a commodity standpoint, it will be largely equivalent for other QSR, you know, chains versus yours. From an LPG perspective, you know, you've got a significantly higher exposure towards LPG, basis pizza category. Second, of course, is the employee cost as well, right? You have got your own delivery fleet. You run your own fleet, which means that inflation, wage inflation costs, the, again, the petrol cost is also hitting. From that context, what is the kind of negative impact one can see on margins? Again, I know it's not possible to quantify, but can we say that you will have a significantly higher negative impact on margins versus your peers?
Actually, no. Suman can add. Firstly, like for like growth will help. Second is a large part of our fleet is actually electric, right? I think therefore we believe we have an advantage versus the rest of the market. Number 3, I think there is an impact of LPG that we are calibrating. Part of it we have already mentioned in our newsletter. We've passed back to the consumer to the tune of 1.2%.
Right. What is the potential for moving these LPG-based outlets towards electric? I mean, what percentage of the outlets currently would have gone to electric, or what is the kind of OpEx of running the outlets on electric basis? How can this number change? Let's say if this war were to continue for the next, you know, 3, 4 months, and the inflation pressure is very high on LPG as a commodity, would you move to electric? If the OpEx was higher, and is it possible firstly to shift a large share of your outlets towards electric?
Yeah, I think we're constantly doing that with the teams have done an amazing job of converting LPG to electric. We've developed our own solution kits. We've also been able to import quite a lot of electric ovens. We are also converting very quickly to piped natural gas, and there is a mandate from the government to convert to piped natural gas. From a business continuity standpoint, I don't see any risks, right? Unless until I am surprised by the extent of war and control of LPG in India. I think the teams have done an amazing job of managing the situation. From a price standpoint, there was a positive delta towards LPG.
With the LPG price increasing, on commercial cylinders, actually the delta between electric and the LPG is no longer there. I think we'll be able to shift. I think I want to assure the investors, and we've released 2 circulars also earlier, that the impact of LPG availability was very minimal on the business operations. On the cost, we already said it impacts to 120 basis points. We've already passed on the pricing to the tune of 120 basis point to the customers. There are other initiatives in the works. I think this should assure you that as a team, we will continue.
We have the wherewithal to continue to grow at the desired pace we want and also improve our margins, barring one or two quarters, which may. We will not do major price increases. That is out of the table. Otherwise, we know what needs to be done on the margin front too.
Sorry, if I may just squeeze in that being the last question. Apart from the Dunkin' Donuts business, which is being hyped up, apart from lower losses in Popeyes that we may see going ahead, what are the structural margin levers that you're building for the next 2 years for Domino's India? What should one pencil in the levers that could drive margin improvement of 200 basis points in the next 2 years?
The biggest lever is the growth. Right? Which covers for inflation, the like for like growth. Second is the gross margins have you seen already improve, right? On account of better management of operations. We've already launched premium products which have better margins. And then there are several productivity initiatives at work. In fact, our supply chain cost has been lowest ever, right? In the history of this company. We believe there is even more juice over there. Our logistics cost actually we believe can improve further. I can go on and on. This is my favorite topic. There are enough productivity levers that exist across line, across large line items. We are opening 250 stores every year.
Therefore, we are able to go back and renegotiate with our landlords because this is giving them annuity rental income. There are several levers that we are pulling, which therefore feel confident to meet our numbers on the margins too.
Got it. Thank you. That's through my side.
Thank you.
Thank you. Next question is from the line of Vishal Gudka from ASK Investment Managers. Please go ahead.
Yeah, I think, just had a simple question. I think, during the World Cup final day, tech suggested that Our systems were down for 6 hours, maybe in the second half of the day, which impacted the sales to an extent. My question is that what is the probable impact in case the channel checks are true? What steps are we taking that such incident will not repeat in future? Thank you.
No, firstly, the information is correct. The systems were not down by six hours.
Incorrect.
Incorrect. Incorrect. Incorrect. The systems were not down. They were. There was a minor downtime on our app, but rest of the system was working and we recovered very quickly. There was not even, like, a notable impact in that week that is noteworthy of calling out over here. Systems are very stable. Please don't worry about this one.
Okay. Thank you.
Thanks.
Thank you. Next question is from the line of Nihal Jham from HSBC. Please go ahead.
Hi, Sameer. Am I audible?
Nihal? Yes, go ahead.
Yes.
Yeah. Just one follow-up. Thank you so much. Just one follow-up on the market share bit that, you know, you mentioned that as per the Nielsen panel, you've gained market share both on dine-in and delivery. The only data point that, say, we track is that if we look at aggregators, which is, say, sort of the larger QSR basket, that this is sort of the first quarter where the divergence in growth has been this much versus, say, Domino's and, say, the aggregators. Just your comments on that.
Good, good question. I think firstly the data that we track is only for delivery, right? That's the most, like, accurate data available through a consumer research. I was referring to that. I think when I was saying that among the 30 odd players that we track, we have gained share among that. Those are largely QSRs, which will go to almost like 3.3-3.4% of market share. I was mentioning against that. You are right, the aggregators have grown faster than the delivery of Domino's. That bit I agree.
Which would only indicate that the QSR as a basket has not grown as fast, and therefore the aggregators are getting growth from other non-QSR players or premium players is what my sense is. I don't have their data. We have plans to increase our delivery growth rate.
Understood, Sameer. That was it. Thank you so much.
Thank you. Ladies and gentlemen, we'll take the last question from the line of Avi Mehta from Macquarie Capital. Please go ahead.
Yeah. Hi. I just wanted to clarify on the gross margin bit a little bit. The reason why, you know, the confusion stems in is we have seen almost a 5% realization decline, which means that the underlying cost of goods have essentially reduced. Does that mean that the expansion is more to do with the move towards 99? If you could just throw some light on that, please. How do you reconcile the decline in realizations with the expansion in gross margin? Is that method also inaccurate? Thank you.
Look, can you just maybe explain, Avi, that, like, when you say expansion in gross margin?
realization-
You mean, like, you're talking about EBITDA, right?
No, no. The gross margin has gone up 100 basis points from 74.5 to 75.5.
Correct.
Your realizations have gone down by 5 percentage points, which means that the cost of materials have to go down by almost about 8, 9%, give or take, percentage points. I'm just trying to understand how is this kind of reconciling. Is it because the move towards the cheaper, or the lower price point is actually towards better gross margin products? The comment that you made about, you know, premium products, mix improvement should have also helped realizations. That didn't pan out, but the margin panned out. I'm just wanting some help on how to reconcile these two.
Avi, maybe it's a more nuanced question. Can I suggest we take it offline please?
Okay. No problem. No problem, sir. No problem.
Realization-
No, we have a break up, but I think it's a reconciliation point, so maybe you can pick it up with Apaar.
I will do that. I will do that.
Fine.
That is all. I will do that. Thank you very much.
Thank you, Avi.
Thank you very much. I now hand the conference over to Mr. Apaar Saraswat for closing comments.
Thank you everyone once again for joining the call and for listening patiently. For any other further questions, reach out to the investor relations team. You will find the recording and transcript of this call on the investor relations page of our website very soon. Thank you, and have a very good evening.
Thank you very much. On behalf of Jubilant FoodWorks Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.
Thank you.