Jubilant FoodWorks Limited (JFL) Monthly Coverage Report. December, 2017

Transcription

1 Jubilant FoodWorks Limited (JFL) Monthly Coverage Report December, 2017 Submitted By: Perfect Relations

2 Media Coverage Index Date Publication Headline Media 04/12/2017 The Economic Times Burger King Sales Grow 69% Even as Industry Stagnates Print 06/12/2017 The Economic Times Higher Prices on Menu at QSRs Print 13/12/2017 The Economic Times (Brand Equity) BACK TO DONUTS Print 13/12/2017 The Economic Times (Brand Equity) DOMINO'S RELOADED Print 17/12/2017 The Economic Times The Bun has got Bigger Print 26/12/2017 Financial Express (Brand Wagon) Beyond the GST smokescreen Print 12/12/2017 Financial Express How the F&B sector is courting the social (Brand Wagon) crowd Print 05/12/2017 The Economic Times Burger King sales grow, even as industry (Hindi) stagnates Print 06/12/2017 The Economic Times Quick service restaurant have increased (Hindi) their prices on menu Print 06/12/2017 The Economic Times Quick service restaurant have increased (Gujarati) their prices on menu Print 22/12/2017 Images Retail TRRAIN RETAIL AWARDS RETAIL CHAMPIONS Print 25/12/2017 Navshakti Jubilant Food celebrates Christmas by treating over 2,300 underprivileged children in Delhi and Mumbai with a pizza Print meal 04/12/2017 The Economic Times Burger King Sales Grow 69% Even as Industry Stagnates Online 06/12/2017 The Economic Times Why despite GST cut, eating out at McDonald s, Burger King, KFC, Pizza Hut & Domino's has not become cheaper Online 17/12/2017 The Economic Times The resurgence of India's fast food industry Online 27/12/2017 CIO & Leader.com Anand Thakur Joins Jubilant Foodworks As CDO Online 25/12/2017 The CSR Journal The Joy Of Gifting During Christmas Online

3 PRINT COVERAGE

4 Title Publication Edition Date 04/12/2017 Burger King Sales Grow 69% Even as Industry Stagnates The Economic Times Chennai, Mumbai, Delhi, Hyderabad, Chandigarh, Ahmedabad, Pune, Jaipur and Bangalore

5 Title Higher Prices on Menu at QSRs Publication The Economic Times Edition Kolkata, Mumbai, Ahmedabad, Bangalore, Delhi and Jaipur Date 06/12/2017

6 Title Publication Edition BACK TO DONUTS Date 13/12/2017 The Economic Times (Brand Equity) Chandigarh, Hyderabad, Chennai, Kolkata, Bangalore, Ahmedabad, Jaipur, Pune, Delhi, Bhubaneshwar and Mumbai

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8 Title Publication Edition DOMINO'S RELOADED Date 13/12/2017 The Economic Times (Brand Equity) Chandigarh, Hyderabad, Chennai, Kolkata, Bangalore, Ahmedabad, Jaipur, Pune, Delhi, Bhubaneshwar and Mumbai

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10 Title Publication Edition The Bun has got Bigger Date 17/12/2017 The Economic Times Chandigarh, Hyderabad, Chennai, Kolkata, Bangalore, Ahmedabad, Jaipur, Pune, Delhi and Mumbai

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15 Title Publication Edition Date 26/12/2017 Beyond the GST smokescreen Financial Express (Brand Wagon) Chennai, Kochi, Pune, Mumbai, Hyderabad, Bhubaneshwar, Kolkata, Jaipur Delhi, Lucknow, Dehradun, Ahmedabad, Bangalore and Chandigarh

16 Title Publication Edition Date 12/12/2017 How the F&B sector is courting the social crowd Financial Express (Brand Wagon) Hyderabad, Dehradun, Ahmedabad, Mumbai, Lucknow, Pune, Delhi, Kochi, Jaipur, Chennai, Kolkata, Chandigarh, Bhubaneshwar and Bangalore

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18 Title Burger King sales grow, even as industry stagnates Publication The Economic Times (Hindi) Edition Delhi Date 05/12/2017

19 Title Quick service restaurant have increased their prices on menu Publication The Economic Times (Hindi) Edition Delhi Date 06/12/2017

20 Title Quick service restaurant have increased their prices on menu Publication The Economic Times (Gujarati) Edition Mumbai Date 06/12/2017

21 Title TRRAIN RETAIL AWARDS RETAIL CHAMPIONS Publication Images Retail Edition National Date 22/12/2017

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24 Title Publication Edition Jubilant Food celebrates Christmas by treating over 2,300 underprivileged children in Delhi and Mumbai with a pizza meal Navshakti Mumbai Date 25/12/2017

25 ONLINE COVERAGE

26 Title Web portal Burger King Sales Grow 69% Even as Industry Stagnates The Economic Times Date 04/12/ Link Burger King Sales Grow 69% Even as Industry Stagnates American fast-food chain Burger King, in the second year of its India operations, grew 69% to post sales of Rs 237 crore during FY17 when most quick-service restaurants were struggling with stagnant sales. In the fiscal, the company generated average sales of Rs 2.7 crore from each of its 88 outlets

27 opened till March, while its rival Westlife Development, that runs McDonald s in the south and west, posted average sales of Rs 3.6 crore from each outlet. Burger King, however, notched up higher numbers than Jubilant FoodWorks (JFL), where average sales per outlet were at Rs 2.1 crore from both brands, Domino s Pizza and Dunkin Donuts. Burger King s losses rose to Rs 62 crore during last fiscal, compared with Rs 38 crore a year ago, as the company doubled its store count. Burger King, that now runs more than 100 stores in India, claims it is now profitable at both the store and company level. Our restaurant EBIDTA (earnings before interest, taxes, depreciation, and amortisation) has been positive since last July, said Rajeev Varman, CEO, Burger King India. Sales grew mainly due to three reasons all our burgers are grilled similar to an Indian-stye tandoor which is healthy, our focus on entrylevel pricing, and we offer the largest vegetarian menu within QSR. Burger King, that is popular for its Whopper burger, entered India in November 2014 when most quickservice restaurants were struggling with falling sales. There was a slight revival last fiscal but the overall market continued to face challenges, compounded further by demonetisation announced in November last year which saw consumers reduce discretionary spending. The 65-year-old burger chain partnered Everstone Capital in India, which holds a majority stake in the company through subsidiary F&B Asia Venture. It has lined up $100 million for expansion over the next few years and expects to open at least restaurants in India in the next few years. There s a significant room to grow as the potential in each of the 28 cities where we are present remains high, said Varman. Leading quick-service restaurants have seen low same-store sales growth (SSG) since the past two years with consumers cutting back on discretionary spending. In addition, the segment also saw the entry of global companies including Wendy s and Johnny Rockets, offering customers a wider cuisine range. For instance, Westlife Development grew SSG at 4% while Jubilant saw a 2.4% decline in SSG last fiscal. Starbucks, the world s largest coffee retailer, posted its slowest sales growth of 14% in India last year.

28 Title Web portal Why despite GST cut, eating out at McDonald s, Burger King, KFC, Pizza Hut & Domino's has not become cheaper The Economic Times Date 06/12/ Link Why despite GST cut, eating out at McDonald s, Burger King, KFC, Pizza Hut & Domino's has not become cheaper Prices at McDonald's (in the north and east), Burger King, Pizza Hut, Domino's and KFC have risen in the past week at least on some of the costlier items on the menu despite a cut in goods and services tax (GST) on restaurants because input tax credit is no longer available to them. On the other hand, the quick service restaurant (QSR) chains said some items are now cheaper thanks to the tax reduction. The GST Council slashed rates to 5% from 18% for restaurants with effect from November 15.

29 Increases at McDonald's (north and east), Burger King, Pizza Hut, Domino's range from 5% to 8%, while KFC said the rise in price was marginal. This comes as the government has been pushing companies to pass on the benefit of the mid-november GST cuts on various items to lower prices for consumers. Connaught Plaza Restaurants Ltd (CPRL) managing director Vikram Bakshi said, "The actual impact of non-availability of input taxes after reduction of GST to 5% from 18% was about 8%." CPRL continues to operate McDonald's stores in the north and east despite the US chain announcing the termination of its franchisee pact for 169 stores in the region in August. "After careful deliberation, CPRL has increased prices, effective December 1, to give us an overall 5% increase," Bakshi said, adding that the breakfast menu and all beverages are unchanged as are items such as the Pizza McPuff. 'Increase in Input Cost' Domino's has raised prices of cakes, garlic bread and some highend pizzas by up to 8% but kept regular pizzas unchanged. "Since denial of input tax credit has led to an increase in the input cost, we have adjusted prices of a few items to only partially cover this increased cost. However, our customers will now witness a significant reduction in effective prices immediately," a Jubilant FoodWorks spokesperson said. The spokesperson said Pizza Mania prices have been cut to Rs 62 from Rs 69, while the basic Margherita is down to Rs 104 from Rs 117. Under its Everyday Value Offer, pizza prices have been reduced to Rs 209 from Rs 235. KFC has raised the price of some items and cut that of others. KFC India managing director Rahul Shinde said, "Our menu prices have been updated to be inclusive of GST, and going forward our consumers will pay exactly what they see on the menu board." A spokesperson for Hardcastle Restaurants, which operates McDonald's outlets in the west and south, said there had been no increase in prices over the past week. "The government has brought down GST from 18% to 5%, but there has been a removal of input tax credit due to which our operating costs have gone up. We have passed on benefits to consumers wherever we could," said a Hardcastle spokesperson, adding that it has "'substantially reduced prices" of flagship products including the Maharaja Mac and spicy chicken and paneer wraps.

30 "Depending on the category of the restaurant, price adjustment exercise to the base menu price had to be done to rationalise the removal of ITC," said Rahul Singh, president of the National Restaurants Association of India (NRAI), which represents thousands of outlets. "We welcome reduction in GST slab from a very high 18% to 5% without any distinction of the air-conditioning. However, denying the ITC benefit goes against the grain of GST and will push up the costs by 10%, which will be passed on the menu price. So, effectively the consumer pocket will get a marginal benefit and not as it seems." A Tata Starbucks spokesperson said, "Like many businesses operating in India, Tata Starbucks adjusted prices following the recent revision of the GST structure. The GST revision included the elimination of the input tax credit, increasing costs for the industry. As a result, we raised our base prices, while still providing savings for our customers after tax on every product." The chief executive of a large global restaurant chain's India unit said, "While there is a decrease in prices of some value products, the absence of input tax credit (ITC) has led us to take selective price hikes." He said it was not possible to pass on all of the tax benefit. "For some popular products, we have maintained prices so that it doesn't impact consumer sales." Burger King and Pizza Hut didn't respond to queries. At last month's GST Council meeting, the rate was slashed to 5% from 18% for all standalone restaurants, irrespective of whether they were air-conditioned or otherwise, without input tax credit. Takeaways and deliveries were also brought down to a flat slab of 5%. The change took effect November 15.

31 Title Web portal The resurgence of India's fast food industry The Economic Times Date 17/12/ Link The resurgence of India's fast food industry India's quick service restaurant (QSR) business was floundering after body blows from demonetisation, the ban on liquor sales on highways and the introduction of the goods and services tax (GST). Hundreds of QSR and cafe outlets shut between 2013 and 2016 through the reckless expansion of Now, they have bounced back, galvanised by the unexpected challenges. Smaller stores, more food innovations, moving out of high streets and greater focus on same-store sales growth (SSG) are driving a resurgence.

32 For Domino's, the bellwether of QSR industry, 2017 started on a grim note: SSG dived into negative territory of 3.2 per cent from a positive of 4.6 per cent for the year-ago quarter a first in six consecutive quarters of low but positive SSG. Despite a bounce-back in the second quarter for India's largest pizza brand, posting a positive SSG of 4.2 per cent, the recovery was tenuous. The pizza, and the larger QSR story, it seemed, were to be sliced asunder. However, for the first two quarters of fiscal 2018, Domino's made a comeback to positive 6.5 per cent and 5.5 per cent SSG(see Same-store Sales Growth has Picked Up in Most Chains). Profit after tax (PAT) of Jubilant FoodWorks, the master franchisee of American pizza brand Domino's and donut label Dunkin' Donuts, leapfrogged from a meagre `6.72 crore in March 2017 to Rs 48.5 crore. "The worst is behind us," says Pratik Pota, chief executive officer of Jubilant FoodWorks. The green shoots of recovery in consumer sentiments and discretionary spends are definitely visible. "We are optimistic." Westlife Development, which operates McDonald's restaurants in western and southern India, similarly saw a stronger September quarter on the back of higher SSG at 8.4 per cent from 1.7 per cent of Q2 2016, making it nine consecutive quarters of same-store sales growth. "Even after demonetisation, which sucked liquidity out of the system, we reported positive same-store sales growth at 5.1 per cent in that quarter," Amit Jatia, vice-chairman of Westlife Development, told ET Magazine. Innovation in menu, brand extensions and launch of value-for-money products such as Happy Price Combo and Chatpata Naan were the key factors driving growth, adds Jatia. KFC India, the local arm of the American burger giant, has seen five consecutive quarters of positive system sales growth. Mad Over Donuts, the largest donut player in terms of store count, also reported an upswing in SSG, averaging 14 per cent over the last three quarters. "I am quite bullish on QSR's long-term growth potential," says Tarak Bhattacharya, chief operating officer of Singapore-based Mad Over Donuts. Sales are up for the past six quarters, consumer sentiment has been improving and there has been a remarkable uptick in SSG. "QSR is back on track," says Bhattacharya. SSG is the best financial metric to check the health of a QSR company as it shows a difference in revenue generated by a chain's outlets over a certain period, often a quarter, as compared with an identical period last year. If the bulk of a company's revenue increase comes from opening new stores, it could be that the demand for a company's product is flattening out and that it will plateau once the company reaches a saturation point in terms of total locations. That's why a positive SSG shows the strong business fundamentals of a company. Though a company can still grow with low SSG by opening more outlets, that's a recipe for disaster as it entails heavy capital expenditure. Profitability Mode

33 Domino's opened 47 stores in the last quarter of FY2014. The SSG number for the corresponding quarter stood at a negative of 3.4 per cent. In the second quarter of FY15, it opened 36 stores, and had a negative SSG of 5.3 per cent. Now, contrast it with the second quarter of this fiscal: one store opened, one closed and a positive SSG of 5.5 per cent. For the last three quarters, Domino's has not expanded its footprint of 264 Indian cities. "Domino's is still chasing growth, but of a different kind, ie, same-stores sales," grins Pota of Jubilant. It is easy to open more stores and get aggregate growth, but if that is not built on strong same-store sales growth, it weakens profitability. "We are hungry for driving sustainable profitable growth, but not at the cost of low or negative same-store sales." QSR players have pressed the brakes after the reckless expansion of two years starting The idea of sustainable growth had taken a back seat. Over 650 QSR and cafe outlets shut down between 2013 and 2016, according to a study done by TagTaste, an online community for food professionals to discover, network and collaborate. The study exposed the flimsy operational metrics. Over 45 per cent of the QSR and cafe players had a negative EBITDA (earnings before interest, tax, depreciation and amortisation). "QSR expanded at a hectic pace," reckons Abneesh Roy, senior vice-president, institutional equities, Edelweiss Securities, resulting in cannibalisation of the same brand stores and shrinking bottom line. "Caution was thrown out of the window and SSG seemed to be a lost word in business lexicon," he adds. What compounded the problem was back-to-back blows: demonetisation and rollout of GST. "Demonetisation and GST took the industry by surprise," says Rahul Shinde, managing director of KFC India. While ups and downs are part of the business cycle, Shinde explains, 2016 turned out to be a turnaround year for KFC, which brought the focus back on chicken as its main offering. "KFC posted five consecutive quarters of positive system sales growth," Shinde said, adding that the brand went back to the drawing board, made a new strategy and decided to bring chicken to the forefront. "As we made this transition, consumers returned to the restaurants," he says. QSR players flirted with innovations in offerings which had nothing to do with the core business in Dunkin' Donuts was pushing burgers, Domino's was betting big on side dishes and Barcelos was trying out more Western cuisines. "We quickly rejig our plans," says Rohit Malhotra, business head of Barcelos India, a South African casual dining restaurant chain that entered the country in early Smaller stores, more food innovations catering to local palate and moving out of high streets came into reckoning. Three years after entry, Barcelos has shifted one store, opened one, two more will be opened next month. "Demonetisation, highway liquor ban and initial blow of GST are things of the past," says Malhotra. Things have turned positive over the last few months. Footfalls and sales are back on track, and consumer sentiment has improved. "From a macro perspective, we believe consumer sentiment is steadily improving," says Amit Jatia, vicechairman of Westlife Development. While the brand will strengthen menu innovation, brand extensions

34 will continue to be the corner stone of growth. For the last couple of quarters, he points out, everybody's results are moving in the right trajectory. "So clearly, QSR is kind of turning around." It's not only international chains that are looking at innovations to drive growth. Mirah Hospitality, which runs flagship restaurant Khandani Rajdhani, serving Gujarati and Rajasthani cuisine, has focused on introducing combos and packed meals through various delivery platforms. "This year is better than last year and the brand has performed well even in the midst of challenges," says Aji Nair, chief operating officer, F&B division, Mirah Hospitality. With GST firmly in place and GDP looking to grow at a healthy pace, there is no reason to believe that the food sector won't keep up the pace next year, says Nair. Suresh Goel, chief executive officer of Bikanervala, which sells the Bikano brand of Indian sweets and savouries, also predicts a brighter prospect for the food industry. "Any business is cyclical in nature. In QSR, there have been some slippages but now it's gaining momentum," says Goel, adding that food services market is projected to touch `5 lakh crore mark by "There is enough room for growth, and economy is resilient," he adds. In the July-September quarter, economic growth bounced back to 6.3%, reversing a five-quarter slowdown, according to data by Central Statistics Office (CSO). Economic growth picked up from a threeyear low of 5.7% in the April-June quarter, CSO said in its data released end of November. Conscious Sentiments Earlier this week, the United Nations World Economic Situation and Prospects 2018 estimated India will grow at 7.2% in 2018 and accelerate to 7.4% in the following year on robust private consumption, public investment and structural reforms, though the risk of sudden capital withdrawal on account of monetary policy normalisation in developed countries remained. An uptick in consumer sentiment and improving GDP is what the doctor ordered for an ailing food industry overwhelmingly dependent on discretionary spend. Consumer confidence in India rose to a 10-year high in the December quarter of last year, according to Nielsen's global consumer confidence index report released in February this year. India retained its No. 1 spot among the 63 countries surveyed. In fact, India scored the top spot in Nielsen's survey for eight consecutive quarters until June last year. "Consumer sentiment has seen an uptick, and it is likely to improve over the next year," says Roy of Edelweiss Securities. Food inflation has been low, modern retail has been posting healthy numbers, and GST slashed to 5% from 18% will only aid the revival underway. Roy said the QSR industry suffered over the last two years owing to massive discounts by food aggregating apps, freebies doled out by biggies such as Domino's that liberally promoted BOGO (buy one get one free) and sharp price hike by fast food brands. "The growth tailwinds will continue next year," contends Roy. In spite of the early signs of revival, food entrepreneurs are careful to temper their optimism. Getting government approvals, permissions and overall rules and regulations governing the F&B industry continue to be a big constraint, says Amit Burman, chairman of Lite Bite Foods, which runs 180 restaurant stores, including Punjab Grill and Street Foods.

35 "However, all negative effects have now trickled down and we are closing the year on a good note," Burman says. The positive sentiment from the consumers has been a silver lining no matter how challenging the environment is, he says. Food analysts caution that QSR might hit speed breakers if fundamental issues are not resolved. Though the QSR industry has managed to hold on to its appeal to millennials and the older generations, globally carbonated soft drinks contribute 25-30% of the business level gross margin and this does not include pouring charges and the advertising support that Coke and Pepsi dole out. "With preferences for soft drinks continuing to decline in India, the QSR industry is likely to come under even more pressure in the coming years," says Jaspal Sabharwal, a food industry veteran and cofounder of TagTaste. Minimum wage plus hiring-to-retention costs in the top eight cities are rising more than revenue growth, and this is impacting industry's profitability by basis points annually, says Sabharwal. Even after taking into account that 10-12% of the revenue comes from the delivery business, in-store dining productivity is declining at an average rate of 4% year-on-year since Consumers' desire for healthier food and smaller portions has led to heightened volatility. Generation-Z (people born in or after 2000) is not looking at QSRs favourably and there are 260 million of them in India. "The QSR legacy is under pressure and it is happening globally," says Sabharwal. Pota of Jubilant, for his part, sounds confident about the growth prospects. The growth will be sustainable, based on fundamentals and food innovations. "We have cut discounts, have turned frugal and more cautious about opening our stores." The dough is rising.

36 Title Web portal Anand Thakur Joins Jubilant Foodworks As CDO CIO & Leader.com Date 27/12/ Link Anand Thakur Joins Jubilant Foodworks As CDO Anand Thakur has joined as the Chief Digital Officer of Jubilant Foodworks Ltd. This is a newly created position at the company. A techie, Thakur served in various IT companies including Infosys, Perot Systems, Adobe before having a stint in online retail companies including Lenskart and Koovs. His immediate last assignment was as the CTO of Koovs. It may be noted here that more and more companies are appointing CDOs and the post is seeing executives with diverse backgrounds - technology, marketing, core business and supply chain.

37 Title The Joy Of Gifting During Christmas Web portal The CSR Journal Date 25/12/2017 Link The Joy Of Gifting During Christmas In the true spirit of bringing cheer, which is really the cornerstone of Christmas celebrations, various corporates went out of their way to spread joy, especially amongst children. SMAAASH hosted a Christmas party for the children of Muskaan Foundation, a NGO dedicated to the people having multiple disabilities. Smiling faces were witnessed at the cannon shooting, ball pool, creative slides and at the other activities present. The little ones of the foundation were also treated to some delicious goodies and sweets.

38 Jubilant FoodWorks Limited (JFL), master franchise of Domino s Pizza and Dunkin Donuts in India, made this Christmas special for underprivileged children by organising a delicious pizza treat for them. As part of the Christmas celebrations, JFL employees also organised special activities for children that doubled the joy of festivities for them. The activity was carried out in Delhi and Mumbai and around 2300 children were part of the celebrations. It was organised in partnership with various NGOs in the cities. The employees spent quality time with the children understanding their aspirations and engaging them in fun filled activities thus spreading the Xmas spirit and fervour. Santa Claus too is in the city in an initiative by 1 SmallStep Foundation to bring the joyfulness among young and old, rich and poor, bold and beautiful at Marine Drive, Kemps Corner, Churchgate, Dadar, Mahim, Bandra, Chembur, Ghatkopar, Sion, Matunga, Andheri, Thane, Powai, Malad, Kandavali. The idea of giving back to the society has been embraced by 15 Santa s who are volunteering to paint the city red, and also have Nitasha Biswas, India s first Miss Trans Queen will spread Christmas happiness in Delhi. Via social media crowdfunding kindness has been gathered by people who have generously filled Santa bags with chocolates, cookies, muffins, biscuits, cakes, stationary such as crayons, drawing books, fancy pens & pencils, shawls & blankets to the elderly. It is this occasion that celebrates happiness, gifts, love and much more. In our own small way, each of us can be a Santa and gift a better tomorrow to the underprivileged and less fortunate than us. Thank you for reading the story until the very end. We appreciate the time you have given us. In addition, your thoughts and inputs will genuinely make a difference to us. Please do drop in a line and help us do better.