CHINA – Jubilant FoodWorks, the operator of Domino’s Pizza and Dunkin’ Donuts in India has begun test runs of a Chinese fast food venture, whose working name is said to be said to be Chinese Kitchen.
According to ET Retail report which cites two people familiar with the matter, the business is the firm’s first independent venture and its third restaurant brand in the country.
“The brand, currently in test-run stage at a store in New Delhi, is based on mass-priced Chinese cuisine.
JFL is leveraging its backend synergies on the same and this will be its first home-grown brand,” one person said.
The Noida, Uttar Pradesh based company is seeking to capture a niche in a fast-growing segment that has only a few national operators such as Mainland China owned by Speciality Restaurants, Yo! China, said industry experts.
Jaspal Sabharwal, a food industry and private equity veteran and co-founder of online food industry platform TagTaste said: “Unlike other quick service restaurants, one can operate pizza and Chinese models at 27-30% of the food cost and yet meet per-head consumer spend expectations.
The food cost at value-pricing in other QSR formats is usually over 42%, which is a significant margin disadvantage.”
Jubilant has more than halved the store count of Dunkin’ Donuts to 32 now from 77 two years ago and is now focusing on small stores and kiosks to cut losses.
The company opened said it opened 24 new Domino’s stores and focused on its online presence during the last quarter.
Some of its key strategies included the launch of all-new Domino’s, every day value as well as a focus on its online and digital platform to drive sales.
In the quarter, it reported 1% rise in revenue to US$120 million from US$99m in the same period last year.
The fast-food group said revenues were driven by a strong same store growth in Domino’s Pizza.
Food aggregators and ecommerce companies are focusing on strategic commitments to offset the impact of rising fuel prices, freight charges, delivery costs and competition for delivery manpower.
“While JFL reported 20%-plus same-store growth (SSG), it largely happened because of low post-demonetisation bases.
Starting in the third quarter, it will be difficult to post high single-digit SSG. Additionally, Domino’s is finding it difficult to grow their network beyond 1,100 outlets in a profit-sustained mode, so adding the Asian leg to their business is the appropriate move,” Sabharwal said.