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Annual Report Takeaways

Jubilant FoodWorks Annual Report Takeaways!

Source: Annual Report 2019-2020

JFL Introduction:

Jubilant FoodWorks Limited (JFL/Company) is part of the Jubilant Bhartia Group and is one of India’s largest food service Company. JFL and its subsidiaries hold the exclusive rights to develop and operate the Domino’s Pizza brand in India, Sri Lanka and Bangladesh. Domino’s Pizza India has a network of 1,335 restaurants across 282 cities.

JFL also has exclusive rights for developing and operating Dunkin’ Donuts restaurants in India, with 34 restaurants under the brand across 10 cities. JFL entered the Chinese cuisine segment with our first homegrown brand – Hong’s Kitchen with four restaurants in two cities.

JFL Brands

FY20 In Glance

The company  reported a double-digit growth and strong EBITDA, which stood at 22.6% of revenues. EBITDA stood at ₹8,771 million.

The operating revenue for the year stood at ₹38,858 million, up by 10.1% over FY 2019.

During the year, online ordering (OLO) increased to 86% of delivery sales against 70% in FY 2019.

Opened 123 New Restaurants in the year.

Company placed zero contact delivery system across all their stores.

Company partnered with FMCG majors to deliver Dominos Essentials such as atta, dal, rice, milk, sugar, buns, etc.

Some key metrics

Profit & loss metrics standalone

Board of directors and Management team

Chairman’s message

In the face of all these challenges, the disciplined execution of our five-pillared strategy enabled us to deliver a strong performance for FY 2020. We reported a double-digit growth and strong EBITDA, which stood at 22.6% of revenues.

The five-pillar strategy

Management Discussion

With a robust business model, efficient supply chain, extensive network of certified partners and countrywide presence, JFL is well-positioned to capitalise on a wide array of growth opportunities in the food and beverages segment. The Company is constantly working towards transforming processes and leveraging technology to enhance capabilities and simplify operations to stay ahead of the curve.

Industry Overview

According to the National Restaurant Association of India (NRAI), the Indian food service industry is estimated to grow at a Compound Annual Growth Rate (CAGR) of 9% to reach Rs 5.9 lakh crore by FY 2023. On account of covid in  the food service industry, the trusted credible brands in the organised service sector are expected to gain market share while the unorganised sector shrinks.

As per the NRAI data four out of every 10 restaurants will likely be permanently shuttered in the absence of a government bailout.

The trends in the food service industry are expected to veer towards online food ordering, increased share of delivery and takeaway mix, changed customer perceptions about product consumption and services, higher emphasis on hygiene and safety among businesses and customers alike, and an exponential rise in digitalisation owing to greater focus on contactless and safer transactions.

Going forward, the entire business model needs to change and technology, hygiene and safety would become the key elements. Restaurants will have to focus on their delivery capacities and add value with initiatives such as special takeout-only menus. Further, contactless delivery will be the way to go. Seating capacity at restaurants is expected to fall to adhere to social distancing norms, which will reduce meal volumes.

Key favourable factors:

 India has the largest population under the age of 25 in the world.

Working age population to rise by 135 million by FY 2022 as India hosts 20% of the world’s working age population.  

Digital inclusion is likely to further propel India’s consumption growth trajectory while improving awareness about health, lifestyle and brands, among others.

Major risk and mitigation

Supply chain disruption

To mitigate regional concentration, strategic tieups have been done with suppliers having sustainable sourcing base outside the West region for supply of milk products.

In the ensuing pandemic situation, single-source vendors have been identified and are monitored for their vulnerability while alternate vendors are being considered.

Business Disruption and Resetting of Business Model due to COVID-19

Steps have been and are being undertaken to build customer reassurance to generate delivery orders through Zero Contact Delivery and Domino’s Pizza points. To encourage Zero Contact Takeaway orders, curb side and Zero Contact Delivery and to ramp up dine-in at restaurants, initiatives include social distancing, Zero Contact Dine-in, dine-in ordering through app, use of gloves, ramp up of the digital payments method, etc.

Impact of COVID-19 on Food Service Industry

Outlook for the Industry

Food consumption and eating habits are likely to be significantly impacted as a result of concerns related to hygiene, personal safety and social distancing. In the short term, the organised sector will grow faster and the unorganised sector will progressively lose its scale and scope. Within the organised sector, trusted credible brands will grow faster and gain greater market share. Going forward, technology, hygiene and safety would be the top drivers of change and well-known brands would have a better chance of emerging stronger out of the crisis.

Consolidated Balance Sheet

Profit and Loss

Consolidated Cash Flow Statement

Cash from operating activities improved from Rs 60,145Lakhs to Rs 86,798Lakhs.
Cash and cash equivalents increased from Rs 2,834 Lakhs to Rs 19,600 Lakhs.

Hope you got good sense of JFL and its performance. Stay tuned for more Annual report takeaways in the future.

Stay stafe, take care of your loved ones in these unprecedented times.

Cheers,

Thamizh

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By Thamizh

Proud Indian. Value Investor

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