Domino’s Pizza said India is performing ‘very well’ under the new management and it has become difficult for rivals to enter the market. “The long game strategy of fortressing against the competition is highly visible, most notably and recently in India with the departure of a competitor.
We didn’t comp them out of the market, but instead relied on unit economics that encouraged rapid growth and continue making it extremely difficult for others to get their foot in the door,” said CEO Patrick Doyle at a quarterly conference call.
“This approach, which is being executed globally, is perhaps one of the more exciting strategies around the future of our business. Needless to say it’s working,” he said.
Several pizza chains in India either scaled down, or completely shut operations, over the past few quarters. Rival Papa John’s ended its operations in India by closing its remaining 33 restaurants in July 2017, while another global major Sbarro closed its stores in Delhi-NCR. Domino’s, which announced its fourth-quarter results on Tuesday, became the largest pizza company in the world with annual sales of $12.2 billion in 2017, unseating Pizza Hut as the leading pizza chain both in the US and worldwide by revenues.
In India, Jubilant Food Works BSE 0.01 %, the operator of Domino’s Pizza and Dunkin’ Donuts, beat analyst estimates to post 17.8% growth in samestore sales during the December quarter, the highest since 19.8% in 2QFY13. This is after posting low single-digit expansion in the previous 15 quarters.
Analysts said Jubilant appears to be gaining market share against unorganised players, led by increased delivery orders and improving footfalls post the reduction in GST (goods and services tax) rates to 5% and strong performance of the core pizza portfolio.
“Recovery in urban discretionary consumption should spur demand growth, allowing Jubilant to realize the fullbenefit of ongoing cost control and rationalised losses from Dunkin,” said a recent Morgan Stanley report.
Rivals Yum! Brands, owner of fast food chains KFC, Pizza Hut and Taco Bell as well as Westlife Development BSE -0.94 %, which runs McDonald’s outlets in west and south India, have also been picking up over the past few quarters after being subdued for more than two years as consumers had cut spending amid economic uncertainty, including the currency note ban in November 2016.
The global fast food giant also said its master franchisee partners are assessing structural and leadership changes and will address a situation that they see is fixable and correctable within the relevant markets.
“The remainder of our regions and territories performed quite nicely including our large public master franchisees, notably the UK as well as India, under its new leadership. India had a period of time where it slowed down and it is now doing very, very well again,” said Doyle.
