The crucial third quarter of FY 21-22 has proved to be the happiest part of the ongoing financial year perhaps for retail and F&B brands. Even as Q3 results are coming out, more brands have shown promising results between Oct. – Dec. ‘21. Dominos Pizza, run by Jubilant Foods has declared a 7.48% increase in their Net Profit to Rs. 113 crores and 13.23% in revenues to Rs. 1,210 crores during the third quarter of FY 21-22 when compared to the same period during last financial year. Delivery channels grew 128% and Takeaways grew 148% compared to the last year according to the company’s earning report.
The company which has been operating in India for almost 20 years now added 75 outlets during the period. There are 1,400 outlets across India right now, making the QSR leader with most number of stores. Though the pandemic led WFH pushed “at-home” consumption rather than dining out, Dominos took more advantage of this opportunity. Unlike it’s global and Indian peer Pizza Hut, Dominos operates a very frugal restaurant model, akin to it’s US stores. The furniture is least comfortable with many seats not even having a backrest. Pizza is served in corrugated boxes along with the sides in plastic cups & holders. The emphasis has always been on delivery and off late, take away from restaurants. The company operates special pricing & combos for “take-away” compared to dine-in or ordering. This is a very smart move indeed.
By encouraging take-aways, the company could be able to massively cut down on delivery costs which take up a big share of its operating costs (OpEx). Secondly, assuming that most of its target group of customers (TG) are in their early 20s to late 40s, it could be safely assumed that they are already on the move and may not mind eating (the pizzas) on the go. This strategy seems to have worked well and it’s showing up on its earnings and results.
Rival Pizza Hut on the other hand operates a “restaurant model” with all the frills. Food is served in ceramic plates alongside metal fork and knife with plush sofas to complement the dining experience. So, food is not packed and given at the counter (like Dominos) rather served at the table by waiters. Lastly, comfortable air-conditioning, clean and neat rest rooms are a must to go with the over all decor which are upmarket. These “frills” add up atleast 20% of the business cost if not more, not to forget the additional capex – from large store spaces to kitchen equipment to additional staff and cleanliness + hygiene.
Though there is no one right model (for dining out) in India, Dominos seems to the preferred model for the younger audience while PH (mostly alongside KFC) sees the family audiences with kids, especially.
The strong Q3 results of Dominos are also indicative of the fact that the younger workforce has more money in their wallets now. Food ordering apps such as Zomato & Swiggy have redefined “eating at home” for the past 2 years, thanks to prolonged stay-at-home. But Dominos with it’s mouth-watering offers, hot pizzas and fastest delivery periods seems to have endeared more customers. No wonder, 1,500 stores are now much closer to their customers than ever before.
