BENGALURU, Feb 1 (Reuters) – Jubilant FoodWorks Ltd (JUBI.NS) on Wednesday reported a 40% slump in third-quarter profit as higher expenses outweighed a rise in orders at restaurants run by the Indian franchisee of Domino’s Pizza (DPZ.N) and coffee chain Dunkin’ Donuts.
The company’s shares fell 8.8% to a more than eight-month low of 444.1 rupees after the results were released.
Consolidated profit for the October-December quarter declined to 803.6 million rupees ($9.82 million) from 1.34 billion rupees a year earlier, the company said.
Revenue rose 10% to 13.32 billion rupees, driven by a growth in orders for Domino’s.
“Historic high inflation resulted in margin compression,” Jubilant’s Chief Executive Officer Sameer Khetarpal said.
Higher costs of cheese and vegetables contributed to a more than 18% increase in Jubilant’s total expenses.
Jubilant has been expanding aggressively over the last few quarters to smaller towns and cities in the country, which further weighed on its profit margins.
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The company, which also has franchise rights for Popeyes outlets in the subcontinent, opened 64 stores in India during the quarter, entering 16 new cities.
Dine-in and take-away form a significant portion of topline in India, Domino’s second-biggest market after the United States – where it is a delivery-first business.
Analysts say the American pizza chain has more than 70% share in India’s pizza market.
Earnings margin before interest, taxes, depreciation and amortisation fell to 22% from 26.4% last year.
Rival Westlife Foodworld Ltd (WEST.NS), which runs McDonald’s (MCD.N) restaurants in west and south India, posted a 74% jump in quarterly profit on Tuesday.
In July last year, Reuters reported that Jubilant had considered taking some of its businesses away from food delivery apps Swiggy and Zomato (ZOMT.NS).
($1 = 81.8250 Indian rupees)
Reporting by Nandan Mandayam in Bengaluru
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