Thank you so much, Reyo. Welcome to Jubilant FoodWorks Limited's quarter two FY26 earnings call for investors and analysts.

We are joined today by senior members of the board and the management team, including the Chairman, Mr. Shyam Bhartia, the Co-Chairman, Mr.

Hari Hari, the CEO and MD, Mr. Sameer Khetarpal, the Turkey Business CEO, Mr.

Aslan Saranga, and the CFO, Ms. Suman Hegde.

We will commence with the key thoughts from the Chairman, followed by remarks from the CEO and MD. After the opening remarks, the forum will be open for Q&A session.

A cautionary note before we move ahead: some of the statements made on today's call would be forward-looking in nature, and the actual results could vary from such statements. We will also share the replay and transcript of the call on the company's website under the investor relations section.

I would now like to invite Mr. Hari Bhartia to share his views.

Over to you, sir.

Thank you, Apaar. Good evening, everyone, and thank you for joining us today for our quarter two FY26 earnings call.

We are pleased to report another quarter of well-rounded performance driven by robust top-line growth across all markets. Our India business has delivered industry-leading revenue growth and a steady operating margin.

Our Turkey business continues to demonstrate strong performance. It is also PAT accretive to the group on a year-on-year basis.

We are seeing improving sales on the back of a strong franchise network and portfolio innovations. We continue to expand our network footprint with a run rate of approximately one new store per day, and we have added 93 stores during quarter two across brands and markets.

Now we operate close to 3,500 stores, out of which close to 2,500 stores are Domino's. In terms of our performance during the quarter, our consolidated revenue from operations increased by 19.7% year-on-year to ₹23.4 billion.

This is on back of a consistently strong like-for-like growth in Domino's India and Turkey and large network expansion. Domino's India delivered a strong 9.1% like-for-like growth despite the early onset of Navratri this year versus last year.

Through judicious cost control measures and continuous improvement in productivity, we have demonstrated sequential improvement in EBITDA and PAT margins. On a standalone basis, our pre-IndAS EBITDA margins have improved during the last two quarters, up by 37 basis points versus the same quarter last year.

We continue to drive innovation in our product portfolio following the successful launch of Big Big Pizza and Chicken Burst. We have introduced four cheese sourdough pizzas in quarter two, which has received exceptional customer feedback.

Going forward, we remain focused on delivering value to our customers. This has been possible because of the strong foundation that we have built with technology, supply chain, delivery capability, and most importantly, our talent and people.

We have been building future-ready organization, one that combines scale with agility, innovation with discipline, and growth with resilience. Thanks to this, we are starting to adapt artificial intelligence in our technology platform to improve productivity across all our functions.

You will be happy to note that Domino's launched Cheeszilla with a breakthrough campaign ad created entirely by artificial intelligence. Finally, in the conclusion, I would like to add that we are extremely delighted with the steady top-line growth across all our markets.

Our India business continues to grow ahead of the market while also witnessing a consistent improvement in operating margin and PAT margin. Our Turkey business is consistently delivering value accretion with robust pipeline growth and healthy PAT margin.

Sri Lanka and Bangladesh businesses are also witnessing strong growth. Overall, our strong performance and the momentum generated in first half, we believe, has set Jubilant FoodWorks for a very promising second half.

With that, I will now like to invite our MD and CEO, Sameer Khetarpal, to provide more details on our quarter two FY26 performance.

Thank you, Mr. Bhartia.

Q2 was yet another dream quarter. Domino's across geographies had strong, positive like-for-like growth with India growing at 9.1%, Turkey at 5.6% adjusted for inflation, and Sri Lanka at 81%.

Popeyes also grew double-digit SSG. In the quarter, like-for-like due to like-for-like growth, we gained market share, expanded store footprint, and improved margin simultaneously.

Domino's India delivered a positive like-for-like growth seven quarters in a row and is now serving in 500 cities, serving customers in 500 cities. India business as an entity continues to deliver double-digit top-line growth led by strong order strong order volume increase.

The revenue from operations increased 15.8% to almost ₹17 billion. Domino's India saw strong growth of 15% year-on-year and revenue growth of order growth of 15% year-on-year and revenue growth of 15.5%.

Like I said, like-for-like growth was 9.1% and delivery like-for-like growth was 16.5% year-on-year. Delivery delivery channel revenue growth continues to be over 20%, demonstrating the lasting effectiveness of our free debit free delivery initiative, just to remind, it was launched five quarters ago, and relentless focus on speed of delivery.

JFL's network expansion is ahead of our internal plan. It aligns with our internal expectation of growth in the QSR market and our ability to gain incremental market share.

In Q2, we expanded the store network in India by 88 stores over previous quarter, out of which there were 81 new Domino's store. YTD number for Domino's is now 149 in the financial year.

During Q2, the footprint for Domino's network expanded by 16 new cities, taking the service to 500 cities. Along with this, we opened eight new Popeyes store, out of which four were in Mumbai, marking the entry of Popeyes into western western part of the country.

Product innovation continues to be an important growth lever. During Q2, we launched sourdough pizza and breads, a new product form which is which is already gaining traction among customers.

It also it follows the launch of Big Big Pizza, Chicken Burst, and our Flavor Burst that were launched in previous three quarters. For us, Popeyes is equal to bold flavors.

To build on the reputation of most flavorful chicken brand, team at Popeyes launched Flavor Burst Burgers. Digitally, in Q2, we achieved a major milestone.

Our tech teams launched an ad monetization platform on Domino's app through which iconic brands like Apple, Tata Neu, Flipkart, which have adopted the service, get get more eyeballs and almost nearly 15 million monthly active users that come on the app. The the app traffic grew 28%, and loyal loyal loyalty member base rose to more than 40 million.

On profitability front, the pre-IndAS EBITDA margin of our of India business has seen an improvement year-on-year and on quarter-on-quarter basis through improved operating leverage and productivity gains. The team has been able to maintain a very tight cost control throughout the supply chain, which is highly commendable.

The business in Turkey exceeded our plans and exceeded our plans. Post-IAS 29, Domino's LFL came in at 5.6%, reflecting a strong growth momentum driven by orders.

The business reported ₹5.9 billion in revenues and a PAT margin of 10.4%. COFFY as a brand in Turkey is wrapping up with compelling proposition and strategic pricing.

We added five new stores for COFFY during during the quarter and now operate 172 cafes. On on a consolidated basis, revenue from operations grew 19.7% year-on-year to ₹23.4 billion, and reported EBITDA grew at 19.5% to ₹4.8 billion.

Post- post-IndAS interest cost declined by 23.5% year-on-year, largely due to efficient refinancing of the acquisition debt in Turkey. Consolidated PAT from continued operations grew 53.7% year-on-year, which validates our strategic capital deployment and relent relentless focus on execution.

To summarize, deeper focus on the three brands across Turkey and India as geographies, consumer-first product launches, tech-forward approach continues to power our growth across all markets and brands. We see momentum carrying forward in Q3 2026, with sales in October beating our internal plans.

I now request the moderator to commence the Q&A session.

Hi, good evening, Sameer and team. Am I audible?

Yes, Vivek. Please go ahead.

Perfect. My question to you is, we have seen how your peers have reported in the last few quarters.

Obviously, your SSG numbers or LFL numbers have been very good, but there was also an element of base. As the base gets reset from December quarter, what number of LFL you will be happy about or that you are targeting at this point of time?

Yeah. No, I think great question, Vivek.

This is how we build our internal plan. We want the India Domino's business to grow closer to 15% year-on-year, right?

That's what internally we target. Now the roughly 5% to 7% should come from like-for-like growth, and we should increase 7% to 10% on the store store expansion.

Together, if you really see, the number varies can vary from 12% to 17%, right, the upper end and the lower end of the ranges. That's how we model.

Within 5% to 7% like-for-like growth, there should be 1% to 2% improvement in pricing or mix. That's how we model, and about 3% to 4% in terms of underlying volume.

Got it. Just a follow-up to that, Sameer.

While the base of, in case of let's say delivery is going up, your dine-in still has a low base. This quarter was flat on a YoY basis.

Do you envisage that will pick up as we go forward now?

I think the work on delivery took time to scale, time to build, right? Therefore, we feel good about how delivery is growing, and we believe there is more juice over there.

The work on dine-in or in-store is very much underway. Like for example, the ₹99 the renown value meal that we launched for dine-in between 11:00 and 3:00 is giving us the joy.

We have expanded that to delivery at about ₹150 during lunch hours. Long story short, there are several initiatives which are in works to increase on-premise sales, and very soon we'll be launching our offerings during that, plus the focus on lunch, right?

Lunch as a percentage of sale, dine-in and takeaway as a preferred channel is much higher during lunch hours versus dinner hours where delivery is much higher.

I see. Okay.

Second point is, on the GST break, you were not direct beneficiary, but there was an input side benefit. Can you just elaborate on what exactly was the quantum benefit and what have you done with that, let's say saving or whatever?

I think our internal estimates, while we were at a 5% regime, and we continue to be at a 5% regime with no input tax credit. Having said that, we are thankful to the government to bring down the GST on some of the input, like the ingredients like cheese and sauces that we get, from 12% to 5%.

Therefore, the weightage of that in our mix is about 50 basis point in terms of margins. The purpose of this initiative is to expand consumption in India, and we have passed on this selectively deeper into our products.

Like for example, in Big Big Pizza, we had taken the price increase to 899. We have brought it down post-GST reduction to 799.

On selective products, we have taken some deeper cuts, but at the moment, to drive consumption, especially also during festive period, we have passed it on to the consumers.

Sure. Lastly, Sameer, when we look at GST cuts, obviously it's not that the customer will be using the same money in the same category.

Do you think that we have seen in case of autos a pickup in demand. Do you expect categories like yours should also benefit now in coming times?

100%, Vivek. If Diwali was an indicator, right, I think while the auto sales boomed, pizza also was eaten in abundance.

I genuinely believe the consumption is good for us and through multiple initiatives of the government, be it interest rate coming down, income tax rates coming down, and also GST benefits, ultimately it will boost consumption, right? I'm quite hopeful, and we're seeing that in places also, the demand for eating out will only go up.

Got it, Sameer. Wishing you and your team all the very best.

Thank you.

Thank you, Vivek.

Hi, thanks for the opportunity. Just continuing on Vivek's question, just following up, one is, in the 45 days so far, is the growth trajectory ahead of your estimate of 5%, 7% or in line?

How does it make you feel about rest of the quarter? Second is— Sure, please.

Go ahead, Jay. I'll try and answer.

Second question is, last year you had double-digit LFL for last four quarters, and you saw a certain margin expansion at a pre-IndAS level. This year, for the next four quarters, that LFL growth you're targeting would be lower.

In that case, how should we think about the YoY margin expansion trend for the company over a four-quarter period, not quarter to quarter? The last question would be, could you sort of give us some sense of progress of Popeyes, especially on ADS trends in unit economics?

Yeah. Okay.

I'll try and answer all the three question, but I may ask you to remind one of them if I forget. Jay, like I said, October has been a very good month for us.

It was ahead of our plans. Having said that, the last year Diwali was at the last day of October, and the momentum post Diwali, which exists because of Bhai Dooj and Chhath Puja and Gujarat, right, all of those will come into the basis in November.

At the moment, I continue to be confident about the numbers, the way October has gone. December was again a very high base for us.

I fully understand the intent behind the question that this is the quarter that will really prove our growth hypothesis. At the moment, I remain very confident looking at how October has gone.

I'm not giving you a particular number saying yes or no to it, but we are ahead of our plan. Right, and the second, I think the margins, there were two interventions which were there on the margins, right?

One was free delivery, and as a result, delivery mix continued to increase in our portfolio, right? That was one headwind.

For the first time, we are beginning to see the ticket size increases, right? Which augurs well from the margin standpoint.

Second headwind was we launched certain products with very aggressive pricing, which were cheesy and therefore, to counter that, we've launched more premium products like sourdough pizza, which come in at higher margin. We believe now we are shifting mix, which was driving volumetric growth, towards mix that is driving more ticket sizes.

Therefore, I do expect margins to improve. I think we stand by our guidance that we have given, or that's what Suman gave during investor day, that we should improve 200 basis point, right, Suman, that's what we—

Over three years.

Over three-year period. That we are very confident of achieving, and you're beginning to see some bit of it reflecting in the coming quarter and will do more in the current quarter.

The last piece on Popeyes, very delighted with the double-digit growth. The product is now truly being loved by many many customers.

Performance in Mumbai has totally surprised us, exceeded all expectations, and Bangalore and Chennai continue to grow on ADS, very very strong performance. As a result, underlying profitability is also improving.

Again, we will come back once we reach 100 stores. We'll give a full color on how it is.

At the moment, we are focused on getting to 100 stores. In terms of ADS, in terms of profitability, the goal for the team is to hit the industry average ADSes and beat the gross margins that are there in the industry, then we know we have a very scalable platform then we know how to open stores.

We can open stores very quickly. We're not far from that goal.

One last if I may, could you sort of also talk a little bit about your market share in pizza? There was a phase where you were losing market share to maybe the likes of La Pino'z.

If you can sort of comment a little bit on that.

No, I think it's a great question. Internally, while unlike FMCG where AC Nielsen or Kantar do a very detailed job of GT and MT, we have to rely on our own databases and internal sources.

I think from some of the listed players, you can compare the number of stores opened and the average daily sales, right? We have disclosed our mature store ADS upwards of ₹80,000, ₹83,000, right?

That number you can compare. This is on a base of nearly 1,700 stores that we have disclosed.

I was in the Western market last week, and I went to quite a few stores of competition, including the names that you are taking. We are materially ahead in terms of number of stores opening and also the ADS per store.

Our internal estimates suggest whatever between 65% to 70% market share we continue to be there and growing. Same news we also get from the aggregators to the extent they share the news.

I think the opportunity to me is there is a growing opportunity on the premium end of the pizzas, which is more gourmet, wood-fired, sourdough, and therefore, I believe the team has done a great job of bringing in a sourdough pizza into the mix. That is the fastest-growing subcategory, and now we are playing over there, too.

We're very happy with the results. In fact, we're surprised by the uptake in tier two, tier three cities of a product like this.

We thought it's more metro, but we are very surprised by how India is consuming.

Thank you very much and good luck.

Thank you, Jay.

Hi, sir. Again, just a question on the margin.

I know you have given a guidance of 200 basis points over three years, but just wanted to understand it in a little more granular fashion in terms of what are going to be the drivers to this 200 basis points, because in the last three, four quarters also, we have had several sort of positive initiatives which should have driven the margin, but have not. Going ahead, what would be the margin drivers?

No, I think Percy, I'd first like to correct that the last few quarters have not driven. I think you don't see the Domino's P&L.

It has driven, right? There is a drag of new businesses, and we have three new businesses, and we have corrected that also, by the way.

You'll see sharper correction over there in the coming quarter. Having said that, Domino's margins have been improving.

Overall also it has improved.

Overall also, right, it has improved, and Suman can give more details. The break-up is very simple.

We have to recover 100 basis point from gross margin through mix, through other procurement initiatives. That's one.

If we grow 5% to 7% consistently, right, the leverage is coming in at least in rental lines. Other lines will also come.

Very calibrated we have taken price increases. That is flowing through.

The other cost line items that we track internally like G&A cost, supply chain cost, that is beginning to give us a lot of leverage. There is far more juice over there.

Again, Percy, it's a conscious choice that we have taken place to get growth. Some of these initiatives, like I said, are more policy decision that we can take.

We have chosen not to do. We have chosen to invest in growth, and as a result, we can open nearly 1,000 stores in the next three years, right?

We'll be materially a very different business, right? We have not added cost at the center.

We are not added cost in our supply chain, right? Our payback periods for new stores is only improving because we are getting more margins.

You have to think of a business, take a three-year view, and then you model the P&L, you will see the results.

Understood. That's all from me.

Thanks and all the best.

Thank you, Percy.

Yes. Hi, Sameer.

Good evening and congratulations on the strong performance. I had three questions.

The first one was again on margins that last quarter you mentioned there were three reasons primarily because of which your margins had got impacted. There was obviously the aggression on Big Big Pizza, offers on chicken, and also the extended IPL.

The expectation somewhere was that at least on a GM perspective, the improvement from Q1 to Q2 would be much better off given a lot of these one-offs sort of normalized, and even you took a price hike for most of the quarter for the Big Big Pizzas. Just wanted to understand that did you have to keep the activation going, or where is it that it was invested back?

I think, firstly we've executed on those initiatives. On Big Big Pizza, we did take a reversal, right, and in terms of pricing to pass on the GST benefits, though it was almost end of the quarter.

There is some inflation that we've been hit on the cheese prices because milk prices post the Maharashtra election has really shot up. Having said that, we will continue to improve gross margins this quarter.

Got that. A second bit again on the opex side, you could just highlight the initiatives which have led to this kind of a reduction in the cost space, and how do we see that sustaining?

Yeah. I think there are four initiatives over there on the operating cost cycle.

One is our supply chain cost, right? That we're driving massive automation and and the higher and the higher sales per store is getting leverage over there.

That is one straight straightforward piece. Second is on we've launched initiatives on store manpower and the delivery cost, those are yet to impact kick in.

Store store level productivity we have gotten a lot, but on delivery side we are beginning to frame our initiatives. Third is I have been the the most hated employee in the company from a G&A standpoint, right?

I track it like a hawk, and in fact, we're getting beginning to get G&A productivity and G&A leverage. I would say these are the broadly three initiatives, plus there are ongoing initiatives in terms of electricity, LPG, store level consumables cost management, which I am not not naming.

Similarly, on Popeyes, right, there is a massive drive to improve gross gross margins, look at various because the the stores are building their playbook. We've controlled wastages, we've controlled oil consumption, we've controlled product wastages, we are sourcing better.

As we gain scale, that margins will, I believe, and the business grows, that margins will improve. Lastly, insourcing, a lot of the seasoning that you get along with pizzas is manufactured at Jubilant at Bangalore.

Those capacities we are adding on. The Popeyes marination now is we were out we had outsourced it, now we have insourced it.

Other stuff like that is also also there, which because we have the the the commissaries and the scale, without adding capex, we are actually bringing some of these pieces inside.

Final question, just coming to that despite us launching the 99 menu more than a year back, what ails the growth in the core dine-in? Leave apart some of the business that we have shifted to delivery, which was takeaway, what's the core issue there?

Are you looking at more than 250 store adds in Domino's given you've added 140 in first half? Thank you.

Yeah. You have to think of the customer ordering in three ways, right?

One is the most known is the delivery where I sit at home and I order in. Second is I go to a store, which is called dine-in, and I eat there inside the store.

It's a dine-in experience outside home. Third is I come to the store, I don't eat there, but I get it packed and take away to my home or any workplace that I eat.

Delivery I mentioned grew more than 20%, dine-in grew 14% last quarter, and takeaway declined by 19%. That business we know, the takeaway business, will continue to decline for the very simple reason we are giving 20-minute and free delivery.

The incentive for the customer to come to the store and do a takeaway is less. Delivery we know once the basis get corrected, we have invested in our stores in terms of look and feel, service, and also our product is best experienced when it is fresh out of the oven.

We believe that dine-in will be able to plow back, and takeaway once the basis get corrected. And 99, of course, during lunch hours that helps.

Confident about that. We have several initiatives.

We will not leave that because we are a neighborhood store, and there are occasions when either it's impulse purchase or a value offering like ₹99 will draw footfalls to the store. Sure,

just on the store adds if you can clarify.

Store what? Sorry, I missed that.

You've added 140 149 stores of Domino's. Store adds,

yeah. I think it is less about the guidance.

We are committed to about 900 stores like we said in the three years, right? That target doesn't change.

In terms of store adds, we may grow a little faster, but see, we want to make a fundamental shift in ops, right? If you see our track record, we open most number of stores in Q3 and Q4, right, and we want to open most number of stores in Q1 and Q2 because we are not in the business of opening stores; we are in the business of operating stores.

The more stores you open before Christmas, big days, Dussehra, Diwali, that is when you get more sales. There is no upward revision of our store opening.

I think the guidance that we have given, we will stick by the guidance. If we do end up opening more stores because the return on investment is making sense, we will go ahead and open.

Thanks, Sameer.

Yeah. Hi, sir.

Just one question on Turkey. Is there seasonality in the margin profile and or not, and hence, how should we look at it from a full year perspective?

That's the only question I had. No.

Let me take that, Avi. No, there's not really any seasonality per se.

Of course, quarter one for Turkey there is a minor seasonality from a growth perspective. Quarter one is big for them, it's post Ramadan, it is also when the holiday seasons are up.

That's where you can see some leverage benefits coming through in margins. Otherwise, they have fairly standard margin profile at an EBITDA level.

The only thing that can impact it, and we have to look at it given it's an hyperinflation economy, there are a couple of accounting adjustments that happen. There's something called monetary gain loss, your balance sheet gets restated.

Depending on how much inventory they're holding at a certain point in time, right, and how that gets revalued into the P&L, there could be some seasonality impact of that. From an underlying business performance, there's not much of a seasonality impact on EBITDA margins.

Understood, Suman. My question is more from first half, second half because the base year or FY25, we saw very sharp variation.

I just wanted to understand was the way things happen because we only have four quarters of performance to compare, hence the question. I hear

you. You're talking about PAT margins?

No, EBITDA margin, I get you. Operating performance first half is a better metric to look at it from a full year perspective is the right takeaway.

Is that—

Yes, yes, it is. Like I said, last year because we were also coming the year, if I look at the calendar year for 2024 of Turkey, they started at very high inflation level and had very high stock levels of inventory because the prices were increasing every every week literally on their commodities, and hence, they were sitting on very high inventory levels, which kind of gets reflected into the P&L.

You saw a lot of up and down in the P&L in the last calendar year. This year, they have had a more steady state of inflation.

We have not seen that much of an up and down in terms of their margin, EBITDA margin profile. Last year also PAT margins saw a bit of an up and down because of some tax-related reasons in the country dynamics.

You should not see any of those variances going forward. It will be more steady state going forward on EBITDA margins.

Perfect. Thanks a lot, Suman.

That's it from me.

Hi, Sameer and team. Thanks for the opportunity.

Sameer, you called out two interventions that impacted margins earlier: free delivery and then more focus on value launch. Somewhere, this initiative has also helped us to unlock demand and deliver robust LFL versus industry.

Now on this base to deliver LFL, which should be healthy, would we need to unlock more benefits or the current status is good enough in terms of consumer's value proposition?

No, I think, Tejash, great question. I think this is a constant balancing act the team has to do, right?

I think there are three vectors, right? One is you have to open new stores in new cities, in white areas, right, so that drives organic expansion, I would say.

Second, and therefore, when you open those stores, you get the leverage on the fixed cost in terms of supply chain and also the G&A cost. That's good for us.

The second is to drive same-store growth, we have several levers and initiatives that are there. Innovation, we believe, should drive, right?

On the free delivery side, there are few things in our back pocket that we don't think we need to pull in those. If we get growth constraint, then we will, of course, go hell for leather for growth, right?

We are unapologetic about our growth plans. The third piece is margins, right?

We are in the business of generating free cash flows. That has to come.

Therefore, from that perspective, we know our growth story, especially the promise of the accuracy of delivery, the service of our 100% mozzarella cheese and high quality products at a great value. That core flywheel is working for us, and therefore, we have to expand margins, right, to fuel our expansion ambition.

It's a constant balancing act, right, and the teams have to juggle all three balls in the air and balance them every day. Sorry for a philosophical answer.

No, I got my answer. Second, commentary and your enthusiasm also on the call today is QSR this season.

What's your read on the demand on ground? Is it largely our micro efforts or bottom-up efforts which is helping us to gain market share?

Second, are you seeing any divergence in demand in areas which are IT sector dominated, especially centers of IT parks and other areas?

Yeah. Of course, the customer in India or anywhere in the world is very discerning, right?

If you see learnings in US, right, and you look at top brands which are doing well, Domino's of course came with 5% SSG in the last quarter in US, and the other brands like McDonald's, Wingstop, which are doing well, they're very value-focused, great service, very consistent there. Then even in China, right, it's not that all grab brands are growing at the same SSG.

There is a huge divergence between there. Overall, as income levels go up, consumptions will go up, and we see it there.

Therefore, self-help coupled with the government initiatives of driving consumption, we believe Domino's is very well-placed, and so is Popeyes, by the way. There are no lotteries that way that everybody will grow at the same pace.

We will have to differentiate and use self-help in a short answer over there. On the tech side, right, I think the sentiment is low, and so some of these geographies which are highly dense IT services zones like in Bangalore and Hyderabad or Gurgaon, they have grown lesser.

This has been compensated by growth somewhere else. We are not that our business is so skewed towards these sectors, and the other sectors like energy, auto, services, those are growing, we are well spread out as a brand.

Thanks. That's all from my side.

Thank you.

Hi, Sameer. Thanks for taking my question.

Sir, anecdotally I noticed that there is some tweaks to your packaging charges, but you see the delivery bill size that has been about 2% dip in Q2. Wanted to check on both fronts, whether actually we're making some changes to the packaging charges, and what is leading to this 2% dip in delivery bill size?

Sorry, your voice is not very clear. Which decline are you talking about 2%, if you can point to the metric and the from to, please?

Yes. I'm pointing to dip in bill size for delivery channel because order growth is higher than the revenue growth.

From that, I'm back calculating that there is dip of about 200 basis points in delivery channel bill size.

Yeah. I think the short answer over there is as delivery grows, it is becoming an acquisition channel for new customers.

New customers typically start at a lower price point, and we've grown very handsomely in our new customer acquisition rate. Earlier, if I go back like three or four years ago or pre-COVID, majority of our new customers actually were dine-in and takeaway customers.

That was the largest channel of new customer acquisition. Today, Domino's app is the largest channel for new customer acquisition.

Therefore, from that perspective, new customers come in at a lower average ticket size. We're seeing no dilution in the repeat rates.

Any customer that we acquire, on an average, is repeating three times in a year. That repeat rates have not changed.

On the other hand, it has marginally increased only. We have to look at the lifetime value, and any dilution in BPO is, I would say, baked in into the plan.

We have launched initiatives on pricing and mix changes to drive the ticket size growth. Packaging charges, they've remained more or less static.

We have tinkered around in few places, but nothing structural that I want to report here.

Understood, sir. Second question, Sameer, we have been investing in terms of new innovation, expansion, even now we've passed on the RMD benefit.

Still, the LFL has seen some dip, though it is industry-leading. If we were to compare our performance with ourselves, what is the headwind here that has impacted us?

Also, are these new launches which are many over the last three, four quarters also leading to some complexity in the kitchen? These were the two questions.

The second answer is no because we have to reduce complexity and we have to take out products if the customer satisfaction and customer repeat is not there. That's a constant exercise, and teams do it very religiously every quarter.

You will see, and some of the initiatives give a high initially, and then they don't sustain, and therefore, we will also see if we have to rationalize those. Like I said during our investors call, we are thinking of platforms, right?

Like cheese is a platform. Whether it is Volcano Pizza, Cheese Burst Pizza, Chicken Burst, we know cheese drives salience and when customers think about eating cheese, they should think about Domino's.

That's how we building that platform. There are other platform.

The platforms are growing, and we believe, to come back to your question number one, right, I think it is to me, I am not worried about any trajectory. I think if you look at the bases, you will get your answers on what it is.

Adjusted for little bit of Navratri here and there, actually we are on the money completely. No alarms, no questions.

We have to build a business that grows 5% to 7% LFL consistently, and on top of it, we add 8% to 10% of store growth. That's how we should think about the business.

Fair enough. Just last one if I can squeeze in.

You mentioned about this ad revenue stream. Sameer, what is the scale of the opportunity that we are targeting and how will this get recognized in the P&L going forward?

I'll let Suman answer how she will recognizes in the P&L, but I think my first goal is to build an awesome product tech capability that the users of this service love it, right? We launched this with ICICI, then got HDFC, then got Tata Neu, then Apple, and Flipkart Minutes.

I think because we have a very large monthly active user base, and almost 60% of the customers actually come to the rider tracking page, and they keenly watch where the rider is, and that's a very emotive page and track page. We have built certain set of tools and properties.

My ambition would be to get at least 50 basis point from the revenue to flow in from the revenue, but it'll take time, right? It's not going to happen at the moment.

I'm just celebrating the launch by the tech teams. Suman can answer how she's recognizing it in the revenue.

Devanshu, just to clarify, are you asking where will it reflect in the P&L? Is that the question?

Yes, Suman.

It will come in as it is other sources of revenue, typically will get reflected when it comes of significant size and should then become visible as well in other operating revenue. That's normally where we park some of these initiatives, and hence, overall revenues of the company will go up to that extent.

Got it. Got it, Suman.

Thanks.

Thank you.

Hi. Thanks for the opportunity.

My first question is on the demand environment. I know it has been asked multiple times, but sorry to harp on it.

How do we see the demand panning out, especially after this GST rate cut? Though we are not a direct beneficiary, but still some consumer sentiment across geographies if you can highlight.

Also, do we intend to kind of rollback the delivery fee waiver, or is it too far away, don't even think of it right now?

I think I can only talk about Domino's, right, and I don't have a industry view and I would love the analyst community to maybe write more about demand because you speak with more companies and have a much wider perspective on the market. When I look at very narrowly on Domino's, there is enough and more demand for pizzas which are high quality in cheese, freshly baked, and delivered free, and provide a great customer experience, right?

From that perspective, there is enough and more demand. I'm actually surprised by the uptake of sourdough pizza in tier two, tier three cities, right?

I would have never imagined that. Therefore, it's indicating the demand does exist in India for a brand like Domino's.

I missed the second question. Delivery charge.

Delivery charge. No, there is no plan to roll back.

However, we will continue to tinker with packaging charges as experiments and see where there is the sweet spot. That's one piece that the team is experimenting very heavily to find opportunities.

Second, of course, is at some point we have to bring it into the product pricing, but without losing the value proposition. We are also, like I said, we have taken some price increases last quarter, and we'll continue to look for those opportunities.

Sir, what has been the pricing action last quarter?

Like I said, we have taken price increases in Cheese Volcano Pizza, we've increased packaging charges in few places, and some other products also we have gone and increased the pricing.

On a blended portfolio level, what could be that quantum of pricing action?

I'm not disclosing that, my apologies for that. I think again, you have to look at the business model per se, right?

It's 5% to 7% SSG LFL coming from 1% to 2% of price and mix actions.

Understood. Sameer, my second question on the, store additions.

We have been adding stores and also entering new cities. Domino's is now available in 500-odd cities.

Which are these new cities, let's say 16-odd cities we have entered this quarter last quarter? Which are these cities?

What are the typical store sizes? Are we entering with smaller store sizes, and what is the strategy over here?

No, I think it is horses for courses, right? Some of the cities that we have entered are Siwan in Bihar, Amroha in UP, and Dhubri in Assam, right?

Again, if you ask me where these cities are, I will struggle to pinpoint it exactly on the map. What we obsess about is I think three things.

Number one, there has to be a customer base, right? We map the household incomes, number of pings we receive on our app.

There are several customers who are in these cities and they have downloaded the app and they get a no-service piece. That's the second thing we look at.

Third thing is we obsess about the ROIC. Typically, these cities have much higher penetration of dine-in because we are the first organized QSR to enter these cities.

Our store sizes have been around 1,200 to 1,500 square feet, more closer to 1,500 square feet in these cities.

Understood. Last question, if I may, this is just a clarification on the said guidance of 200 basis point margin improvement over three years, FY28, but this is on a base of FY24 if I'm not wrong, on the presentation it was mentioned.

That means that we have now to catch up 300 basis points rather than 200 basis points from the current level. Am I correct?

Because we wouldn't look at a quarter-on-quarter number if that's what we're looking. Yes, firstly it is on FY24 levels of numbers.

We said a minimum of 200 bps, that's the bare minimum we will increase. It's not like if more is coming, we will stop the flow.

I'm just trying to understand when you say from the current level, are you looking at the quarter number? Are you looking at the year number?

Which number are you—

Suman, I'm looking at H1 number. H1, we are somewhere around 19.29%.

I think you should look at full year to full year numbers, right, that we would need to increase on, because there is a bit of seasonality in our margins like you would also have realized in quarter three given the high growth base on seasonality. It is there.

Yes, we still stay committed to the number on what we have quoted, that we will see those improvements come through, right? Just keep a long-term view because we also don't manage the business for quarter by quarter, but we're clear on where the—

Absolutely. Just a clarification that 200 basis point on FY24 base, that's what I—

Absolutely. Absolutely.

Exit FY24, and I think we called out the metrics also very clearly on how we believe this will shape out, right? Of course, the EBITDA margin improvements will be upwards of 200 bps and plus.

Across Domino's, there will be strong growth on margins coming through. We will see the profitability improve on our emerging brands as we go through as well.

If you recall in FY24, when we had called that out, we almost had a 200-plus bps of drag on account of the emerging brands, which we expect to significantly almost bring down to half or below as a proportion. We know where also we believe these numbers will come through on, and there is a bit of a back-endedness on that, but confident of delivering to the projection and the commitment.

That's very great to hear. Thanks.

Thanks, Suman. Thanks, Sameer and team.

Wish you all the best. Thank you.

Thank you.

Thank you.

Hey, hi. Thanks for taking my question.

Just two of them. The first one, can you just help me understand this ₹415 crores of investments in H1 into fixed assets or capex?

Can you give me some more color like what are store investments, tech investments, back end?

We don't break that up, Gautam, and I think what we have said off in the past also is a large part of our investment base is now, of course, shifting to store investments, and it's very little. It's between store and tech investments majority of our investments are now going into because our supply chain investments that we've done and we said it's a large cycle that was there with our last big investment on commissaries, which is the Mumbai one which will get commissioned by this quarter or early next quarter, we will be done with our large supply chain cycle of investments.

Predominantly, it is based on store and technology capex.

Suman, is it fair to assume that there would have been some investment in the commissary in the first half? I am not asking you to break that up, just trying to understand because if we just do a back-of-the-envelope, half of it seems to be explained by the stores, we're just trying to understand there has to be a component of the back end in this first half, right?

Yes, yes. There is some amount of investment in the back end as well, in the store commissaries.

I'm just saying that it is not the material component of all. You're talking about the H1 numbers, right,

as a— H1 number,

right. There is, of course there is, but it is not material, I can assure you.

It is not a material number. The materiality of the number sits on two accounts: one is our store capexes, which is quite significant; the second is tech; and the third is in terms of our existing stores where we continue to put in maintenance capexes to ensure stores are up and running to support the high LFL growths that are coming through.

We do, as growth increases and LFL comes in, you do realize a large component, given we have our own delivery network, comes on bikes. A large part to support the growth has also gone behind putting in more bikes on the ground.

That's also a large part of our investment, which is over and above store investment. Those are three big components.

Commissary is very, very minimal.

Got it. Just one small one.

In the mix of the dine-in, right, how long before the takeaway part comes into the base?

I don't know. To be very honest, we don't track it like that, right?

We in fact want takeaway to also grow. I think as all channels have to grow.

Somebody asked a question, therefore I gave a break-up, right? From that perspective, what we care about is to be present on all channels, delivery, takeaway, aggregators, ONDC, right, our own app.

That's the endeavor over here. I think I don't know if there is a internal calculation that floats, how long will it take.

What is important is are customers coming to the store and are they liking the product and the experience? The answer to that question is yes, and then there are few places that we take the feedback and correct it.

Got it. Thanks, thanks a lot.

Thank you so much.

Yup, thank you.

Thank you, everyone, for joining the call and for your patient listening. As Apar said in the beginning, you will find the transcript and the earnings recording on our investor relations link on our website.

Thank you, have a good evening.

Thank you so much. For any other questions, please reach out to the investor relations team.

Thank you.