marketing strategy: Not hiking prices for 10 quarters is a very conscious decision; it helped Jubilant gain massive market share: Sameer Khetarpal

But can you increase your penetration levels further because you are talking about reaching 700 cities by 2028.
Sameer Khetarpal: Yes, that is right.

How many cities are you currently present in?
Sameer Khetarpal: We are present in 465 cities.That is a bold bet? From making 2,000 stores to 3,000 stores, from reaching from 400 cities to 700 cities, which means for the next three years you are looking at serious expansion, something which you have not done in the last 15 years you will do in the next three years.
Sameer Khetarpal: That is correct. It took us nearly 15 or 16 years to get to a thousand stores. It took us another five or six years to get to another thousand. I think we will do it in three years. And what the number that you are calculating, yes, we delivered, probably reached every household one time in a year but an average consumer eats thousand meals in a year and we are hardly present over there.

You are in a high growth phase now, which you have in a sense clearly articulated. But with growth, there are also return ratios. When I started tracking Domino’s or Jubilant FoodWorks, the return ratios were enviable. They were the best in the industry at 30% plus. Now, they have come down to sub-20. Will they come back or will they remain here?
Sameer Khetarpal: Definitely we will see improvement in return on capital, that is a very important metric for me and my team. Now, we are doing three things for it. Number one, the biggest driver of return on capital is the same store growth rate. That is back on track.

Second, is a reduction in our store capex. In the last couple of years, we have reduced our store capex by about 10% to 15% and yet improved our store experience.

Third is that we were in a heavy investment cycle of technology, building capacities. We believe that capex intensity will marginally come down. So, therefore, I genuinely believe the ROCE should climb up.So, every year, every quarter will we see an improvement?
Sameer Khetarpal: Hopefully yes, but the same store growth to me is the biggest driver of my return on capital.

But 12% same stores growth what you reported for the quarter gone by, you feel that the trend will be strong. It may not be 12%, that could be an aberration, but the trend could be in and around India’s GDP growth.
Sameer Khetarpal: We have to do better than India’s GDP growth rate. I mean it is a…

Nominal GDP.
Sameer Khetarpal: Nominal GDP, okay. So, I think that is the endeavour, but we have the highest throughput per store, we have the fastest delivery, and our stores’ payback period is about two-and-a-half years. As long as that happens, we are ready to open stores.

There was a time I distinctly remember there were drop in your margins and the line which we used to describe what was the challenge for Jubilant FoodWorks was that who moved my cheese. Milk prices went up, cheese prices went up and that was a struggle. That could come back again. So, while there are plans in terms of getting AI, increasing the return ratios and customer satisfaction, you have not taken a price hike for 10 quarters. Are you struggling to take a price hike or is it a conscious strategy?
Sameer Khetarpal: It is absolutely very conscious. Price hike is the easiest thing to do. It is a policy decision at the end of the day. But by not taking price hikes in the last nine quarter or 10th quarter running, what we have been able to do is gain massive market share. While everybody talks about mandi and demand slow down, we are growing the fastest. So, it is testimony of not only our execution but some of the bold decisions we have taken on technology and an execution on the ground along with shying away from taking any price hike. It is giving more value to consumers and that is what Domino’s stands for, great food, fast delivery and renowned value.

Food delivery companies are saying that we will deliver in 10 minutes. They are trying to beat even 15 minutes now. How would you compete with them?
Sameer Khetarpal: Firstly, we use the freshest ingredients. We use a fresh dough ball, hand stretch it. It is never frozen and we believe we have the density to serve the freshest pizza fastest. Take for example Gurgaon. When I joined about two-and-a-half years ago we had about 35 stores. We now have about 50 stores.

In Gurgaon there are 50 stores?
Sameer Khetarpal: 50 stores and we are adding about 20 more.

Only in Gurgaon?
Sameer Khetarpal: Only in Gurgaon.

How many stores do you have in Mumbai?
Sameer Khetarpal: So, Mumbai has about 80 stores.

And you are planning to add here more?
Sameer Khetarpal: Of course. In fact, there are wide spaces in Mumbai that we are not able to find the store. So, again 20-minute delivery is one of the massive moats that we have in the top seven cities. In about 12 to 18 months, you plan to cover all top seven metros in India with a 20-minute promise.

The Popeyes brand is almost five years plus for Popeyes for Jubilant FoodWorks.
Sameer Khetarpal: Three years.

Three years now. But you have not seen a significant ramp-up. Is it a conscious strategy that you will focus on one market and then move to some other city?
Sameer Khetarpal: No, that is not true. Firstly, in three years, we have about 60 stores in 23 cities and are largely concentrated in the South. We have opened in the North, in Delhi-NCR when we are actively looking to expand in Mumbai. So, for me at about the 50-store mark, we have fine-tuned the model. Our capex has come down. Our gross margins have improved. We have launched the brand with its own app. Our order share on our own app is growing.

We were one of the fastest growing QSRs on the aggregators. Right now, I am focused on making sure I get the right unit economics, then we can scale. If you see, we did the same thing with Coffy in Turkey. We opened nearly 50 stores in the last six to nine months. So, once the unit economic model is filled, we can accelerate.

Is Dunkin’ Donuts still a hobby project or is this a brand you want to take higher because it is nowhere close to 100 stores also?
Sameer Khetarpal: I think you are absolutely right.I am a big believer of focusing on a few things. So, for me the growth vectors for Jubilant FoodWorks are three, Domino’s both in India and Turkey, Popeyes, and Coffy. Rest everything I am making conscious choices on capital allocation, resource allocation and once they prove the unit economics, we can actually scale very fast.