FoodWorks Expects Near-Term Margin Pressure Amid Rising Costs

Jubilant FoodWorks Flags Near-Term Margin Pressure Amid Inflationary Headwinds

Jubilant FoodWorks Ltd, the operator of Domino's Pizza in India, has flagged near-term margin pressure due to rising energy, labour, and commodity costs. Despite this, the company continues to gain market share in the pizza and quick-service restaurant (QSR) segments.

In the March-quarter earnings call, Sameer Khetarpal, managing director and chief executive, highlighted the multiple inflationary headwinds faced by the company, particularly from liquefied petroleum gas and piped natural gas prices, wage inflation, and rising logistics-linked commodity costs. Energy inflation alone is impacting margins by around 100-120 basis points.

Experts say the sector is entering a more cautious phase after an aggressive expansion cycle. Store expansion will continue but in a calibrated fashion, as companies seek to get returns before the next big wave of reinvestment. Consumer spending and outdoor eating need to resume its growth trajectory before expansion can accelerate again.

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Key Financial Highlights

The company has reported a 19.3% year-on-year increase in revenue during the fourth quarter, with net profit rising 67% on-year to ₹82.42 crore. For 2025-26, revenue rose by 17.37% to ₹9,512.51 crore from the previous fiscal, with net profit increasing by 104.61% to ₹444.24 crore.

Jubilant FoodWorks has 2,562 stores in India, including 2,455 Domino's outlets, 78 Popeyes stores, and 29 Hong's Kitchen outlets. The company has decided not to renew its franchise agreement with Dunkin' in India after it expires in December 2026.

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To mitigate margin pressures, the company is relying on operational efficiencies, premium product offerings, and supply-chain improvements. Jubilant FoodWorks is also accelerating its shift towards electric ovens and PNG systems to reduce dependence on LPG, while continuing its expansion plans with 280-300 new restaurants, increasingly focused on smaller, delivery-led formats.

The broader sector outlook remains cautious, as inflation and discretionary consumption continue to be under stress. Till the geopolitics improves and job growth returns, the QSR sector will stay watchful, experts say.