Domino's Pizza India franchisee Jubilant's profit slumps on higher expenses

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.

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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