# 1. Financial Performance ## A. Key Figures * **System Sales:** **INR 2,671 Cr** (3,387 stores, +71 net new) * Consolidated Revenue: INR 2,261 Cr (+17% YoY) · Stand-alone Revenue: INR 1,702 Cr (+18.2% YoY) * Pre-Ind AS EBITDA: INR 292 Cr consolidated (+18.2%, 12.9% margin) · INR 205 Cr stand-alone (+22.5%, 12% margin, +42 bps) * **PAT:** **+59.8%** consolidated · **+29.5%** stand-alone ## B. Revenue Growth * **Robust System Expansion:** Strong consumer engagement fuels store network growth and high single-digit system sales momentum. * **Digital Leverage:** App-driven personalization enhances cross-selling and contributes to gross margin resilience. ## C. Profitability Trends * **Margin Discipline Amid Mix Shifts:** Gross margin pressure from value-led pricing and Big Big Pizza success offset by operating leverage and cost control, protecting bottom-line growth. * **Profitability Outpacing Sales:** PAT growth significantly exceeded revenue growth, reflecting improved capital efficiency and structural flow-through from SSG to earnings. * **Strategic Investment Payoff:** Deliberate margin compression over three years to drive customer acquisition now showing early signs of stabilization and recent improvement trajectory. * **Interest Cost Tailwinds:** Lower post-Ind AS interest expense boosts earnings, supported by stronger working capital and debt management. ## D. Cash Flow & Debt * **Sustained Capex Commitment:** Stand-alone annual capex maintained at **INR 700–800 Cr** over past three years, focused on supply chain and commissary infrastructure. ## E. Capex Efficiency * **Rising Capital Efficiency:** Per-store capex reduced **10–15% YoY** for three consecutive years via scale and technology gains. * **Future-Focused Spending:** Shift toward technology (ERP, supply chain transformation) and store rollout with expectation of **higher ROCE** and shorter payback cycles. --- # 2. Sales & Volume Trends ## A. Key Figures * **Revenue Growth:** **17.7%** (India) driven by **17.3% order growth** and **11.6% like-for-like growth** * **Delivery LFL Growth:** **1%** despite tough base; **mature store ADS: ₹85,396** (record) * **Dine-in Growth:** **~20%** YoY, with strong momentum nearly on par with delivery ## B. Like-for-Like Growth * **Sustained Momentum:** Third consecutive quarter of double-digit like-for-like growth, reflecting resilient demand and operational strength. * **Pricing Discipline:** Calibrated, data-driven price increases in select markets showing early success, with value LFL slightly outpacing volume. * **High-Base Challenge:** Q3 faces tough comparisons after three strong quarters, with stores operating near capacity constraints. ## C. Channel Sales Split * **Balanced Channel Recovery:** Delivery grew 6% YoY; dine-in rebounded strongly at 5% growth, supported by targeted traffic-building initiatives. ## D. Pricing Strategy * **Strategic Traffic Levers:** INR 99 lunch offer in dine-in drives midday utilization and reduces table splits, enhancing throughput. * **Scientific Price Management:** A/B testing over 13–14 weeks guides selective increases (e.g., Volcano Pizza), minimizing elasticity risks. * **Product Mix Benefit:** Big pizzas boost absolute profitability due to higher ticket size, providing cost leverage despite delivery overhead. --- # 3. Store & Network Expansion ## A. Key Figures * **Net Store Additions:** **61** new stores in India · **484** cities served * **Store Performance Range:** Avg. **73%** utilization, with individual stores ranging from <**10%** to **100%** ## B. Expansion Strategy & Outlook * **Confident Scaling:** Robust net store growth reflects strong conviction in India’s QSR market, with clear pipeline of **100–150 stores** planned despite temporary site availability constraints. * **Mumbai Entry Confirmed:** Market launch in Mumbai achieved via **three operational stores** and **two under development**, marking strategic metro expansion. * **No Dark Stores Policy:** Company maintains physical store model to ensure **transparency in food prep** and protect **brand trust**, with strict **ROI thresholds** for new openings. ## C. Store Format Optimization * **Urban vs. Rural Design Split:** New metro stores are compact (**800–1,000 sq. ft.**) and delivery-focused, while **Tier 3/4 stores exceed 1,500 sq. ft.** to support **>50% dine-in/takeaway** demand. * **Data-Driven Calibration:** Formats are being refined based on **two years of performance data**, with size capped at **1,200 sq. ft. in cities** except in malls or new locations. ## D. Capital Efficiency & Payback * **ROI Protection Focus:** Payback periods and returns remain intact despite operational scaling; **split store output maximized** to boost efficiency. * **Capex Optimization:** Actively negotiating higher **landlord contributions** to reduce capital outlay and **accelerate payback timelines**. --- # 4. Product & Brand Performance ## A. Key Figures * **Turkey Revenue:** **₹519 Cr** (38 cities, 167 Coffy cafes) * Turkey PAT Margin: 9.4% (PAT accretive, high ROCE) ## B. New Product Uptake * **Strong Consumer Response:** New H2 FY25 launches—Lunch Feast, Chicken Sides, and Big Big Pizza—are gaining robust traction, with Big Big Pizza cited as a standout innovation enhancing consumer satiation. * **Innovation Momentum:** Chicken Burst Pizza is building on the successful cheesy platform, signaling strong potential in non-veg formats and underscoring focus on lunch and late-night delivery expansion. * **No Cost-Cutting on Pizza Size:** Company explicitly ruled out downsizing large pizzas despite margin pressures, prioritizing value perception and customer satisfaction. ## C. Popeyes Growth * **Double-Digit SSG in South India:** Popeyes delivered strong like-for-like sales growth with improving restaurant-level profitability and is expanding into West India, backed by a healthy Q2 pipeline. * **Operational Integration Accelerating:** Leveraging Domino’s 40,000 daily riders and delivery expertise across 60 stores; regional team restructuring has strengthened execution capability. * **Profitability Trajectory Improving:** Sequential gains in Popeyes’ margins indicate reduced drag from emerging formats, with expectation of at least a 50% reduction in losses over the next 12–18 months. ## D. Turkey Business * **Resilient Performance Amid Inflation:** Turkey operations remain highly profitable and cash generative, with healthy order volumes compensating for CPI-driven price lag and supporting plans to fund acquisition debt from next quarter. --- # 5. Digital & Delivery Operations ## A. Key Figures * Monthly Active Users: 15 Mn (+21.5% YoY) · App Installs: 12.3 Mn (+19.4% YoY) · Loyalty Members: 37 Mn (+48.6% YoY) * **Delivery Contribution:** Improved from **~1%** to **3%** this quarter, with targets to reach **6%** * **Delivery Penetration:** **73%** of orders delivered, with stable operations at scale * **Late-Night Delivery:** **Doubled** over the past 9 months ## B. App & User Growth * **Strong Digital Engagement:** Robust growth in active users, app installs, and loyalty members reflects deepening consumer engagement via proprietary technology and seamless UX. * **Competitive App Advantage:** Domino’s app differentiates through price transparency and simplicity, avoiding complex fee layers seen on aggregators. * **Tech-Driven Personalization:** Smart pricing and targeted promotions powered by regional cohort data are boosting conversion and order frequency. * **UX Issue Acknowledged:** Inaccurate store contact details online have caused customer frustration; AI-based fixes underway. ## C. Delivery Penetration * **Delivery Momentum Building:** Contribution rose to 3% this quarter, supported by demand-shaping and consumer preference for convenience. * **Operational Resilience:** At 73% delivery penetration, current store models remain efficient with no major redesigns planned. * **Daypart Expansion:** Late-night delivery has doubled, revealing untapped potential during non-peak hours and festivals. * **Backend Tech Investments:** Delivery management systems are being enhanced to improve DOT and optimize delivery executive deployment. ## D. Loyalty Program * **Loyalty Driving Frequency:** Free delivery and tiered rewards (e.g., Cheesy Rewards) are increasing visit frequency and digital engagement. * **High-Value Customer Activation:** The Cheesy Rewards cohort—triggered at **6 orders** vs. average of **3**—is growing fastest, signaling strong retention potential. * **Long-Term Value Focus:** Program success measured by AOV × frequency, with emphasis on cultivating high-lifetime-value customers. ## E. Tech-Driven Efficiency * **Growth Engine:** Five pillars—product innovation, digital investment, free delivery, 20-minute promise, and ground teams—underpin scalable growth. * **Integrated Delivery Scaling:** Popeyes successfully integrated into Domino’s digital and physical delivery infrastructure, enabling efficient expansion. * **ROI on Tech Spend:** No reduction in tech investments; focus shifting to maximizing returns, which will support gross margin improvement. --- # 6. Cost & Supply Chain ## A. Key Figures * **Supply Chain Delivery Costs:** At **historical lows** (best-ever levels) * Capex Payback Period: 2 to 2.5 years for stores · Faster for technology * **Capacity Buildout:** Commissary and supply chain infrastructure scaled to support **2 to 3 years** of forward growth ## B. Food Cost Trends * **Benign Inflation Environment:** Food commodity basket remains stable with only minor dairy cost pressures, supporting gross margin resilience. * **Gross Margin Pressures:** Decline driven by **strategic pricing on new chicken items**, extended IPL promotions, and **unexpected dilution from Big Big Pizza**. * **Active Cost Optimization:** **30 cost-reduction initiatives** underway, including cheese storage, oil procurement, and corn localization, without impacting input quantities. ## C. Supply Chain & Capex Strategy * **Efficient Delivery Network:** Integrated view of recipe and delivery costs shows **delivered food cost is better than recipe data implies**, aided by optimized logistics. * **Depreciation Dynamics:** High recent capex in commissaries and tech will yield **operating leverage over time**, with faster benefits expected from technology investments. * **Tech Spend Below EBITDA Line:** Reduced technology spending will not directly improve gross margin, as related depreciation is recorded below EBITDA. ## D. Operational Leverage * **Labor Productivity Gains:** Technology investments will primarily boost **employee cost productivity** and operating leverage, not gross margin. * **Demand-Supply Alignment:** Success hinges on **generating sufficient demand** through new stores and efficiency gains to fully utilize existing supply chain capacity. --- # 7. Risks & Competitive Pressures ## A. Key Figures * **Margin Drag:** **200 bps** reduction in FY '25 profitability due to emerging format losses ## B. Pricing Sensitivity * **Heightened Price Competition:** Consumers are increasingly price-savvy, leveraging AI tools for instant cross-platform comparisons, making industry-wide price hikes more difficult. * **Pro-Consumer Pricing Stance:** Management rejects platform fees, prioritizing transparent and simple pricing—key to Domino’s app growth and long-term brand trust. * **Cautious Pricing Strategy:** Ongoing sensitivity in the Indian market necessitates a measured, calibrated approach to any price adjustments. ## C. Aggregator Dependence * **Strategic Aggregator Engagement:** Popeyes maintains strong digital presence and customer reliability, enabling continued share gains despite reduced promotions. * **Customer-Centric Distribution:** Company actively participates in aggregator initiatives to align with evolving customer behavior and preserve competitive positioning. ## D. Margin Reversion * **Confidence in Margin Recovery:** Current gross margin pressure is viewed as temporary, with expectations for improvement as business stabilizes. * **Emerging Format Drag:** New formats underperformed in FY '25, contributing a **200 bps headwind** to overall margins. ## E. Urban Saturation * **Market Saturation & Margin Normalization:** Deteriorating gross margins reflect past unsustainability amid rising price sensitivity and intense competition in urban QSR markets. * **Scientific Market Share Tracking:** Company employs comprehensive, data-driven methods—spanning listed, unlisted, and aggregator data—to assess competitive performance despite not disclosing specific shares. * **Differentiation via Customer Experience:** Domino’s prioritizes internal benchmarks on value and quality over direct rivalry, focusing on long-term customer franchise. --- # 8. Guidance & Outlook ## A. Profitability Targets * **Sustained Margin Roadmap:** Company reaffirms 3-year target to lift stand-alone profitability by **at least 200 bps**, with inflection expected post-FY'26 as high-investment phase concludes. * **Strategic Shift to Higher-ROI Projects:** EBIT pressure from current investments will ease by FY'26, enabling pivot toward higher-return initiatives beyond manufacturing assets. ## B. Capex Plans * **Capex Reallocation, Not Reduction:** Overall capital spending to moderate slightly, with material shift from supply chain commissaries to **store-level capex**. ## C. Store Expansion * **Accelerated Store Rollout:** Company to ramp up retail footprint, targeting **1,000 new stores over next 3 years**, underpinning shift in capital deployment. ## D. Demand Forecast * **Resilient Start, Improving Trajectory:** Despite challenging demand backdrop, FY'26 opened strongly, with management anticipating **quarter-on-quarter demand improvement**. * **Gross Margin De-risking:** Consumer incentives and promotions—distinct from aggregator costs—are expected to **decline over time**, supporting margin stability.