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69% of Domino’s online orders were made via mobile in Q1 FY18

We missed this earlier…Jubilant Foodworks, the company which operates Domino’s Pizza and Dunkin Donuts in India, reported (pdf) that online orders contributed around 51% of delivery sales for the quarter ended June, 2017 (Q1 FY18). This is up from a 44% online ordering share in the same quarter last year. The company added that more than half (69%) of the online orders were placed through the mobile app, and has been growing steadily. In the same quarter last year, mobile app orders accounted for 44%. Note that the online delivery sales are exclusively for Domino’s Pizza

The company also mentioned that the number of downloads of its mobile app stood at 7.5 million at the end of Q1 FY18, as compared to 4.4 million in the same period last year. In the previous quarter, the company’s app downloads stood at 6.4 million. Currently, Jubilant Foodworks has a network of 1,125 Domino’s Pizza restaurants across 264 Indian cities, and another 55 Dunkin Donuts restaurants across 15 cities.

On app updates and online ordering

During an analyst call (pdf), Hari S. Bhartia, Co-Chairman and MD of Jubilant said that the company is focusing on enhancing its app’s user experience by making it easier for customers to discover food items, mainly for selecting pizzas on its app. He added that Dominos app will invest more in upgrading technology stacks and deploy analytics to improve UI/UX. “We will be adding some more functionalities to our App in Q2,” he said.

Note that both Dominos and Dunkin Donuts list their restaurants on food ordering apps like Swiggy and Zomato. Both Swiggy and Zomato charge a commission cut for each online order. Bringing users to their own app would help them reduce these costs. The company said that it has increased its “resourcing in critical parts of the business such as Digital and IT, with people coming on board for areas like Retail Tech, Payment, Analytics, IT Infrastructure, etc.”

On digital media marketing

The company is facing trouble running its Dunkin Donuts segment, mostly because it’s a low margin business. It makes more money by selling combo packs i.e. doughnuts coupled with Coffee/Burger, etc, but not all walk-in customers opt for a combo. This has subsequently led to a number of shutdowns on the Dunkin Donuts segment: 13 outlets were closed in Q4 FY17 (i.e post demonetization) while 9 other outlets were closed in the current quarter.

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To tackle this, Jubilant is focusing on digital marketing initiatives which are cheaper than offline advertising. “We are looking at less mass media (advertising), but much more store level marketing and use of digital media which is obviously lower cost”, Pratik Pota CEO of Jubilant said during the analyst call for Q1FY17.

Financials

  • Operating revenue: Rs 678.8 crore for Q1 FY18, up 11.5% YoY
  • EBITDA: Rs. 79.6 crore, up by 38% YoY
  • Profit after tax: Rs.23.8 crore, up by 25.5% YoY

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