Beacon.Jan 2014

Issue : 3

Volume : 2
January 2014

B E A C O N
A Newsletter by SIMCON– SIMSREE Consulting Club

Inside this issue:
CONFLUENCE’14 : The Consulting Conclave
INDUSTRY ANALYSIS : Organized Fast Food Industry
COMPANY ANALYSIS : Jubilant FoodWorks Ltd.
Concept of the Month
Quiz
Did You Know?

Volume : 2
Issue : 3


BEACON : Page 1
Jan. 2014

Confluence, an annual consulting conclave at Sydenham institute of Management Studies, Research and Entrepreneurship Education
(SIMSREE) is a platform to discuss the current issues plaguing the nation from the viewpoint of a consultant. Confluence ‟14,
sponsored by LIC India in association with Syndicate Bank was held on 25thJanuary, 2014. Organized by SIMCON, the consulting
club of SIMREE, Confluence‟14 saw a plethora of senior professionals from diverse functions and industry discuss the challenges and
possible solutions to the problem that is currently grappling the nation and also the theme of Confluence ‟14 – “ Business
Sustainability in a VUCA (volatile, uncertain, complex and ambiguous) world.
With the line-up of star professionals as speakers and panellists,
quality opinions and discussions on sustainability and an
enthusiastic and an inquisitive audience to complement the above,
the event surely had to be a huge success!
Confluence ‟14 began on a high note with the Chief Guest for the
day Mr. Sridar Iyengar, ex- chairman and CEO, KPMG and
co-Founder, The Sounding Board addressing the batch on the
attributes necessary to achieve stability in times of uncertainty. He
stressed on the importance of an individual needing to connect
different aspects of business viz. human capital, technology, data,
and experience among others.

This was followed by the speech by our Chief Speak
Dr. Nachiket Mor, head of the financial inclusion committee setup
by RBI and the chairman of CARE. Mr. Mor spoke about the need
for financial inclusion in the nation and stressed how banking needs
to spread across the nation covering thoroughly the rural areas of
India. He opined that currently supply side needs to broaden to cater
the banking demand and he suggested serving this need through use
of technology like prepaid payment instruments (PPI) with the help
of

mobile

service

providers ,through appointing business

correspondents who would act on behalf of the banks inter alia.

For detailed report and all industry analysis from previous Beacons together, please visit our blog :
http://simconblog.wordpress.com

Volume : 2
Issue : 3


BEACON : Page 2
Jan. 2014

Post the speeches by the chief guests, panel discussions took place. The first panel had an incredible lineup of speakers coming from
background ranging from management consulting to banking to entrepreneurship. The panel comprised of Mr. Gaurav Bagaria,
Senior Manager at EY, Mr. A. Narayanan, COO Finance, HSBC and Mr. Chandrasekharam Tatapudy, Co-founder, Yasham P2D Life
sciences Pvt. Ltd. The panel was moderated by Mr. Yatrik Vin, Sr. VP, NSE. The panel discussed the opportunities for investment in
India. They concluded the discussion by suggesting on having a balance of inorganic growth (through M&A overseas and within the
nation) and organic growth through correction of policy paralysis resulting in an investment friendly business environment.

The second panel discussion began post the lunch break and this panel comprised of Mr. Anuj Bharagava, CEO, A B Associates,
Mr. Sandeep Kothari, Director, Capgemini Consulting and the very own alumnus of SIMSREE Mr. Parag Risbud, VP, Avalon
Consulting. The path for the discussion was traced by the moderator Mr. Suresh Mhatre, VP, TCS and the President of IMCI. The
topic for the panel was – “Overseas avenues for Indian products and services”. The panel suggested improvement in our trade competitiveness through increased exports is possible through policies that aim at catalyzing them, identifying specialized products and
services which India is capable of offering at a premium price, developing ability to value add and finally tapping the full potential of
Indian consumption.

The speakers were very much impressed with the nature of the questions posed to them by the batch and according to them this
reflected the batch‟s awareness about the recent happenings in the world.
SIMCON is determined to continue its tradition of linking the theoretical management concepts to the real world business problems
by interfacing with the industry and we strive to make sure that the next version of Confluence is bigger than Confluence‟14.


BEACON : Page 3
Jan. 2014

Volume : 2
Issue : 3

INDUSTRY ANALYSIS : ORGANIZED FAST FOOD INDUSTRY

The Indian fast food industry is largely dominated by
unorganized retail (which is approximately 95%), which
includes stand-alone restaurants, carts and dhabas. The
$12.5billion (approx. ₹776 billion) industry is grew at 36% in
FY13. Out of the organized sector, QSR contribute to ₹34
billion. QSR (quick service restaurant) is a fast food restaurant
with minimal table service and a fixed menu, e.g. McDonald‟s.
The QSR market is dominated by foreign players.
Key growth drivers
Higher disposable incomes, changing consumption patterns and
the marketing might of powerful international brands are the
key factors supporting the development of fast food industry in
India. With 65% of India‟s population below 35, many Indians
fall in the 15-35 age bracket (including students and young
working adults), the target audience of fast food industry. As
many as 530 million Indians will reside in urban areas by 2020.
There is growth in disposable incomes with income elasticity of
1.4x. There is also a rise in nuclear families and youth spending.
The rising urban middle class is also changing its food habits.
As per FY12 data, Indians are eating outside more often, as
many as 7 times a month. The paucity of time and the wider
penetration of a Western-style culture will further fuel the
growth of fast food in India. Companies are expected to target
not just urban areas but also tier II and tier III cities in a bid to
strengthen their presence. International brands such as
McDonald‟s, KFC and Subway have considerable resources in
terms of spending on marketing and promotional activity, a
factor that will further drive the category‟s development.

Figure 1: Total Market Share

New outlets to largely aid growth in QSR market
Figure 2 : Foreign Brands Market Share Split
Pizza dominates the fast food industry, accounting for 47 to 50
% of overall fast food revenue, compared to 36 % from
sandwiches and the remaining 14 % is split by other assorted
fast foods. In value terms, pizzas, burgers and sandwiches
account for 83 % of the QSR market. The chicken fast-food
market is forecast to reach ₹13 billion rupees ($207 million) in
2013, while pizza consumers are projected to be worth ₹23
billion in 2013. The pizza market in India was ₹15 billion in
FY12 and grew at a CAGR of 26% in the last 5 year. The
Domino‟s has over 55% market share in organized pizza market
and 70% market share in pizza home delivery segment. Newer
types of fast food are also taking off in India, too, including
Latin American fast food (Taco Bell).

Growth in the Indian QSR industry is expected to be largely
driven by new outlets. We expect outlet additions to continue to
grow at an average annual rate of 16-18 %. The remaining 8-10
% growth is expected to come through an increase in same store
sales. Of the total store additions, we believe that 40-45 % will
take place in tier II and tier III cities. Currently these markets
account for just 25 % of total outlets. For large, established
players who already have a sizeable presence in tier I cities, tier
II and tier III markets are expected to account for roughly 70 %
of store additions over the next three years. Large players have
already established a strong brand and are better-placed to take
advantage of the lower lease rentals and limited competition
that smaller cities offer. On the other hand, new entrants and
relatively new Indian QSR brands are expected to focus more
on larger cities and consolidate operations in a single region
before moving on to newer markets.

Growth

Same store sales growth to remain subdued in the near term

The Indian QSR industry is expected to grow at a CAGR of 27
% for the period from 2012-16.

Same store sales, which have been growing at a robust 20-25 %
over the past few years, are expected to slow down significantly
in the near term. Two factors will cause the decline in growth:


BEACON : Page 4
Jan. 2014

Volume : 2
Issue : 3

INDUSTRY ANALYSIS : ORGANIZED FAST FOOD INDUSTRY

1. An economic slowdown, which will curb discretionary
spending;
2. Cannibalisation due to opening of multiple outlets in the
same catchment area and a resultant increase in competition.
Growth in same store sales is expected to come from a 5-6 %
hike in prices (in line with the typical hikes made every year)
and a 3-5 % increase in the number of transactions at existing
stores. Stores set up in the last couple of years are expected to
see a higher increase in transactions per outlet, as new stores
usually take2-3 years to ramp up operations.
Recent happenings
In a recent development, Nando, South Africa-based
Afro-Portuguese, global restaurant chain has plans of starting
up around 35 outlets in various parts of India through the
franchise route by 2014. The company expects to expand enormously in the northern parts of India.
Mukesh Ambani-led Reliance Industries Ltd (RIL) plans to
open a quick service restaurant (QSR) chain called 'Chicken
Came First' in India in partnership with a UK-based company,
as per a report in The Times of India. The firm through its retail
venture Reliance Retail has picked 45 % stake in an Indian joint
venture with UK-based food service company 2 Sisters Food
Group Ltd (2SFG). The JV, Two Sisters Foods India Ltd, will
initially be a supplier of chilled and frozen food at its food and
grocery outlets in the country and later set up its own QSR
chain under the brand Chicken Came First, the report said citing
sources.
Burger King, one of the world's top fast-food companies, will
soon enter India through a franchising partnership with a company that will be headed by the present CEO of its UK operations and majority-owned by private equity firm Ever stone
Capital. This would be a rare instance where a PE fund would
be partnering with a fast-food chain.
Trends
Indianized offerings
In an effort to appeal to the palates of Indian consumers, operators of multinational brands such as McDonald‟s, KFC and Subway have changed their food offerings, particularly increasing
the vegetarian options. This is mainly because India has a huge
population of vegetarians. Multinational fast food brands have
long adapted their Indian menus to cater to local tastes, with
plenty of spice and vegetarian options. The first vegetarian
McDonald‟s opened in 2013 in northern India near the famous
Golden Temple in Amritsar. Some of the multinational brands

like Subway have also taken this trend to the next level,
introducing Jain variants in Gujarat targeting the country‟s Jain
community.
Franchising model
On the strategic front, it has been found that the franchising
concept in India is continuously rising with the increase in the
number of international players opening more franchise outlets
in India. The increasing revenue figures from franchise outlets
encourage the players to opt for the concept. As a result, many
international fast food giants are opening up their franchise
outlets in India to grab the huge untapped potential in a fast
emerging market.
Indian fast food chains
To compete effectively with their global peers, Indian players
such as Jumbo King, Kaati Zone and Faaso‟s have adopted the
centralised kitchen model. Investing in centralised cooking and
supply chain facilities is critical to success in the QSR space, as
it ensures quality and consistency across outlets, and helps
players reap the benefits of bulk procurement. Some Indian
players also serve global cuisine laced with Indian spices to
satisfy the local taste.
Laws governing the food industry
The Indian food industry is regulated mainly by the Food Safety
and Standards Act (FSSA), 2006 which govern the aspects of
sanitation, licensing and other necessary permits that are required to start up and run a food business. FSSA initiated harmonization of India's food regulations as per international standards. It established a new national regulatory body, the Food
Safety and Standards Authority of India (FSSAI), to develop
scientific methods &standards for food and to regulate and
monitor the manufacturing, processing, storage, distribution,
sales and import of food so as to ensure the availability of safe
and wholesome food for human consumption.
Conclusion
Increasing inclination of people to eat outside (restaurants) will
be the major driving force behind the projected growth. Besides,
healthy food options and low-price menu will also contribute to
its growth, to attain a CAGR of around 27 % during 20122016.Moreover, continuous economic growth and improving
employment situation will lead to higher personal expenditures
on outside food. Fast food joints will also need to maintain their
stance on pricing because the environment will remain
extremely competitive. Hence, it is believed that the fast food
industry will experience modest improvement in the coming
years.


BEACON : Page 5
Jan. 2014

Volume : 2
Issue : 3


Introduction
Jubilant FoodWorks Limited (the Company) is a Jubilant Bhartia Group Company. The Company was incorporated in 1995
and initiated operations in 1996. The Company got listed on the
Indian bourses in February 2010. Mr. Shyam S. Bhartia, Mr.
Hari S. Bhartia and Jubilant Enpro Private Ltd. are the Promoters of the Company.
Jubilant FoodWorks Positioning and Product Mix
Quick Service Restaurant (QSR):
Higher levels of disposable income among consumers have led
to more adventurous tastes and a greater appetite for eating out
in many areas of India. The fastest growing segment in the organized segment of the industry is the Quick Service Restaurants segment (QSR‟s). Presently, QSR business is growing at a
fast pace in India. The industry which makes up 42% of the
organized food services market is outpacing most modern food
service formats.
Domino’s pizza:

Jubilant FoodWorks Limited (the company) & its subsidiary
operates Domino‟s Pizza brand with the exclusive rights for
India, Nepal, Bangladesh and Sri Lanka. As of 31st December
2013, Domino‟s Pizza India operates 679 restaurants in India,
covering 142 cities across the Country. As per the Euro monitor
Report 2013, Domino‟s Pizza is largest organized Pizza chain in
India with 67% market share.
Over the period since 1996, Domino‟s Pizza has remained focused on delivering great tasting Pizzas & sides, superior quality, exceptional customer service and value for money offerings.
It has endeavored to establish a reputation for being a home
delivery specialist capable of delivering pizzas within 30 minutes or FREE to a community of loyal customers from all its
stores around the country.

and cheese burst added as a newly introduced category to this.
Dominos for the first time in India also introduced Pizza mania
for prices as low as Rs. 39/-. Through its strategy of „Think
global and act local‟, Domino‟s Pizza India has been innovating
with delicious new products such as crusts, toppings and flavors
suitable to the taste buds of Indian Consumers and thereby delighting them. Its initiatives such as Fun Meal and Pizza Mania
have been extremely popular with customers looking for an
affordable and value for money meal option.
Dunkin’ Donuts:
Dunkin‟ Donuts is the world‟s leading Donuts, baked goods and
coffee company with market leadership in Donuts, Regular/
decaf drip coffee, iced coffee, hot flavored coffee, bagels and
muffin categories. The Company launched Dunkin‟ Donuts in
India in April 2012 in Delhi. The Company has 21 Dunkin‟
Donuts restaurants in India (as of 31st December 2013). Dunkin‟ Donuts (DD) in India is positioned as a Food Café, occupying the sweet spot between Cafés and quick service restaurants.
It serves a wide range of Donuts, Dunkin‟ Donuts Original
Blend drip coffee; espresso coffee based beverages such as cappuccinos‟ and Lattes, fruit milkshakes, smoothies, tea, as well
as a delectable range of sandwiches made out of artisan breads
such as Foccacia, Croissant, Ciabatta, Bagels.
Though signature Dunkin' Donuts offerings such as Glazed
Donuts and Dunkaccino are part of the India offerings, more
than 60 per cent of the India menu has been altered to suit local
tastes. Their stores in India have more on their plate than the
rest of the world, where Dunkin is known for its doughnuts,
coffee and sandwiches. In India, the company offers a variety of
burgers also. Dunkin' has launched yam patties, bagel buns,
mutton and corn burgers, and a revamped coffee range should
be in stores soon.
Financial Health :
Network expansion and innovative menu offerings pushed
EBIDTA to Rs. 2,444 Million, with PAT standing at Rs. 1,351
Million for FY 2013.The decrease in EBIDTA margin from
18.7% in FY 2012 to 17.4% in FY 2013 is largely attributed to
establishing Dunkin‟ Donuts business as well as the opening of
new stores, coupled with increase in service tax. In the long run,
however, the company stands to positively leverage the potential growth from both, Dunkin‟ Donuts and Domino‟s Pizza
business

In veg and non-veg pizza category, Dominos offers four categories starting from simply veg pizza at starting price of Rs. 60/to Feast pizza. With cost till Rs. 500/-. Also there is a categorization based on the size of the pizza with regular, medium, large

For detailed report and all company analysis from previous Beacons together, please visit our blog:

BEACON : Page 6
Jan. 2014

Volume : 2
Issue : 3


(Rs. in Million, except otherwise stated)
Particulars

Total Income
(EBIDTA)
Add:
Other
Income
Less: Interest
Less: Depreciation
Less:
Exceptional Items
Profit
Before
Tax
Provision
for
Taxation
Profit After Tax
Earning
per
Share
(EPS)
(Rs.)
No. of Domino’s
Pizza Stores
No. of Dunkin’
Donuts
Restaurants
No. of Cities
covered
System
Sales
Growth (%)
Same Store Sales
Growth (%)

Marketing Strategy: Customer Engagement During the year,
JFL invested considerably in mapping emotional insights into
the evolving and transforming consumer needs. With these insights, they moved on to evolve our new Domino‟s Pizza India
brand positioning to `Yeh hai rishton ka time‟. And pushing
further towards goal to be the `most emotionally connected
brand‟ in FSI. Consumer centricity extends to our Dunkin‟
Donuts business as well, where they are striving to connect better with consumers through a focused marketing campaign.
This positioning is well suited to address the fast-paced young
new generation that seeks speed, value and quality, along with
ambience, music, packaging and designing.

March
31,

March
31,

March
31,

March
31,

March
31,

2013
14,153
2,444
78

2012
10,233
1,904
59

2011
6,803
1,201
19

2010
4,243
656
1

2009
2,810
338
1

1
547

376

3
293

83
243

89
169

-

41

-

-

-

1,974

1,546

924

331

81

623

490

204

1

8

1351
20.7

1056
16.3

720
11.2

330
5.5

73
1.3

Player
Dominos

576

465

378

306

241

10

-

-

-

-

Yum! (Pizza Hut &
KFC)
McDonald’s

123

105

90

69

47

38

50

60

51

33

16

30

37

22

6

Competitors: Dominos:

Subway

Market Share
12.6%

Outlets
679

10.71%

444

6.93%

250+

7.56%

416

Dunkin Donuts:
Player
Starbucks
Barista Lavazza
Café Coffee Day

Outlets
34
180
1534 (Footprint Leader)

Dunkin Donuts
The Chocolate Room
Gloria Jeans
Mad Over Donuts

23
74
18
42

Conclusion:

Business Strategy: Growth Strategy: Notwithstanding the
current industry dynamics, the potential to grow remains. JFL‟s
focus on expansion will continue, with plans in place to open
125 new Domino‟s Pizza stores next year, while taking the
brand to many more consumers and cities. On the Dunkin‟
Donuts front, JFL has 18 new restaurants on the agenda in the
coming fiscal, coupled with consistent brand development at all
levels. Future agenda is focused on extending the brand in the
market, competing in the industry effectively, streamlining
costs, offering innovative and superior value products to consumers and enhancing operational excellence. These efforts,
along with several other initiatives, will increase the profitability of the company.

Backed by the Company‟s inherent strengths and the overall
favorable market dynamics, the outlook for Jubilant FoodWorks
remains positive. The Company has well accepted brands that
have extremely high recall and brand value, its operations are
well controlled, it has a robust back-end, and its business model
is proven. Given its leadership position in the industry, concerted business philosophies, an uptick in the economic activity
will enable it to declare sustainable results in the coming years.
References:
Jubilant FoodWorks Annual Report FY‟13
Jubilant FoodWorks Earnings Presentation Q3 FY‟14
Crisil Report – Organised Fast Food in the Fast LaneI BEF –
Fast Food Growth Report April,2010
http://lighthouseinsights.in/indian-qsr-social-media-unmetricreport-cafe-coffee-day-reaches-out-to-customers-across-allplatforms

For detailed report and all company analysis from previous Beacons together, please visit our blog:

Volume : 2
Issue : 3

Concept of the Month

BEACON : Page 7
Jan. 2014

Balanced Scorecard
. Balanced scorecard is a concept originated by Dr. Robert Kaplan and David Norton as a performance
measurement framework that added strategic non-financial performance measures to traditional financial metrics to
give managers and executives a more 'balanced' view of organizational performance. Various organizations use
Balanced Scorecards to align business activities to the vision and strategy of the organization, improve internal and
external communications, and monitor organization performance against strategic goals.

Balanced scorecard transforms an organization‟s strategic plan from an attractive but passive document into the
"marching orders" for the organization on a daily basis. It provides a framework that not only provides performance
measurements, but helps planners identify what should be done and measured.

Design:
As per Kaplan and Norton, four steps are required to
design a balanced scorecard:
1. Translating the vision into operational goals;
2. Communicating the vision and link it to individual
performance;
3. Business planning; index setting
4. Feedback and learning, and adjusting the strategy
accordingly.
These steps go far beyond the simple task of identifying a
small number of financial and non-financial measures, but
illustrate the requirement for whatever design process is
used to fit within broader thinking about how the resulting
Balanced Scorecard will integrate with the wider business
management process

Perspectives:
The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect
data and analyze it relative to each of these perspectives:
Financial: encourages the identification of a few relevant high-level financial measures. In particular, designers were
encouraged to choose measures that helped inform the answer to the question "How do we look to shareholders?"
Customer: encourages the identification of measures that answer the question "How do customers see us?"
Internal business processes: encourages the identification of measures that answer the question "What must
we excel at?"
Learning and growth: encourages the identification of measures that answer the question "How can we continue to
improve, create value and innovate?"

Volume : 2
Issue : 3

QUIZ OF JANUARY

BEACON : Page 8
Jan. 2014

1. He is CEO of a company founded in 1975. He led his
company in development of one of the largest cloud
computing infrastructure. Identify him.
2. One of the co-founders of this company holds 1093 US
patents. The company operates in different subsidiaries
including aviation, oil and gas ,capital, energy
management. Imagine a little and work out the name of
company.
3. Company X was acquired by company Y in 2013.
Company Y gave X $ 1.1 billion and a promise “not to
screw up “ . Identify X.
4. Identify the country with the images.
5. This iconic car was designed on basis of need and objectives stated by Adolf Hitler. This car is
longest running and most manufactured car of the single design. Identify the model of the car.
Answer To: simcon.simsree@gmail.com with Subject= simcon_quiz_jan_2014
Winner will be recognized.
All Correct Answers will be published in next month’s Edition.

ANSWERS : DECEMBER ISSUE
1. Dead Cat Bounce :- A temperary recovery in share prices after substaintial a fall
2. Serge Kampf and Capgemini

Winner:-

3. Parle G
4. Kiran Mazumdar-Shaw
5. Karnataka Bank

Bhagyashree Masram
PGDBM, SIMSREE

 Monte dei Paschi di Siena is the oldest surviving bank in the world, founded
in 1472 by in Siena, Italy.
 The three-pointed star in Mercedez logo symbolizes Daimler‟s ambition of
universal motorization – “on land, on water and in the air”.
 Revenue of Walmart is almost equal to GDP of Taiwan. If Walmart was a
country it would have made 28th biggest country (by GDP as per IMF).
Contributions invited:
To make this feature a successful effort, we seek continued involvement and contribution from our readers,
that is YOU. We invite articles and trivia on themes related to consulting. Be it industry news, consulting trends, a
joke, a cartoon or feedback, we are eager to hear from you. So go ahead, do your research, pen down your thoughts
and mail your entries to simcon.simsree@gmail.com.
Best Regards,
SIMCON –SIMSREE CONSULTING CLUB

Our FB page : https://www.facebook.com/SimCon
Mail To: simcon.simsree@gmail.com

Beacon.Jan 2014

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