Swiggy and Zomato are eating into Domino's slice of profit
- Goldman Sachs maintained ‘Sell’ rating on
Jubilant Foodworks, which sells Domino’s pizza in India.
- Aggressive growth plan of food delivery aggregators like
Swiggyand Zomatoas a risk for Domino’s sales, according to analysts.
- Swiggy is now delivering in over 200 Indian cities, while Zomato is in more than 300 cities.
Goldman Sachs maintained ‘Sell’ with a price of ₹1,129 for shares of Domino’s parent company Jubilant FoodWorks. It said, “Dominos will find it challenging to deliver double digit same-store sales growth in FY20/21,” citing risk from aggressive expansion of Swiggy and Zomato in smaller Indian cities.
Domino’s has over 1,227 restaurants in over 270 cities. Jubilant Foodworks had reported an operational revenue of ₹35.3 billion in FY19 as compared to ₹29.8 billion in FY18.
Meanwhile, ICICI Securities in its report has pointed out that the “aggressive discounting by food aggregators over the past few months continues to impact the dine-in industry and Jubilant Foodworks’ dine-ingrowth in the top-10 cities”.
Swiggy is present in over 200 cities while Zomato has gone beyond 300 cities in India. Their deep dive approach into tier-2 and tier-3 cities could result in Indians preferring to order in instead of going to restaurants to eat, something that has helped Domino’s same store sales so far.
In the US too, Domino’s saw a similar turn of events, with food delivery aggregators like DoorDash, UberEats, GrubHub with their deep discounts and variety of options, impacted the sales of Domino’s. In February 2019, the shares of Domino’s fell by 10% for the same reason.
AdvertisementFrom Domino’s to Hong’s Kitchen – India's Jubilant Foodworks enters the Chinese fast food segment with its own budget brand
Popular on BI
- Cisco says a company 'leader' who encouraged TikTok followers to report strippers to the IRS is no longer employed at the company
- Cryptocurrency investment 101 — here’s how to do your own research (DYOR) and invest in the right digital asset
- Realme GT Neo 2 5G review: Great performance, fine display but camera needs work
- India's farmers protest takes a gruesome turn with a chilling murder at the scene — here’s the sequence of events
- Bizarre! Shubhman Gill was brought back to bat after being declared out
- Ruturaj Gaikwad and Faf du Plessis — amazing data on how the two openers led CSK to IPL 2021 championship
- Budget and safety top criteria for Chennai households during festive season:LocalCircles
- Electric bus makers on a roll as states like Maharashtra and Karnataka send in large orders