Synopsis: Jubilant FoodWorks exited Dunkin’ Doughnuts due to its weak financial contribution and continued losses. The segment contributed just 0.61% to revenue and reported significant losses. The company chose not to renew the franchise agreement, instead focusing on its high-return Domino’s business to improve profitability and long-term growth visibility.
Jubilant FoodWorks has decided to exit the Dunkin’ Doughnuts segment of the company after a strategic review of the company’s business portfolio. This decision comes at a time when the company’s Dunkin’ segment has contributed minimally to the company’s revenue and has remained a loss-making segment. This exit would allow the company to focus on the Domino’s segment of the company, which provides more scalability and profitability.
With a market cap of Rs 28,984 crore, the shares of the company are trading at Rs 440 and are trading at a PE of 89 compared to their industry’s PE of 63. The shares have given a return of more than 1,800% since February 2010.
Weak financial contribution and strategic reassessment
The major reason behind the decision taken by Jubilant FoodWorks to discontinue the Dunkin’ Doughnuts segment is its weak financial contribution. According to the company’s disclosure, the Dunkin’ Doughnuts segment contributed only 0.61% to the total revenue, generating only Rs 372 Cr compared to the total revenue generated by the company, which is Rs 61,046 Cr.
Most importantly, the Dunkin’ Doughnuts segment was also a loss-making segment, and the net loss incurred was Rs 191 crore. The company, after conducting a strategic assessment, decided not to continue the Dunkin’ Doughnuts segment, as the decision was in line with the company’s long-term growth strategy. According to the company’s disclosure, the board decided not to renew the franchise agreement upon its expiry in December 2026. Furthermore, the decision was taken in an orderly fashion, and the company was able to discontinue the operations of the Dunkin’ Doughnuts segment.
Sharpening focus on core and high-return segments
The other important reason for exiting this segment is that the company is planning to sharpen its focus on its core business, i.e., Domino’s. The company recently extended its Domino’s franchise agreement for 15 years, with an additional 10 years as an extension.
Domino’s is a high-return segment for the company, with high brand recognition and a well-established supply chain compared to Dunkin’, which was struggling to scale up its business in the highly competitive QSR and café segment.
The important thing to note is that the company has clarified that this exit would have no material financial or operational impact on its business, implying that this segment was not crucial to its overall business.
Overall, this is a positive move for the company, as it is exiting a loss-making segment and focusing on high-growth and high-margin businesses, and this clarity is expected to improve its profitability for a longer time.
Financials
The revenue from operations for the company stood at Rs 2,437 crore in Q3 FY26 compared to the Q3 FY25 revenue of Rs 2,151 crore, up by about 13 per cent YoY. Similarly, the net profit stood at Rs 73 crore in Q3 FY26, up compared to the Rs 43 crore profit in Q3 FY25.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
The post Why did Jubilant FoodWorks exit its Dunkin’ Doughnuts segment? appeared first on Trade Brains.