Future of Domino’s Pizza in India: A Slice of Trouble ?

The company’s aggressive expansion plans in a weak macro environment will likely hurt its cash generation ability in the near term.

Domino’s Pizza is one of the most popular pizza chains in India, with over 1,500 stores across the country. The company first entered the Indian market in 1996, and it has since grown to become a leader in the pizza delivery market. Domino’s pizzas are known for their high quality and affordable prices, and the company has a strong reputation for customer service.

Domino’s Pizza’s business in India is suffering for a number of reasons. Thought the company saw a 10% growth in revenue from operations to Rs 1,316 crore, driven by growth in orders, it has been facing grave challenges including:

• Increased competition from local and international brands. In recent years, there has been a surge in the number of pizza chains in India, both local and international. This has made it more difficult for Domino’s to stand out from the competition.
• Cheese prices remain elevated. Analysts believe that Jubilant FoodWorks’ operating and net margins are unlikely to go back to the high levels of the past for a couple of years because of persistent cheese inflation, the impact of focus on low-priced products on near-term operating margins and higher depreciation because of addition of nearly 200 stores every year. 
• High commissions charged by food delivery platforms. Domino’s relies heavily on food delivery platforms like Zomato and Swiggy to reach customers. However, these platforms charge high commissions, which eat into Domino’s profits.
• Decrease in quality. Some customers have complained that the quality of Domino’s pizzas has declined in recent years. This could be due to a number of factors, such as the use of lower-quality ingredients or the use of more processed foods.
• Innovative offerings from competitors. Competitors like Pizza Hut and Burger King have been more innovative in their offerings, which has attracted customers away from Domino’s. For example, Pizza Hut has introduced a number of new pizza flavors, while Burger King has introduced a line of burger pizzas.