Jubilant Foodwork shares trading lower after climbing 4 percent early in the day on news of the company signing a master franchise and development agreement with PLK APAC Pte, to bring US fried chicken fast food restaurant Popeyes to India.
A statement by Jubilant Foodworks said that the agreement would help it to “to develop, establish, own and operate hundreds of Popeyes restaurants in India, Bangladesh, Nepal, and Bhutan in the coming years."
The fried chicken category world over is one of the fastest-growing categories. The chicken sandwich and burger market in India is dominated by KFC, McDonald's, and Burger King.
Abneesh Roy, Executive Vice President of Institutional Equities of Edelweiss said, “It is a bit late entrant but if you see the way Burger King scaled up in spite of being a late entrant, it does show the opportunity which is there. Now the market is going to expand with new players.”
He added, “Globally, Popeyes is a very good brand, in terms of profitability it compares favourably. I would expect huge customisation for the Indian palate, this clearly adds almost like Rs 9,000 crore revenue opportunity in terms of business size because this opens up a chicken market, this also opens up burgers plus the sandwich market so brilliant addressing of the wide space. Yes, it is going to be competitive so this will take head-on KFC and to an extent even the burger chain. But definitely much higher focus on delivery synergies in terms of sourcing will be there.”
On Jubilant Food Roy said, “Our target is Rs 3,575 so we do see two reasons for being more excited. Yes it is an expensive company, but from the top, it has corrected 10 percent, but definitely Rs 3,575 next one year I would say that is an opportunity we can look at.”
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