Jubilant Foodworks targeting to add 85 new stores in FY13

Jubilant Foodworks which has expanded in the past three years is looking to add another 85 stores in FY13.

"We have entered 60 new cities. In terms of growth we have been adding at least 70-80 and this year we will add 85 new stores to our kitty, "Ajay Kaul, chief executive officer, Jubilant Foodworks told CNBC-TV18.

The company would be following measured plan and strategy for expanding Dunkin Donuts. "The idea is first to establish the category. If you see there is coffee and donuts as a category is almost nonexistent in India. The third pillar of our Dunkin Donuts entry strategy is all day part food solutions," he explained.

Kaul said that the company will be adding almost 80 to 100 Dunkin Donuts Stores in the first five years of operation.

Jubilant Foodworks is a net cash positive company even after Rs 100 crore capex and it will not funding from the next few years to meet these expansion plans, he said.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Q3 was a good quarter for Jubilant. Can we expect that momentum to continue going forward and for how many quarters?

A: We did see a bit of consumer demand fall somewhere in Q2 for which we had taken some corrective measures. We had thrown right marketing stimuli at our customers and we were able to reverse the trend. Like 37% was the same store growth in Q1, it fell to 27% and we brought it back up to 31%. Our full year forecast is that we will do at least 25% for the full year basis. I am not going to comment on how Q4 is going,it is still a good quarter.

Q: Are you expecting the margin pressure to ease off going forward?

A: The margin pressure coming out of food inflation. I think we have seen the tail of that big alligator. The pressure which came in the last 15 months from food has clearly started stabilizing a little bit. So I would say going forward the pressure coming from that side will not be as much. However, there are pressures coming from labor for example because we are growing at such a rampant pace. We are present today in 100 cities, we plan to close this year at at least 85 new store openings for the full year.

So when you have to add lot of people you have to also invest lot of money on the people side. We are one of the best employers in the country, so those investments in labour will also put some pressure on margin. We took a salary increase for our people working in the store, nearly 12,000 staff in Q3, so that pressure is going to come. Margin management will have it's own challenges. So from the food side we are a bit relieved compared to what we were a few quarters before that.

Q: What have you charted in terms of a road map for Dunkin Donuts?

A: Our plans are very measured. I