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Popeyes: Right ingredients for significant rampup (some impact for KFC is inevitable)

We returned impressed from Popeyes first store in Chennai (Phoenix Mall, Velachery), which marks its entry into Chennai and expansion from Bangalore (12 stores), in the fried chicken market. The store atmosphere is appealing with vibrant colours and a contemporary look and feel, self-ordering kiosk, good lighting and highest seating capacity amongst Popeyes India outlets (with a separate section for ‘open to sky’ table seating). These features differentiate the store look with a superior proposition (picture of the store, menu details, etc. on pages 3-4). Its Cajun flavour offerings are unique in India QSR and we reckon it has high probability of consumer acceptance. A casual positioning (set between fast food and casual dining) fits well with JUBI’s strengths – focusing on valuefor-money and delivery.

We forecast JUBI to add >100 stores in FY24. The market may eventually expand to accommodate both brands - Popeyes and KFC; however, KFC does have an air-pocket to tackle for now as we assign high probability of new Popeyes stores in same catchment as KFC. Retain BUY on JUBI. Devyani and Sapphire may potentially face some growth headwinds in interim

* New store launch looks promising: JUBI has expanded its Popeyes network to Chennai from its existing operations at Bangalore. Popeyes is launched in a new city with flagship store format – with 'open to sky' seating arena which has a contemporary vibrant look and feel. The launch (a month ago) has gained google rating of 4.4. The store is the largest Popeyes India outlet, currently with a seating capacity of 150 split into two divisions (108 indoor and 42 outdoor with ‘open to sky’ arrangement). We believe the brand will compete fiercely with KFC and wrest some of its market share. The market may eventually expand to accommodate both brands; however, KFC does have an air-pocket to tackle for now

* International flavours a potential growth story: On the menu, the Cajun-based sandwich, fries, rice bowls are a unique offering giving consumers a choice to relish international flavour with a mild touch of Indian spice. Traditionally, at other QSRs, fries are a standalone offering while Popeyes brings the twist of serving French fries pre-coated with Cajun mix (a layer coated over the potato) before frying, serving with fusional twist. While the Cajun seasoning is available more at barbeque dine-ins (Barbeque Nation, Coal Barbeque, Absolute Barbeque) and is well preferred, we believe Popeyes menu may find customer patronage, which may help the brand gain market share

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