NEW DELHI | MUMBAI: A day after Jubilant FoodWorks (JFL) announced that Chief Executive Ajay Kaul would be leaving next year, the stock slumped 6 per cent. The operator of the country's largest fast-food chain, Domino's Pizza, recouped some of those losses since that Tuesday plunge but investors have been wary for a while now. JFL's market value has halved to Rs 6,500 crore from a peak of Rs 12,700 crore in July 2015.Still, Kaul's departure appears to be free of rancour. "My immediate priority is to find a successor," he told ET. But it does follow several top and mid-level exits. Former executives and others with knowledge of the company's inner workings said JFL has been struggling to cope with challenges facing the quick service restaurant (QSR) business in India but also suggested that some of its wounds may be self-inflicted.They pointed to the breakneck pace of expansion in the face of a clearly waning appetite for western-style fast food across the country. This seems to have caught up with JFL, forcing it to cut store openings.The company, which also has the Dunkin Donuts franchise for India, reported a 3.2 per cent year-on-year drop in same-store sales growth (SSG) for the June quarter, the worst in seven quarters as net profit dropped 31 per cent to Rs 19 crore from the year earlier. Expansion has been reined in — 23 stores were added in the quarter against the previous average of 30-40. JFL has 1,062 Domino's stores and 73 Dunkin Donuts outlets."Consumer fatigue and relentless expansion of stores when consumption is down have taken a huge toll. Accelerating offers such as buy-one-get-one through the week and setting up stores in new markets isn't helping too," said a former senior executive on condition of anonymity. Dunkin Donuts has been a drag on the company and pressure has been mounting on the leadership, said the executive.This has played a role in executives quitting. The company declined to comment, saying it was "mere speculation". Those who've left include chief financial officer Ravi Gupta, marketing head Harneet Singh Rajpal and supply chain head Harsharan Marwah, apart from several mid-rung executives."They (Domino's) expanded too fast," said Abneesh Roy, analyst at financial services firm Edelweiss Securities . "Adding some 150 stores per year cannibalises same-store sales growth. Besides, there have been price increases of about 6 per cent per year – on a non-sale day, a pizza can cost a consumer as much as Rs 400-500, which is steep."JFL has also been frustrated by its inability to implement a plan — gestating for about three years — that could have propped up the company's fortunes, said a former employee. This was to launch a restaurant brand of its own, similar to the strategy of Ravi Jaipuria. Along with the franchise for Yum's KFC and Pizza Hut, Jaipuria has set up his own south Indian cuisine brand Vaango. But JFL's plan seems to have been caught in a loop."The blueprint for the third homegrown restaurant had been drawn up by Kaul," said a former executive. "The leadership at JFL had also seeded the market to see if they could buy out an existing homegrown restaurant chain. But the ambition hasn't yet been realised due to the slump JFL's existing brands Domino's and Dunkin Donuts are facing. That has been causing stress in the company." JFL denied any such plan. "This is completely baseless,'' a spokesperson said. "We are in the process of evaluating both existing brands as well as developing ideas internally. Only when we complete the process to our satisfaction will we move ahead. There is no hurry.''Then there was the failure to win the Burger King franchise, something the founding Bhartia family was said to have been keen on. It eventually went to a joint venture that Burger King set up with private equity firm Everstone Capital. Burger King opened its first outlet in India two years ago."JFL had held talks with Burger King… (They) had differences on how the brand would be scaled up in India. At that time, there was pressure on Kaul and his team to bring in a second brand, which is when JFL did a deal with Dunkin Donuts," said the person cited above.In hindsight, that choice may not have been apt, said the person."Unlike Burger King, which has the potential to be scaled up like McDonald's, Dunkin remains a niche brand appealing to limited consumers," the person said."Unlike burgers, doughnuts don't have mass appeal among Indian consumers." To JFL's credit, the company has sought to broaden its appeal by putting burgers and other items on the Dunkin Donuts menu.JFL dismissed the Burger King franchise move as speculative.But as Jaspal Sabharwal, partner at Everstone Capital, pointed out, JFL and others have had to deal with a market that has evolved rapidly in the past six years. "We are currently living in a tough, lowreturn environment and you can no longer ignore risks associated with changing consumption patterns, which are historically unprecedented and dizzying," said Sabharwal. "This is in contrast to the 2000-10 phase when brands enjoyed a first-mover advantage, there was a plenty of good quality and rightly priced real estate and the rising middle class needed more choices."JFL said the company had held its own through these tough times."It is no secret that the economy has gone through a rough patch with two backto-back droughts and other macroeconomic factors," a spokesperson told ET."The period saw consumption taking a hit and a resultant impact on the business too. It is pertinent to note here that we continued to consolidate and grow our business even during this period too, thanks to our well thought through strategy and our nimbleness. Our business model continues to deliver across parameters like expansion, innovation and operating efficiencies."Harminder Sahni, MD of retail consultancy Wazir Advisors, said the novelty of western fast food is fading. "Consumers are going back to familiar tastes offered by a Haldiram's or a Bikanervala." Also, consumers have started making pizzas and burgers at home "because one, it's much less expensive, and two, because cooking aids and condiments such as sauces and mayonnaise have flooded stores at competitive prices," Sahni said. Apart from this, delivery apps like Swiggy and neighbourhood pizzerias have vastly altered the landscape.G Chokkalingam, founder of advisory firm Equinomics Research & Advisory, said the attrition weren't too worrying and the stock drop had been expected. "If the exits of top management are because of governance, then it can be a cause of concern. But otherwise, with JFL being a big player in the food industry, people leaving doesn't impact the company's prospects in the long run much," he said. "The company's recent quarter performance was poor and hence could not sustain the super-rich valuations commanded by the stock. So a correction was imminent."Other stocks have also been hit too. Speciality Restaurants, which operates chains such as Mainland China and Oh! Calcutta, and Coffee Day Enterprises, owners of Café Coffee Day, are both trading below their listing price. JFL told ET that it expects the future to be robust."The good news is that Domino's Pizza not only is the No 1brand in the country in the food service space which it always was even last year, but we have further increased our market share and we have become a formidable No 1ahead of all other opposition," JFL told ET. "Given our solid business platform and optimism for improvement in overall economic parameters, we are expecting positive performance in the mid to long-term range."Kaul, who joined in 2005 from logistics firm TNT Express, will lead JFL until March 2017. He told ET that he's considering "various options which could range from CSR to private equity" to pursue once he leaves JFL.