Thank you. Welcome, everyone, to United Food Brands Limited Q1 FY '27 earnings conference call.

For today's call, I have with me Mr. Kayum Dhanani, Managing Director; Mr.

Rahul Agrawal, CEO and Whole-Time Director; and Mr. Amit Betala, CFO.

Before we begin, I would like to remind that some of the statements made on today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to our earnings presentation for a detailed disclaimer.

The results and earnings presentation have been uploaded on exchanges and our website and are available for anyone to access. We'll begin this quarter's call with Mr.

Dhanani sharing his business perspective on the quarter, followed by a detailed discussion on operating and financial performance by Mr. Agrawal.

We'll then open the forum for questions. I'll now hand over the call to Mr.

Kayum Dhanani. Thank you, and over to you, sir.

Thank you. Good evening, ladies and gentlemen, and thank you for joining us for our Q1 FY '27 earnings conference call.

Over the last two quarters, we have consistently demonstrated that the strategic and operational initiatives we have been executing are translating into stronger business performance. Q1 FY '27 builds decisively on the momentum and in many ways marks an important milestone for Barbeque Nation.

This has been our strongest operating quarter in recent years, with multiple performance benchmarks being achieved simultaneously. More importantly, the momentum is broad-based.

Every business segment, every channel, and every geography has contributed to our growth, giving us confidence that our performance is underpinned by structural improvements rather than isolated factors. Let me briefly highlight some of the key numbers.

Consolidated same-store sales growth for the quarter was 28.7%. Consolidated revenue grew 43.4% year-on-year to Rs 426 crores.

Dine-in transaction volumes increased by 63.5%, accelerating further from strong momentum we witnessed in the previous quarters. Our delivery business also continued its excellent trajectory, growing 62% year-on-year.

Pre-IndAS adjusted operating EBITDA margin improved to 8.1%, reflecting a year-on-year growth of 152%. Within the portfolio, Barbeque Nation India delivered same-store sales growth of 33.5%, supported by dine-in transaction growth of 68.6%.

Our international business continued its strong performance with revenue growth of 46.6% and same-store sales growth of 8.5%. Our premium casual dining restaurant business delivered revenue growth of 36% with same-store sales growth of 13.6% while continuing to maintain healthy restaurant operating margins.

While these numbers are encouraging, what gives us greater confidence is what they represent. Over several years, we have invested patiently in strengthening our customer value proposition, deepening our captive customer ecosystem, building a more efficient supply chain, improving restaurant operations, and developing a diversified multi-brand portfolio.

For some time, we spoke about building these capabilities. Today, we are beginning to see the cumulative impact of these initiatives reflected consistently in our performance.

Importantly, this growth is being delivered alongside stronger profitability and healthier unit economics. Our mature restaurant operating margins reached 16.2% during the quarter, demonstrating that we are not pursuing growth at expense of returns.

Instead, we are building a business that can sustainably deliver profitable growth while continuing to invest for the future. Another encouraging aspect of the quarter is the continued strength of our diversified portfolio.

Barbeque Nation remains our anchor growth engine, our international operations continue to scale profitably, and our premium casual dining brands are delivering healthy growth while maintaining robust margins. Together, these businesses provide us with multiple growth drivers and greater resilience across market conditions.

Looking ahead, we remain optimistic while also remaining disciplined. We recognize that the exceptionally strong same-store sales growth reported this quarter creates a higher base, and as the year progresses, reported growth rates will normalize moderately.

We view this as a mathematical consequence of stronger comparatives rather than any change in underlying consumer demand. Our priorities remain unchanged.

We will continue to focus on driving healthy transaction growth, strengthening restaurant-level economics, enhancing customer engagement, and expanding our network in disciplined manner. We remain confident in our expansion plans, which continues to be funded largely through our internal accruals, reflecting the strength of our cash generation.

Finally, I would like to acknowledge our restaurant teams and colleagues across all our support functions. The performance you see today is the outcome of several years of disciplined execution, resilience, and unwavering commitment from our people.

They have helped build a strong organization, and this quarter reflects the quality of that collective effort. While we are encouraged by the strong start to FY '27, we believe the opportunity ahead remains significantly larger.

We will continue to execute with discipline, remain focused on creating long-term shareholder value, and build on momentum we have established over the past three quarters. With that, I will now hand over to Rahul, who will take you through the operating performance in greater detail.

Thank you.

Thank you, Kayum. Good evening, everyone, and thank you for joining us today.

I'll walk you through the operating and financial performance and our outlook for the year. Q1 FY '27 has been a strong quarter across every dimension of our business.

Consolidated revenue for Q1 stood at Rs 426 crore, growing 43.4% year-on-year. Consolidated same-store sales growth was 28.7%, on top of the 14.4% we delivered in Q4 FY '26.

Our growth continues to be entirely volume-led. We have not taken any price increase during Q1, and our average per cover spend continues to reflect changes in business segment mix, daypart and session mix, and value-led initiatives that we started from Q2 FY '26.

Consolidated dine-in transaction volumes grew 63.5% year-on-year. This is meaningfully higher than 43.4% we delivered in Q4 FY '26 and reflects the compounding of the customer acquisition and engagement work we have been doing over multiple quarters.

Let me dive into each of our business segments. Barbeque Nation India delivered another exceptional quarter.

Same-store sales growth was 33.5%, revenue growth was 43.4%, and dine-in transaction volumes grew 68.6%. Every metric was higher than the strong Q4 FY '26 levels.

The strategic interventions we have been building for several quarters are now scaling meaningfully. Our value-led campaigns during some dayparts, the food-led occasions we have created, our big buffet format in tier 1 and tier 2 markets, and our sustained investment in captive digital engagements are each yielding very positive results.

Our monthly active users on our digital platform have grown to approximately 1.4 million, which is up by almost 60% year-on-year. Our captive digital ecosystem contributes to 65% of overall Barbeque Nation India dine-in transactions, up from around 61% in Q4 FY '26.

Approximately 90% of our dining volumes continue to come from our own captive channels, that is our app, our website, our reservation call center, and walk-ins to our restaurants. This captive demand architecture is a structural feature of our business, and Q1 FY '27 shows it deepening further.

Barbeque Nation International delivered another strong revenue growth of 46.6% year-on-year, with same-store sales growth of 8.5% and dine-in volume growth of 45.2%. Gross profits grew 40.3%, and pre-IndAS restaurant operating margins grew year-on-year by 22%, with restaurant operating margins of 18.7%.

During the quarter, we added one new restaurant in UAE. Delivering this level of performance against the backdrop of ongoing Middle East geopolitical situation is a very strong outcome and reflects the operational discipline and execution quality of our teams on the ground.

Our international business continues to operate with the strongest unit economics in our portfolio. This is despite the fact that Q1 restaurant operating margin came in at slightly softer than typical levels.

This is mainly due to the impact of higher food inflation for a large part of our input categories. While this is linked to the ongoing and uncertain geopolitical crisis, we are taking efforts to reduce the impact of this in our overall business.

We continue to focus on building volume-led growth in our international business also, and believe that short-term margin impact will correct over time as situation normalizes. Moving to our premium CDR business, our premium CDR business delivered around 36% revenue growth with 13.6% same-store sales growth and around 40% dine-in volume growth.

During Q1, we added one premium CDR restaurant and closed one, ending the quarter with same total network. Our mature premium CDR restaurant continued to deliver restaurant operating margins of upwards of 20%.

The Q4 FY '26 cohort of new restaurants is now progressively maturing through FY '27 and is expected to lift the segment restaurant operating margin as we move further in the year. Across all three engines, Q1 FY '27 marks the third consecutive quarter of every segment and every channel growing at healthy double-digit rate simultaneously.

We closed Q1 with 266 restaurants, with five new additions during the quarter. As of today, we have 15 restaurants that are under construction, and these will operationalize through Q2 and Q3 of this financial year.

Our new store pipeline is also healthy, and we believe that our FY '27 expansion trajectory is well on track. Moving to financial section now, pre-IndAS adjusted operating EBITDA margin for Q1 came in at 8.1%, which was around 350 basis points higher than Q1 of last year.

On a sequential basis also, pre-IndAS adjusted operating margin have increased from around 5.5% in the previous quarter to 8.1% this quarter. This reflects the operating leverage that we have been always talking about through our investments that we made in the previous year.

Let me also walk you through the subcomponents of this margin profile. First, on our gross margin, I think gross margin has begun to improve.

On a sequential basis, our consolidated gross margin improved by approximately 30 basis points versus Q4 FY '26. More importantly, Barbeque Nation India gross margin improved by approximately 130 basis points, which is reflecting the beginning of recovery from the value-led investments that we observed in Q4 FY '26, combined with the procurement and scale benefits.

This was partially offset by international segment where gross margin was softer due to the Middle East crisis-related inflation impact that I just mentioned earlier. Premium CDR gross margins have been steady and at healthy levels.

Secondly, on our mature portfolio ROM, we have seen this continue to improve. Q1 FY '27 mature portfolio pre-IndAS restaurant operating margin came in at 16.2%.

This was again around 290 basis points higher than Q1 of last year. This single metric, I think, depicts the strength of underlying unit economics.

Every incremental rupee of same-store sales growth is flowing to our restaurant profitability at a healthy rate, and this is the structural operating leverage in our business that we have been building on. The margin expansion is despite the lower gross margin on a year-on-year basis.

This is despite the higher investments in marketing spend that we have done, inflationary pressures that we saw from energy and manpower cost, and also when compared to last year, the share of delivery business has increased by 2 percentage points. Third, on the margin profile, our new restaurant portfolio has also increased, which is accelerating our overall payback periods of restaurants.

Our new restaurant portfolio reported 6% pre-IndAS restaurant operating margin, which is the highest that we have seen in last three quarters. We have done five additions this quarter, and the FY '26 cohort is also maturing well, the drag from this portfolio will also reduce over the period of time.

The gap between mature portfolio and the consolidated operating margin have also reduced to 1.6% versus 1.8% in the previous quarter. The overall impact of the above three levers is an expansion of around 310 basis points in our consolidated pre-IndAS restaurant operating margin, which has increased from 11.5% in Q1 of FY '26 to 14.6% in Q1 of FY '27.

On an absolute basis, overall restaurant operating margin increased by around 82% on a year-on-year basis. Lastly, I think our backend cost is also delivering operating leverage as revenue is scaling.

We have mentioned in the previous call that our backend cost has increased because of investments that we have made in our culinary team, marketing team, digital, and central capabilities. I think these as a percentage of revenue had stepped up in the last quarter.

In Q1, we have seen that operating leverage working in our favor. Our backend cost as a percentage of sales have reduced from 7.1% in Q4 FY '26 to 6.5% in Q1 FY '27.

Moving to our balance sheet and cash flow, I think our net debt positions has moved marginally up from Rs 102 crores at the end of FY '26 to Rs 106 crore at the end of Q1 FY '27. This is marginally higher due to the investments that we have made in our capex and also the ongoing pipeline that we have.

I think the capital allocation discipline is unchanged. We'll continue to fund expansion largely from internal accruals, and we'll keep the borrowings at present levels related to the underlying business profile that we have.

Moving on to our outlook for the year, I think on same-store sales growth, as Kayum mentioned in his opening remark, we are conscious that the same-store sales growth will moderate as we move through FY '27. This again is more mathematics than our comment on demand.

Our comparable base tightens meaningfully as we move through the year with Q3 FY '27 and Q4 lapping on to our strongest quarter of FY '26. Our focus will continue to remain on building up healthy volume growth on top of the business that we have already built at scale.

On margins, our approach through FY '27 is to continue building on unit economics improvement that we are demonstrating. I think the gross margin recovery in India, the mature portfolio restaurant operating margin improvement, the improvement in margins of our new store cohort, and operating leverage in the backend cost base, each of these is directional levers that we expect to continue delivering throughout the year.

On network expansion, we continue to remain on track. We are committed to reaching 300 restaurants by FY '27, and we'll build our portfolio from there.

The pace will continue to be disciplined and calibrated, and we will not chase [store count?] just at the cost of underwriting discipline.

On capital allocation also, our priorities remain unchanged. I think we continue to fund our expansion largely from internal accruals.

We'll continue to invest in our multi-engine portfolio that we have built. Overall, we'll continue to focus on building volume-led growth and deepening our captive demand architecture.

This is the operating discipline that has helped us to deliver Q1 of this year, and the same discipline is what will guide us through the rest of the year. To summarize, the business has reached a new operating scale.

The unit economics are stronger than what we have seen ever. Our multi-engine portfolio is working very well, and we'll build forward from this base with the same discipline.

Thank you. We can open the lines for questions now.

Yeah. Hi.

Congratulations, Rahul and entire team of Barbeque, for an absolutely outstanding performance. Rahul, just had one question.

Post the introduction of Big Buffet and the success that you are seeing in terms of the number of new markets that it opens up, like tier 3, tier 4 markets, which probably could not take the price point earlier but can take Big Buffet price point, in your view, how much more market does it open up for you probably wasn't really a market for you two years back?

Thank you, Viraj. I think this is a good question.

As 2.5, 3 years back, we were struggling in our tier 2, tier 3 markets portfolio, and we've been internally working to see how we can change our operating model. Frankly, we've taken the same operating model in metro markets to these markets.

We have experimented it. We have enough data for almost six quarters now.

We are doing a mix of strategy. In some places, we are doing exclusively only Big Buffet, and in some cases, we are doing mix of both Big Buffet and regular buffet that we do.

Frankly, in my view, if there are 700 districts that we can look at, the Big Buffet model we have taken to some markets where the population is as low as 3 lakh people. Overall, if I look at the dynamics that we have with respect to the metro markets, the tier 1 markets, and tier 2, tier 3 markets, I think at the current scale, the brand which is Barbeque Nation India can take it up to around 600-odd restaurants.

Sure. Earlier, what you thought was the upper end of 400, 450 restaurants, now you think we can go to 600 restaurants with Big Buffet.

Yes, and this is the current number. I think one of the other things that we have seen is that our penetration in some of the cities have also been increasing very well.

There are markets where we were only operating one restaurant and were operating very profitably. As we've expanded to two and three restaurants, we've not seen the first restaurant economics deteriorating, right?

A classic example is a city like Visakhapatnam. Just three years back, we only had one restaurant.

In fact, during the period, we have also closed one, we opened two more, we closed one, and today we open two more, and all four of them are doing exceptionally well, and we have fifth under discussion right now. Cities like Visakhapatnam, and a lot of state capitals, a lot of second, third largest cities are also opening up multi-store opportunities for us.

Today, I think with Barbeque India having a portfolio of only 210, I'm not concerned about availability of trade areas to open new stores.

Thank you so much and best of luck.

Thank you, Viraj.

Congratulations, sir, on a good set of numbers. I wanted to know that what were the key growth drivers for the improvement in SSSG?

Because if we see in the last five quarters, this quarter has shown the best of SSSGs, almost 2x in some of the areas. If you can help me understand for Barbeque India, for Barbeque International, and the premium CDR segment, what drove the SSSGs, and yeah?

I think the underlying strategy is as follows: we were just targeting value-driven volume growth across our business,

and this is

this started first in Barbeque Nation India and then taken over to international and also in some manner to premium CDR. The moment we have come up with a with a great value offer for our for our guests and and that too also weaker dayparts, we increased our marketing spend.

Earlier, this used to be approximately 1% or 2%, which has now moved by 1 percentage point higher. On a higher revenue base, the quantum becomes also larger to ensure that these value initiatives have are reaching the customers appropriately through through proper campaigns and initiatives.

Third, most important part is that we have really built our own digital assets, which is helping us to convert the demand or or the inquiries that are coming inside the system into a real transaction or a or a sales transaction, right? All three put together has has been accelerating.

We pretty much started this in Q2 of last year. We have already started to see the impact of those in the months of September, October.

I think that momentum built up in the month of in Q3. It carried on in Q4, and it's carrying on in in Q1 of this year.

What's most exciting is that our average revenue per mature restaurants have now increased to around around Rs 7 crore, and obviously, moving ahead at the same pace from this number, it's not easy, but we are seeing that momentum continuing, right? As I said earlier in my opening remark, the focus is absolutely clear.

We will drive transaction growth, we will drive volume growth, and we'll let others other parts of the business settle down on its own. This is exactly the the playbook that we have also taken in international business and in some manner in the premium CDR business.

Got that. Sir, one more question: so how much time does it take for the premium CDR restaurants to mature?

Historically, we have seen around 18 months to around 24 months. That's the timeframe.

Premium CDR also was a very South region-specific brand, right? We started expanding in Pune a few years back.

We went to Bombay almost four, five quarters back. We went to Delhi four, five quarters back.

If a restaurant in a South market like Chennai or Bangalore will mature faster, expansion in a newer territory altogether like Bombay or Delhi would take some more time to mature. That's the trajectory where we are in also right now.

Got that. Thank you, sir, and all the best.

Thank you, Pooja.

Hi, Rahul. Thank you for taking my question,

and

congratulations on a very good set of numbers. My first question is regarding our mature restaurant margins, right?

That with the growth that we have seen, a 28% growth on the revenue per store, we have seen a 16.2% reported EBITDA margin pre-IndAS. Even if I adjust for the 200 bps of gross delta that has happened over the last one year, we are still at 18%.

Is it fair to say that at 18% we cap our restaurant margin, or there is still some juice left to be extracted from the operating margin?

No, thanks, Palak. This is a very good question, and you are absolutely right about it that with the amount of SSSG that we have seen, which is around 28%, the mature portfolio should have delivered more margins, right?

Just pure flow-through maths that we always spoke about, if the business would have increased by 28%, our last year base of 13%, ideally should have been around 20%, right, because the base also shifts, right? Earlier you're comparing on let's say Rs 100, now you're comparing on Rs 128, right?

Overall, we have reported 16%, there's a 400 basis point lower than what we should have ideally delivered, right? I think this is very clearly driven by four factors.

One, as you rightly mentioned, last year our gross margin was higher, and there is a almost 2 percentage point impact on gross margin. Since the SSSG base also compares with last year Q1, our marketing spend last year to this year is also higher by approximately 1 percentage point, these two factors itself accounts for around 3% movement in the ideal number that we should have done.

The third point is on our mix of dine-in delivery last year versus this year. There's a 2 percentage point incremental change between dine-in and delivery.

Delivery comes with an incremental cost of commissions plus packaging cost, which is let's say around 30%. There's a impact of around 60 basis points coming also from the change in delivery mix, right?

Fourth very important point is we are also living in a very high inflationary environment where energy cost, specifically gas and fuel cost, has been really higher versus last year. We also have higher manpower cost due to some minimum wage changes that we have seen, and there are some other items which has led to inflation below the gross margin levels.

These togethers has again contributed to around 140, 150 basis points. These four factors together has an impact of around 5%.

Ideally, what would have been around 20% is actually 16.2%, despite the fact that there's a drag for 5% from these factors. I think some of these we're already working on, and I won't say that the mature portfolio margin caps at 18%.

I think businesses go through cycles. Once we are in a slightly favorable cycle, we also see that the gross margin impact is sequentially helping us between Q4 and Q1.

Some of these initiatives will help us further. Got it.

Does this higher A&P spend and party packaging also explain the higher corporate overhead expenses? Because if I look at your YoY, a Rs 20 crore has gone to Rs 25 crore in the last one year, the corporate overhead.

I'm just subtracting your restaurant-level EBITDA minus the corporate EBITDA that you report at pre-IndAS.

Right. Sorry, I didn't get the question here.

There was sound at the background.

Is it audible now? Yeah.

Yeah.

I'm saying when I look at your corporate overhead, which is a very basic mathematics, subtracting your restaurant EBITDA cumulatively minus the reported EBITDA margin pre-IndAS EBITDA, that number has jumped up by 32% on a YoY basis. Ideally, in a high SSSG era, you would have expected a much larger operating leverage there.

Is part of this because of the A&P spends, or there is some initial investments that you are making for the faster growth in other segments?

No, all the A&P spends are actually sitting in our store cost. Our restaurant operating margin is after all this, this has nothing to do with that.

As we have mentioned in the previous call also that we are actually continuing to invest in our backend capabilities also. We have beefed up our culinary team.

We have a new chief culinary officer joining. Under them, we have created regional SPOCs for our culinary heads.

We earlier had SPOCs for operations, but not entirely for culinary, we have built in approximately four senior people all joining us from five-star hotels with good culinary backgrounds with an experience of around 20 years. We have beefed up our marketing team.

Since we are making this investment, we have beefed up our investments in our brand team and digital team. We have also strengthened our core tech digital team, which is on our app and website.

We have also invested in some of the other specific functions where we found that that needs specific areas of improvement because the business at scale and one improvement on let's say Rs 1 of improvement will also add close to Rs 1.5 crores of annual cost impact, right? These investments have been done.

I think the right metric to track is how did Q4 last year versus Q1 this year. We are broadly on track.

The only impact would be increments which happened in the April month in our company. Other than that, I think this is a normalized level.

We'll continue to invest in these positions if we believe that this particular segment of the business or area of the business requires dedicated focus, and we'll not shy away from that to build. Our focus today is build volume growth, build scale, and simultaneously also keep focusing on extracting cost-saving initiatives, efficiency initiatives, and thereby deliver margins.

You mentioned that your TAM for Barbeque India is around 600 stores. Does it expedite your store expansion plans given that your model is better now and you believe that it is scalable, or you still believe in a more measured expansion over the next 5, 6 years in that decade?

Overall, this year to achieve a target of, let's say, 300 restaurants, we are adding 40 restaurants, right? Last year we added around 35.

We are also making investments in our business development team, our projects team, the legal team for these areas. That's continuing.

That's why today with respect to the strong under-construction pipeline that we have or the new store pipeline in the early stages is there, I feel that we'll keep adding more and more if we get a good site at a rental that we like, right? I think overall, yes, there is a larger TAM, and yes, there is an opportunity to build it at right scale, given the unit economics also holding up pretty well.

We will continue to make those investments to maybe accelerate the pace if the site that comes towards justifies that. I don't need to hold back anything for that.

Yeah. Thanks, Rahul, and all the best.

Thank you, Palak.

Hi. Good evening, Rahul, and congratulations on fantastic set of numbers and execution.

Thank you, Dhwanil. Yeah.

My first question, Rahul, is that you alluded to that the mature stores are already doing Rs 7 crore per outlet kind of a number. Now looking let's say one year out, if we have to grow on that base, I think in the earlier cycle we were doing around similar numbers at the peak.

What are the levers that you have to move from let's say Rs 7 crore to Rs 8 crore? If you can elaborate on that, that would be very helpful.

Look, our levers are very simple. We are just focusing on building up volume growth across all our restaurants, right?

To build that, we have a focused strategy by daypart, by sessions. We have data insights to understand which restaurant is not working on let's say Monday lunch or the second session of let's say Tuesday dinner, right?

A team is structured like that, and our inquiry system that comes in either on our digital platform or on our call center, reservation call center, also tweak some of these with respect to ensuring that the volume is built up, right? We obviously also have a dedicated, defined metrics for where the offer will go up to.

This is the way that we are building it. That is one big lever that we have.

Since we started all this, we have not taken any price hike in our business. We also are impacted by inflation a bit, but at the right moment, we will take that also.

We will not do anything which impacts our volume growth momentum that we are building. If we feel that the momentum or the volume has stabilized now on a larger base and in some of the places the volumes have stabilized and there's the opportunity to take some price hikes, we can take that in those.

That's also very selective decision based on that unit-level excel, right? The other lever is delivery.

Our delivery business has also grown very well. The only impact on delivery is that the flow-through to the growth is lower because delivery also comes at a cost of higher marketing spend, slightly higher food cost as per our system, and packaging cost, and obviously commissions.

On the revenue bit, as long as it is incrementally generating absolute EBITDA for us, we are okay to do that. Overall, I think one number that I can tell you is that our average performance throughout the entire let's say quarter, it's still let's say lower than what we do in last two weeks of December, right, when the business is really good.

We are looking at that gap and saying, look, there is an opportunity, there's a customer who is dining out somewhere. Why can't they come to Barbeque Nation?

Because the value proposition is super strong, right? Whether it goes to 8 or 8.5 or 9 or 7.5, look, I don't know that right now.

Our focus is absolutely clear. We will continue to build on volume growth and let everything else settle for itself.

Got it, Rahul. Very clear.

Second question is I think this year how do we look at going to double-digit EBITDA margin on a pre-IndAS basis? Do we have a kind of line of sight for that, or what are the things that need to be falling in place to get to that number?

Look, I believe moving ahead in the right direction our overall business unit economics, right? Rather than chasing a number, I would like to focus on what are the levers of this margin improvement and track this let's say quarter-on-quarter.

I think our margin levers gross margin recovery as a big lever. We have mature restaurant operating margin expansion portfolio as one of the big levers.

New store cohort faster now. I think the new stores are maturing faster in case of Barbeque Nation than let's say in case of premium CDR, and the current year the expansion is more geared towards Barbeque Nation than premium CDR, right?

Lastly, the other lever is operating leverage in our backend cost as we scale up revenue, right? Each of these levers are, in my view, moving in the right direction, and our performance in Q1 obviously confirms this, right?

Going forward, as we have always done, we'll continue to report against each of these levers and...

I can hear you.

Oh, sorry. So...

Sorry. I'll repeat that.

I don't know where it dropped, but I think what I was saying was we are moving in right direction, and rather than chasing a number, we should look at what are the levers of margin improvement, and are we tracking well on these quarter-on-quarter, right? We have gross margin recovery.

We have seen...

Sure.

Yeah. Hi.

Sorry for this. We are talking about margin levers, right?

Rather than chasing a number, I think we should look at what are these margin levers and are we moving in right direction. I think these margin levers, in our view, is very clear.

One is gross margin recovery. We have seen that happening in the previous quarter.

Our restaurant operating margin of the mature portfolio should expand. Our new store cohort should also mature appropriately.

I think given that a lot of new store expansion is happening in Barbeque Nation where the path to maturity is faster, so that should help. The operating leverage in our backend cost, which should also help as the revenue scales up.

I think all of these levers are moving in right direction, and our performance in the previous quarter is just confirming this, right? We'll continue to report against each of these levers as we move, and I believe the margin will be an outcome that will follow from these levers.

Got it, Rahul. Got it.

Very clear. Thank you, and wish you all the best.

Thank you, Dhwanil.

Hello. Am I audible?

Yes.

Yeah. Congrats on a great set of numbers, sir.

Sir, my first question, I just wanted to touch upon delivery. Delivery, we have seen a very strong growth.

I understand that the overall growth has been strong in general, but are there any specific initiatives that we are taking out for delivery? Because I'm presuming that since we are more dine-in focused, our marketing initiatives would be more oriented towards driving those sort of dine-in volume growth.

Anything specific on that?

Yeah. On delivery, one, whatever marketing initiatives that we have done also have to some extent rub-off impact on delivery.

Our consumers know that we also do delivery from our stores. We've been doing it for now almost seven, eight years.

More marketing campaigns, while they are all strictly towards dining business, also bring in a very good brand recall, which converts into a delivery transaction for us. Specifically on delivery also, we have continued our focus on building up transactions and on value, right?

Specifically, we have three brands that we operate. One is Barbeque Nation, which is focused more towards starters and tikkas.

Second is UBQ, which is more towards meals and daily bowls. Third is Dum Safar, which is for biryani.

Across all of these platforms, we have launched value SKUs, and they have done extremely well in most of these restaurants. We've also run various campaigns for these SKUs, specific SKUs, for various dayparts which are not performing so well.

For example, there's an item called Bachelor Biryani in Dum Safar, which does extremely well during weekday lunch session because the price points are starting from as low as Rs 129 for a veg format and going up to Rs 250 for a non-veg item. These initiatives have helped.

We've also increased our marketing spend on the platforms to get delivery. It's a mix of all of these three items that I spoke about, which has given us fantastic results on delivery.

Got it. Got it.

Sir, you mentioned that we dialed down on these value initiatives from 2Q FY '26. That's correct, right?

Yes. Okay.

Secondly, sir, now just to recall to the commentary in 4Q, we were optimistic on a let's say high single-digit to early double-digit sort of SSSG, if I'm not wrong. Are we still firm on that or slightly higher on the optimistic side?

Look, our focus remains to build volumes in our business, right? All of these volumes are translating into obviously larger average revenue per store, specifically in our mature portfolio.

I think rather than looking at a number for the full year, what's important is to look at how the overall business direction is moving. If I look at last year, I think the story was more around inflection, right?

This year, I think the story is more about the business has reached a new operating scale, and we are trying to compound from here, right? I think more than SSSG, what matters more is our underlying volume growth and our own captive customer engagement that we'll continue to deepen, and the operating leverage that will continue to work for us at scale, right?

I believe Q1 has worked across all of these parameters. This is the direction that we would like to think about in our business.

We're obviously very excited about the fact that this is the first time ever that we crossed, let's say, Rs 400 crores of revenue. While initially beginning of the quarter we thought we'll cross 400, but we delivered 425, right?

I think the momentum is building up well. It's continuing in the month of July too.

We're just doing our work to build up our volumes and transaction, and then SSSG will be an outcome of that.

Understood. Sir, that's all from my side.

Wishing you the very best for future quarters.

Thank you.

Yeah. Thanks for the opportunity, and congratulations for a great set of numbers.

Rahul, on the gross margins front, if we have seen inflations, we have seen we are focusing more on Big Buffet, we are focusing more on lunch parts. On a normalized basis, one or two years down the line with inflation moderating, how should we look at our gross margins?

The operating leverage will definitely come below the gross margins with the scale-up that is happening and with the growth on the SSSG front, but on a normalized basis with the kind of focus we have on Big Buffet and all, how should we look at our normalized gross margins going ahead?

Sure, Ankit. Thank you, first of all.

Look, gross margin recovery is directionally right, and I think this has been given by factors like any pricing change, obviously inflation, mix of business across let's say dayparts, right? Our pricing on weekday lunches is far lower than what we do on weekend dinners, for example.

The value-led investments that is compounding into volumes, right? We also have procurement benefits that helps, and the scale benefits that helps you in sourcing also, right?

The India gross margin is sequentially improved, we're moving in the right direction there. International gross margin was again lower due to inflation, and premium CDR is largely intact, right?

I think the current levels of around 66%, 67% range is a good operating band and would expect to move directionally from here over time, right? Also, our current gross margin of around 66%, let's say, 66% band, I think reflects three things, right?

One is the current level of gross margin is a result of deliberate value investments that we have made in our business, which is by daypart or by sessions to drive volume, right? As long as these investments are compounding into strong same-store sales growth, we like this, and we are not worried about gross margin, right?

Second, we have some segment mix impact. Barbeque India, which is at a lower gross margin than let's say international and premium CDR, is today growing faster than the other two segments, right, and which is pulling the consolidated gross margin down, right?

I think this is a good problem to have. Barbeque India is the flagship brand, and as long as the flagship brand continues to grow at a faster rate than the other two brands, at least, I think good problem to have.

Third, I think our international business has been softer this quarter, and the Middle East geopolitical situation, we all know that, and the inflation impact there is real, right? In some cases, we've seen commodity prices going up by almost 30%, 40%, right?

All of these, I think, will taper off as we move sequentially. In terms of recovering or coming back to the earlier levels, I think some reversal will happen, and some reversal will not happen also.

For example, the India gross margin will directionally move better, and I think that will happen through some of the levers that we spoke about. International also, at some point of time, we'll find its balance, right?

The impact of business mix change, which is Barbeque India growing faster than the other two segments, will actually just structurally also keep the gross margin lower, right? We all know that, but that's a problem that we're not worried about.

I think we keep looking at our gross margin by segments, and as long as each segment is growing higher, the mix impact don't bother us. Lastly, I think see gross margin also is a headline number, right?

What's most important is how does it flow through your restaurant operating margin and your overall EBITDA? I think those are also moving in right direction, right?

Despite the fact that last year versus last year the gross margin lower by 2 percentage point, the restaurant operating EBITDA is up by around 3 percentage, and also, this has flowed down in your overall India's EBITDA margin, right? We are more concerned about that absolute number.

As long as the direction is right and the flow-through to bottom line is very strong, we are very happy with absolute profitability that is maximized.

Sure. Secondly on the...

Sure.

Hi. Thank you for the opportunity.

Sir, you had mentioned that this 30% SSSG growth that we saw is mostly due to value-driven customers. Could you give me a sense of the repeat rate on these customers?

Historically, our repeat rates have been very strong. In fact, since we started these initiatives, we've also seen that the number of days in which the repeat customers coming back is also shrinking.

I think overall transaction growth is upwards of 60%, which can only happen through a mix of both new customer coming back at a faster rate than previously and also new customer coming back at a faster rate than previously, right? Typically on any particular period, our repeat business is approximately 45% to 47% and the balance is new customer.

During this period of acceleration, we've also seen that our ratio of new versus repeat is actually shifting slightly in favor of new customers, right? That's also very good because we are adding more and more new guests to our overall pipeline, which will obviously translate into repeat business, right?

Also, just one fact about our repeat business number: in our business, on average bill, we have around 4. 4.3 pax per bill, out of which you only get one mobile number, right?

The only way to track repeat is through that mobile number. The number of repeat business that I'm talking about is actually depending with that metrics, right?

Directionally in the same like-to-like comparison, the repeat business growth rate has been very handsome.

Got it, sir. My second question is on the improvement of the ROMs of the new stores.

This has been the highest in the past four, five quarters, if I'm not wrong. Could you just give me a sense of what drove this improvement and if this will be sustainable for the stores we are opening in the future?

This is largely driven by expansion of Barbeque Nation in both India and internationally. I think the payback profile of Barbeque Nation is faster.

Whenever we open up a new Barbeque Nation in let's say existing territories or in a new market altogether, we've seen that the brand is known very well. In fact, in the initial first two months, three months, we see a real jump in our transaction for people coming and trying, right?

Then it slightly taper off for the next couple of quarters, and then it again come back. Then, as you build up volumes, we also keep working on our initial cost and bring it to the regular track.

If you compare it with previous quarters, it is largely mix. More and more Barbeque Nation opening will improve this because the profile of Barbeque Nation reaching maturity is faster than let's say premium CDR segment because they're also entering into newer territories.

I think as the brands become mature in those newer territories, I think that impact will also reduce.

Got it, sir. Thank you.

Thank you, Swetha.

Good evening, sir, and thank you for the opportunity. I hope my voice is clear.

Yes, thank you.

Yes, sir. Sir, my question was maybe you have already answered it, but how much was the revenue driven by higher footfall or guest traffic versus higher average order value for this quarter?

What would be sustainable over the medium term?

The entire revenue growth is driven by more walk-ins in the restaurant. If you look at the headline numbers in our presentation, we have grown our dine-in volume by around 63%, while our revenue growth is around 40%, 43%.

There is, in fact, because of our initiatives, value initiatives, there is a decline in average price point. Those price points is pretty much now stabilized.

Whatever we're doing in Q1 is actually very similar to what we did in Q4 of last quarter. That's the normalized number.

Despite inflation, we're not taking any price hike. There is some opportunity here and there, but we'll very prudent in terms of taking that.

We'll never take that at the cost of some transaction volumes. That's the way we think about it right now.

Got it, sir. Just a small question: could you please update what is the profitability for the delivery business?

As delivery scales, do you expect it to become meaningfully margin accretive, or will dine-in continue to remain only the primary earnings driver?

Look, delivery, my view is dine-in is more captive for us, and, like I've always said, 90% of our business comes from our own captive sources. We are building our own ecosystem of digital sources, our call center, our walk-ins, and we're not dependent on any third-party aggregator or suppliers of demand to us, right?

Dining becomes and is the core of our growth model. We are obviously not averse to delivery, and, as long as delivery is incremental to us and delivering higher margins and higher absolute margins, we'll do that.

The delivery is also non-captive for us. We depend on aggregators for these delivery businesses.

On delivery, the margins, as long as on absolute basis it is better, and on the contribution margin level it's better for us, we'll continue to do that.

Got it, sir. Thank you so much.

Thank you.

Thanks for giving me the opportunity. Rahul, first, just thank the team for the hard work which has gone in over the last two years to improve the value proposition for our customers.

I had two questions, Rahul. One was, once the low base of the previous year is behind us, and I'm talking about India BBQ specifically, what SSSG range is practically possible in this business model of BBQ India, assuming a steady consumption environment and also keeping in mind the constraint of we don't want to really step away from the value focus which has brought in to the business over the last two years?

Like I said earlier also, the focus is just driving volume growth, right? We are today at an average number of, let's say, in BBQ India around maybe 6.5.

I don't know that number, we're not reported that, but my sense is it's around that, right, because international is higher and premium CDR is slightly higher, the average in mature marketing is around 7.1, right? The real question to ask is, is there a capacity to take more?

Yes, the answer is yes. If you look at our restaurants, do our weekday business as much as weekend business?

No. Is our lunch business or dinner business as much as lunch business?

No. We are seeing all of these as opportunities, right?

We are taking efforts to look at all of these sessions and try and build on our volumes. The point is, will the growth in these BBQ India business now still happen because you've reached your max capacity?

The answer is no, right? I think also in some of the other dayparts or weekends where we do well, we still don't do as much as we have done in let's say peak days of our business, right?

You've been following our company for quite some time, you know that we've also done changes in our sizes of restaurants, right? We've become more efficient there.

We were earlier doing 4,500 square feet, now doing 3,000 square feet, right? Despite that, and last 40 restaurants would have been in this model, right, and despite that, the revenue per restaurant is among the highest, right?

We have actually also figured out slotting better, we figured out how to move demand better with respect to value that the guest needs, right? I think all these are open.

Even if we feel that we have a capacity constraint and there is a demand, we're very happy to go ahead and open one more restaurant nearby which will give us that, right? I think I'm not too worried about SSSG number right now.

I think the team inside is single-handedly focusing on building up our volumes. Once the volume happen, we have seen that the operating leverage benefit flows through at various points of time for us.

I don't know, Manjeet, if that answered your question.

It does, Rahul. I'll touch upon this later once more.

I have a second question. You mentioned about some investments which you are making in the backend, right?

Are these mainly to support the restaurant growth which you are sort of forecasting, or they will also contribute in any way to the gross margin improvement in the longer run? Just one housekeeping with it was, what is the total capex you expect for FY '27, including new restaurants and the backend and the maintenance capex, if any, for our existing refurbishments?

Thank you, Rahul.

On the investments in the backend team, it is across the level, right? When you spoke about culinary team, this is largely on the product end of it.

How can we make the product offering to the guest better? The culinary team that has come up now is doing that.

We have done a lot of innovations inside our kitchens, which is helping us. The new chef-led, driven activities that we do in most of our restaurants is actually also given by this new culinary team which has come up, right?

This is also into marketing. This is also in let's say our sourcing division, which is now looking at each and every items sourced with a different lens, and saying if the business has scaled up let's say in terms of volume double of what we used to do 2 years back, how can we get better sources of these things, or can we source from an entirely different place and ensure that what lands up is of a better quality and better pricing, right?

That will also bring in that gross margin efficiency benefit in our system. Last part is also moved towards tech and digital and our reservation centers, right?

The volume of calls that is coming in also needs to be handled in an appropriate manner so that we don't lose on business, right? Simultaneously, we also used some AI inside our reservation center to make better conversion calls, and also, built up our internal reporting metrics to see that the conversion is happening in the right manner.

That's on the backend side. On capex, Amit, do you want to take it?

Yes, Rahul. We guided previously.

Capex for full year would be around Rs 140 crores, and of which Rs 120 crores come from the new outlet expansion and Rs 20 crores towards the maintenance capex and other ancillary capex.

Got it. Thanks, Amit.

Thanks, Rahul.

Sorry. Go ahead.

Good evening, sir. My question is on the service part.

Given the footfalls the way they are growing for the last few quarters, I have been observing and I wanted your comment on the same that obviously there are a lot of comments and reviews on our various restaurants where people have been a little disappointed either with the service or the say AC and all those things. What are the steps we are taking to address the same, given the footfalls are mostly increasing at the time during weekdays where maybe even the employees historically they have not been attuned to this kind of footfall increase and all those things?

A related question to this also, there was an video recently by a food blogger based on the quality of one of the items that he had done, and he's a very famous food blogger. There was some issue on the quality.

Any comments on that also?

Thanks, Aman, for bringing it out. I think fundamentally, Barbeque Nation is known for service, right?

We have built this over last 20 years...

Yeah.

Sorry. Can you hear me?

Let me just answer that question, right?

We are talking about service part. Our business is built across last 20 years on service, right?

We stand by that, and we have a very defined mechanism to track how is the service moving across all our restaurants, across various dayparts, right? We have a GSI system where we call back our 25% of our guests and then take that review, and the team on the ground is reviewed on that, right?

That number is intact. We did see some blip during the months of April when we had some manpower crisis because of a situation wherein a lot of manpower from across many industries had moved back to East India for the election reasons, right?

Apart from that, as they came back, as we also build up our manpower, we've not seen that happening. In fact, the guest scores have only been improving over last three months on these counts, right?

Maybe because of disproportionately higher volume, there may be some service impact, but we take that very seriously. In our own NPS scores that we are seeing over last three months, we have seen improvements on that.

It's a continuous process, and we'll keep working on that. Regarding the video that you're talking about, I don't know which video is there.

As a large brand, we keep spoken about a lot. A recent video just did came up wherein somebody they commented about the chicken quality they have tested in their own labs.

Look, we don't know what labs they're testing, and how it is moved, I can't comment on that. I think I'll tell you what our process.

There are defined FSSAI guidelines on testing and on hygiene, on our reviews. We follow all of these.

In fact, we have a very strong internal audit team of around 30 people who goes and audits all our restaurants across all these FSSAI points on a monthly basis, right? Most of these scores that we are seeing is reviewed and tracked on a monthly basis, even though the FSSAI requirement is not monthly and annual, right?

In terms of lab testing also of the product, based on the FSSAI requirement, that has to be done twice in a year. We have done that across all, and with the NABL accredited labs, and all the products that have been launched in these are falling under appropriate limits there.

Apart from that, it's very difficult for me to react on somebody on how they've done. We have actually engaged with them, but most of the time, once they've already put it out, they generally don't listen to you.

Apart from that, I have no other comments to make on that.

Thank you, Rahul, for answering the question.

Thank you, Aman.

Good evening. Hope I am audible, sir.

Sir, I have just two question. First on UAE, are you seeing same kind of inflation pressure on UAE business?

Second, do you think this Q1 FY '27 SSSG was one-off? Because I am asking this question as you mentioned every time that your main focus will be on volume growth, then should I assume this SSSG was one-off?

Sorry, I didn't understand the last point that you mentioned. I should assume that?

I will repeat. Should I assume this Q1 FY '27 SSSG was one-off?

On UAE inflation, yes, it's real. I think the inflation impact, I've also mentioned in my gross margin comment, that it has impacted us a bit.

In fact, our gross margin is lower by around, I think, 3 percentage point. The numbers are in the presentation.

In terms of SSSG, look, I won't comment whether it's one-off or not, but what I will comment is that we moved out of a negative territory from Q2 onwards. Q3 was around 8%, which moved to around 14.5% in Q4, which moved to around 28% in Q1, right?

I think the momentum is continuing. The business is now at a particular operating scale, and we are just working to compound it from here, right?

As we build volume, I think some of these SSSG-related numbers will be as it is.

How you will tackle with the inflation? Because agar aapka volume growth ke upar to aap se thoda inflation ko pass

on nahi karna padega because agar inflation pass on nahi aayega... No, that's true.

That will maybe impact our gross margin as it has. Like I said, beyond gross margin is also operating leverage.

Even though with volume the revenues goes up and your gross margins are lower, your overall restaurant operating margins and overall corporate EBITDA margins are better. As long as the absolute EBITDA margins are better, I am not too worried about gross margins.

Just to sum it up, the inflation impact is more than offset by the volume growth that we have seen.

Okay. Got it.

Thank you.

Thank you, Shubhanu.

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