Welcome to Americana Restaurants Q1 2023 earnings presentation. My name is Sonika Sahani, and I'm the Head of Investor Relations at Americana Restaurants. Today's discussion will be led by Amarpal Sandhu, CEO of Americana Restaurants, and Harsh Bansal, CFO and Chief Growth Officer. We will conclude with a Q&A session to answer any questions you may have. Before we start, I would like to remind you of the disclaimer provided in our presentation, which applies to this call. I will now hand over to Amarpal, who will begin with the presentation. Thank you, Sonika. Good day, everyone. Thank you for taking the time to be with us today. We'll start by recapping our KPIs for quarter one 2023, followed by a Q&A session, as Sonika had mentioned earlier. Some key highlights. We had a good start to 2023 and Q1 performance is in line with our operating plan. Further building on the strong performance of 2022. As of March 31, our portfolio has grown to 2,228 restaurants. Our new store expansion has been quite healthy over the last 12-month period with 236 openings. This includes 210 openings for our power brands, KFC, Pizza Hut, Arby's, and Krispy Kreme. In Q1 2023, we opened 49 gross new restaurants versus 33 gross openings for Q1 2022. This is a 50% improvement year-over-year. In addition to that, as of March 31, we had another 63 restaurants under construction. This demonstrates a healthy pipeline and gives us the confidence that we are on track to deliver on our guidance of 250+ net new units in 2023. Revenue for Q1 2023 was $589.4 million, a 2.1% increase year-on-year, despite the partial shift of the holy month of Ramadan to Q1 of this year. Last year, Ramadan was during Q2 in the second quarter of 2022. As many of you are aware, there is a significant impact on out-of-home dining across MENA during the holy month, as Muslims observe fasting, prayer, and reflection. Families or friends typically gather to enjoy home-cooked food rather than eating out. Up until the start of Ramadan, the period from January 1st, 2023 to March 22nd, the LFL revenue grew a solid 7.5% versus the same period in 2022. The business generated adjusted EBITDA of $126.9 million, with a healthy EBITDA margin of 21.5%. This is a 5.6% decline versus Q1 of 2022. Net profit for the quarter stood at $58.1 million, down 19.2%, resulting in a net profit margin of 9.9%. The year-over-year decline in adjusted EBITDA and net profit was largely due to high cost inventory carryovers that were impacted by commodity inflation. Lower sales and fixed cost deleverage in March because of Ramadan, currency devaluations in Egypt and Lebanon, and higher depreciation as a result of accelerated new restaurant openings in quarter one of 2023 versus quarter one of 2022. It's important to note, however, that there were no surprises, and the factors mentioned are accounted for in our 2023 operating plan. We will discuss these in more detail within the financial review section. We remain disciplined in our CapEx deployment, allowing us to maintain a very healthy balance sheet and strong overall financial position. With this in mind, we are well positioned to meet our growth and capital expenditure commitments as well as support our dividend policy. Moving on, some key updates for quarter one. During the first quarter of the year, we continued to progress on several operational and strategic fronts. One of the major milestones was the kickoff of the KFC and Pizza Hut launch for Baghdad, Iraq. The first restaurants opened last month. The response has been very encouraging. Both brands are significantly exceeding projections. We see Iraq as a greenfield opportunity for us, which further strengthens our regional presence. We are building a strong pipeline to accelerate the expansion for the balance of this year. We are also pleased to report that Peet's Coffee has successfully launched two locations in the UAE, offering a unique experience to coffee enthusiasts. As you may remember, Peet's is a new addition to our portfolio, adding further depth to our coffee vertical. Peet's Saudi launch is on track for Q3 of this year. We have three restaurants under construction currently. We continue to build a pipeline in both the UAE and Saudi for a successful scale-up of the Peet's brand. In addition, as part of our customer first approach, we launched a loyalty program for KFC, which is focused on providing a differentiated experience to our customers, improve retention and also repeat rates. The pilot is running in select KFC stores in the UAE and Saudi Arabia, with a full-scale rollout planned across those two countries for Q2 of this year. We have also developed a proprietary technology platform to manage our last mile delivery logistics. The Americana Last Mile Platform is focused on automating and driving efficiencies in our delivery fleet. This proprietary platform has been launched in over 200 stores in UAE, Qatar and Bahrain. We have plans to expand its coverage to Oman, Kuwait and Saudi Arabia in quarter two of this year. We are also pleased to report that the company was recognized in quarter one with two distinguished awards. First, the Gallup Exceptional Workplace Award for fostering an inclusive and engaging environment. Americana is now a two-time winner in consecutive years. This is a strong testament to the ongoing people and culture transformation at Americana, where we pride ourselves in cultivating a performance-driven, values-led culture. The second award is the Yum! Global Digital Disruptor Award. Recently, Americana was recognized as a champion of large-scale digital transformation at Yum's global convention in Singapore, which was held in February. That's a summary of some of the key highlights. At this point, I'm gonna turn it over to Harsh, who will review the financial section. Thank you, Amarpal. We will start the financial section with new store openings. We are on track to deliver our net new restaurant opening target of 250-300 per annum. It has been a good start to the year with 49 gross openings in Q1, which is 50% higher of what we opened during the same period last year. We have closed four restaurants, which resulted in net openings of 45 during Q1. We have a strong pipeline in place. If you look at chart on the right, we have 199 units at, between under construction, lease approval and feasibility approval, which gives a very clear visibility of the openings in the next two quarters. In addition, we are further building the pipeline, and we have 30 additional sites which are under review, which would go into site approval as well as lease secured over the next couple of months. In terms of payback, though we are not presenting it as part of Q1 results, the numbers continue to be strong and are in line with what we have reported in February, which is circa two years. We would be reporting detailed paybacks during our H1 results. Moving on from new store openings to revenue. If you look at chart on the left, we closed Q1 revenue at $589 million, which is 2% higher than Q1 2022. Contribution from NSOS was $40 million. In terms of LFL, just before the start of Ramadan, which is from the 1st January to 22nd March, we did 7.5% LFL during that period. Given the Ramadan seasonality, overall LFL for Q1 was at 1.7%, which impacted our overall revenue growth as well as the profitability given the operating leverage, which we will discuss in detail in the later slides. In addition, FX impact, largely driven by Egypt and Lebanon, has also impacted the overall revenue growth. If you look at the chart on the right, our contribution from stable currencies increased by 82%, from 82% to 83%. Given the strong performance of power brands, share of power brands have actually increased from 93% to 94%, highlighting the strong fundamentals of the stable currency business as well as the performance of power brands. Now we go into the detail of revenue performance by brand. KFC performance continues to be strong with double-digit LFL if exclude the Ramadan seasonality, which is till the 22nd of March. Pizza Hut had a very strong quarter with positive LFL growth despite of Ramadan seasonality. In particular, Pizza Hut UAE performed well and actually exceeded expectations during quarter one in terms of LFL. Hardee's performance has been robust in UAE and KSA, with some softness in Kuwait and Qatar impacting the overall revenue growth. Historically, Kuwait has been the strongest market for Hardee's, which has been under pressure due to restrictions on expat visas and competitor dynamics. However, we are seeing pickup in Q2 post-Ramadan, and we are seeing positive signs in terms of Hardee's performance in Kuwait. On Krispy Kreme, very strong performance in terms of overall revenue with a 10.6% growth. LFL has been largely impacted by KSA performance given the intense competition in sweet treat and indulgence category, as well as significant new openings for Krispy Kreme. Just as a reference point, we opened 77 stores of Krispy Kreme between 1st April 2022 and 31st March 2023. Before we go into the profitability slides or the profitability metrics on the next slide, let me explain the cost of inventory movement, as this has been the significant driver of margins in Q1. As highlighted during our last earnings call in Feb, HY 2022 had a positive impact from low cost inventory carryover from 2021. If you look at the charts on the left, in Q1 2022 and Q2 2022, our cost of inventory was the lowest. It started picking up in H2 2022, given the commodity headwinds we saw last year. This has carried over into Q1, and it is expected to carry over into Q2 as well, given the inventory carryover, but we expect it to taper down as we speak into H2 2022. If you look at Q3 2022, which was most impacted at 33.1% cost of inventory, we're already 0.6% better than Q3 2022, and we are currently at 32.5%, and we expect the cost of inventory to further go down in the subsequent quarters. We expect overall cost of inventory for full year to be largely in line with the last year, and as we explained earlier, HY in 2023 would be similar to H2 2022. Having said that, H2 of 2023 should be similar to H1 of 2022, which results in largely the similar cost of inventory over the course of the year. Here are the profitability metrics. Margin and profitability, we... Given the Ramadan seasonality and the commodity pressures, there has been some dip in the profitability. Having said that, given the ongoing focus on cost, we have been able to recover some of that through ongoing cost initiatives. The two big reasons, which I already explained, one is cost of inventory, which impacted the margin by 2.3% in Q1 2023, and the second is operating leverage on the P&L due to Ramadan seasonality. We went from 7.5% LFL just before the start of Ramadan to 1.7% LFL, which had an operating leverage impact on the P&L, which should even out by Q2, given the seasonality or the shift in Ramadan. On the net income level, we saw some deleveraging because of leasing-related depreciation and finance costs, which you can see in the financials. That was an additional $8.3 million impact compared to Q1 2022. Here we talk about our cash flow and CapEx. On the working capital side, the focus on inventory, reducing the inventory levels has seen some results. If you look at, we have reduced the inventory from $174 million to $154 million, by March 31, 2023. Our DIO is largely in line with the target DIO, which we have. In terms of payables, we have seen reduction in payables. This has been driven by the high interest rate environments, especially the smaller suppliers are facing the pressure, that's why there has been some reduction in the payables. We will continue to work with our suppliers to increase their payables, but we expect the pressure to remain till the time the interest rates cycle eases out. CapEx has been largely in line with our expectations. We are at 5.3% of the revenue, largely driven by new store opening CapEx. That's in summary about the financials. Revenue performance has been robust. While we had impact due to Ramadan, we were able to mitigate the impact driven by NSO performance or NSO revenue contribution. In terms of margins, the two big contributors were cost of inventory and deleveraging due to Ramadan, which was partly mitigated by the cost initiatives. Cash flow has been largely in line with our expectations. Now I will hand over to Amar to go through the way forward. Thank you, Harsh. We would like to reiterate the focus areas for 2023, as mentioned in the earnings call that we conducted earlier this year. Growing the restaurant portfolio remains a top priority for us. As such, there's no change to our guidance to open 250-300 net new restaurants annually. As mentioned in our earlier calls, we will over-index in KSA, as we believe Saudi Arabia provides compelling opportunity both for the power brands as well as our incubator brands, such as, Pizza. In addition, we are very excited about the greenfield opportunity in Iraq with the recent highly successful launch of KFC and Pizza Hut last month. We will continue to drive accelerated growth in Iraq as well. Second point, given Egypt's overall macroeconomic environment, this country remains a focus for us in 2023. While we are believers in Egypt's long-term potential, we have made a conscious decision to pull back on capital deployment for the time being. This year, focus remains on operations excellence and cost efficiencies through ZBB initiatives. On the revenue front, we are working on smart pricing as well as disruptive value to ensure that we continue to mitigate the transaction decline. Also, as mentioned by Harsh earlier, we remain focused on driving improvements in our gross profit margin by the second half of 2023 once our existing strategically built inventory is phased out. On top of that, we will continue to dedicate time and investments to further develop our digital offerings. Optimizing our off-premises revenue channels, as seen through the pilot launch of our loyalty program and the Americana Last Mile Platform. Finally, we will continue to scale up new growth opportunities. Some examples for that are Pizza Hut in Saudi Arabia. We finished 2022 with 30 openings, our target for this year is certainly to top that. We also have Peet's Coffee scale up plans for UAE and Saudi, we mentioned earlier KFC and Pizza Hut in Iraq. Just as a reminder, something that we have shared previously, we expect our new brands to reach portfolio-level margins within 24 to 36 months as we continue to drive brand strength and scale up. Once again, thank you for joining us today. At this point, we will open the lines for any questions. Back to you, Sonika. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, please press star two. Our first question is from Henrik Herbst from Morgan Stanley. Please go ahead, Henrik. Thank you very much. Hey, guys. A couple of questions. Firstly, if I could just follow up on, I think you mentioned, if I heard you correct, you mentioned transaction decline in your final remarks. Maybe I missed it during the sort of broader presentation, maybe you could talk a little bit about that and clarify that perhaps. Secondly, I'm just wondering if you could talk a little bit about what you're seeing in terms of broader consumer demand in your main markets. I guess inflation is low, consumer sentiment readings are pretty high, I mean, consumers should be pretty strong, we're hearing some concern from other corporates. I was just wondering if you could maybe give us a bit of a rundown of your main markets, I mean, in particular Saudi, U.A.E., and Kuwait. Thanks so much. Sure, Henrik. Always good to hear your voice. The transaction comment was specific to the situation in Egypt, I think there's probably some misunderstanding there. Sorry. Yeah. The overall situation, we saw really strong momentum in UAE as well as in KSA, and the business remains exceptionally strong in two of our biggest markets. We did see some softness in Kuwait as well as in Qatar, you know, for different reasons. Qatar, obviously the World Cup impact and everything associated, all the infrastructure, you know, builds and the activity that was going on with that. In Kuwait, it was more, you know, with some structural changes, with visa cancellations, et cetera. We saw that across the market. It wasn't just us, you know, it was affecting the country. However, we are seeing a very good recovery during Ramadan Eid, Kuwait was phenomenal performance. Even post that, you know, Ramadan and Eid, we are seeing a really good recovery in Kuwait. Very strong performance in Kazakhstan, in Morocco, across various other geographies. That's kind of an update of what's happening across the markets. Thanks. You're seeing no sort of signs of consumers cutting back, trading down or anything like that in Saudi or the UAE? Nothing in Saudi and UAE for sure. We are not seeing that. Yeah, our brands continue to perform very well. We were concerned. You know, because we were lapping Expo from previous year, we thought, you know, we would have some softness in UAE, but we have been pleasantly surprised. UAE remains quite strong for us. Got it. Thanks very much. Thanks. The next question comes from Céline Cornu from CNN. Please go ahead. Hi. Yes, just a couple questions from me. Starting with the explanation for Ramadan, I'm just struggling to understand kind of how the impact of kind of. Mm-hmm. The 10 days between last year and this year has kind of, so kind of negatively impacted kind of the results. If we could just get some color there? Hmm. If you look at chart on the left, in the nine days of Ramadan, which is from 22nd to 31st of March, we saw a 45% decline on the revenue. That was driven by the seasonality of Ramadan, because last year Ramadan was in Q2 rather than Q1. Every year Ramadan shifts. That's the revenue impact which we had due to Ramadan. Given our business, a significant chunk of our costs are fixed or semi-variable in nature. That has an impact on the P&L just because of the leverage. That resulted in dilution of margins as well as impact on profitability due to Ramadan. Just to clarify, you're saying that in those 10 days, you had a 45% decline in revenues, and that's kind of where the operating leverage of the business was negatively impacted, yes? Yeah, that's right. Okay. So this is very helpful. Can I just also ask, other income was also down quite significantly. If you could give color there as to why that was the case. Other income as such is a very small component, and this is just because of Lebanon is going through hyperinflation and that we have to follow the IAS 29, and we have to do hyperinflation, and that has an impact. It's just a comparable versus last year. We have certain re-rental incomes in Egypt. Just because of the effects in Egypt, the rental income and the logistics income went down because most of the rental and logistics income come from Egypt, where we own certain real estates. That's just because of the effects which we used for Egypt last year versus this year. Okay. If I could just also ask you if you could give color on the expansion in the financial calls and kind of what your expectation is for the rest of the year. Again, we have not given specific, I would say, guidance for the year, but we are very much on plan and intact in terms of medium-term guidance. As far as cost of inventory is concerned, which if you look at, if you go to the chart on the right. Next slide. Next. If you look at cost of inventory, in Q1 2023, we saw a dilution versus Q1 2022 of 2.3%. Having said that, over the course of the year, we expect our cost of inventory to be largely in line with last year. That, which has been driving our margins or has been driving the profitability in Q1, we expect it to even out during the course of the year. Otherwise, on the profitability, we are very much in line with our medium-term guidance, which we have given earlier. Thank you. That's very helpful. If I could just make a quick comment. I don't know if the presentation was widely distributed. I don't happen to see it on your website. If you guys could share that would make the call a lot more helpful if we could have access to the presentation in real time. Tessa, that will be uploaded on our website, later tonight or tomorrow. Our next question comes from Taher Safieddine from JPMorgan. Please go ahead. Yes. Hi, good afternoon, gents. It's Taher from JPMorgan. Thank you for taking the time. Just couple of questions from my side, please. First one is on this adjusted like-for-like of 7.5. Can we just get an understanding on, you know, transaction versus basket? I'm just trying to gauge here, you know, with inflation, is there still ability, you know, for pricing to come through? Maybe if you can shed some color on that would be very helpful. The second question is just on the EBITDA margin. In your press release or earnings release, you still reiterated the medium-term EBITDA margin expansion of 250-300 basis point. I'm just trying to understand, should this be more backloaded in a sense that it will come through more 2024 onwards, given we're still, you know, dealing with these inflation, commodity cost headwinds? Maybe if you can just shed also some color on this, margin trajectory will be very helpful. Just a follow-up from the CFO, you talked about some pressure in Hardee's operation and Krispy Kreme. Maybe I've missed that. If you can just explain what has happened exactly in these two brands. I can answer the transaction in Hardee's and Krispy Kreme. Thank you. Taher we'll, you know, that's a loaded question, so we'll split it between Harsh and myself. In terms of transaction, we have a healthy growth. You know, removing the Ramadan impact, we have a healthy growth on transactions as well as check. There's no decline on that side. Secondly, you know, on Hardee's and Krispy Kreme, as Harsh mentioned in his presentation, Hardee's is over-indexed in Kuwait that, you know, that's a significant weight in the overall Hardee's portfolio. We did see some softness in January and February in Kuwait for Hardee's. However, the recovery has been quite good, and for the full quarter, Hardee's is positive LFL. The performance in KSA was very strong, and UA is very strong as well, as well as our market in Hardee's performance in Kazakhstan. On Krispy Kreme, also Harsh touched on this in his presentation. One, yes, there is a challenge in KSA because, very competitive segment in coffee, sweet treats and indulgence. As well as, you know, we have opened roughly circa 70 new Krispy Kremes across our portfolio, so there is a cannibalization impact as well on the LFL. In Egypt, which was a very strong market, we were going up against the early launch phase of the brand. Overall, Krispy Kreme revenue is, circa 11% positive. I'll turn it over to Harsh to answer the profitability questions. Can you please go to the margins slide? Taher, in terms of profitability, let me. First of all, if you look at our GP, we had a dilution of 2.3% in gross profit or in cost of inventory, if you look at Q1 2022 versus Q1 2023. Having said that, if you look at the next slide, our EBITDA margin was the dilution in the EBITDA margin was close to 1.8%. There is a reduction in terms of margin dilution from gross profit to adjusted EBITDA of 0.5%. As I mentioned earlier, we expect our gross profit to be largely in line versus last year. That will happen because we expect the gross profit to be better in H2 compared to H2 of last year, given the drop in the commodity prices as well as the flow of the carryover of the pricing. That should flow to an EBITDA level. The dilution which happened in GP level should not happen at the EBITDA level as well. We expect there should be margin expansion at an EBITDA level if you compare to last year. We remain in line with the guidance, which is 250-300 basis points in the medium term. Okay. All right, perfect. Very helpful. Thank you. Our next question is from Eraj Ahmed from Ashmore Group. Please go ahead. Hi. Thanks very much for taking the questions. Perhaps just to cover up on one that was asked previously on the like-for-like growth, the mix of price versus volume. I think you said that both were positive, but could you give any more detail on that, please? Hi, Eraj Ahmed. Hope you're well. Good to hear your voice again. Yeah. We saw a fairly, I would say about a third of that was in transactions and about two-thirds in check, but positive growth on both sides on transaction and check. This is the 7.5% pre-Ramadan. From January 1 to March 22. Obviously, you know, Ramadan, we are not taking that into account here. Ramadan over Ramadan was a fairly strong performance as well versus last year. That was in fact better than 7.5%. Ramadan and Eid combined this year versus Ramadan and Eid combined last year. That's great. Thank you. Have you been raising prices on a like-to-like basis year to date? We have in some countries, taken pricing and as we highlighted earlier, we continue to review pricing on a periodic basis. It's not only pricing. We look at, I would say, various menu optimization opportunities, be it sizing, be it pricing, be it launching LTOs which are slightly more premium. We have taken pricing in some of the GCC markets as well. For sure, in markets like Egypt and Kazakhstan, we have been taking pricing more just because of the inflationary pressures we are seeing in some of those markets. Pricing, we look at every month and wherever there's an opportunity, we do take pricing. That's great. Thank you. Looking at the store addition numbers for Q1, if we just annualize that, for the full year, if we were to just times it by four, that would obviously be a little bit below the full year guidance. In a typical year, are your openings normally back-end loaded or are there any other kind of context you can give to that? What is that? You're talking about new store openings, just to clarify? I think you opened 45 net new stores in Q1, but to hit 250 for the full year, the run rate would need to pick up in. Yeah. -quarters. Is that how you see things and is it normally a back-end loaded process for you? It is back-end loaded. Even if you look at comparison versus last year, a significant chunk was opened, especially in Q3 and Q4. While we have opened 49, which is significantly higher than Q1 last year, and last year, just as a reference point, we opened 220-220 gross stores. We are in line with our guidance of 250-300. We have visibility, as I mentioned earlier, 199 restaurants which are either under construction, site secured or feasibility approved. Eraj, just to, you know, give comfort, that 49 number in Q1 has significantly increased just in over the last month. At the end of quarter one, we had 63 under construction. A lot of those have been converted to open in April. Understood. Thank you. What's the average construction time frame for a store? It varies on the asset type by country. I would say in a roughly, a range of 4-6 months. We get a good mall location in a food court, we can turn it around in 60 days. We are building freestanding drive-throughs, that could be up to nine months. That's great. Thank you. Perhaps on some of the newer formats and some of the key growth drivers. We're now kind of over two or three quarters into the Saudi Pizza Hut project. Can you talk a little bit about the store economics there, some of the first stores that you opened middle of last year? What are the paybacks, the ROIC, the margins look like? Is it kind of in line with what you're expecting or is it similar to KFC? Similar with Peet's as well. I know it's very early days, but how is that kind of tracking versus expectations? See, it's too early for Peet's. We only have two open at this stage. As I had stated earlier in this call, as well as in the last call, for new brands, you know, at this point the focus is on brand building, then we move into scale-up stage and it'll take 24-36 months to achieve portfolio level margins. Maybe anything you could share on, Saudi Pizza Hut, maybe in terms of competition or initial response or have you had to tweak anything on pricing or brand positioning? Just kind of any updates you could share. Pizza Hut KSA, we had shared earlier we opened 30 in 2022, we have a very healthy pipeline for 2023. We have six under construction currently, we're also moving outside of Riyadh and Dammam. In general, the pizza market in KSA, both the existing franchisee that is operating in Jeddah as well as the competitors, the pricing in the cities of Makkah and Madinah is significantly higher than Riyadh. We have a very healthy pipeline building in Makkah, Madinah, Taif, and Tabuk. We are moving into the western region, we expect better margins, better profitability, the consumer response has been very strong. Our AUVs are holding quite healthily. They are above the competitors. Our rent-to-revenue ratios are very, very good. Those are all good signs and, you know, at this point it's all about reintroducing the brand, driving brand love, and we can always, tweak the P&L as we continue to scale up. Great. Thank you. Last question, if I may please. would just be on the Krispy Kreme negative like for likes. I know you've spoken about a couple of different drivers there in terms of QA competition, what's going on in Egypt. Overall, the -12%, I'm sure you see that as kind of a, maybe a disappointing number or a headwind for this year. Can you maybe give us any comfort that over the coming quarters things could normalize there? Or do you think this brand is gonna have a challenge for a year or two? Or kind of how should we think about Krispy Kreme given what we've seen in the like for like numbers in Q1? The challenge with Krispy Kreme, as I had shared earlier, we do have a challenge in KSA because it's over-indexed in KSA, so 50% of the store count of Krispy Kreme comes in KSA, and that's a very competitive market, both in terms of coffee, sweet treats, and indulgence. There are two elements, you know. One is competition is driving deep discounting. We haven't really engaged in that. The second is, 50% of our new openings have been in KSA, so there's a level of cannibalization as well. We are seeing transaction growth in recent months in KSA, so we're adopting different approaches to drive the business. Overall, Krispy Kreme still continues to be the best performing brand when it comes to paybacks. It is circa, you know, 1.2. Yeah. Years. There's no, we don't see any risk. We are tweaking the model in KSA. Just to elaborate a little bit more on that, in KSA, Krispy Kreme brand has been there for a long time, and we realized when we launched Egypt and Jordan, when we approached with the hub and spoke model where we seed the brand with a Hot Light store, a factory store where people can come in and experience the fresh donuts coming right off the line, that really plays into the brand love. Just recently, we opened our first Hot Light store in KSA in the city of Taif. It's very early, but the response has been very good, and we are very encouraged by that. That's great. Thank you very much. Thanks for your time. Our next question is from Asjad Hussain from International Securities. Please go ahead. Yeah. Thank you very much for taking my question. I just have two quick questions. I think the first one you have addressed partially previously as well. The company have guided on 250 net new openings in 2023. As we can see in the first quarter, there are 49 gross new restaurants. Kindly if you can share the net openings in the first quarter. I'm just trying to understand from the company's perspective, like if we can expect more openings in the upcoming quarters or in the second half of the year. My second question is pertaining to the channel mix of the company. Like previously we have seen in 2021, 42% of the revenue was from home deliveries, and in 2022 it declined to 39%. If you can give some color on how it was in the first quarter of 2023 and how it will evolve going forward. Thank you. Sure. In terms of, first is openings, we closed four stores. Our net openings for Q1 2023 are at 45. That's on new openings. Yes, absolutely we are on track for 250-300 net new store openings. If you look at the chart on the right, we have 199 restaurants which are either under construction, site approved as well as feasibility approved or site secured. As Avan mentioned, a lot of under construction have actually opened in the last month or so. We believe we have clear visibility to getting close to 250-300 net new store openings, which is in line with our guidance. That's on openings. As far as your second question is concerned, which is on channel shift, the home delivery Went down from 42% odd to 39%. We have seen slight decline of home delivery as a channel further. It's not as significant as what we saw earlier, but there has been a slight decline in Q1 2023 as well. We expect the home delivery to either stay largely at the similar levels or maybe have a further slight decline, but nothing significant. Our next question is from Nishit Lakhotia from SICO. Please go ahead. Yes. Thank you for the call. I just have one question more on the performance through the rest of the year, given that there were the seasonality from Ramadan. Should we expect a very reasonably strong second quarter now, given that two both Eid al-Adha and Eid al-Fitr is falling, plus you have 10 less days, and then second half you will see the margin improvement from the inventory high cost inventory, you know, movement. Is it right to expect three strong quarters now after a tepid start, if I can say, in terms of numbers in first quarter? That's my first question. Second, more like a comment that why is the management not sharing the presentation just before the call? Why do we have to wait for the presentation after the call? It's not the standard practice, and I'm sure this can be done, right? For the next quarter call. Thanks. First let me answer the margin question, then I will leave the difficult one for Sonika. I mean, if we are happy to share that, but I'll leave Sonika to comment. On the margin side, for the performance of Q2 and Q3, the Ramadan seasonality should normalize by Q2 for sure. As you rightly said, we have two Eids in Q2, which should positively boost the sales in quarter two. We are also seeing the commodity inflation or the commodity prices going down. As I mentioned earlier, especially if you compare to last year, this should also have a positive impact because Q1 last year was the best quarter in terms of gross profit and that started deteriorating as we went into Q2 and Q3. We do expect stronger performance in Q2 and Q3 as compared to Q1 for sure, or going into Q4 for that matter. In terms of slides, Sonika, you want to cover it? Yeah. Feedback noted, Nishit, from next time we'll try to make sure it's there before the earnings call. Perfect. Thank you so much. That was helpful. Our next question is from Sara Abushakra from SNB Capital. Please go ahead. Hello. Thank you for taking my question. Would like to know if you can please provide some granular detail about the store expansion and how many Pizza Hut restaurants are currently operating in Saudi and how much do you expect they will be in the future, and if you could also please shed some light on Pizza Hut and KFC. You mentioned that you are planning to open some in Iraq, so what's your plan there? You also highlighted that you're still operating 1-2 Peet's Coffees. I'd like to know why is it taking so long to expand in that front? Sara, we didn't catch your last question. There was a break in the line. Let me answer the first two, the KSA Pizza Hut and then the Iraq expansion, then we'll give you an opportunity to ask your third question again. At Pizza Hut we are currently operating 30 restaurants. We have another six under construction, and we are building a strong pipeline for further acceleration in 2023. As I'd mentioned earlier, we are moving to the western region now, and we are building a strong pipeline in Makkah, Medina, Taif, and Tabuk. You can expect some openings in the coming months in those towns as well. Separately on Iraq, we just launched the brand in April, both, you know... These are new rights we got for both KFC and Pizza Hut for Iraq. Our first stores opened in April. The response from the consumers in Iraq has been very strong, very encouraging, and we are in the process of building a pipeline for further acceleration, you know, this year. Hopefully we'll be able to share more specifics in the mid-year calls. Thank you. I would like to know more about your Peet's Coffee stores and how are you expanding in that front? Peet's Coffee, we've opened two coffee shops here in Dubai, and we are building a pipeline in Dubai. As I mentioned earlier, we are also planning. Currently we have three Peet's Coffee under construction in Saudi Arabia in the Riyadh area. We expect to launch the brand in Q3 of this year. In parallel, we continue to build a pipeline for, you know, for strengthening the brand and also scale up in these two countries. The focus for this year will be on UAE and KSA. At the time for the IPO, you said that you were having 2 Peet's Coffee stores. Why is it taking so long to roll these Peet's Coffee stores out? At the time of the IPO, we did not have any Peet's Coffee open. The Peet's Coffee only opened in January. We wanna be very careful in getting the brand positioning right, getting the products right, getting the execution right. This is not a race. It's better right will always trump fast. Okay. Thank you very much. That is very clear. The next question is from Sergey Dubin from Harding Loevner. Please go ahead. Yeah. Good, good morning. A couple of questions from my side. The first one, you mentioned that you saw some kind of a cannibalization on Krispy Kreme stores because you opened a lot of them in a short period of time in KSA, and that therefore, they cannibalize the existing stores. Can you just broadly outline how you think about that issue? Not just specifically for Krispy Kreme in KSA, but broadly. When you're gonna open 260-300 restaurants, in some markets you're gonna have these issues. How do you view that in terms of is there a certain time at which cannibalization sort of tempers off or is gonna persist? You know, just share your thinking on that. That's the first question. Sergei, great question. I'll give you some context. We do market mapping for each brand in each country, and it's more focused on some of the urban centers and the cities where we want to expand. This market mapping focuses on both the holding capacity for each brand as well as prioritization of the trade areas. There are various examples, you know. For example, launching Pizza Hut as a new brand, the approach is that there should be no overlap. We should only go into virgin trade areas, and there should be no cannibalization because it's a new brand. As a result of that, you know, given that a lot of our openings were in northern Riyadh for Pizza Hut, as well as, you know, Covid in some parts of Dammam, we felt it was the right time to move into the western region because there's a huge opportunity in Makkah, Medina, Taif and Tabuk. The general approach to a new brand is no cannibalization. When you take Pizza Hut in UAE, where we are very well penetrated, and Pizza Hut is more than, you know, twice the size of the other two closest competitors, which are Domino's and Papa Johns in UAE. At the same time, we don't wanna lose ground to the competition. Wherever there's an opportunity for an infill location where, you know, whether it's to blunt the competition or to improve the service, you know, from an existing restaurant which might be over-trading, we would consider infill locations. That's the general approach, we believe for KFC in Saudi Arabia, there's plenty of opportunity to go into virgin trade areas, with minimal cannibalization. Cannibalization is already factored into the overall like-for-like sales. This is despite the openings we are seeing. We saw very healthy like-for-like in 2022, and on top of that, if you exclude Ramadan, there's another 7.5% like-for-like on top of that. Krispy Kreme specifically, our focus was concentrated on Riyadh and we took those learnings and, you know, hence now on Krispy Kreme, we are also moving outside of Riyadh into more newer virgin trade areas where we might not have a strong presence. The first factory store we opened for Krispy Kreme or the Hot Light concept has been opened in Taif. We build a hub and spoke model around that and a similar Hot Light store is also opening in Tabuk. Okay, got it. No, this is very helpful. Then my second question, you mentioned earlier something about your AML, Americana Last Mile Platform. Could you give some more color or details in terms of what exactly is it, you know, supposed to achieve? Like, how is it different from what you were doing before? How is it different from competitors? What are the key KPIs that you're measuring this by? Like, how would you know whether it's successful or not? Sergey, just to give you context, this Americana Last Mile Platform is for fulfillment for the home delivery orders and previously we have been working with one of the third parties by the name of One Click. This is a proprietary technology which we have built in-house, and we own the IP for that. In terms of this is not only for our home delivery orders, this is also as we deal with aggregators only for customer acquisition, a lot of deliveries for aggregators also happen through our own channels. In terms of KPIs, there are three key KPIs. One is to drive customer experience. This is actually, we have had our learnings of delivery over the last so many years and all that learnings have gone in to build a platform. The customer experience from this Last Mile Platform is significantly better than what we had. The second is it gives us visibility for cost optimization. It gives us the visibility of driver productivity. It gives us a visibility so that we can pool orders amongst different restaurants as well as it gives us flexibility in terms of order allocation into the riders. The third is, it also seamlessly integrates with our own assets. It provides a more holistic experience rather than our digital app vis-a-vis our delivery app or the tracking on the maps working successfully. Overall, I would say experience and cost optimization has been two key drivers for this. Okay. Just to understand, essentially, and I'm not as familiar with you guys at the moment, but just to understand what? Is that basically like a technology sort of enabled, you know, kind of like a tool, right? That allows you to view and kinda control like all these third-party delivery guys can plug into that, and you have a... Yes. A real-time view where they are and you can track, like how many deliveries each of them performed over what period of time and where. Is it basically like a technology tool that allows you to manage the whole delivery essentially, right? Absolutely. It's exactly what you said. It's a technology platform which helps us to manage a fleet of 8,000 riders. Now also the driver on demand can tap into this platform. We get the visibility on a real-time basis of everybody who is active on that platform. Okay, gotcha. Gotcha. Thanks. We have one follow-up question from Cecil Corney at uncertain]. Please go ahead. Yeah, hi, Harsh, just a quick one for me. Given the variability in the revenue decline in Ramadan, if you were to normalize for that, what would that have done to top line and kind of what would you know, what is your expectation, what that would have had as an impact in terms of the operating leverage of the business? Again, we are not sharing the exact numbers in terms of Ramadan seasonality, but if you look at the decline over nine days has been around 45%. You can back calculate our daily revenue pre-Ramadan, and you can take 50% out of it. You can see what the impact has been if you compare. In terms of operating leverage, see the, again, the leverage gets impacted because of the fixed and the variable cost. We have not given exact numbers, but typically the flow through on the like sales is between 40%-45%, and that's what the impact happens. That should even out by end of Q2 because Ramadan would be normalized by then. Thank you. We have no further questions at this time, so I will hand the floor to Sonika. Thank you. Thank you again everyone for joining the call. In case you have any follow-on questions, please feel free to drop us an email on our email ID, which is investor.relations@americanarestaurants.com. Thank you.