Limited Q3 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dattaprasad Tambe, General Manager, Finance and Accounts. Thank you, and over to you, Mr. Tambe. Thanks, Neal. Thank you all for joining us on the Westlife Development Limited earnings conference call for the quarter ended December 31, 2021. We are joined here today by Mr. Amit Jatia, Vice Chairman, Ms. Smita Jatia, Director, and myself, Mr. Dattaprasad Tambe, General Manager, Finance and Accounts for Westlife Development Limited. Please note that our financial results and investor presentation has been mailed across, and these are available on our website as well. I hope you had the opportunity to browse through the highlights of the performance. We shall commence today's call with key thoughts from Amit, who will provide a strategic overview, which shall be followed by Smita to take you through the key business initiatives with overall operational progress and the strategic imperatives that lie ahead. I will cover the analysis of the financial performance. At the end of the management discussion, we will have a Q&A session. Before we start, I would like to remind you that some of the statements made or discussed on this call today may be forward-looking in nature and must be viewed in conjunction with the risks and uncertainties we face. A detailed statement and an explanation of these risks is available in this quarter's press release, investor presentation, and in our annual reports, which is available on our website. The company does not undertake to update these forward-looking statements publicly. With that said, I would now like to turn over the call to Amit to share his views. Thank you, and over to you, Amit. Thank you. Good evening, everyone. Firstly, I wish all of you a very happy and healthy 2022, and hope you and your loved ones are safe. 2021 was a special year for us for many reasons. To begin with, it marked a significant milestone for us at Westlife as we completed 25 years of operations in India. Looking back at the journey we have traversed, there is so much to be proud of. From a single store in Bangalore to over 310 stores in 44 cities, from pioneering large-scale lettuce farming to setting up various ecosystems from scratch that have taken lives of their own, from a 10-employee store to building a 10,000-strong family, from bringing a quintessential American brand to India, from making it to making it a household name. Our journey has been defined by leadership across menu, people, supply chain, and technology. Our growth has been consistent, sustainable, and a true testimony to our commitment to the market. We have also been very mindful about our impact on the environment and the community we have been part of. We have therefore woven sustainability in our business right from the start and are very proud of our ESG efforts that have resulted in positive impact in terms of reducing carbon footprint, skilling the youth, and generating employment. There have been many wins for us in these 25 years, but the one thing that we are most grateful for is all the love we have received from our customers, 300 million strong customers. We thought the best way to celebrate this milestone would be to do something to give back to the community. To mark our 25 years in India, we have announced 25 Acts of Happy. 25 big and small initiatives we hope will bring a smile to the faces of our customers and employees. Smita will be telling you more about these initiatives. Like I said, the year 2021 brought in many more reasons for us to celebrate. 2021 was the year we saw our strategies come to life. We believe that the last 20 months have been an inflection point for our business. What started off as an unprecedented crisis steadily turned into a springboard for our next phase of growth. Our concerted effort to build. Sorry to interrupt you. We're unable to hear you. Hello? Yeah. Mr. Jatia, Our concerted efforts to build an all-day-part menu, an omni-channel brand, and a strong value proposition made us the customers' favorite. Our technology investments to pivot McDonald's from a food to food tech brand started manifesting in the way our customers used our brand across several touchpoints, helping us own the convenience proposition. This complemented with our sharp focus on cost and operational efficiencies, a unique real estate portfolio, and best-in-class supply chain helped us accelerate business and set new benchmarks. We saw this play out strongly in quarter three FY 2022 as we delivered our best ever quarter so far, firing on all cylinders, notwithstanding the restrictions and volatilities. The convenience channels that we built over the last 20 months continued to grow stupendously. As we have hypothesized right at the beginning of the pandemic, the convenience channel continued to add incremental revenues led by new brand use cases, even as dine-in came back strongly. This is a true testimony to our omni-channel strategy, where customers being able to access us wherever and however. Menu innovation is our core strength, and this quarter we added the new gourmet burger collection to our menu. The customer feedback for these new indulgent range of burgers have been phenomenal. Last quarter, I shared how our new fried chicken platform was aiding the average unit volume growth in a big way. Now, with these new burgers, our AUV is set to accelerate further, boosting the overall profitability of our restaurants. I now hand over to Smita to take you through the earnings presentation. Thank you, Amit, and good evening, everyone. Happy New Year to you all, and hope you are all keeping safe. I am happy to share that quarter 3 FY 2022 was our best ever quarter with robust trends across all business parameters. As a stronger new normal set in for us, our revenues jumped by 46.7% Y on Y to INR 4,768 million, our highest ever in 25 years. Our SSG for the quarter stood at 44% Y on Y. This was driven by growth across both dine-in and convenience channel that grew by a solid 39% and 55% respectively. Our performance continued to accelerate through the quarter. We started by clocking an all-time revenue in October and then beat that in December, setting a new benchmark. This growth in revenue was complemented with continued cost efficiencies. Despite all inflationary pressures, we clocked a robust gross margin of 66.4%, an improvement of 48.3% Y on Y. Our strong top line ensured a robust 60.3% Y on Y jump in restaurant operating margins that stood at 22.6%, again, setting a new benchmark. We also reported an all-time high EBITDA of INR 836.2 million, a 61% increment Y on Y, taking our EBITDA margin to a new high again. As a result, our PAT zoomed to an all-time high, INR 208.2 million, a formidable jump over the same quarter last year. What is particularly interesting to note is that this growth came in a quarter that continued to see COVID-led restrictions, but our strategy pegged on a strong channel mix enabled us to activate different levers depending on what the external environment was. This helped us capitalize on the tailwinds for the organized eating out sector and grow our overall revenue pie, which we believe is the new baseline for us. Quarter 3 FY 2022 was a true manifestation of all our efforts in the last 20 months. Our vision to build a one for all for one brand with an omni-channel presence and relevant menu offerings for all day parts and segments truly came alive in this quarter. We saw a strong dine-in as malls and food courts recovered. This, however, did not result in any cannibalization for our convenience business, which continued to accelerate. Like you can see on slide number 11, our sales mix over the last few quarters has had a significant share on convenience-led revenue. Even in this quarter, where most dine-in restrictions were eased, 45% of our revenue came from our convenience channels. This is a testimony to our definite pivot to being a convenience-led brand with a stabilizing channel mix. As you know, we have been making con- We're sorry, we're unable to hear you. Ma'am, can you hear us? Hi, can you hear me? Yes, ma'am. Now we can hear you. Okay. As you know, we have been making concerted efforts to build and grow our meal daypart through our ADS and premium burger platform. I am happy to share that this quarter we saw a robust 50% jump in our meal daypart revenue. This led to a larger revenue pie on the back of new customers, new brand use cases, and growing AUV. Menu innovation, omni-channel strategy, and network expansion continue to be the key levers of our strategy. Our ADS are all-daypart proposition and enables us to own both the snacking as well as the meal proposition. Reinforcing our burger leadership this quarter, we launched our new gourmet collection, a range of premium items made with exotic ingredients and sauces. This helped us bring in new customers to the McDonald's fold and further strengthen our meal proposition. As a result, our burger meal volumes grew by over 50% as compared by June 2021, and we saw a good jump in our brand scores for great tasting burgers. As you know, chicken is emerging as a pivotal platform for us, giving us a strong foothold in the South market and helping us boost AUV in a big way. This quarter, we gave our chicken offering yet another fillip by launching the Rashmika Meal. As a part of the campaign, we not just tapped into superstar's popularity to build brand relevance, but also led some disruptive innovations to build long-term brand recall. As a result, our chicken scores jumped up by close to 4x. We also kept our McCafé platform buzzing with exciting new launches and marketing campaigns. Finally, as one of our 25 Acts of Happy, we gave our iconic Happy Meal a wholesome makeover by adding a mixed fruit beverage and a cup of hot, fresh corn to it. All these menu interventions together helped us increase our average unit per restaurant by a solid 30%, taking it close to INR 6 crore, which is 2-3 times of the industry average. I would like to highlight that this has come purely on the back of menu relevance without any significant CapEx investments, thus giving a boost to our second lever of our strategy. Our omnichannel strategy helped us complement our strong menu relevance by making the brand ubiquitous, accessible however, wherever, and whenever they like. We deployed a series of ATL and BTL initiatives to showcase these channels, including delivery, takeout, on-the-go, drive through, and of course dine-in. This created new brand use cases, helping us acquire new customers and increase frequency of the existing ones. Convenience continued to fire with McDelivery yet again clocking an all-time high revenue. At the same time, we saw a complete recovery of dine-in in the quarter as malls and multiplexes came back. While McDelivery app continued to enable our convenience proposition, our McDonald's app, a unique offer engine that gives customers personalized offers, played a key role in driving in-store volumes and frequencies. The app saw cumulative downloads of 1.3 million in the quarter. We also saw both active user base and average check for the McDonald's app increase significantly. With a stronger baseline, we are back on track with our expansion plans. This quarter we added 8 new stores, taking our restaurant count to 316 restaurants across 44 cities. Close to 80% of our restaurants have McCafé now, while 100 of them are Experience of the Future stores. We are now ready to accelerate our network, doubling our new store run rate from 25 to 30 a year to 40 to 50 stores a year. With an investment close to INR 800-1,000 crore in the next 3-5 years, we are looking at taking our store count to more than 500. Our expansion strategy will be completely aligned with our omnichannel strategy. We will have a robust portfolio of Experience of the Future stores, and stores with separate takeaway windows, enabling our customers to use our brand wherever, whenever, however they like. Inclusion and sustainability have been important pillars of our last 25 years. We have been very mindful about creating a positive impact on the environment and community. Last year, we launched EatQual packs that make the act of eating burgers easy for our people with limited upper limb mobility. This quarter, as one of our 25 Acts of Happy, we reinforced our commitment to inclusion through a refresh to the EatQual campaign. EatQual is an inclusive platform that we will continue to build. This unique packaging marks just the first step in the direction. We aim to launch a host of new meaningful innovations to make the McDonald's experience easy for everyone. I now hand it over to Dattaprasad Tambe, who will take you through the financial highlights of the quarter. Thank you, Smita. Good afternoon, everyone. Hope you all are doing well. I wish you a happy 2022. It's been a happy start for the year for us. As Smita said, we clocked all-time high sales of INR 4,768.3 million, a 46.7% jump from the same quarter last year. The same store sales growth has jumped to 44%. The top line results represent a continuation of our broad-based business momentum that is coming from both on-premise and off-premise consumption. We have seen robust business growth across all our channels, in-store, delivery, takeaway, and drive-throughs, thus reinforcing our faith in our omni-channel strategy. Let me give you some key highlights of Q3. We saw a record sale in each of the three months, October, November and December, resulting in highest ever revenue with high AUV of INR 6 crore. Our gross margin jumped by 48.2% despite inflationary pressures. This is because we continue to maximize our supply chain efficiency and rationalize the food cost. The strong revenue growth led to commensurate increment in both EBITDA and operating EBITDA that jumped by more than 60%. This is on the back of operating efficiencies in utilities and M&R. The flow-through of the top line growth also gave our margins a strong boost, and we clocked an all-time high PAT margin, operating EBITDA margin, and restaurant operating margins. As a result, our PAT increased manifold and created a new benchmark of INR 208.2 million for the quarter. We have complemented our revenue growth with continued cost leadership. We continue to target meaningful margin progress and are tracking towards our long-term margin objectives, demonstrating our ability to accelerate value creation regardless of the environment. We continue to maintain a strong balance sheet and a robust liquidity position by optimizing our treasury and working capital. Our relentless focus on internal improvement and driving synergies across our portfolio will enable us to extend our continued best-in-class record. Going forward, we are confident that our operating performance will continue to fuel growth in our already strong free cash flow profile. As a result, we are committed to our historical capital allocation priorities to invest in new restaurants, in existing restaurants and opportunity to grow the business. I now hand it over to Amit for his closing remarks. Thank you, Prasad. The short-term volatilities are here to stay, but we believe we have the right playbook to navigate these and stay relevant to our consumers. We are bullish on the future and press the gas pedal. We have a solid strategy pegged on menu innovation, digital and strategic store expansion. With gourmet burgers, the chicken platform and McCafé, we believe we have the right menu strategy to retain and acquire customers, increasing the baseline. We also have a pipeline of digital initiatives to drive personalization and enhance customer experience. Lastly, we've already started work on our expansion plans that we had announced in October 2021 as a part of our 25th anniversary. We have identified the opportunities to strengthen our presence and optimize our network. We have an aggressive expansion plan to increase our restaurant count to over 500 in the next 3-5 years, and already have a pipeline of close to 100 new restaurants that will fructify in the next 1-2 years. As we enter our 25th year, we are excited about the opportunities and the possibilities of our next phase of growth as McDonald's. Thank you very much and for Q&A. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Avi Mehta from Macquarie. Please go ahead. Hi, Amit. Hi, Smita. Thanks for this opportunity and congratulations on sales performance. I wanted to just understand first from a near-term lens, you know, have we seen any material impact from the third wave on operations and more importantly on the dine-in recovery and this ADS trend that, I mean, we are witnessing this quarter? If you could kind of give us, help us understand that part, that'd be helpful. Yes, Smita, over to you. Yeah. I mentioned that whether it's third wave or whatever the circumstances are externally, I think we've been true to an omni-channel presence, and we are able to kind of accelerate different channel mix depending upon what the external environment is. Obviously the third wave did see restrictions on dine-in again. The good news was we were able to accelerate what we could on our other channels, and that's why even in December when the last 15 days had restrictions, we were yet able to deliver a stellar quarter. Perfect. That's extremely clear. Just, you know, continuing on that, you know, we have now seen two quarters of, you know, almost close to double-digit EBITDA growth, whether you take, you know, in adjusted or Ind AS numbers or not. With the demand strength sustaining, would it be fair now to expect FY 2023 to see double-digit EBITDA margins? Or if you would kind of help us give a sense on what should we look for as we go into next year, given the demand side looks fairly back to normal. Thank you. Thank you, Avi. I mean, as you've seen, I think, we continuously pivot our business based on the situation. You know, if you look at a four-year trend, we've grown our EBITDA by 130 basis points every single year, if you leave out the COVID exception. I had talked about Vision 2023 effectively FY 2023, which is now sort of coming to close. We had talked about a 13% EBITDA pre-Ind AS. I think we will definitely, we are at that number, and we definitely see that and more in the future. Now, we will have an investor day where we will talk about our next vision, and as we boldly laid that out in 2016, we'll again boldly lay out our next 3- to 5-year vision in the next one. Yes, you can expect this EBITDA to remain as the baseline. Awesome. Last, just a bookkeeping. Could you share what CapEx number should we expect for FY 2023, given that, along with the 40-50 stores, there would be investments required in digital as well as supporting infrastructure. That's all from myself. Thank you. Sure. Firstly, you know, I think you might have noticed that we've consistently reinvested back in our existing restaurants, which is why, you know, whenever we open McCafé, we modernize the restaurant as well. The important thing that, you know, the industry, even in the industry, I think everybody will realize this over time, keeping a modern fleet is extremely important. Today, the relevance of our designs with our consumers is at the highest. We have 100 Experience of the Future restaurants and so on. All those investments are gonna continue. You know, essentially, you can expect about INR 200 crore of CapEx for the next year. Thanks a lot, Amit, and wish you good luck for the future. Thanks a lot again. Thank you. Participants can now press star and one to ask a question. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity, sir, and congratulations on the good set of numbers. My first question is with regards to, you know, earlier your presentation, I had seen one thing that, you know earlier there was a lot of focus on the value for money meals categories, but this time it already had been to see that, you know, the gourmet burgers or the chicken offerings have also taken place. Can you just highlight about how big the contribution from these two parts pieces and are there, that their contribution increase is led to the gross margin expansion also? It was not very clear, but whatever I could understand, I'll tell you. Firstly, in my opinion, it's not about, I think it's the evolution of a brand. In our journey, the first idea was to introduce burgers to consumers and make it relevant. That was the first phase of value recruiting more users into the informal eating out categories. What happens is, once it becomes baseline, then you got to launch indulgence, which is what we have done now. It does not mean that value is over. Yet at the same time, now consumers do expect indulgent products. You will see a balance across these parameters coming from us. Like particularly gourmet burgers have just been launched. Obviously there's a lot of runway left on the gourmet burgers. I think fried chicken is also just the beginning. It is just, you know, our first step towards leadership in the chicken area. Essentially we are gonna deal with that. Second part of the question on gross margin impact. As you have seen, you know, I always like to talk with facts. If you look at five years of our history, five years is a very good basis for anybody to make a judgment as to where the company is headed. Through thick and thin, we have our secret recipe of how we are able to manage our gross margins and components of that in the past. It's around product mix, it's about managing supply chain, backward linkages to the farms, long-term relationships and so on, so forth. You know, I hope that answers the question. Although it was not completely clear. Sure, Amit, that definitely it does. I mean, that was my point that, you know, giving the product mix, I would have improved this, we are developing these new products, that also would have benefited the margins along with the cost efficiencies. Yeah, you have answered this. My next question, you know, is with regards to the recovery in the dine-in. I mean, is the dine-in recovery back to the pre-COVID levels? I mean, we understand that, you know, many places there are still restrictions on the seating capacity to 50% odd. If you can shed some more light on how the dine-in recovery is and how it's panning out in the future as well. Yeah. So just before the wave three kind of hit us, pretty much our dine-in was close to around pre-COVID levels, around 90%-95%. That's what you have seen, that in the quarter, even dine-in has grown by 49%. So pretty much again, I will repeat that depending on external circumstances, we basically just see whichever channels we are able to accelerate. That is why we are very true to our omni-channel strategy. We have a very robust platform that irrespective of what happens in the future, we are able to get what we can from our customers. Sure. Just one last question from my end. You know, the slide number 11 that you showed, the mix of, you know, the delivery and the convenience mix, I would say has remained very consistent around 40-45% odd. So should we consider this as a base case now going ahead with, you know, dine-in now also getting recovered fully? Yeah, I think that is the new baseline. There is an evolution and as we said, new use cases which the customers have come with, whether it is using the on-the-go feature or whether it is ordering in delivery even on a weekend. We feel that this is going to continue as a baseline, where both dine-in and convenience channels will have a very respectable contribution. Okay. Thank you, ma'am. That's all for me. Thank you. The next question is from the line of Percy Panthaki from India Infoline. Please go ahead. Hi, team. My first question is on the margins. You mentioned that you would do a 13% kind of pre-Ind AS margins very soon. I just want to understand the implications of the royalty increase which could happen at 2-3 years down the line. I think it is slated to increase by approximately 300 basis points. Once that increase does take place, what kind of margins are we targeting on a pre-Ind AS basis? Yeah, I have maintained this before, and I've answered this many times. That, firstly, it's in 2026, okay? We have always maintained whatever vision we've set up is the absolute number that we're gonna deliver. We are not gonna lose the margin because royalty increase is there. Also, I have mentioned this in the past, that while currently the path of royalty is up to 2026, there is, you know, it's unlikely that it'll go from 5% - 8%. That part we will try and resolve and bring clarity over the next couple of years. We are not very worried. If we are able to deliver whatever we are talking about, both in terms of unit growth as well as the average unit volume, in any case, globally, we are able to absorb these royalties. That's what it is. Smita would like to add something. I mean, the only thing I would add is, by FY 2026, as you saw in this quarter, we are going to get, as what we had always said, operating leverage benefit. You know, you already saw the operating leverage benefit come with a INR 6 crore AUV. By 2026, this INR 6 crore AUV will also grow and giving us the operating leverage to cover up for whatever loss of royalty which could come up later. Understood. This 8% number, is that a standard number for McDonald's across other franchisees globally? Absolutely. Because I don't think I'm a bad negotiator. Right. Right, Right, sir. Secondly, just wanted to understand in terms of the normalization of dine-in, although yeah, Q3 was a very good quarter, but I'm sure there's still some more leeway for normalization. Do you think that basically there is some amount of channel mix change which has happened, which is permanent in nature, and therefore comparing the normalization% to a pre-COVID level is not necessarily right because that benchmark itself has changed as people have changed their habits, et cetera. Any thoughts on that? Yeah. I have shared this over many earnings calls. I'll explain what I mean. First, let's take the convenience channel sales today at INR 100, okay? I strongly believe. Let's say earlier the dine-in was INR 80, right? What I'm saying is that the 80 rupee is gonna come back to 80 for sure, and it's gonna further grow, but the 100 is not gonna drop. Therefore, in my opinion, percentages are irrelevant. Essentially, our sales will go up by 8%-10% with the new channel mix. You know, I had explained that earlier as well. I hope you are able to see it, 'cause it's finally rupee value that matters, right? Right. Understood. Lastly, just wanted to understand in terms of now that you're accelerating your store addition, two sub-questions to that. One is that the new stores, are they going to be of a different square footage versus your existing stores? The second sub-question to that is that with the new stores coming up, do you think that sort of to some extent depresses the sales per store on a total average basis because the new stores open up at a lower level? How do we look at same-store sales growth, which is a slightly different metric, versus just sales per average store? How do you look at same-store sales growth going ahead once this COVID-based issues, et cetera, are normalized? Okay. I have mentioned this in pretty much all our earnings calls. We do not believe that we are gonna reduce the size of our restaurants. We will continue to build the 2,700-3,000 sq ft restaurant. So far, it worked beautifully for us, even with all the new restaurants. I think that kind of answers your second question because, you know, I don't see my average unit volume dropping. That's not been factored into our plan, and by no standards are we sort of going in that direction. Lastly, on stabilization, as I have said this many, many times, 8%-10% same-store sales growth is kind of what we shoot for. That's pretty much on stabilized basis what we will gun for. Okay, sir. That's all from me. Thanks and all the best. Thank you. Participant, you may press star and one to ask a question. The next question is from the line of Vicky Punjabi from JM Financial. Please go ahead. Thanks for taking my question, sir. Just again on this delivery and dine-in kind of split now, you know, with McDonald's as a thought, is that given the McCafés which are you know better suited for a dine-in segment. The relaxation of restrictions that we saw in the last quarter, you know, which was almost a normalized quarter pre the COVID hit. You know, the thought process for me was that you would see a sharper growth in the dine-in segment. You know, when I look at the growth rates, I think delivery is still continued to outpace the dine-in segment in terms of growth. Could you help me understand you know what's the theme here? You know, were there certain factors that actually kind of impacted the dine-in segment in this quarter as well? Firstly, I kind of disagree with the hypothesis that McDonald's is a dine-in brand. I've mentioned this many, many times that we operate in a segment called QSR, and table stakes of QSR is around convenience, right? And convenience is all about about just taking things away. I mentioned this before that globally, even pre-pandemic, 70% of our business was off-premise. So you've got to understand that it's the segment we operate in. In India, the brand had been building, and therefore it is what it is. What has happened is through COVID, the pivot has been sharp, and the last quarter is a phenomenal example of how this omni-channel thing for McDonald's is a reality. To my mind, in store, you know, in store restrictions, by the way, even in the last quarter, pretty much half of October and the last 10 days of December, which are the most important days, we had tremendous restrictions in dine-in. Yet we were able to deliver an almost INR 500 crore quarter, which we've never done before. Imagine if the restrictions are not there. You know, our own expectation was higher than whatever numbers you see. We got impacted because of the things I just talked about. My belief is, we keep talking about why do we keep talking about average unit volume along with new store openings? Because it goes hand in hand. The first point is that if some other brand wants to open 80, we believe that our 40 restaurants are worth 80 because of the average unit volume we do. We are not saying that by opening the 40, the INR 6 crore should go down. We are in fact shooting for a much higher average unit volume over time, and that is also visible in the global McDonald's model, which is over a 70-year horizon. If you look at McDonald's global average unit volume, and you look at any of their competitors, is almost double across the world. I don't know if that answers your question, but by and large, that's what it is. I think Akshay won't, yeah, that's really what we feel. Sure. Thank you a lot for that, sir. Just on, conceptually, if the mix changes in favor of delivery and the revenue per store would have remained the same, just in a hypothetical example, would that have a negative implication on the EBITDA margin per se? No, because, you know, it's just we've been through it over the last 5, 6 quarters, and you look at our growth margins. Other than very heavily impacted quarters, like the first quarter of this year, where everything was shut, right, it was the beginning of second wave. You cannot compare that because everything goes topsy-turvy. But outside of which, even with delivery being 70% of sales, our margin profile has been pretty solid. Sure, sir. Just, you know, while we are here, I just wanted to understand, you know, previously we were talking about, you know, say SSGs relative to, pre-COVID levels or, you know, say our December 2019 quarter. You know, if I have to look at the overall, you know, unit SSG versus, say, instead of the base Q FY 2021, we look at versus 3Q FY 2020, what would that, I mean, what that figure could be? I didn't understand the question, actually. I mean, I just wanted to know, you know, the SSG versus, say 3Q FY 2020 levels, rather than 3Q FY 2021 levels if. Versus 20? Yes, yes. Just pre-pandemic. It's about 10%. Okay. Sir, just last- We believe in sharing SSG, you know, pretty transparently. Yes. Definitely, sir. Last thing, you know, in this quarter, I couldn't find the disclosure regarding the pre-Ind AS EBITDA margin. I don't know whether I have missed it or not. Could you help us understand what was the pre-Ind AS EBITDA margin for the quarter? Yeah. They're all better than whatever numbers you saw. It should have been there as an annexure. We will email that to you. I'll tell you the numbers. I mean, I know the absolute numbers. It's 13.5% EBITDA pre-Ind AS. Our profit, of course, in an absolute number goes to INR 27-28 crores, which is another 200 basis points more than whatever you see here, which to me is the more important number. Absolutely, sir. Frankly, crossing 13% EBITDA margin in a quarter that still had some impact of maybe, you know, we can't really consider being a complete normalized quarter. Does that mean the, you know, the vision for EBITDA margins kind of get reset for future? It always does. I mean, see, we had in 2016 when the market was quite bad, I think we had boldly laid out a vision that nobody kinda thought was deliverable. I think quarter-over-quarter, year-over-year, I feel we've done that, and that's the feedback we got from the community as well. We will come out with our new vision. It will be bold, it will be big, it will be audacious, but it will be sustainable and smart. In our opinion. I feel we've made bold calls, and even in real estate, while, you know, it seems that our number of store openings are what they are, but when we get there, it's a 25-year deal, it's a 20-year deal, it's a deal that is sustainable. You know, many, many examples of locations that were otherwise would not have come through to us. If you look at the international departure McDonald's that is there, everybody's talking about it. It's a beautiful store. Volumes are phenomenal. We actually are profitable. That's the kind of store we like. It took us time, but we are there. You know, that's sort of our philosophy, and you will see margin continuously rise from here on, and we will bring that out in our vision document, the 3- to 5-year vision document. Sure, sir. All the best for that and congrats for a very strong quarter. Thank you. Thank you. Thank you. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Kapil from Edelweiss. Please go ahead. Thank you for taking my question, and congratulations on a great set of numbers. Sir, in terms of revenue per store, we are at, we have touched around INR 6 crore per store. If we compare this to our closest burger competitor, it would be around INR 4 crore per store. Apart from the cafe segment, no, the number of mature stores also that would be contributing to a great extent. What would be the mature stores as on today, you know, as a percentage of sales as a percentage of total stores for us? Also like what would be average revenue per store for these mature stores? You see, I don't ever believe that stores mature because I'm not saying three years from now that these stores are not gonna come or give same store sales growth. Also, you know, last year we effectively did not open any stores. All the stores that we are talking about, so our growth of 47% is largely from existing stores, and all of them have been open, you know, I think 24 months or 20 months ago, because the pandemic has been around for that long. You know, we feel that this mix is giving you this average unit volume. You know, we feel that's quite positive. Okay. Sure. Sir, a couple of bookkeeping questions from my side. Like the McDelivery hubs, you know, have given a very good sales number this quarter. What would be the number of McDelivery hubs as on today, and what sales contribution would be from here? The total number of hubs would be, I'll tell you right now, about 280. 240. There are 240 delivery hubs. We don't share the breakup per hub, actually. Okay. Sure. Sir, one more thing, from the total number of stores, outlets that we see, it seems that you have closed 2 McDonald's stores this quarter because the last quarter, the number was around 310 stores. Now since you have opened 8, probably, you know, 2 stores must have been closed. Could you provide some color on it? No, these two stores were relocated, so they were not added as new stores. They've been relocated, not closed. Okay. Sure. Thank you. Thank you for answering all the questions. Thank you. Sure. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Kunal Sanghavi from HDFC Securities. Please go ahead. Hi, thanks for the opportunity. I just wanted one clarification on store openings. In last quarter, you had mentioned about doubling the store count over the next three to five years, let's say, which should translate roughly to 60-100 stores per year. In this quarter you are mentioning about 40-50 stores every year. Can you tell us, is this 40-50 only for FY 2023, and will this number increase going ahead to reach 500 stores by FY 2025, 2026, or how should we look at it? Sure. My philosophy around store opening, it's always over a 3-5-year horizon. We do not talk about quarters and years. What we are telling you are two things. We are telling you that we will do 200 stores more in the next 3-5 years, and we are saying next year we are gonna do 40. The rest is all math. Okay. Understood. Now the revised target is 200 over the next 3-5 years and not double, which was, let's say, 300 stores, for next 3-5 years. Yeah. Yeah, you can say that. I mean, like I said, we will come out with our vision, but very firmly, we are talking about 200 stores over the next 3-5 years with 40 openings next year. Okay. Understood. Thanks for answering this. Thank you. Thank you. Thank you very much. Ladies and gentlemen, you may press star and one to ask a question. Participants, you may press star and one to ask a question. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity again, sir. Sir, with regards to this chicken burger, now has it been introduced all throughout? I mean, earlier I think it was only the southern part of India. Now is it available all across your network? No, it's right now the fried chicken's only in South India as of now. Okay, okay. Sir, I think last time you mentioned around, you know, that approximately INR 50 lakhs of incremental contribution is expected from the fried chicken burger. So one clarification on this. Also, this incremental contribution would only be for the southern stores because it's introduced there. How has been the progress so far? Yeah. Right now it's only in South. It will of course come to West, but right now this incremental volume that we've talked about is for the store base in South. Sure. Sir, what has been the progress so far? Are we, In West India, of course, we've got the gourmet burgers, so that's what sort of given a fillip here as well. Sure. Sir, what has been the? I mean, so are we reaching near that INR 50 lakh contribution on an annual basis now in the southern stores or, I mean, how has been the progress there? I mean, we normally don't share details like that, but basically that's the number that we have reached, which is what we've said. Our ambition does not stop there. We do believe that as the consumer starts connecting bone-in chicken and fried chicken to our brand, we believe that over the next 2-3 years, this business is gonna grow quite exponentially. I mean, you can do your own channel checks, but the customer feedback around our product has been extremely positive, and that puts us, you know, on a good wicket, and we are quite bullish about this particular business. Okay. Sure. Thank you. Thank you. Thank you. Participants, you may press star and one to ask a question. The next question is from the line of Nihal Jham from Edelweiss. Please go ahead. Yes, sir. Thank you so much, and congratulations to the management. Just one question from my side on the store opening target. When we are looking at this target of 500 stores over the next few years, do we have internal plan of how many cities do we expect this to be in? Currently we've been in 43, and I think over the last couple of years that number has more or less stayed the same, but just wanted your perspective on that. Sure, sure. Our philosophy is around ensuring that we continue to gain market share in the cities we operate in because cities are changing very dramatically, and we don't like to lose our share there. Yet at the same time, in the next 3 to 5 years, we want to add at least 20-25 new cities as we kind of expand our network and we spread our roots into the interior of the country. Absolutely. That's helpful. The only related thought to that is that in one of the earlier questions you were asked about the store sizes. As, say, you go deeper and beyond the tier one or tier two cities, ideally smaller store formats would work, depending on the areas that those stores do. You are still sure that even as you go deeper into the remaining 25 cities you would keep the store format between 2,700-3,000 sq ft? In fact, our learning is, I mean, at the end of the day, we do operate in 43 cities, and they include the smallest cities down to the largest. Our experience is that in smaller cities family sizes are much larger, and the occasion for consuming is very concentrated. Therefore, we believe that we should have larger stores. In fact, in many of the smaller cities, originally, you know, we started with a smaller footprint, but we kept the space available. If you visit our Bharuch store now, I mean, we've doubled the size. Fortunately, we kept the real estate available to be able to do it when we needed to. It's a whole separate conversation around what are the implications of not doing that. We've seen that over our 25-year journey. Point taken, sir. On the gourmet burgers, is it currently only available in a certain number of stores? If that is the case, you could just share approximately what proportion of stores are we serving that in, and what is the plan of scaling that and also the fried chicken incrementally to, say, the entire network? We normally do everything through the entire network, and therefore gourmet burgers are across the network. In South India, what had happened is that time, COVID came in, otherwise our plan was to rapidly expand that. With the gourmet burgers coming in, you know, that's also. Yes, you will see it in West India. We are just working the details out, but eventually it will be across 100% of our restaurants. This is helpful, sir. Wish you all the best. Thank you so much. Thank you so much. Thank you. The next question is from the line of Chintan Gindran from Reliance Nippon Life Insurance. Please go ahead. Yeah. Thank you for taking the question. Sir, just on the growth margins front, I mean, I missed on that part of our commentary, like, what is the reason for such good margins we have put out in the current quarter? Well, I mean, that's our secret sauce. I was just saying earlier that over the last 5-7 years, we've been able to consistently grow our gross margin systematically, you know, while not really increasing prices too largely to, for, to the consumer. I think we've been able to understand the playbook around that quite well and, you know, it worked for us. It obviously started with a strong supply chain foundation, where right from day one we've been working directly with farmers and, you know, most of our relationships with our suppliers are 25 years old. We've not had to change suppliers at all, and we've worked with them, so a lot of efficiencies come there and 3-5 years. That's one part of it. The other part is really the secret recipe that we have by which we are able to manage this through product mix and other ideas. Sir, on the EBITDA front, I mean, on a broader assumption, would it be fair to assume that the delivery would be having maybe lower EBITDA margins because of the delivery cost attached to that with respect to aggregator or your own? Would that be a fair assumption to make? See, we don't see our business like that. As far as I'm concerned, we have to deliver a higher EBITDA, full stop. If something's gonna take away, how do you, what do you do to manage the other part of it? Okay. Gross margin is the same question. My point is that, you know, line items have to be managed. Something goes up, something goes down. Something is inevitable and it will go up, but something else will work to bring it down. In summary, we work on 100-200 basis of cost elimination every year out of the system. It's a continuous process. It never ends. The world keeps changing around us, giving us new opportunities to cut costs. That is how we sort of stayed where we are. I think that's how we will continue to manage. I'm not really getting into line items. Essentially our job, in my opinion, is to finally deliver an operating EBITDA and a PAT. That's the way I look at it. Sure. My last question was regarding to the fried chicken. I mean, you mentioned that, more or less we have reached that, maybe on annualized basis that INR 50 lakh kind of target, right? Would this be for most of the stores in South where we have that offering or is this comment with respect to the stores. All stores. Sorry. Sir, Smita, you wanna take that? I didn't get the question very clearly. My question was, you mentioned that, basically with respect to the fried chicken, we have kind of reached INR 50 lakh kind of incremental topline addition on an annualized basis. So would that be across stores in South where the product is available or a few specific stores? In fact, absolutely. I mean, there are many stores that do far greater. That's the sort of average across. I wouldn't take a few stores. That would be the wrong sort of number to share. But it is across the board, and it's getting stronger by the day. Sure. Thank you. Sure. Thank you. The next question is from the line of Vishal from Nirmal Bang. Please go ahead. Yeah. Thank you. Hi, team. Congratulations on a strong quarter. My question is on the overall industry, nothing specific to the quarter. There were talks in the last two years on many standalone players kind of struggling to operate, and also we're seeing closures during the last two years. With the markets now stabilizing, if you can share some thoughts on how things will pan out in terms of market share movement for the organized players, specifically for players like you who are present across dining as well as convenience channel. I'll tell Smita to take that. Hi. In COVID, there was a change in the IEO construct, you know, from mom-and-pop players. People started to go into chain and organized more because of safety and assurance and hygiene. This is something which I think is going to be here to stay and the organized sector is going to grow and it's going to become a much larger part of the informal eating out, which till now it wasn't. It was dominated by the unorganized sector. We can see this happening in India like it happened in the world. In that organized sector, I think definitely we are a very strong player, and especially our omni-channel presence will help to get better market share as we go quarter-on-quarter. Yeah. Right. Have you seen anything on ground in terms of in the last two quarters where operations are kind of normalizing? Have you seen those players coming back on ground? Any anecdotes that you can share or any examples? Difficult to give a complete, but yes, there are new players which keep on mushrooming, and I think everybody has learnt kind of from COVID to make a sustainable business model. I'm sure there will be single units which will come back and O&D was pretty normal for everyone. I think the players which are single players would have definitely seen a better O&D quarter. It's not going to take away from new players coming in. There will be new players which will come in. Agree. Okay. Thank you, and best of luck for future. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Amnish Aggarwal from Prabhudas Lilladher. Please go ahead. Hi, Amit. Congrats on strong set of numbers. I have a couple of questions. My first question is that you stated that even in Q3, there were some disruptions with regards to the occupancy in these stores, and particularly the last 15 days, once the third wave started setting in. Can you give us some idea of how the last 15 days of the quarter particularly panned out because you have big presence in, say, Mumbai, Pune, Bangalore, et cetera, where usually we have seen that any wave of COVID has been starting from these cities. How much and in what manner the sales got impacted during this quarter, particularly in the last 15 days? I wouldn't say completely sales got impacted. As I mentioned earlier on the call, we are now an omnichannel. When we saw dine-in getting restrictions and there were some curfews also which came in, what we were able to step up and accelerate was our delivery on the go. Yes, we did see a slight impact, but I don't think we saw an impact like what we saw either in wave one or wave two. I think this is now a way of doing business, the new normal. Even in the future, if there could be some restrictions, I think all brands are now poised to be able to accelerate with their own channel mix. That's what we did in the last 10 days, and that's the reason why we continue to have a great quarter. Okay, were we able to normally, you can say, conduct our delivery operations even during those restrictions or curfews, et cetera, in general? I mean, it was different city-wise. In Chennai, there was a Sunday curfew all day where obviously we were not able to open till a certain timing. Whereas in Mumbai, there was no curfew or restrictions, and therefore delivery was flying as per normal. It was city by city. There were no curfews in Maharashtra, only capacity was impacted, and therefore delivery was also functioning and dine-in was also functioning. Okay. Thanks for this update. Now, my second question is on the margins. If I can recall, earlier as our, you can say, thought process used to be that on a pre-Ind AS basis. In a steady state, we used to guide for our margins of say roughly 14-15% kind of a number. Now with 13.5% margin, which Amit said we have achieved in this quarter on a pre-Ind AS basis. Do you think that over the next 2-3 years, we can now have a margin which will be significantly better than what we used to guide earlier? I mean, see, it has to be, right? I mean, I just mentioned earlier that every year we've given 130 basis point consistently year-on-year on margin growth. In my opinion, any company that stops growing their earnings, I feel they shouldn't exist, right? That is the expectation of all stakeholders. Therefore, you know, that was a vision that we set for ourselves. I feel we've delivered on that vision because in 2013, 2014, 2015, you know, margins had dropped to almost 7%-8%. Over these last few years, we've at least sort of come to 13.5% of this quarter. Essentially, obviously, our next guidance will be to push it higher. We are not gonna accept that we will stay at 13.5 for the rest of our life. It is intended to go up. That there is no doubt. Okay, thanks a lot. Thank you. Thank you. The next question is from the line of Ashit Desai from Emkay Global Financial Services. Please go ahead. Yeah, thanks for the opportunity. Hi, Amit. Just a question on the store openings. We have seen a little bit of back and forth on the outlook for next three, four years store openings. Can you give the reasons for that, and what's your confidence level in achieving this 500 stores over the next three, four years? No, I don't think there's been any back and forth. We generally don't give out. We had in 2016 talked about the number of stores that we are gonna open by FY 2022, and after that, the only time we really talked about it was on our 25th anniversary. The intention is obviously to double the store base over a certain period of time. But what is a firm call is that we are gonna cross 500 stores, which means we are going to build another 200 stores over the next 3 to 5 years with a roughly 40+ openings for FY 2024, 2023. Next is FY 2023. That is really what you can take it as. It's 200 stores over the next 3-4 years. Correct. Okay. Is there an increase in CapEx per store? Because our CapEx number has remained the same at INR 800 crore-INR 1,000 crore. Is this for the additional 200 stores? 200 multiplied by, say, about 3 is about INR 600-700 crore right there. Then we do, as I mentioned in the call earlier, that not only are we gonna convert the rest of the stores to Experience of the Future, but we need to get McCafé to the other 20%. Plus we like to reimage. Reimaging is a continuous process because as stores age, if you don't go back and reinvest in them, you cannot long-term deliver, you know, good results, and also the brand takes a beating. You know, we stick by the numbers that we've just talked about. Got it. When you say 40 stores a year, that is the minimum that you would look at? No, I'm not saying 40 stores a year. I'll repeat it again so that everybody gets it. I said that 200 stores over the next 3-5 years and a definitive plan of 40 stores plus next year. That's all. I'm not talking of the year after because I don't give such numbers out. I've given you a 3-5-year horizon, and I've talked about the immediate year that's coming up. Okay. Okay, got it. Secondly, can you share what has been the recovery in the café segment? I mean, see, café, while McCafé is big for us, obviously with in-store, not fully there, it's a more in-store brand. It's obviously at that 80%-90%. It's not yet at 100%. You know, it's gonna pick up. You know, for us, we are a multipurpose all-day dining restaurant. Everything fortunately for us is a smaller component of a larger pie, and that is McDonald's globally. That is why we like to operate, say, in breakfast with beverages, which is McCafé, in chicken, in burgers, so that, you know, we are an all-day restaurant appealing to everybody. Overall, spe`cifically, it's 80%-90%. Okay. Actually request you if you can put the pre-Ind AS numbers on the exchange as well. Yes, we will put that up. We will update the earnings thing and add it as an annexure. That's it then. Thanks, and all the best. Thank you. Thank you very much. Now I hand the conference over to Amit for closing comments. No, thank you very much everybody for participating and taking the time to be with us today. We appreciate it. Have a lovely evening, and talk to you soon. Thank you very much. On behalf of Westlife Development Limited, that concludes this conference. Thank you for joining us. You may now disconnect the line. Thank you.