Ladies and gentlemen, good day and welcome to the Westlife Foodworld Limited Q1 FY23 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. We would like to remind you that certain statements made by the management in today's call may be forward-looking statements. These forward-looking statements reflect management's best judgment and analysis as of today. The actual results may differ materially from the current expectations based on a number of factors affecting the business. Please refer to the Safe Harbor disclosure in the earnings presentation. I now hand the conference over to Mr. Chintan Jajal. Thank you, and over to you, sir. Thanks, Michelle. Welcome, everyone, and thank you for joining us on the Westlife Foodworld earnings conference call for the Q1 ended 30 June 2022. I am Chintan Jadal, Lead Investor Relations at Westlife Foodworld. From the management team, I have with me Mr. Amit Jatia, Vice Chairman, Ms. Smita Jatia, Managing Director, Mr. Saurabh Kalra, Chief Operating Officer, Mr. Akshay Jatia, Executive Director, and Mr. Dattap rasad Tambe, General Manager, Finance and Accounts. We shall commence today's call with overall operational progress highlights by Smita, followed by financial review by Datta Prasad and strategic outlook by Amit. We will be referring to the earnings presentation and financial releases which are available on the stock exchange as well as investors page of our website. With that, I now turn the call over to Smita. Thank you, and over to you, Smita. Thank you, Chintan. A very good afternoon, everyone. I hope you and your families are all keeping safe. Today is a moment of great happiness, and I am proud to share that for the third time in a row, we have outperformed ourselves to post remarkable results. Our strong performance in the Q1, irrespective of macroeconomic and inflationary challenges, was underpinned by highest ever quarterly sales and operating profit, reflecting broad-based momentum across all segments. Our revenues for this quarter are up by 108% year-on-year and 18% sequentially. The same-store sales growth for the quarter stands at 97% year-on-year. We have delivered a strong INR 5.38 billion revenue and recorded a cash PAT of over INR 551 million. It was heartening that we continued to see healthy growth across West and South markets with the average annualized sales per store, not just remaining over INR 60 million, but hitting a new milestone of INR 67 million, supported by our recently opened restaurants, which are performing at par with the system average. Our growth in both dine-in and convenience channels has been continually setting a new baseline for the business. While dine-in grew over pre-COVID levels, convenience platform business has more than doubled, underlining the success of our omni-channel strategy. Despite strong inflationary pressures, we have recorded highest ever quarterly profits. Impact on gross margin was partially mitigated by pricing actions. Our operating net EBITDA stood at 17.1% for the quarter, led by favorable operating leverage, cost optimization initiatives, and improved productivity. We sustained QSR traffic share gains in most of our markets by focusing on elevating our brand, accelerating digital channels, and showcasing our core equities of burgers and chicken. Owing to our multi-channel, multi-daypart strategy, we were able to serve our customers wherever they are, whenever they want it, and however they want it, further cementing our market leadership position in West and inching towards leadership in South. We consistently find new ways to reach our customers where they are and make their experience more seamless and personalized. Our omni-channel strategy has given us better business predictability. In the Q1, digital channels, which include our mobile app, self-ordering kiosk, and delivery, made up more than 55% of system-wide sales. Building on our strength, we have renewed focus on expansion and offered a differentiated experience through re-imaging our stores, creating Experience of the Future. While the re-imaging dramatically improves the customer experience, we have also seen a tangible benefit of over 30% return on incremental invested capital. This quarter, we have opened five new restaurants. With this, we have a total of 331 restaurants, 267 McCafés, 65 drive-throughs, and 132 restaurants across 48 cities. We are proud to launch the gold standard drive-through with an all-women crew near the Statue of Unity in Gujarat, which further strengthen our inclusivity agenda. Furthermore, I am happy to see that tier two cities have grown twice the pace of metros compared to pre-COVID levels. While we were a bit shy of our intended new store opening target, 12 new stores are currently breaking ground. With that, I believe we should have around 17 to 19 stores in the H1 and on track to add 35 to 40 new restaurants in FY 2023. We have been making concerted efforts to build and strengthen our brand trust and business through menu innovation, business initiatives like Real Food, Good Food campaigns, McDonald's in every celebration, amongst others. Lastly, at Westlife, we have no stone unturned to create a great place to work for over 10,000-people-strong family. I am elated to share that we were awarded the prestigious Great Place to Work Laureate Award as one of the top three companies for being in the top 100 list for 10 consecutive years. I now hand it over to Dattaprasad Tambe, who will take you through the financial highlights of the quarter. Thanks, Smita. Good afternoon, everyone. We started FY 2023 on a strong note. Our revenue for the quarter was up by 108% year-on-year and 18% quarter-on-quarter to INR 5.38 billion, with the same-store sales growth of 97% year-on-year. Dining channels grew by 418% year-on-year and 14% over pre-COVID base of Q1 FY 2020. Convenience channels grew by 13% year-on-year and 112% over pre-COVID base. Despite significant inflationary pressures in food and paper, impact on gross margin was limited to about 70 basis points, sequentially mitigated by price hike and improving product mix. We have taken a blended price hike of around 5% during the latter half of the quarter, and hence the complete flow-through will happen in Q2. Restaurant operating margins stood at 21.6%, which is 4.5x last year and 68% jump from Q1 FY 2020. Operating EBITDA was 18x last year and grew 82% on Q1 FY 2020. On a sequential basis, EBITDA grew by a strong 26%. EBITDA margin improved to 17.1% versus 16% last quarter, that is Q4, and 2% in Q1 FY 2022, led by better operating leverage flow-through across various line items and optimized cost structure. On an absolute basis, our EBITDA stood at INR 921 million, and our cash PAT stood at INR 551 million, which are the best ever profit numbers we have recorded. I would like to highlight few one-offs and provide some clarification, which may help make better sense of our numbers and operating performance. Firstly, we have recorded a one-off cost of around INR 27 million pertaining to ESOP charge as seen in the financial results. Please refer note 1 in our financial results for further details. Second, please note that our cash PAT margin on a sequential basis is lower by 140 basis points, largely on account of current tax impact in Q1 FY 2023. We were accounting for deferred taxes in prior periods due to carried forward accumulated losses. However, from Q1 2021, we paid tax at normal tax rate. As our business enters a new phase of consistent profitability, profitable growth, we will be paying tax at a normal tax rate of about 25.2% year-on. On a comparable basis, excluding the current tax, the cash PAT margin would be sequentially higher to about 11.8%. Third, our royalty rate for FY 2023 will be at 4%. FY 2024 it will be 4.5%. FY 2025 and FY 2026 will be at 5%. We are in active discussion with McDonald's Corporation for rate from FY 2027 onwards. Our initial sense is that the increase will be progressive in nature over the years from FY 2027 onwards. We have mentioned the current royalty rates on our investor page on our website www.westlifefoodworld.com. Lastly, as many of you have noticed that our EBITDA margins that we report in our operating performance sheet and earnings presentation is slightly different from what one would compute from SEBI format financial results. If you take an example of Q4 FY 2022, the EBITDA margin that we reported in our operating performance sheet and earnings presentation was 16%. While if we use the formula of sales minus COGS, staff cost, and other expenses from SEBI format financial results, the EBITDA margin would come to around 13.8%. There are two broad elements at play here. One is a mark-to-market gain reversal of earlier quarters in Q4. In Q4 FY 2022, we sold around INR 700 million worth of our investments, and the cash was largely used to square off our debts. As per Ind AS, when we sell investments, the MTM gains which are recorded in the previous periods have to be reversed, and the reversal is recorded as net loss on fair value changes, which is grouped in other expenses. Simultaneously, the entire profit on sale of investment gets recorded in other income. However, since the other income is excluded in EBITDA calculation, the other expenses gets included in EBITDA. It has a negative impact on EBITDA margin. At a PAT level, it would have no impact. Please note that this is a notional accounting entry with no impact on business or cash flow. Hence, to provide more clarity, we have shown it as a separate line item in our financial results, requesting you to take a note of that. The second element is a provisional asset write-off. When we reimage or modernize our stores, we take a provision for book value of furniture and fixtures, which is clubbed in other expenses in SEBI format financial results. This again is a provisional entry pertaining to CapEx with no cash flow impact. Ideally, if we don't reimage or modernize the stores, this amount would flow below EBITDA in depreciation. In our EBITDA margin computation, we exclude these two elements as well as the other income, as we believe it gives us a true and fair picture of our underlying business performance. Accordingly, we are pleased to see a new operating profitability baseline being created for our business with both December as well as June quarter posting over 17% EBITDA margin. These adjustments are visible as separate line items in our SEBI format financial results. We hope these clarifications will help you with your own analysis. With that, I now hand over the call to Amit. Over to you, Amit. Good afternoon, everybody. Thank you, Dataprasad. Thank you, Smita, and a big thank you to each one of you for joining the call today. Hope you are keeping well. You just heard us report highest ever quarterly sales and operating profit, highest quarterly sales in the McDelivery app, the highest ever monthly sale in dine-in. We achieved a crucial milestone by crossing INR 5 billion sales this quarter. We are consistently outperforming our benchmarks every quarter. With the quarter one FY 2023 numbers, I am proud to share that Westlife Development is witnessing the wave of the next wave of growth. Beginning of the next wave of growth. With robust and consistent results for three consecutive periods despite external challenges, it demonstrates that we have built a resilient business that has delivered results and is set up for the long term. What makes Westlife unique is the strength of our people, the scale of our supply chain, the quality of our real estate portfolio, the agility of our systems, the power of the McDonald's brand, and moreover, consistency in our strategic approach. We have believed in our core, stood firm, walked the talk, and execution is now paying off. Our agility to identify industry shifts early on has helped us deliver a differentiated experience. Be it our Experience of the Future stores, our world-class drive-thrus, our digital platforms, every engine is geared to make the consumer experience seamless and feel good. To summarize, I would like to say that while I'm proud of our progress, we are constantly challenging ourselves to invest in the future. We are on track with our expansion plans of opening over 200 stores in the next 3 to 4 years. We expect this will be a year of continued progress. Focusing on our foundation of operations excellence, expanding our growing digital advantages, and continuing to put the health and safety of our customers and crew first will remain critical. We will tackle any challenges with agility and a strong focus on execution. With a redefined cost structure, increased productivity, strong average unit volumes, and healthy restaurant cash flows, we are well positioned to deliver accelerated business results and create long-term value for shareholders. With that, let's open the floor for questions and answers. 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 phone. An operator will take your name and announce your turn in the question queue. Participants are requested to use the handset only while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Percy Panthaki from IIFL Securities Limited. Please go ahead. Hi, sir. Congrats on a good set of numbers. My first question is on the dine-in business. If I look at the dine-in ADS, only the dine-in ADS, on a sequential basis, Q4 versus Q1, there is a growth of around 30%, and it wasn't as if Q4 was terribly depressed. There was an Omicron impact, but it was the least intensive of the three waves. Apart from a couple of weeks, people were up and about their business. Just wanted to understand that in one quarter, what has changed so much that the dine-in ADS has gone up by 30% in just one quarter period. Any insights on that would be helpful, sir. Sure. Thank you, Percy. See, as you've noticed about Westlife, for us it's all about consistency and sustainability. Therefore, to some extent, these are building blocks. I mean, this is sort of the Q3 post-COVID where the results have been good. If you look at pre-COVID, probably for almost, I would say 16 quarters, we were positive sales growth, sales growth growing our average unit volume, year on year, quarter on quarter. Obviously, things like this don't happen because of tactics. Things like this happen because of strategy. Again, if you know, hear our calls or read our commentaries, it's all consistently built around three or four themes. First thing, of course, there is a structural shift in QSR and in informal eating out, where I have mentioned this before, that restaurant fast food is taking larger share within the informal eating out itself. The second big thing that is happening is that within restaurant fast food, brands that have a high trust score and that talk about safety, hygiene, contactless, and I think we've done a number of campaigns around that they are seeing a slightly bigger benefit than maybe some others. Thirdly, you know, there are a number of strategic elements that we've consistently been following. You know, earlier it was about, say, McCafé only, and then it was about, say, Experience of the Future and so on. But while these continue to grow, we've added a few new building blocks to it. For example, if you look at our slide number 9, we've given a lot more context around menu relevance and its impact around consumer occasions and day parts. We have very transparently talked about going after the meal occasion, and the linkage to that is the launch of our chicken fried chicken in South India and the gourmet burgers. Clearly that has started reflecting back in our sales. It's a combination of all of this. Last point I wanna make is around McCafé, that we had mentioned this in our previous calls as well, that McCafé has been impacted because it's got a tremendous experiential consumption pattern as well. As in-store came back, McCafé sales have bounced back pretty well as well. This is the combination of the reason why our in-dining is doing quite well. Got you, sir. Got you. I completely understand and fully appreciate the good sort of initiatives that you have continuously undertaken over the last several quarters. My question was more in the sense that, see, all these initiatives that you spoke about were present in Q4 as well. Just in a one quarter period, what has really changed for the dine-in ADS to go up so sharply? Does it mean that in Q4 the Omicron impact was actually so much more huger than what we understand? Yeah. Akshay wants to answer that. Yeah. Hey, Percy. You know, as we've discussed, obviously, yes, there was an impact of Omicron in January, where dine-in was partially open. There were restrictions, there was a capacity constraint. A lot of states were going in and out of lockdown. We don't know exactly what, you know, the overall impact could have been, but there was an impact on overall quarter delivery, which is evident as we ramped up in, you know, February and March. However, if you see our performance this quarter, it's largely firstly the Q1 of the year, you know, with summer holidays, with festive periods to an extent, is pretty good. Secondly, obviously it's the first normal period post-COVID, where customers are going out again. Dine-in has come back. Not that we don't expect to continue to see this momentum because like we just discussed right before this, there's a fundamental shift that's happened for the category as well as for brands like ours, where customers are a lot more familiar, they're a lot more used to eating out at a McDonald's, and it's something that they now look for consistently. We've seen that growth both in frequency as well as, you know, average ticket size when families are coming back to our restaurants. Most recently we've just put out some, you know, communications in our advertisements, centered around our new campaign revolving around families. Okay. Got it. My second question is on margins, and I'll break it up into two parts. One is on the gross margin front. There's a price increase which you took, but it wasn't effective for the full quarter. What I wanted to understand is that now that it is sort of there for the full quarter Q2 onwards, what kind of gross margin delta can we attribute in future to this timing effect? That's the first part of the question. The second part of the question is that if I look at your other expenses, occupancy and other expenses line, that is up quite sharply at 54% YOY. That was, I mean, while the overall sales, et cetera, was clearly much, much above consensus and our expectation, I think this one-line item is also a little bit above our estimates. If not for that, the margins would have been even higher. Can you just throw some light on why this line item is slightly on the higher side? Yeah, that's all from me. Yeah. When you compare. First, I'll take the second question. When you compare year-over-year, I feel it's not really comparable, and that's why we kept giving sequential data as well. Because at that time, you see, we have a number of real estate sites that are percentage based. If you look at our sales at INR 200-some crores versus INR 538 crores, that is one element of the cost increase. The other thing is, you see, I have said this long time ago, maybe it's a good time to revisit that typically, you know, our advertising in a year is about 5% for the whole year, 5 to 5.2%, and in different quarters it varies. So therefore, the booking is done based on that as well. So it's a resultant of that. I don't see anything really out of line there. Coming to the second, your first question around the pricing effect and all of that. Basically, I mean, I don't like to give specific because things keep changing, but there are two things that are happening. One is inflation. I'm at least beginning to read and see it's kind of flattening out and I'm seeing prices come down. I feel in the coming quarters, you know, it'll be good, and it'll reflect back. Our immediate objective with this price increase is to kind a get back the gross margin that we've had in the previous quarters. We are hoping that from next quarter onwards, the full effect of this will take us back to the previous quarters of gross margin. Okay. That's all from me, sir. Thanks, and all the best. Thank you, Percy Panthaki. Thank you. The next question is from the line of Vishal Gutka from PhillipCapital. Please go ahead. Team, congratulations on excellent set of numbers. I have a few questions. Just wanted to understand the presentation. You stated that you are on the verge of becoming the market leader in South India. I just wanted to know who is bigger than us in the burger segment. I thought that we are one of the largest player in the burger segment in South India as well. Sure. We don't look at market share from a burger point of view. Burger, we are by far the leaders across the whole country. We look at leadership in what we call informal eating out. In informal eating out, one of the big factors is, of course, chicken. Our recent launch, which is now sort of over 12 months, is resonating extremely well in our average unit volumes there, as I've said in our calls earlier, has risen per restaurant per year by INR 50 to 75 lakhs, INR 5 to 7.5 million per year. Therefore, we think that it is still gonna continue to grow. We believe that the consumer, in their mind, have to still connect, and I feel that is an opportunity. They have to still connect brand McDonald's with a chicken, fried chicken sort of, a menu item. I feel that is where the opportunity lies to take it to the next level. I'll just add a little bit flavor to this. In the South, we saw that the eating out was dominated by bone-in chicken and chicken, and hence we took this insight, and that is where we are playing with, along with our burger leadership. Together, we are confident that with burger and chicken as strong portfolios, we will be able to get even higher leadership in the South market. Got it. Thank you. Second question on region, you stated that tier-2 cities have grown faster than metro. My understanding is maybe because in those markets dine-in share would be higher. That is one, that could be one of the specific reason that tier-2 cities have grown faster than metro. Any other reason apart from that, you are seeing on the ground, why the cities have done better than metro cities? Again, I will go back to what Amit mentioned. You know, there's been a whole shift in the IEO structure where organized players after COVID are getting better share of the wallet because of food safety, hygiene, contactless. This shift is not something which was momentarily. We are seeing that it is definitely staying on. Secondly, again, convenience as a habit has got built in small towns which was predominantly first dine-in. Because of both these factors, there is a new baseline, and as I mentioned in my commentary also, new small towns and new cities are now coming at system average and not becoming a lag for the first one year. Okay. Just last question on McCafé. As the sales recover to pre-COVID levels now because this was the Q1 where we saw the stores in operation fully for McCafé sales. Any comments on McCafé would be really helpful. Sure. No, it has recovered to pre-COVID levels. As I've said, always said before, that we have two big opportunities. One is, of course, to put it across our portfolio of 330 restaurants. So there's an opportunity of 89-90 new McCafés right there, which we are of course doing. On the other side, the average sales per McCafé, per restaurant, per annum, we believe that over time it's gonna double again. So there's tremendous opportunity on this beverage category there. Okay. Thank you so much, and all the best for the future endeavors. Thank you. Thank you, Vishal. Thank you. The next question is from the line of Avi Mehta from Macquarie Capital. Please go ahead. Hi, Amit. Am I audible? Yes. Yes, Avi. Very well. Amit, congratulations on this performance. Really good to see these numbers. Thank you. Just wanted to kind of pick your thoughts on, you know, the AOVs. You know, for the last few months now, we are essentially stabilizing at an annual run rate of close to about INR 6 crores. I cannot see any reason why this should moderate down given your initiatives. If you could give me a sense on what could be potential risks which could drive this down, or how should I look at that? Sure. Avi, I mean, again, we've been, you know, you've been on our calls regularly. I've seen that. You will see the consistency in conversation. If you look at global McDonald's, firstly, we've given a lot of sort of insights into our thinking across our investor days, and particularly more in the earnings deck. Again, slide nine represents a lot more than what is sort of evident to everybody. If you recollect, you know, I've been always saying that the real game for McDonald's in India is yet to play out. Firstly, let's take coffee alone, and I just talked about how we can double it in the restaurant and double the average unit volume. Again, if you look at meals, we haven't touched the tip of the iceberg. We were leaders in snacking, and we are starting to now move towards leadership in meals. As you can see from that slide, meals is a much larger segment, and a much larger occasion for the consumer than snacking. As we grow that, all of this leads towards AUV growth. In the past, I had given specific ways of how we would get from INR 5 crores to INR 6 crores, INR 6.5 crores, and that was around McCafé, it was around menu, and it was around delivery, right? All of these three things have played out. Now we've added a new dimension while these are still playing out, and I believe this is what will take us from the INR 6.7 crores to the INR 7 crores, INR 7.5 crores. We feel the game's not over. Globally, McDonald's plays across all these segments, and average unit volume is $2.6 million, pretty much the highest in the category. Even if you look at Asia pretty much stays in the $2 million category. When I compare countries similar to Indian per capita, they are at least over INR 10 crore plus. We have a whole bunch of stores that are in that category as well. Aspirationally, we don't think that it is gonna slow down. I've given you some context to how it's gonna move, and Smita just wants to add something. Yeah. Just to put it very simplistically, Avi, basically all our growth in AUV has come from strategic platforms. It's not on the back of any discounting or one-time promotion. Therefore, we are confident that all our strategic platforms, which Amit just mentioned, will continue to play out both on delivery and dine-in. If I kind of summarize or, you know, kind of, if what I understand is logically this 6.7 should rationally move to 7-7.5 as these initiatives kind of gain pace. That's the right way to look at it and you know, how AUVs kind of flow through to margin. That would be the right, at least the expectation going forward. Would that be a fair thing? Absolutely. I mean, yeah. Absolutely. I've been saying this too, that at least at Westlife we have two jobs to do. One is of course completely increase penetration because there's a huge opportunity there. We also have been talking consistently about growing our average unit volume. Because I'll give you one example. I mean, you know, some time ago our average unit volume was INR 5.5 crores. Today it is INR 6.7 crores. When you take INR 1.2 crores and multiply that by 331 stores, you can see the impact of that is INR 400 crores in incremental sales without putting any more CapEx, while new stores will keep coming, and they capture a different set of elements of unpenetrated markets. We believe that this double benefit is what's gonna take our margins to our aspirations, which are, you know, much higher than Yeah. than where we are. The only one small caveat I would like to put in there is that we are going to now accelerate on new store openings. That will keep our AUV in the range of $6.5 to 7. However, if you look at our comparable stores, definitely we are going to be giving our comp sales, which is something which we've always been focused at. Smita, if I may, you know, just differ on that. Logically, right now, if you're at 6.7%, your existing stores would be much higher. That's why I was actually nodding towards what Amit is saying. I take your point. I get what the factor is. Just Amit, you know, continuing with your approach, just on the margin front, you've always indicated that mid-teens aspiration, but you know, that was under an earlier system of reporting. Would it be possible for you to give us what the reported margin expectation is that we can kind of look at, say, a few years down the line, you know, if you could share a guidance for more on the reported basis? Sure, sure. I mean, we will come out with a vision document, but I can use past as an example for the future. I think we've been improving roughly about 130 basis points every year, pre-COVID. Again, you know, as we are coming out of COVID, we've been able to do that. I'm hoping that, yes, about 100 basis points a year for the next 3 years is really what we are pushing towards. Definitely wanna go from, now the high teens under Ind AS to sort of the twenties. That's where our ambition lies. Okay. If I hear you correctly, you'll be sharing an updated guidance in the vision document soon. Is that- Yes. Sorry, did I hear that correctly? Yes. Okay, perfect. I'll wait for that then. Thank you very much. Thanks a lot. Again, wish you luck. Thank you, Avi. Thank you. Thank you. The next question is from the line of Kapil Jagasia from Edelweiss Financial Services. Please go ahead. Congratulations on great set of numbers, sir. Sir, my first question is, like earlier you used to follow this cluster policy of opening the stores in major metros. Around 70% of stores in major metros and 30% in the smaller towns. Now with this intensifying competition, have you changed your strategy there or, you know, it could continue to remain a breakup of or a mix of 70/30 going forward? Okay. You know, our strategy around store openings has nothing to do with competition. It has to do with unpenetrated consumer areas that we should be focusing on. For example, in Mumbai today we are by far leaders and Mumbai is a consumption market. We have over 100 restaurants here and at least in sort of our immediate competitor base, you know, we have a huge margin in cities like Mumbai, Pune, Ahmedabad, our six core cities. Including some of the cities like Surat, Baroda, et cetera. We don't want to lose our leadership there. You will continue to see openings in that area as well. Meanwhile, we are gonna now accelerate. We are only in 48 cities, and I see that as a positive rather than as a negative. Our strategy has been focused inside out. It has been clustered and so on. As more and more clusters have opened, it has now given us the ability to go into small towns as well. That's how the openings have moved from 25, 30 to 35, 40, which will now go towards the 50, 60s if we want to deliver our 200 stores over 3 or 4 years. We will not reduce the number. Percentages keep changing. We will not reduce the number of openings in our core markets, but we will add a lot more openings in our smaller cities as well, and therefore it'll become a 60/40 kind a ratio. Okay. Thank you for that. Sir, as this normalcy has now resumed in the restaurant space, what can be the like, same-store sales growth for next two years or three years for us, like average ballpark number? See, I've always maintained that, you know, a good number, which is I feel quite aggressive because remember, same-store sales is compounding. Now, you know, if you are at INR 5 crore average unit volume and you grow 10%, that's INR 50 lakh. When you are at INR 67.67 crore and grow 10%, that's sixty-seven lakhs. Rupee is what the consumer spends, not percentages. We are saying aspirationally we can stay above 8% same-store sales growth. I feel that sustainably that's a good number to go by. Okay. Thank you for answering that. Pramesh with you, sir. Thank you. Thank you. The next question is from the line of Nihal Mahesh Jham from Edelweiss Financial Services. Please go ahead. Yes, thank you so much, and congratulations on the strong performance. Three questions from my side. The first one was that while we're given an SSSG number, I was just interested in understanding that if you compare the same base of stores to the pre-COVID Q1, what would be the improvement over that for the stores that are currently there? No, our same-store sales growth. Pre-COVID. Oh, pre-COVID. Yes. Saurabh, you wanna answer that? If we take it versus pre-COVID, and I also take Q1 FY20 as a proxy, we would be around 30% more same-store sales than that number. 30% on absolute level versus Q1 FY20. Yeah. Perfect. That's helpful. Pardon me. Is this audible? No. Ma'am, I'll come back in with you. Sorry. Okay, thank you. 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 strong set of numbers. My first question is with regards to a comment in your PT that you have given that even the new stores are now performing at the same par with the system average. If you can throw more light on it, you know, what is leading to this and how sustainable is this going ahead? Okay, sure. I mean, see, obviously the brand keeps getting built and what happens is if I use a simpler example to make my point, you take Mumbai. Today, we've been in Mumbai for 25 years and therefore our presence and availability is there. Yet, let's say there's an under-penetrated area. Let's take, say, a suburb, Vasai. Right now, when we open there is familiarity with the brand. People have consumed McDonald's somewhere or the other in the city regularly. Therefore, when we are opening there, we are seeing, you know, the average volume starting off quite well to start with. Similarly, in small towns we are seeing, you know, that the numbers are starting off pretty strong, much different than what it was earlier. These, this is what we are observing and hence the comment. Sure, sure. That's very heartening to know. Sir, my second question, you know, is with regards to the sustenance of the strong sustenance in the convenience channel. If you see, it's almost, you know, now 2x versus the pre-COVID levels and even grown at a strong base of 30% or 13% or so. You know, where do you expect this to stabilize in a normalized environment? You know, once things stabilize, what percentage contribution do you expect going ahead from this? I think what you are seeing today is where it's gonna be. If you recollect, I mean, again, I feel that we've been very consistent in our comments. I had always maintained, I mean, at that time everybody was asking me, "Why are stores not smaller?" This, that. I would say that dine-in is gonna come back to 100%. People are not gonna just keep ordering. They need a change. There is a reason why people eat out, right? That is, sometimes to celebrate. It is about refueling on the go and things like that. We believe that that is here to stay and therefore we believe, however, convenience is also here to stay. We are continuing to aggressively build drive-throughs, our on-the-go is working, you know, takeaway is working, delivery. I think 58, 60% and 40% is a good number. Globally, of course, our convenience channels are almost 70%. I feel over a 5-10-year horizon, that's where we are gonna move. For now, I feel 60/40 might be where we will be. Sure, sir. Just follow up to this is that, you know, now with the new contribution structure, say 60/40, that, you know, we're expecting ahead, how does this helps in our margin profile and, how incrementally does it contribute to our margin profile? See margin, as I mentioned to you, as we keep growing average unit volume, the margin flow-through will come. I think between delivery and in-store and all now, there is not much of a difference. Now, I have always maintained, you know, on every call, over the last five years that if business is happening from where you have to make your unit economics work there. Yeah, we have to go where the consumer is. We can't have the consumer coming to our business model. Now between delivery and in-store, there are pros and cons to each. Both business models for all of us are working well. We look at as long as average unit volume keeps rising and we keep cost in control, both I feel we are pretty strong in both these areas, you will see margin flow-through come in. I feel now we have history, right? I mean, even in the really difficult period of 2014, 2015, 2016, 2017, every year, we were improving our EBITDA by 130 basis points. For us, it's about sustainability, consistency and strategy, not tactical. You will see that flow-through come, irrespective. Sure, sir. That's very helpful. Just one last bit on the comment earlier made in terms of the mark-to-market gain. Actually, I just missed that bit of the one-off. If you can just repeat that, it'll be really helpful and how it changes. Yeah. The other income line item for us. Sure, sure. DP, can you please take that? Hi. Basically, what has happened is in Q4 FY 2022, when we sold off around INR 700 million of our investment, as per the accounting standard, the mark-to-market gains, which were recorded in the previous period, had to be reversed. Now, when the reversal happened, it happened in the other expenses in the SEBI format. Okay. Whereas the realized income was being booked in other income. Now, typically, for an EBITDA margin calculation, we exclude the other income, and thereby the mark-to-market gain reversal also has to be excluded, which, when the investors calculate the EBITDA margin through SEBI working, it was getting excluded, which we have separately reported now in our SEBI results. Oh, okay. Basically the Q4 numbers from that has been restated to that extent, right? Yeah. It is typically in Q4. Yeah. Sure. Just one thing here, you know, with the other income for this quarter, you know, seems to be a bit lower, to that extent. You know, given that we are making good cash profits, so, how is this other income, you know, expected to be ahead? Because, for this quarter, it's just around INR 1 million odd if I total up. Yeah, I feel DP can take that, but I feel it's just to do with the mark-to-market on our treasury. That's about it. That keeps fluctuating. It's not a big deal, but Datta Prasad, you can answer that. Yeah. Gaurav, one of you. Basically what has happened is in this quarter, as you know, with the repo rate increasing by almost 90 basis points, you know, the overall valuations in investment has gone down, which is typically a market phenomena. Okay? If you look at the results, we are having a mark-to-market loss this time. Okay. That's the reason. Okay, got it. Thank you so much for this. Best of luck for it. No, thanks, Gaurav. Thanks. Thank you. We have Mr. Nihal Mahesh Jham connected again in the queue. Please proceed with your question, Mr. Jham. Am I audible? Yes. Thank you so much, sir. Apologies for that. Sir, I was asking on the chicken part of it. I've seen the soft launch in Mumbai. I just wanted to first confirm that, and if you could share metrics, whether you shared the run rate for the south stores. Is it similar in Mumbai also for the store that you've launched, the chicken portfolio? Yeah. It is a soft launch, Nihal, and we don't share sort of results this early, and it's a 5 to 6-store test, and we have a whole process of what we do. It's too early to talk about. It's not even to measure sales. It is more to get all the operational aspects right and get a first cut view on consumer qualitatively. Quantitatively, 5 to 6 stores don't give you enough. It's too early, Nihal. The important thing is, yes, there are some restaurants here that have the product. Understood. Do we have a timeline of when we plan the rollout for the 100+ stores in Mumbai, or that's depending on how the pilot progresses? No. Yeah, I mean, no timelines as yet. It's all sort of. You know, our philosophy is work, keep working on horizon two. While horizon one's playing out, you need to keep working on tomorrow's initiatives. Since this has done very well in South, it's part of that program. You know, it's all, there is a lineup, and our priorities here could be quite different from maybe the fried chicken. No plans as yet to sort of give out, but whenever we are ready, we will come back with that. That's helpful. Just one more question from my side was that you've obviously highlighted on the menu innovation part in the presentation. Over the last 18 months, there have been multiple SKUs across daypart that we've launched. So incrementally, what are the parts that you think are still missing and where you want to keep innovating and adding the, you know, menu innovations? That's, you know, sort of hard to explain on a call. I'll tell you, two years ago, three years ago, if I would have said gourmet burgers, the context would not be understood. I believe that our menu is still a tip of the iceberg. I'll use McCafé. It's easier to explain. In McCafé alone, we just played primarily on core products right now. Yeah, there is no innovation, there is no indulgence as yet. For example, take smoothies. While we have two or three smoothies in there, you know, I remember a global program where we had taken smoothies on television and, you know, sales really shot up for smoothies, not just at McDonald's, but in the whole category. Similarly, in McCafé alone, there is tremendous menu play. Even in our core menu, there is tremendous menu play. Whether it's to do with burgers, whether it's to do more work on the chicken side, whether it's to do with wraps that we've not talked about, our desserts. You know, dessert again is a $300 to 400 million market, and we've just touched the tip of an iceberg. McFlurry is the hero there and there's a lot of work that one can do. Breakfast is another area. Therefore, my whole point is that there is a lot of work to be done, but if you have to prioritize it right, otherwise your energies can get dissipated without results. It's a big subject, but the important thing is we've just touched the tip of an iceberg. There's a lot of room to grow our menu. Sure, sir, that's helpful. That'll be it from my side. I wish you all the best. Thank you so much. Thank you. Thanks, Nihal. The next question is from the line of Jay Doshi from Kotak Securities. Please go ahead. Hi, thanks for the opportunity and congratulations for extraordinary results and progress on QSR. My question is, when I look at 1QFY20 versus 1QFY23, dine-in is broadly comparable, maybe about 10%, 14% higher. Delivery. Sorry, convenience channel has gone up from roughly about INR 1.5 crore annualized, you know, revenue per store to INR 2.8 crores. It's added INR 1.3 crores again in a quarter where everything has opened up and, you know, there's a push for dine-in. Can you provide some more color? First a bookkeeping question, is takeaway a part of convenience or only on-the-go is convenience? No, I personally, I think, I don't think that takeaway is part of convenience. Takeaway is a part of dine-in. Saurabh, please confirm that. This is effectively drive-throughs, delivery and on-the-go. Can you sort of provide some color in terms of what, you know, when you look across these three sub-channels within convenience, where have you seen maximum traction and, you know, what explains this kind of stellar performance? We don't think any other QSR player has managed, you know, such No, thank you, Jay. We appreciate that. While of course I cannot provide specific details, I'll tell you that remember we are in the convenience business, right? QSR is all about convenience. For example, we've been talking about on-the-go for a while. I'm just using this as an example. Now obviously, nobody really took that seriously in our context. Today on-the-go has become a very decent size of our business. Of course, we feel we want to grow that as well. Of course, as dine-in came in that sort of played down a little bit. The other big one is takeaways and drive-throughs. Yeah, drive-throughs I feel is a major play for us because even globally, we do enough business through the windows that could justify a whole restaurant. You know, we have 65 drive-throughs and the plan is to double that. What happened through COVID is that the habit for using the drive-through got formed and that habit has not dropped. It's only growing. It is things like this that outside of delivery. Delivery also continues to grow. We are watching the rupee amount of delivery which continues to grow. It is these two, three other incremental things that have also helped grow our convenience channels. Therefore we believe that is going to continue to grow, particularly with the effort we are putting around drive-throughs as well. Saurabh, Akshay, y'all wanna add anything to this? No, Amit, no addition from my side. I think you've covered it. I think drive-through is a big focus for us. As we grow more and more drive-through, we should be able to get the traction in more and more restaurants as we grow drive-throughs. Yeah. Great, Jay. I hope that answers the question to some extent. Sure. Thank you, so much and good luck. Thank you. Thank you. The next question is from the line of Amnish Aggarwal from Prabhudas Lilladher Private Limited. Please go ahead. Yeah. Hi Amit and team. Congrats for a great set of numbers. Thank you. Yeah. Yeah, I have, say, two, three questions. My first question is that for Tier 2 cities, they have done very well this time around and their throughput has grown at double the pace. Can you share with us that, you can say, how much is the sales contribution coming now from Tier 2 cities and what is the throughput per restaurant there in terms of, say, like, for example, we are at INR 1.6 crores per quarter per store. How far that your number would be for a Tier 2 type city? Sorry, Amnish, we don't break up our sales by the Tier 2 cities and all of that. Neither, so sorry, I can't share that breakup. Just giving some direction that is it significantly different from where you can say the tier one or metro cities would be? No, it's not like that. It's very different. You see, it's all about ease in the city as well. Particularly, it's hard to tell you that the important thing is that it starts off very well and it continues to grow. Remember that in a Tier 2 city, finally you can build one or two McDonald's. You know, you can't build five, 10, 20. Therefore, the volume that it does, and it comes to system average, we are quite happy with that. In summary, whatever best I can tell you, it is starting off very well. Earlier it would take two to three years to build to system average. Now it is starting close to or maybe sometimes ahead of system average. The good news is that it is continuing to grow. Remember, yet 80% of our stores are still in Tier 1 cities. You know, this is building out, and I feel it just shows the opportunity for growth more than anything else at this point. Okay. Amit, that is pretty useful. Now, the second thing is that if we look at the current quarter, our dine-in is 58% and delivery or convenience channel is 42%. Now, pre-COVID, this number was far lower. Do you believe that now dine-in will, you can say, sustain around 58%, or do you think that convenience will pick up from 42%? What is the long-term trend which you are witnessing in both the channels? Yeah. As I answered this a little while earlier, but I'll repeat that. One, we are a convenience brand, and it's all about impulse purchase. Globally also 70% of our stores is off-premise. Seventy percent of the consumption of our business is off-premise. I feel it is here to stay. As I said, 60/40 is a good base for us to work on. Longer term, if it moves toward, I'm talking 5, 10 years as the category matures, going towards 65% is where I see India at very long term. Okay. 65% dine-in, you are saying? No, long term. Right now you please take it as 60/40. I'm saying as the category matures over 10 years, that is where it could go to at best. Amit, finally, fried chicken, I think we are, you can say, piloting the same in a few stores in West India. But in how many stores in South we have launched this product? South, it's across the board. I don't know. We have 170 stores, maybe 200 stores. I'm not sure of the exact number. Probably 170 stores we have in South India, and it's across the board. It's in West, it might be in 5, 10 stores somewhere in Mumbai. Amit, final bit on the royalty. As I think it was stated during the initial remarks that it will now move up gradually to, say, 5% by 2025, 2026, and you are in negotiations with the parent company. Do you think that it will eventually go to 8%, or there's a probability that it will goes to, say, 6%, 6.5% only, which is the maximum paid by any other, you can say, your global brand in India? No. Basically, see, it, the important thing was to just clarify. I think the rest is speculation today. The important thing is that it's at 5% till FY 2026. Our contract is at 8% after that. Essentially all we are saying right now is that it's not gonna go from 5 to 8%. It is gonna be a gradual increase, and we are working through it. By the way, globally McDonald's is at 8% around the world, including in markets with similar per capita income. That's because they bring something to the table. If you think about it more deeply, that you see, as brand McDonald's, we have, for example, chicken and coffee as well. We don't need to build other brands or bring in other sort of operators, licenses to be able to be leaders in these segments. I'll just leave it at that for now. The main point is that up to five, there's clarity up to FY 2026. After that, all we are saying is it'll not go straight to 8. There'll be a gradual movement which is being discussed with the parent. Okay, Amit. Thanks a lot, and congratulations. Thank you. Thank you. Thank you. As that was the last question for today, I would now hand the conference over to the management for closing comments. I just wanna take this time to thank everybody for being on the call with us today. I really appreciate it and have a lovely weekend ahead. Thank you. On behalf of Westlife Foodworld Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.