Ladies and gentlemen, good day and welcome to the Westlife Foodworld Limited Q3 FY 2023 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode. 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 and 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. Over to you, sir. Thanks Vivian. Welcome everyone and thank you for joining us on the Westlife Foodworld Earnings Conference Call for the third quarter ended 31st December 2022. I am Chintan Jajal, Lead IR at Westlife. 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. Saurabh Bhudolia, Chief Financial Officer. We will kick off today's conversation with Smita sharing her thoughts on overall business progress and outlook. This will be followed by Akshay taking us through operational, financial, and strategic highlights. Post that, we can open the forum for question, questions and answers. We will be referring to earnings presentation and financial releases available on the stock exchange and the investor page of our website. With that, I now turn the call over to Smita. Thank you. Thank you Chintan. Hello everyone. On behalf of the entire Westlife Foodworld team, I wish you all a very happy new year and thank you for participating in the call today. I'm happy to report that Westlife Foodworld has once again delivered and consistent results. We are able to produce another steady and profitable quarter, thanks to the ongoing implementation of our strategy. Backed by the festivities, customer sentiments remain stable, and we witness sustained momentum in the quarter gone by. This, coupled with menu innovation, convenience, and a strong value proposition, helps us to serve our existing customers, besides attracting new ones. We witness consistent growth in both our on-premise and off-premise channels, owing to the strength of our omnichannel, continuous focus on cost optimization and operational excellence. Our outcomes demonstrate that we have developed a robust business model and a much-loved brand as a result of our clear and convincing strategic approach. We are committed to consistently reinventing our to keep up with the shifting market trends. Our expansion plans are on track towards opening 35-40 new restaurants in FY 2023 and 580-630 more by 2027. Growing at this pace, we are in a strong position to deliver accelerated business results generate long-term value for all our stakeholders. I am delighted to inform you that Saurabh Bhudolia has joined our team as CFO. We are confident that he will play a key role in Westlife Foodworld. Finally, I'd like to thank all our employees and partners for their hard providing excellent value to our customers. As a company, we pledge to prioritize consumer experience and productivity, building on our emerging digital advantages and providing differentiation in the marketplace. I want to express my gratitude on behalf of the entire Westlife family for your support and belief in us. I will now request Akshay to share the operational and financial highlights of the quarter gone by. Thank you. Good day everyone. I wish you a great 2023. It gives me immense happiness to share that we have posted market-leading performance with outstanding results across all parameters. In Q3 FY 2023, our record-breaking revenue of INR 6.1 billion increased by 28% year-over-year. This was supported by a 20% increase in same-store sales on the back of a healthy rise in guest counts. Even on the pre-COVID basis of FY 2020, we saw over 40% growth in sales in Q3 as well as nine months. Healthy consumer adoption of our digital channels, like the global McDonald's app and self-ordering kiosks, added to our in-store digital ad sales. As a result, we crossed over INR 2 billion, sorry, of average monthly sales, with highest ever sales in October and subsequently in December, also helping us to gain market share amongst QSRs. As you can see on slide five, our average sales per store in trailing 12 months increased to a new high of INR 64.7 million. Our three pillars of burger meals, chicken, and McCafé continue to drive our differentiated results. Menu initiatives like McCheese Burgers and the KITKAT collaboration saw great consumer response. Simultaneously, we augmented our brand affinity through memorable brand campaigns which are meals and family-focused. Fried chicken also continues to do well in the south. As you all would be aware, we also introduced the Chicken Big Mac for the first time in India in January. We will try and share an update on this next quarter. Moving on, I think consistency in growth across west and south markets served as a foundation for our impressive third quarter performance. On a pre-COVID basis, non-metro towns continue to grow at 1.5 x the rate of metro markets, reinforcing our belief in the emerging markets opportunity. If we look at channels, the growth trend has been broad-based, with the on-premise business maintaining its streak of healthy growth and gaining significant traction, while our off-premise business continued to rise steadily, yet again clocking double-digit growth and the best quarter ever. Overall, the on-premises business clocked 42% year-on-year growth and 23% over the pre-COVID base, while the off-premise business grew by 12% year-on-year and 85% over pre-COVID base. It also gives me pleasure to say that more than 57% of the system's total sales were made through digital channels, like our mobile app, our self-ordering kiosks, and our McDelivery channel. We saw higher sales growth in our own channel, the McDelivery platform, owing to enhanced consumer affinity and such activity. The performance in delivery is also a strong reflection of all the work that our teams have been doing at the back end, which is leading to best-ever scores in business operating KPIs. I believe that having a strong foundation through efficient operations will be key to serving the humongous consumption appetite of India. On to slide number seven. We saw an all-around improvement in profitability with EBITDA margin at 18%, reaching an all-time high. Our supply chain cost initiative, along with better product mix and calibrated pricing actions to mitigate inflationary pressures, resulted in a 52 basis points year-on-year and 141 basis points sequential increase in gross margin to 66.9%. The gains further populated to the restaurant operating margin or ROM, which was up a healthy 35% year-on-year to INR 1.45 billion, implying a margin of 23.8% as against 22.6% last year. Our Q3 operating EBITDA of INR 1.1 billion and margin of 18% was helped by enhanced operating leverage. Our staff cost as a percentage of sales was higher on a year-on-year basis on account of variable payouts. On a nine-month or annualized basis, it was much lower than last year. Nevertheless, this is the third quarter in a row where we saw sequentially improving EBITDA margins. Our cash profit after tax stood at a record INR 753 million, implying a margin of 12.3%. We continue to maintain a strong balance sheet and liquidity position. Our operating performance will continue to generate healthy free cash and fuel our growth in the future. We are on track with our network expansion targets. We added six new restaurants in Q3, taking the total to 341 restaurants, including 288 McCafés, 67 drive-through eateries, and 205 EOTF restaurants. A key highlight was the rapid modernization of our stores, making them more relevant for digitally savvy customers. Over 60 stores transitioned to the EOTF format during the quarter. Six new stores have been added in January as of today. Hence, overall, we retain our target of opening 35-40 new stores in FY 2023. In order to increase brand affinity, we launched several new brand campaigns under the umbrella of Festivals Make Families. To further reinforce our commitment towards fostering inclusion, we unveiled a new brand film under our marquee EatQual initiative. As you may be aware, as a milestone event, we charted our five-year strategic growth path and unveiled our Vision 2027 in December, and we remain committed to achieving these goals, guided by a well-defined strategic growth framework. With that, I now hand over the call to the moderator and open the forum for your questions. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may kindly press star one on your touchtone telephone. The operator will take your name and announce your turn in the question queue. Participants are requested to use handsets 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 Latika Chopra from JP Morgan. Kindly proceed. Yeah, Hi. Thanks for the opportunity. My first question was around your Same-Store Sales Growth. Would it be possible to give us a flavor of, you know, a broad breakup of this 20% LFL in terms of increase in average ticket size, versus number of transactions growth? Hi, Latika. This is Amit here. Thank you for the question. As you know, we don't break up the guest count and average check, but I can tell you that there was robust growth in our guest count as well that kind of led to this growth in sales. Largely driven by guest count. It was largely driven by guest count. Sure, Amit. Thank you. My second question was around, you know, your broader thoughts on the overall demand environment. Clearly, you know, you have gained market share and, you know, you elaborated, you know, the key vectors of growth for you. Any broad color on how you are sensing the market growth for QSR and incrementally any comments on consumer behavior, you know, in terms of upgrading, you know, spends, frequency of consumption. Are you worried about, you know, how inflation is affecting consumer walk-ins into stores? Sure, Latika. I mean, as you know, I've fortunately been consistent over the last 10 years. Of course, we've seen all the ups and downs, my philosophy is that all times are good times. I, you know, I do hear about the environment getting tougher and so on, all the time, essentially, my philosophy is that we are very, very entrenched with our long-term strategy. Essentially, as I feel we've done in the last three or four quarters particularly, that strategy has played out and connected extremely well with the consumers. Even if you look at sort of the informal eating out market, visit growth, et cetera, even on, say, account of the visit growth, our share has been higher than that. I feel that even if, suppose, the environment does get challenging, we are very confident that our strategies are long-term in nature, and we should be able to navigate that. That's at least how we see it. We are not worried, but we are always alert and adapting our strategy, our tactics I would say, to adjust to the environment. Sure Amit, I don't know whether you will give me a, you know, a specific answer to this, but what I wanted to know was on your delivery sales today, even if qualitatively, is the revenue coming from your own app, higher than what you derive from aggregators? No. Currently, the aggregator demand is higher than our own app. Our own app is growing quite well. As we said in the in our report as well, between the two maybe two million customers downloads now. The number of active users is increasing month-on-month. It is dominated by sort of the aggregators even today. All right. Thank you so much, and all the best. Thank you. Thank you, Latika. Thank you. The next question is from the line of Avi Mehta from Macquarie. Kindly proceed. Hi. Thanks for the opportunity. I want to just build up on the earlier participant. Just could you give us a sense on how is the inflation scenario right now as we speak, and whether, if, we have taken any additional price hikes? Sure. Sure, Avi. We did take a 2% price hike in October, which we sort of mentioned in our earnings presentation. In terms of inflation, it is definitely much better than what it was before. I feel that even though inflation has peaked a couple of quarters ago, I think because of our long-term supply chain methodology or pricing protocol, we were able to navigate that quite well. Currently, we are not seeing very high pressure on commodity prices. Okay, perfect. Perfect. The second bit, I just wanted to kind of check on the store addition bit. Now, I do hear you've added almost about 17 to six, close to about 23 odd stores in the 10 months till January. The guidance that you gave out, is this more I should look at this more as a target that you look at internally and, you know, We're looking at reaching that may not be March, may be April, but that's the broader philosophy or how should I kind of look at this? I would love to hear your thoughts. No, no. As Avi, we maintain, I think again, over the last 10 years, if we maintain something, we tend to deliver that. We are quite confident of between 35-40 restaurants this year. As you know, we've opened 6 restaurants already in January. The pipeline is very strong because we look at ground breaks in the last quarter and therefore we are quite confident to be in that range. Whatever sort of our Vision 2027 talks about, we are completely committed to making that happen and you will see that happen year-on-year. We stand by what we have talked about. Perfect. Perfect, Amit. Lastly, Amit, just a bookkeeping, if you could just, if someone could help clarify the reason for this, you know, sequential increase in employee cost, because otherwise no ADS is all up and gross margins are awesome. That is the only thing that I wasn't able to understand and if there's any runoff over there. Sure, sure. In fact, that's why we kind of covered that in the commentary. You know, I've always maintained that particularly such costs should be looked at on a nine-month basis. If you look at it, from 5.9 we are at 5.3% of sales. It has grown far lesser than sales, which is the operating leverage that we talk about. In this particular quarter, it had to do with bonus, and it had to do with provisions around ESOP and things like that, which kind of took the cost slightly up, you know, because given the results, that's something that we felt we would like to accrue already. That's, the quarter looks like that, on a nine-month basis you will see that we are all right. Perfect, Amit. That's all from my side. Congratulations on this performance. Thanks to you. Thank you, Avi. Thank you. Thank you. The next question is from the line of Kapil Jagasia from Nuvama Wealth. Kindly proceed. First of all, congratulations on the excellent numbers. I have two, three questions revolving around the store network. First of all, your presentation states that non-metro store is 1.5 sub from metros in this quarter. Is this demand coming from smaller towns like Amit said, high inflation scenario, you know? Would you see this demand coming more and would this warranting any change in our store openings of 50/40 in the future? Let me ask Saurabh to take the question. Saurabh? Yeah. We've seen what we wanted to pinpoint that there is a lot of opportunity available to us, especially in non-metro towns. Metro town opportunity continues to remain strong and we are leveraging that. In non-metro what we've seen is the demand has grown dramatically from pre-COVID levels. We do not see any softness as far as that is concerned, and we're fairly committed to all around growth where we will have growth coming out of both metro cities and non-metro cities. It's the point, is the larger point we wanted to make. Correct. You know, I'll just build on that. I've always maintained that we are only in 60 cities in our territory while there could be 130 cities that have the potential. Clearly that kind of goes back to the 580 - 630 restaurants that we are talking about, that opportunity is presenting itself and the performance in these slightly smaller towns has been very robust. I think that's really the point we wanna make. Would there be any possibility that the price hike which we would have taken, that would be only applicable to metros and not so much to the non-metros? The average would be more higher in metros. Would there be a possibility of that? While we don't give a breakup, when we are saying 2% price hike, it's a weighted average price increase. What will happen is 2% sometimes we don't take a price hike. It's product by product, it's restaurant by restaurant, and the composite score of there is 2% price increase. No, we will not be in a position to give the breakup store by store out here. What you need to understand is broadly 2% was the cumulative price increase which we took. Normally we would not differentiate between metro and non-metro, but product by product, we would go about it and some restaurant consideration are always taken. Okay. Thank you for that. My next question is, like, could you provide some color on this average revenue per store going forward? This quarter the average revenue per store seems to be around, say INR 7.2 CR per store. Is this the peak for now as you would be opening new stores at a higher rate going forward? You know, I've got this question for like now many, many years. When we were at INR 5 crore also the question was, have we peaked? It has peaked. We don't think that globally when we look at the performance of the brand, even today after 70 years of existence, comparable sales growth is part of our DNA. The simple answer is absolutely not. Our DNA is to grow in-store sales quarter-on-quarter, year-on-year, and therefore while we've done extremely well with INR 7.1 crore pretty much the highest in the industry, our ambition is to take this much higher than where we are today. Also if you look at the presentation also, it's about, it's also a seasonal business. I think the key metrics which drive us is same-store sales. You will see same-store sales being differentiated in the marketplace quarter- on- quarter driving to the higher aggregated volume sales. It is as simple as that for us. Thank you. Thank you. That's quite helpful. Just last one from my side. like, could you provide some color on this, closed restaurant during the quarter, like, these were in metros and non-metros, and was it profitable at operating level? I guess that's it from my side. That's all. Close, restaurant closure happens due to multiple reasons. Primarily actually three reasons. Our term is expired or there is an infra or something has happened around the visibility, trade area has shifted. For example, one of the restaurant we shut down is Channapatna, which was in Bangalore Y2 highway. All of a sudden now the highway has changed, it's a new highway and there is no way you can reach a restaurant, so we had to shut down. In another case, there was the restaurant, the trade area has shifted. That's how we do it. Two stores, for the entire year is actually not even 1%, so we don't even talk about closed restaurants. We believe in opening restaurants. I think you will continuously see our total number of stores growing substantially. We do not like closing stores unless and until it's the reason, on reasons beyond our control. That's how I look at closures. Sure. Thank you for all this. All the best. Thank you. Thank you. Participants are requested to kindly restrict your questions to two per participant. Time permitting, you may re-enter the queue for follow-up questions. The next question is from the line of Shirish Pardeshi from Centrum Broking. Kindly proceed. Hi Amit, good evening. Thanks for the opportunity. Hi. congrats for achieving the excellent numbers. Just two questions. On slide five, when I'm reading, chicken portfolio is being augmented and Chicken Big Mac we have launched in January 2023. Sorry, you're too soft, we can't hear you. Can you be a little louder, please? On slide five, I'm reading chicken portfolio has been augmented. Maybe the question there is that which all restaurants we have got or whether finally in the West we have introduced. The second question on Chicken Big Mac, which was launched in January. How many stores we have rolled out, or is it primarily in the western part of the country? My spicy fried chicken wings are actually available in Hyderabad and three, four restaurants, in other places. If you look at Chicken Big Mac, Chicken Big Mac runs across the system, which means across all restaurants. This INR 245 is price, which is universal everywhere? Sorry. The what? The price? Yeah. Yeah. I mean, it should be about that much. I mean, there are some differences. It might be 1 rupee, 2 rupee difference here and there. Here and there. That's about it. Broadly that, 2, 245, whatever the price is. Yeah. Okay. My second and last question on the EOTF, which is slide 12. Can you provide now we have got 205 EOTF stores. Some quantitative numbers for just from the sake of how this number is driving, whether footfall is coming or it's because of our ADT is growing or something, some convenience which is definitely working. Maybe quantitatively you can back up. Yes, sure. I mean, we don't share details around each platform. The important thing is that the customer experience is differentiated. Again, the way I would like to say it, if you Google customer reviews around Experience of the Future stores, the answer lies right there and then. That typically for QSR, Google reviews range between 3-3.3, while our out of this, out of five, of course, while EOTF would range between 4.2, 4.3-4.5 out of five. That itself automatically leads to a better customer experience that leads to better sales. We believe that we have the largest portfolio of modern stores around QSR in the country. It's also redefining the QSR experience. We think eventually customers will insist on this experience from all QSR brands, and that is where competitive advantage comes to us. That's how we think about it. Obviously, financially, we are finding that it does make sense. Not only in India, but globally there is a big move towards Experience of the Future. Luckily for us, if you look at it last quarter, the Same-Store Sales Growth is largely driven by dining and EOTF, muck of it together, augurs extremely well. I think you will see the differentiation in the dining results and overall growth amongst the other competitors. Thanks, Amit. I do agree, and I have seen the customer reviews. I'm more inclined asking this question primarily what kind of footfall growth we are seeing. Obviously the numbers are panning out, and I have visited at least three stores in last one and a half months. I'm pretty excited on that. Just one follow-up here. Out of 341, you have already done 205. To reach to 300+, do you need lot of time or it's conscious that we are developing slowly? No, no. I mean, I think last quarter we did 60, so that's a testament to the speed. You know, it has to be clubbed in with various other factors. There are many things involved. It's not just that you pick up and convert, but the target is that within the next 12 to 18 months, within the next 24 months. Yeah. We will be 100% Experience of the Future stores. Because all new stores are opening as Experience of the Future, and therefore we just have to bridge the 150 gap, which will take 12-24 months. Wonderful. Thank you, Amit, and all the best to you. Thank you. Thank you very much. Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Kindly proceed. Yes, sir. Thanks for the opportunity and congrats on leading SSSG at about 20%. Sir, I wanted to check if this SSSG of 20% also includes some component of low base as we were relatively more impacted last year because of higher presence in South and West. Yeah. If you look at it last year, last year was the first time we announced on October, November, December that COVID was behind us and we had recovered fully, in fact, done a growth on top of pre-COVID numbers. For us, October, November, December was a regular quarter in which we had shown growth over pre-COVID. This October, November, December is actually on a stable base, is how we look at it. We have looked at it as a strong quarter delivering strong results, except, including October, November, December. That's how we look at it. Got it. This compared to our sort of outlook of about high single digit SSSG for the next few years. This number, if it is normal, then it is significantly high. Are we relatively more conservative on the near-term outlook that we have sort of portrayed? No. You know, as you know, we never talk about near-term outlook. That is what it is. I mean, quarter on quarter, it's very hard to, you know, talk. We talk normally on a three-year, five-year horizon. On a yearly basis, a sustainable same-store sales growth, as I've maintained, is always sort of 6%-9%. Of course, you know, as our strategy is playing out, we've been able to deliver, you know, pretty strong numbers. You know, I would like to leave it at that. Got it, sir. gross margin performance was also I would say quite strong at about 67%. I wanted to check if Q3 particularly has any seasonality in terms of better gross margin or it is a good base to consider for quarters coming ahead? I mean, you know, I always look at every number from a consistency point of view on a nine-month basis because quarter-on-quarter there are differences that happen. Therefore, you know, if you want a better. The trend is looking all right because inflation's been okay as well. I would look at the nine-month data to sort of build anything for the future. Got it, sir. These were the questions from me. Good luck for the coming quarters. Thank you. Thank you so much. Thank you. The next question is from the line of Gaurav Jugrani from Axis Capital. Kindly proceed. Thank you for the opportunity and congratulations on the great set of numbers. My first question is with regards to a couple of clarifications. One, the target of 35-40 stores, is that on a gross basis or a net basis? That's on gross. Gross. Okay. Sir, this chicken, the Chicken Big Mac that we had launched. Is this a limited launch? There were few newspapers that we read, you know, was referring to this as a limited period launch. It is a limited. Sorry. It is a limited time offer. Sorry. Yeah. Okay. Sir a last final question, you know, is with regards to the store relations. I mean, we are seeing, you know, aggressive store relation in Q4 now. Going by the numbers, we will be opening somewhere around 18-20 stores for Q4. Do you think this in any way, you know, could in the short term impact the AUVs? Because the new stores generally would, you know, come with a drag. Anything on this front, if you can highlight, you know, how the new stores are performing versus the system average or anything, any color on this? I mean, generally I feel, you know, now that we've operated for over 25, 26 years, in the past also on a smaller base if you open 30 restaurants, you know, that is quite a bit of addition. We are very careful and we do a very methodology in which we open new stores. I feel that what in terms of 6%-9% Same-Store Sales Growth is what we will intend to deliver. The way we plan new stores, there is a lot of opportunity in smaller towns. We just opened our second store at the airport in the domestic terminal, which has absolutely zero impact on anything. There are a lot of trading areas that have no impact and there are some trading areas where there is impact and it grows. On a base of 350 stores, we feel that we can absorb this. We will not shelter ourselves in saying that by all these openings our comps are gonna be under pressure. The intent is to deliver a single-digit high numbers. We do believe that there are enough open markets where it will not impact same-store sales. Sure. My actually the question was more relevant to the newer bunch. I mean, if you can just highlight how a particular store, generally, you know, grows over a period of two to three years? For example, if in the first year it could be like 60% of the system average, then it goes to 80 and then 100. Gaurav, I mean, there is, it depends on market to market. I mean, it's not that I've not heard this question before. The important thing is even if it opened at INR 100 crore, yeah, it continues to grow as the trading area settles down. You know, a store could open at, you know, you've just heard that INR 7.1 crore is our average volume. A store could open at INR 10 crore. If it opened at INR 10 crore, it will go to INR 11 crore. It will grow in the following quarters. There is no set number. The important thing is it grows from once it opens. Sure, sir. That will be all from me, sir. Thank you. Thank you. Thank you, Gaurav. Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Nihal Mahesh Jham from Nuvama. Kindly proceed. Yes, sir. Thank you so much and good evening to the management. A couple of questions from my side. First, you mentioned about the 2% price hike in October. What would be the cumulative hike you've taken over the last 12 months? Pardon? Yeah, it will be around in tune of around 7%. 7%. That's helpful. The second question, I'm just going back to our performance versus the industry. I just wanted to understand one aspect of this was that over the last 12 months, I think we've been the most aggressive in terms of new product launches, and I'm counting even the chicken portfolio as a part of that. In your reading, do you see that that has been a key driver of maybe the footfalls or in a way, the significant SSSG that we've been seeing this quarter and maybe over the last couple of quarters, if there is anything you could highlight of that. I think, we have laid down actually in the investor deck also that, there are three core in the informal eat-out construct. We were already leaders in snacking. We're the only player who do breakfast and post dinner also we were leaders by far. There was a game to be played for meals during lunch and dinner, and we were very strategic, and this need arise right from the time, only delivery was available during COVID, and we were very serious about it to be able to take this opportunity head-on. For that, we had talked about three pieces, right? Three piece meal, which is the burger meals, the Gourmet Burger Collection, and the fried chicken in South, right? I think these three have augured extremely well. We haven't been actually very aggressive in launches. Very few new additions on the menu, but they've all been strategic, they've all been strategic imperatives in order to grow market share in meals. Whatever you see is a result of us being strategic rather than being random in terms of product launches. In fact, you'll be surprised to know that we've got only a very few SKU additions when we have done all this work in the last 50 years. Sure. What I was maybe referring to is that if you count gourmet with the chicken range and maybe the McSpicy Mexican that you've recently launched, is it that that has become a significantly higher proportion or versus pre-COVID? No, I don't think so. I mean, see, these are building blocks. You know, that does not take away from the McAloo Tikkis and the Makki ki and the McChicken. You have to understand, that's what Saurabh was trying to explain, that it's not a product strategy, it's a occasion strategy. Yeah, it's about meals, it's about relevance of that occasion. Okay? What meals do is build lunch and dinner. These products are bigger products, and that helps. That's not replaced the McAloo Tikki of the world and the Makki ki and our McChicken, our spicy chicken. That portfolio continues to do quite well. That is very helpful, sir. Thank you so much. Thank you. Thank you. The next question is from the line of Amnish Aggarwal from Prabhudas Lilladher. Kind you proceed. Yeah. Hi, sir. Congrats on good set of numbers. I have a couple of questions. First, I think during the commentary, perhaps Akshay mentioned that the manpower cost had an element of, you can say, 1-time variable, you can say, incentive paid to the employees. It would be good if you can please quantify the same. That is one. Secondly, in the previous quarter, we have added 67 stores we have converted to EOTs and 15 McCafés we have added. What could be the CapEx on account of these particular, you can say, conversions? Does, you can say, these conversions plus the 15, 20 stores which you plan to add in a macro 1 quarter. Was there some front-ending of expenses with regards to manpower or overheads ahead of the openings of these stores? These are my two questions. Sure. I mean, firstly, we don't share break up of our G&A growth, we gave you the key reasons why the% has gone up. If you look at nine months, which is the more, you know, bigger base and the right way to look at it, the numbers look all right. Unfortunately, we are not gonna be able to break up the bonus factor and all of that. Similarly, on CapEx, as we said, that we do in fact now generate some free cash flow as well. Typically the CapEx is between INR 150 crores to INR 225 crores, of which about 60%-80% typically goes into building new restaurants. That is roughly how our CapEx is broken out. Particularly, you know, front-ending, the good news is that our net debt position remains very robust, and our net cash debt position. Therefore, you know, even with all this these expenses, I think our cash flow has been very strong and we manage that quite all right. Yes, I mean, if you are gonna grow stores, we need to ensure that the development team is well built, because taking 25, 30 restaurants to 45 - 50 with the right location, the right quality of negotiation with the landlord takes time. But I think that's manageable within the guidance that we've given in our Vision 2027. I think that we are quite comfortable. We are not concerned that it would take G&A up beyond the point of our management or ability to manage it. Okay, sir. That's really helpful. My, you can say, only submission was that in particularly Q3, because Q4 is going to be heavy in terms of store addition. Was there any impact both in terms of the other expenses or the payroll due to, you can say, employees being hired and trained for the upcoming stores and some of the overheads? Not to my mind. I mean, what happens is that, you know, typically real estate cycle is 12 -1 8 months. For the opening in the next quarter, this quarter is not impacted. Maybe nine months ago, 10 months ago, it could have impacted. Last quarter has no bearing on the next quarter. You know, the construction cycle is 60- 75 days. If you are not in construction already, it is not gonna open. You can't just hire in the quarter. Okay, sir. Thanks a lot. Thank you. Thank you. The next question is from the line of Sabyasachi Mukherjee from Centrum PMS. Kindly proceed. Yeah, Hi. Thanks, thanks for the opportunity. Two questions from my side. First one, you mentioned, you had a total price hike of 7% if I compare last year same quarter to this year same quarter, almost 7% of price hike. I believe out of the 20% SSSG growth, there would be some, you know, portion of, effect from the premiumization happening through gourmet burgers and, you know, the chicken portion. What would that amount to be, in terms of percentage, if you can highlight the same? Look, Sabyasachi, we don't break up the 20% components. Also, you know, math does not work where you've taken a 7% hike and 7% is out of the 27% is your price increase. It doesn't work like that. There is a rebalancing that happens, and therefore, you know, it's almost impossible to predict. The important thing is, I think as I mentioned in the first question, that our growth has come on the back of robust guest count growth. That is the important thing, because our strategies are working. We talked about the meal occasion. We are already leaders in snacking and other day parts, and the meal occasion is resonating with the consumer because the products are now relevant for the meal occasion, and that is what is driving footfalls into McDonald's restaurants in west and south. It is aided by McCafé, it is aided by experience of the future and the modern restaurants that we have, and everything together plays a part. That is how at least we see it. Again, for example, when you go to an experience of the future store, there's a very nice-looking restaurant with McCafé. You know, people come in bigger groups sometimes. You know, there'd be more coffee buying, which pushes the average check up. It's a combination of all of that. Price hike does not total up in the way, you know, you would suggest it. Particularly in an FMCG, that's where you will calculate that this is the price increase, this is the product. For us, it's customers coming in, and sometimes they would buy something, they would buy something else, so price increase doesn't necessarily flow into the sales or average check as an exact formula. That's not how it goes here. The reason why I'm asking, where I'm coming from is, you know, if I, you know, go back and to your commentary of 6%-9% kind of a steady state SSSG growth that you see in the medium to long term, that 6%-9% should come from in my sense, 5.5% kind of a inflation trend that we see in India. The rest probably, you know, 3%-4% coming from the, you know, the volume part. From a footfall perspective, I just wanted to understand that, you know, how much of this 20% would have been contributed by the footfall or the guest count. Is it 10% or more than, and is it in double digits or single digits? you know I'll explain to you what the rest I can. One, you can look at our history. Number two, we typically take price increase of about 3%, 2%-3% a year. Therefore, you know, like I explained to you, the math is not complete because many times customers trade down if they don't like the price increase as well. You're not able to capture the entire increase. Basically, our DNA is about growing guest counts. Our DNA is not just about growing average sales. To give you an example, what happens is, let's say when we introduce McCafé, somebody who is coming in for lunch, and now they like our coffee. They've added a coffee, which is INR 99 at that time, let's say. What that has done is increase the average check. You understand? We've been able to get the consumer to buy more. Second example is that when you look at meals, right? Obviously, a meal is a part of three pieces that you buy. If you were to buy only one McAloo Tikki when you come, but if you are coming for the meal occasion and buy a meal, what happens is your average check goes up. Now the consumer is now in their mindset, they know that there is good coffee at McDonald's, so we get one extra occasion of visit as well. Because, I'm again making this up just to make my point, that they like the coffee, they could say, "Oh, at McDonald's we like the coffee and there is a meal. Why don't we go there for lunch?" The brand starts becoming more relevant and usable for them. This is how it plays between growing average check, price increases and footfall growth. Price increase is normally only to, the way I see it, is to only manage inflation a little bit, but we push ourselves harder to grow sales through guest count. You are suggesting, just to, you know, summarize, are you suggesting that the same customer is probably coming more number of times because of the options he or she is getting, and whenever he or she is coming, visiting your restaurant, they are also ordering more than they used to order? That's how the average check size is going up. Is that what you're suggesting? Sabyasachi, we are not suggesting anything. It was just an example for you to understand that our business is a little different from how retail would evaluate it. Our business is average, this is average check, which is per order bill value multiplied by the number of customers who come. What we are saying is in the last quarter, this was majorly driven by, not by value increase per average ticket size, but was driven through the guest count of footfall, as you call it in your language. We are not ready to give you a breakup at this point in time, but largely, the vast majority of this growth has come out of the guest count. I'll give you one last example. I've made it before, but this is a better offline conversation than on the earnings call. What happens is earlier, let's say you wanted to have a cup of coffee, right? Before McDonald's had McCafé, there was a McDonald's at Café Coffee Day and some other brands. McDonald's would not come in your consideration set. Now McDonald's comes in your consideration set, so you get that extra visit. I think we can take this offline, essentially I'll try to explain that it's a mixture of everything. Understood, sir very clear. Second question, you know, your point towards the market share gain. You know, as I see, probably it's a very small sample set, if I, if I look at stores in Mumbai, you know, there is one another competitor that has come up with the cafe proposition. How do you see, you know, the competition growing and the, you know, coffee business, is it kind of, I mean, affecting you or, I mean, it doesn't really affect at this point of time? How do you see competition right now? I mean, competition's been around for the last 25 years in different forms, just because a competitor launches coffee does not take away from where we stand long term. Essentially our results speak for themselves quarter on quarter. You know, just because we do coffee does not mean that we'll hit somebody else. Just because somebody else does coffee does not mean it's gonna take us away from where we are. Saurabh can take it more clearly, to my mind, our results speak for themselves. Yeah. To me, it's about what focus one company has. I think as McDonald's, being the global leader, we always focus on our consumer. We saw the need of McCafé back in 2014. That's when the first McCafé was launched. Till today we are talking about conversion of EOTF almost close to 100%. To us, it's about following the consumer. We don't get very bothered about what competition is doing. In fact, to us, it's also a testament that people are following what we are doing. Right now we see where the consumer is. There's a meal category, there's a meal play which we want to do, it's a green field well for us. I think that's substantially differentiated results and all the best to everybody in the marketplace. Last question, if I can squeeze in. You know, if I look at a long-term trend of McDonald's, Westlife, let's say last eight years, nine years data, FY 2016 to, you know, nine months, FY 2023. If I were to kind of annualize the average sales per store of this TQ number, it is somewhere around INR 7 crores. Out of that, 60% is dining. Roughly INR 4 crores is dining and, you know, balance INR 3 crores is from delivery. This number, dining number, INR 4 crores number way back in FY16 was somewhere around, you know, INR 2.8 crores, INR 2.9 crores. If I do a seven to eight years CAGR, the number comes around 5.5%, which is very in line with the, you know, inflation that is there in India. The question here is, again, boils down to the, you know, average sales per restaurant, that is people, you know, goes on asking that, you know, where do your numbers settling in? Do you see the same kind of CAGR going ahead, 5%, 5.5%, 6% kind of. Right. You know. All I can tell you is that we talked about in 2016 that we were at INR 4.5 crores, INR 5 crores. Today we are INR 7.1 crores. Where the business is coming from is irrelevant. The important thing is we are capturing the customer occasion to eat out. As I have maintained, this is gonna continue to grow. We've given you a sense of the 6%-9%, okay? We've given you a sense of 2027, and that's really where we are. Okay thank you. That's all from my side. Thank you. Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Amrita from Wealth Managers India. Kindly proceed. Thank you for the opportunity. My question is regarding the breakfast menu, as in, how many stores offer breakfast menu right now, and what is the plan going ahead? The second question is regarding again, how does the breakfast menu contribute in the revenue per store and also the restaurant operating margins? Thank you. While we don't give up, we give individual breakups of what contribution each department has, I'm pleased to tell you that we have got around 30-35% of our restaurants which serve breakfast. This is typically between 7:00 A.M. to 11:00 A.M., and that's when we change the menu completely to the regular menu. Breakfast for us is a huge opportunity, especially on highways, et cetera, where there is a big morning business. In key cities like Mumbai and Bangalore, we've got substantial number of stores doing breakfast. For us, breakfast is a growth lever which will play at some point in time. Right now we are more focused towards meal as an occasion. Primarily burgers, chicken and coffee are the three areas where we see right now we need to have our laser sharp focus on. Thank you. Amrita, any further questions? Thank you. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. No, just wanted to thank everybody for taking the time to join us today. Have a lovely evening, and we'll talk again soon. Thank you. Thank you. Thank you. On behalf of Westlife Foodworld Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.