Ladies and gentlemen, good day and welcome to Barbeque Nation's Q3 FY25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Bijay Sharma. Thank you, and over to you, Mr. Bijay. Thank you, Sagar. Welcome, everyone, to Barbeque Nation Hospitality Limited Q3 FY25 earnings conference call. For today's call, I have with me Mr. Kayum Dhanani, Managing Director, Mr. Rahul Agrawal, CEO and Whole Time Director, and Mr. Amit Betala, CFO. We will begin the call with Mr. Kayum sharing his perspective on overall demand scenario and key highlights for the quarter. This will be followed by a detailed discussion on business performance and outlook by Mr. Rahul. Post that, we will open the forum for an interactive Q&A session. Before we begin, I would like to remind that some of the statements made in today's conference call may be forward-looking in nature and may involve risk and uncertainty. Kindly refer to the earnings presentation for a detailed disclaimer. I now hand over the conference to Mr. Kayum Dhanani. Thank you, and over to you, sir. Thank you. A very good evening, ladies and gentlemen. I take the pleasure in welcoming you to Q3 FY25 conference call of Barbeque Nation Hospitality Limited. I'm happy to report yet another stable performance in an otherwise tough operating environment. Our same-store sales trend has continued to improve. The business recorded an SSSG of -2% during the quarter. Each of our three business segments are in different life cycles and have performed well. In our Barbeque Nation India business, our focus has been to establish Barbeque Nation as a preferred destination for celebration. We have undertaken a targeted marketing approach to achieve this. We launched two food festivals during the quarter and continue to upgrade and refurbish our older restaurants to drive guest experience. We have seen a positive impact of these initiatives in our overall guest satisfaction scores. These measures have helped us to improve the SSSG trends despite an overall tough demand environment. Our focus has been to protect margins in the existing portfolio rather than expansion and have taken multiple efficiency projects to maintain restaurant operating margins. Despite the decline in sales and possible impact of operating de-leverage, we have maintained restaurant operating margins of 14.9%. As consumer demand continues to improve, we have increased the pace of our network expansion in quarter three. We have added four new restaurants in Barbeque Nation India business and have four restaurants under construction. Going forward, we expect to maintain a network expansion of 8%-10% in this segment. Our international business continued its robust performance with SSSG of over 5% + and recorded an annualized revenue of INR 100 crores + during the quarter. The average revenue per restaurant and restaurant operating margins were also very impressive. We have targeted to add four restaurants this fiscal year, out of which three new restaurants are under construction and one is in advanced discussion. We are entering new geographies with the launch of these restaurants. We will maintain a calibrated expansion plan for this segment and target to add four to six restaurants every year. We will continue to maintain our focus on SSSG, operating margin, and strong operating cash flows generation. This business segment will continue to be funded by cash generated in the international business. Our premium CDR business has been growing well and has achieved an annualized revenue run rate of INR 175 crores. The revenue increased by 24% on a YoY basis, led by new restaurant expansions. We have launched our first Toscano in Hyderabad, Delhi, and Mumbai this year and have received extremely positive guest feedback. Restaurant operating margins in this segment are strong at 20%+. We will continue to grow this store count by 30% YoY in this segment for the next few years. We are also happy to announce our strategic investment in Willow Gourmet, which operates an ice cream brand called Om Nom Nom through the delivery channel. The brand has strong guest recall, strong cloud kitchen unit economics, and has a significant opportunity to scale. This investment is in line with our strategy of building a portfolio of scalable brands. This will strengthen our existing delivery portfolio and also add another growth vector in the future. Our overall performance has been in line with our strategy and is shaping our three distinct segments while the overall demand scenario continues to be difficult. We experience slow and gradual improvement, also with the recent budgetary measures by the government to drive consumption. We are anticipating the discretionary demand to get additional impetus. We are there to accelerate our network growth and benefit from this anticipated demand improvement over the medium term. We remain committed to our store target of 325 by FY27. Thank you, and I will now hand over to Rahul to walk you through the performance in detail. Thank you, Kayum. Good evening, everyone. During the quarter, we added five new restaurants and closed one restaurant, resulting in a net count of 226 restaurants. The network included 190 restaurants of Barbeque Nation India business, eight restaurants of Barbeque Nation International, and 28 restaurants of premium CDR business. During the quarter, we reported a revenue of INR 328.9 crores. The revenues were flat compared to the same period last year. Our SSSG for the quarter was - 2% and continued to be on an improvement trend. Our dining business recorded a revenue of INR 277.5 crores, a decline of 2% compared to quarter three last year. The delivery revenue for the quarter was INR 51.4 crores, an increase of 9% YoY, primarily led by strong growth in volumes. The dining delivery mix for the quarter was 84% to 16%. Gross margin for the quarter improved by 30 basis points on a YoY basis to 68.2%. This was primarily driven by better realization and efficient management of input cost. Pre IND-AS restaurant operating margin for the quarter was 16.5%. Despite the operating de-leverage, the restaurant operating margins were similar to last year. Our adjusted operating EBITDA for the quarter stood at INR 33.9 crores and adjusted operating EBITDA margin stood at 10.3%. The margin continues to be among the best in the food services industry. Consolidated reported EBITDA margin for the quarter was INR 61.5 crores and reported operating margin for the period was 18.7%. We also maintained robust EBITDA to cash conversion and delivered INR 30 crores of cash profit during the quarter. Barbeque Nation India business SSSG trend continued its improving trend during the quarter and recorded an SSSG of - 2.6%. The business recorded a revenue of INR 261.8 crores and maintained gross margins of 67%. The Pre IND-AS restaurant operating margin for the business was maintained at 14.9%. Efficient cost management helped in maintaining restaurant operating margin at similar levels as last year despite operating de-leverage. Barbeque Nation International business recorded a revenue of INR 25.3 crores during the quarter and increased of 8% compared to the same period last year. The growth was supported by strong SSSG of 5.2%. The international business maintained its gross margin at 75%. Pre IND-AS restaurant operating margin for the business was extremely strong at 26.2%. Our premium CDR business recorded a growth of 24% YoY to INR 43.2 crores. The gross margin for the segment expanded by 70 basis points on a YoY basis to 75%. Pre IND-AS restaurant operating margin was 20.2% compared to 24.8% in quarter three FY24. The margins were impacted due to new restaurant additions, which are yet to mature. On a nine-month year-to-date basis, our revenues have been lower by 1.7% YoY, whereas adjusted operating EBITDA has increased by 5%. We also continue to maintain robust balance sheets with net debt position of only INR 17 crores as of December 2024. While the business segment performed in line with our expectations, we remained focused on building a portfolio of scaled brands and maintaining best-in-category guest experience. We are also committed to our restaurant target of 325 restaurants by FY27. Thank you. With this, we can open the session for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Manjeet Buaria from Solidarity Investment Managers. Please go ahead. Hi, am I audible? Hello. Yes, Manjeet, it's clear. Yes, hi. Hi, thank you. Thanks for the opportunity. I had two questions, both on the 51% stake acquisition in Willow Gourmet. One, whether it's a related-party transaction where either the promoter or anyone from management has any stake in this entity. And the second question was, given we already have multiple new growth avenues in Toscano, Salt, probably some part of international, why do we look to open this new front at this point of time? These two questions, please. Thank you. Sure. Thanks, Manjeet. So first, no, there is no related-party involvement in any of these. This company is owned by a couple, Cynthia Thomas and Pat, and they have built this business over the last six years, very strong guest feedbacks. So there's no other involvement of anybody related to Barbeque Nation. On the second point, yes, we have existing vectors of growth, but if you realize, if you look at our previous acquisitions like Toscano and Salt, this was acquired at a very early stage, and in five years now, we have built it to an approximately INR 125 crores net business. This will go in a similar sort of direction. I think this will strengthen our delivery segment. The word synergies in back-end kitchens and capabilities, we believe it's a very strong brand with strong economics. This will add a vector of growth in the future for us. Also, as part of our capital allocation strategy, I think we should allocate some portion of our operating cash we generated to newer ideas, which will help us to give us some vector of growth in the future. And with that thesis, we are investing around INR 17 crores in this business. Okay. I have just two follow-up questions, Rahul. One was, I read in the presentation that the annual revenue run rate was about INR 4 crores. So if you could just highlight which city or state this is in mainly because it doesn't seem very large at this point of time. And second. Sorry. Yeah, sorry. Go ahead. Okay. So just the second follow-up link to this was, when you think about adding these vectors of growth and you take a primary capital infusion in some of these brands, right, how does the incremental thought process on capital allocation take place, whether you want to put more money behind these brands or not? At what scale? And when do you get that confidence that now we want to put more money in this brand, which we have sort of seeded in the early stage? Thank you. This brand is only based out of Bangalore right now and not in any other parts. That's how this is only INR 4 crores. We only do three cloud kitchens currently, but they have an existing manufacturing facility in Bangalore, which can gear up and take this cloud kitchen from 3 to 10. In the initial stage, we plan to only launch it in our existing kitchens, which is the fixed kitchens of Barbeque Nation or Salt or Toscano in Bangalore, and thereafter take it to other markets. The current primary investment is good enough for at least the next two years. Whether we invest more in this will depend on how the business performs over the next two years and is it in line with our current base case scenario for this business. The other point on the capital allocation, like I said, largely each of the businesses generate their own cash flows, the three segments that we spoke about, and the new growth expansion has been done from that cash flow itself. Just that some portion of cash we want to sort of also deploy in some early opportunities, which can become a good vector for us in the future. Got it. I'll come back and queue. Thank you. Thank you, Manjeet. Thank you. A reminder to all the participants, if you wish to register for a question, please press star and one on your touch-tone phone. Our next question comes from Vicky Punjabi from UTI Asset Management Company. Please go ahead. Yeah. Hi. Thanks for taking my question. Just to understand, I mean, in a way, when we look at this quarter, it has come out of a base. I think last year the base was weak. The SSSGs are still not really up to the mark. How do you rate the performance of this quarter? Because we're still not seeing the kind of recovery that we had expected. Sorry, Vicky, your voice was not very clear during the time it was recording, but did you say that how do you rate the performance of this quarter? Yeah, yeah. Absolutely. Absolutely. I mean, if you had to really rate it, because we're still seeing a negative SSSG on a base that was really not that great. Yeah. Look, overall, I think each of these three businesses are in different cycles. When I look at Barbeque India business, as you know, over the period of the last two years, we have also consolidated some of our stores, and that has given us very positive results. One thing that we have tried to do during the quarter is do a lot of deep discounting and add to just revenues. I think we were consciously looking at maintaining our margins, and despite a 2.5% sort of SSSG decline, we have maintained our margins because of various other efforts that we have taken, right? You see that in the last three quarters, the pace of store expansion has been slightly improving, and now also we have a very strong pipeline of new stores that are under construction and their discussions. Similarly, international business has been very, very sound, very strong revenue economics and profitability. We are very cautious about adding more, and just that some of the new stores got sort of back-ended, and you will see at least two to three new stores coming in quarter four now in this year. Similarly, on Toscano and Salt side, I think the performance has been very good in terms of growth. We had grown our business around 24%, and have also maintained very strong operating margins at the restaurant level. So each of these businesses on net basis have done their part, and going forward, I think as we add more stores to each of these networks, we will see some impacts on overall revenues and bottom line. Okay. And just on this margin thing, I mean, my assumption is that we would look to get into early teens in terms of margins on a sustainable basis. Should we consider that at current levels of throughputs, we need to get there despite the external environment, given the prolonged phase of slowdown that we have seen? No, I don't think it's not that we can't go to early teens. We have done that in the past. Just that last two years have been tough for the business, both from the same-store sales growth perspective, and as we consolidate a few stores, this has led to the margin decline. As we've always maintained that the margin will move significantly as same-store sales growth happens. If you look at the performance between quarter three and quarter two, you will see almost 3 percentage points margin improvement, all driven by throughput from the same stores, right? We have also been taking a few measures in terms of the expenses of the outlet, which we've taken recently to a same-store sales growth of 3% to 4%. The margins will move to early teens. Okay. And just lastly, I think on the acquisition, I mean, my thought process, of course, delivery is a structural growth story. My thought process would be we would look to kind of get into segments that could be possibly highly scalable in the future because the current segment looks niche overall. So that delivery could become a real vector of growth for us. I mean, what's the thought process here? Because structurally, it clearly seems that consumers are moving towards delivery. So this will strengthen the delivery, and that's why this sort of fits with us. Plus, we can also leverage our existing kitchens to supply this particular product. This is a standardized product which comes out of manufacturing facilities. So to that extent, operating this particular brand from our existing kitchens also will be easier. So that's the thought process here. And I think if you look at the economics of all these cloud kitchens, they are really great. My question is different. My question is, how are we thinking of leveraging delivery in a bigger way, to be fair? Because this would still remain quite niche, even at scale, as a percentage of our total revenue, is what I understand. So look, the current areas of cloud kitchens is 30,000+, right? And our areas of cloud kitchens of Barbeque Nation restaurant delivery is around 25,000. So to that extent, if we grow it right, then this can add up to a significant way in our overall delivery business. Okay. Sure. Fine. Yeah, that's it from my side. Thanks. Thanks, Rahul. Okay. Thanks, Vicky. Thank you. The next question comes from Naitik from NV Alpha Fund. Please go ahead. Hi, sir. Thanks for taking my question. So my first question is, we've seen smaller players, smaller size players doing, say, a low single-digit SSSG, or even the QSRs, for that matter, we have seen at least doing closer to 0% SSSG, but not really a negative SSSG. Now, I understand that we are not operating in the same two-legged space, but generally, we are still operating in the food sort of space. So just wanted to understand the scenario from your end. I mean, what exactly are we doing for getting SSSG growth, and are we doing all that we can to get the SSSG growth back? I think we should not be looking at just SSSG in isolation, but also look at the SSSG comes at what cost? Is it done through a large amount of discounting or marketing or other stuff, right? So it's very difficult for me to comment on the specific players, but like you said, the strategy that we are playing is that we can't just burn money to get sales and to put SSSG and have an impact on our margins. That's not us. And if you look at our numbers in the previous quarter and also during the past quarters, we have shied away from deep discounting and built a brand based on profitability. So I think on a holistic basis, we should look at both SSSG and margins. In terms of other initiatives that we are taking for SSSG improvements, I think there's a lot of work being done on this experience side. We have been continuously upgrading and refurbishing some of our older stores. There's a lot of food festivals that have happened in the last two quarters. We have done last quarter, we have done two food festivals. Before that, in the nine-month period, we have also done four other food festivals. This quarter around, we launched three desserts in our menu, also launched rice bowls in our delivery menu. So a lot of new initiatives have been taken to keep the brand fresh. And we believe that there has been obviously improvement in these SSSG trends, and as we go forward, this will also continue. Okay. Got it. I had a bookkeeping question. I just wanted to know what is the ESOP cost for the quarter and for the run rate for nine months, and what was this compared to? INR 2.5 crores. INR 2.5 crores, and what was this last year, same quarter? Hello? Hello? Yeah. And what was this same quarter last year? Around similar. There has been no significant ESOPs being issued. Got it. Got it. Okay. That's it from my side. Thank you. Okay. Thank you. Thank you. The next question comes from Rohit from iThought PMS. Please go ahead. Yeah. Hello. Am I audible, sir? Yes, sir. Yeah. Hi. Good evening, sir. So the question I had was, sir, so we are at about 225 restaurants. So I think this year we'll close at about 230. So the incremental journey of 70 restaurants over the next couple of years, can you broadly sort of share what would be the split between Barbeque versus the premium CDR, so Toscano and Salt? We have 226 restaurants currently, and I expect the year to end at around 193 for Barbeque India, which is three more restaurants in Barbeque India, 10 in Barbeque International, which is two more in International during quarter four, and 30 in premium CDR, which is two more restaurants in quarter four. Overall, we expect to close the year at 233. Next year, we are targeting around 22 restaurants in Barbeque India, around five to six in Barbeque International, and around 16 in premium CDR, which is both for Salt and Toscano put together. Overall, we expect to close the year at around 270 also. Got it. So sorry, how much did you say in premium CDR? From 31? 60. Okay. Got it. So let's say two years out, the share of premium CDR in our revenue should be like about 20-25%. Is that a fair number? Right now, it is about 10-11% on a run rate basis if I take INR 160 crores. Yes, sir. sir. Yeah. No, it should be around 20%, yeah. It should be around 20%. And sir, if you can just maybe help us with the payback that you look at in these restaurants, especially now as you go into newer geographies for Toscano and Salt, if you can just maybe look at when do you think that these restaurants typically break even? What is the majority unit economics that you would want to see for these? Right. So the premium CDR burns around INR 6.5 crores of current TTM revenues, and I think it should settle down at INR 6 crores as we open more stores. In some cases, we're also opening up smaller stores of around 1,600-1,800 sq ft, as against the original ones of around 2,400 sq ft. So at INR 6 crores, we will generate around 21%-22% restaurant operating margin here, which will be close to INR 1.2 crores. And the Capex here is around INR 2.75 crores. So we're looking at almost three years with that period with some time for ramp-up. Typically, sir, how much time does it take for I mean, what is the typical buildup of the INR 6 crores or INR 6.2 crores that you said in terms of restaurant-level revenue? Let's say year one, year two, year three, how does it work broadly? I think we start with a revenue pipe front of around INR 33-35 lakhs per month, which will give us around INR 4 odd crores. This grows up to around INR 40-45 crores, and then settles down at INR 50-52 by year three. Understood. Understood, sir. As the revenues grow, the margin also starts increasing with similar proportions. Right. The gross margins in these would be upward of 70%? Yeah. In premium CDR, our gross margins are on average around 74%. Right. 74% to 75%, yeah. So sir, then while they would be 20% in terms of revenue, from an operating margin perspective or operating profit perspective, they should be much more than the Barbeque brand. Is that a fair understanding? Two, three years out. I'm not saying immediately, but two, three years out. Is that a fair understanding? Sorry, they should be what? No, I'm saying, sir, the premium CDR brand, both Toscano and Salt, from an op, as you said, revenue-wise, they will be 20% from a contribution point of view, but from an operating margin point of view, they should be significantly more than that. Is that a fair understanding? Not now, but two, three years out. The percentage, yes, that's happened today also. I mean, Barbeque Nation today operates at a restaurant operating margin of 15%. I think this has a potential to go up to around 18%, and if the premium CDR is at, say, 21%, there will be a disproportionate share on the operating margins from premium CDR. Yes. And that's also true for international business because that also operates at almost 25%+ restaurant operating margin. Right, and your last question for me from my side on the Barbeque India business, so of course, I mean, the last few quarters, six, seven quarters have been tough from an operating environment point of view, but we still maintain our leadership in the category that we operate in. However, I mean, I think a few quarters back, you also alluded that there's been an increased amount of supply from various formats, so I mean, from a customer mindshare point of view, I mean, how do you see the brand in terms of relevance? I mean, a lot of our weekday crowd would be from the corporates, but just from anecdotal or from observation perspective, now there are so many brands that have opened up. I mean, from a relevance point of view, from a valuation point of view, how do you see that brand, even though we may be leader in the Barbeque category, but from an overall relevance point of view, how do you see it? I mean, any thoughts that would be helpful, given that supply has gone up significantly, as you have already mentioned, maybe three, four quarters back? Well, look, the supply has gone up, and also there are many new copycats or the similar format schools that have come up. But like you mentioned, we have the leadership position in this particular segment, and over the course of years, we have also done course correction in our operating structures. So like I was mentioning in the early part of my call, we look at a few of the cost initiatives and ensure that in the revised scenarios of the existing throughput that you get from the existing restaurants and the new stores, how do you set your economics right such that on an incremental slope basis, you start making at least 18%-20% restaurant operating margin, even though the throughput is, say, around INR 5.5-6 crores, right? And those initiatives have been taken. These have been also implemented in our existing outlets, and that is the reason why we have been able to sort of maintain our margins the way it is. What this also means is that in the past, if you were doing larger stores, we have to do it in smaller stores also, which means that we can reduce our store size by around 20-25% so that the economics sort of is maintained. That's on the format front. Also on the guest front or in terms of value proposition front, the same category is value for money-driven brand. I realize that there is two to three percentage point drop in sales for sales growth, but I think these remain extremely important for our balance, 98% of our consumers who keep coming to us for all-you-can-eat and for their celebration needs. From brand side, we keep updating our restaurant design. The new ones that have opened up have been far, far superior in terms of ambiance and design that we have done in the past, and in the existing ones also, we are updating our store assets and simultaneously doing a lot of stuff on our food stuff, so I think with the mix of all of these, I'm extremely hopeful that we start seeing positive changes in our India business also. Sure, sir. That's very helpful. Thank you. Thank you very much. Thank you. Thanks. Thank you, Rohit. Thank you. The next question comes from Madhur Rathi from Counter Cyclical Investments. Please go ahead. Hi. Sir, thank you for the opportunity. Sir, if I look at the longer term, like from 2016 to current year, sir, it seems that our store opening has grown at a faster CAGR than our revenue growth. So that would mean that the unit economics of store has decreased because we have taken price hikes as well during this period, and that is true for FY 2016 to FY 2020 period as well, so barring this two, three year of slowdown in the economy and all, sir, on the longer term trend, sir, do we see the store unit economics getting deteriorated or the product appeal getting down, so sir, your thoughts on that? This will also depend on what size of store that we opened up, which trade geographies we opened up, and also what throughput has been expected from what markets we have opened these up on. But overall, if you look at our average throughput per restaurant, these have been pretty stable from 2019 to 2024 right now. But, sir, when you see our average throughput has increased, but we are similarly taking price hikes. So, sir, something is going wrong, right? Because we are saying that we are taking price hikes as well as our store opening has increased, but it is not reflecting in our revenue. So, sir, I'm not understanding when we say that our throughput is the same, our unit economics is the same, but the revenue is not growing. So, sir, from that perspective, sir, I'm not able to understand. So yes, we would have taken on a CAGR basis 2% price hikes, but on a net basis, if I look at 5 to 6 year trend, our average revenue per store has been stable. What it means is that in some of these markets that we open up, say, smaller stores or stores in K2KC market, there the average throughput will be lower. So in the part of the portfolio, with SSSG over a 7-8 period time frame, the average revenue per store in that portfolio will grow, and the new ones start with a lower sort of number, and the blended number of this is still flattish at around 6 crore revenue per store. Okay. So, sir, like over the next three-to-five-year period, considering just the Barbeque India. Mr. Rathi, you're sounding a bit muffled. Can you use the handset mode in case of any? Yes. Is it better right now? Is my voice better right now? Yes, sir. Please go ahead. Yeah. So, sir, over the next three- to five-year period, sir, where do we see our per store revenue growing, considering? And what are the strategies that we are following to increase this throughput level overall at our stores? There are two, three vectors. One, obviously, is price. We have maintained around 2%-3% price hike over a longer period of time. Second is volume growth. While last couple of years have been subdued, there will be some base effect of this, and we will see some core growth from the existing stores coming in. And third vector is delivery, which last quarter also has grown at around 9% rate. With these three vectors overall put together, it should lead to around 4%-5% SSSG growth. Okay. Got it. Sir, just a final question from myself. Sir, this Willow cloud kitchen that we have bought, sir, we have bought it at a 9 times sales multiple. So at an INR 4 crore annual rent rate, we have bought it, I guess, at around INR 34 crore valuation. So, sir, what gives us confidence that we can scale this segment when players like HUL are de-merging their ice cream business to protect their margins? So, sir, and double-digit margin on an INR 4 crore revenue won't make scale vendors go to INR 40 crore. So, sir, what gives us the confidence that we can grow this segment? I would like to understand on that. And, sir, are we going to pay them by ESOPs of Barbeque Nation, or it's going to be a pure cash transaction as well? So when I think you are comparing post-money valuation, so the money that they're investing into the company is also remaining in the company and will lead to growth. So to that extent, I think your comment on multiple is incorrect. This is cash transaction. This is not with share transaction. And like I also mentioned in the earlier part of the call, we understand that right now small because they already operate two cloud kitchens, but they also have a growth portfolio. They have the recipe set for the ice cream that we produce. They have great feedback from the consumers. The average rating on the platform is 4.8+. They also have almost 62% repeat rates of consumers, which is among the best in class in the industry. So I think we have to look at all of these aspects when we try and value something like this. Like I also mentioned, this is not something which is directly going to add to our growth, but we have to keep investing in this and in terms of building this business and ensure that this becomes a larger business in the past. If I look at our past history, we looked at we acquired Red Apple, which is Toscano business, almost five years back when the business was almost INR 30 crore sort of revenue run rate annualized, and today that business is close to INR 125 crore annualized run rate. Some of these things will build over a period of time, and as part of our capital allocation strategy, we will invest some part of our operating cash into these smaller and newer concepts, which will help us to build a portfolio of scalable brands. Okay. Got it. Sir, thank you so much for all the work. Okay. Thank you, Madhur. Thank you. The next question comes from Abhishek Nayak from Hexagon Assets. Please go ahead. Hi. Hi. Thank you. Good evening, Manjeet. Thank you for taking my question. So my first question, pardon me if you covered in your prepared remarks, my first question is regarding the same store growth for international. Could you quantify the impact of currency in that same store growth for me, please? I think there is no impact of that. Amit, do you have that number ready with you? No, Rahul. We have to give that number to them. Sorry, Abhishek. I think we'll get back to you with this number. All right. No problem. I'll take it offline. And, sir, secondly, I had a question regarding marketing initiatives, particularly with respect to customer data. So when you are looking at trying to grow the dining bookings through your app, for example, right now I can see that number is at 31% or something. So how is the company trying to kind of use customer analytics to kind of boost customer targeted marketing? One is that. And second, when it comes to India's operating margins, do you have any other levers? Because I can see the gross margins are pretty stable. So do you have any other levers, for example, your commissions with your delivery aggregators or any store-level expenses that you are looking to control that might help us improve margins in India? Right, so the two parts. One, on our consumer data, we do a lot of analytics, and as you actually pointed out, our app has been going pretty well, and a lot of consumers want to book directly with us through our website or app. We have now a new website that was launched almost two quarters back, and we have seen very positive results on that. Apart from the 31% business on dining that comes from app and web, around 27% comes from our call center. A lot of large bookings want to talk to our call center representatives to make the booking, and then balance large part is also the walk-in guests. Our data collection rate, customer data collection rate, or the contact number data collection rate is almost 99%, and we do mine this data to retarget some of the existing customers through either SMS or WhatsApp or through other digital channels on Meta or YouTube. And apart from this, there's similar marketing, digital marketing efforts have been taken to build new customers for the profile. And in some of the communications of Meta, we also have tweaked our communication to make it very relevant for the type of customer profile and for the type of celebration needs that the customer may have. So this is usual, and it runs like an autopilot once the customer journey has been set. Overall, in our company, we would have maybe around 50 or so customer journeys that are already mapped from the existing data to mine this, and this keeps happening on a regular basis. On operating margin front, there are two, three levers still. One is on our manpower cost. If you look at our store manpower cost, we are still tracking at around 18%-19%. We target to bring this by 1 percentage point. Then we have other cost optimization levers of around 0.5%, which will come from some of the supply chain costs. We will also need to work on some of our electricity cost reductions and some other overhead costs that we have. So put together, I think there is around 200 basis point margin improvement plan that we have, and some part of it will also flow through from higher SSLGs. So with this, we expect the operating margins to go up. Okay. Okay. Thank you so much, sir, for the color. And pardon me again if you covered this one also in your prepared remarks, but since we are one month down in the fourth quarter, can you share some emerging trends that you might have seen this month with regards to, say, traffic or delivery flows or anything that you can help us pinpoint something with customer consumer sentiment? I mean, it's very early to sort of call out this quarter. We only have one month gone, and then I think we'll wait for the quarter end to see how it emerges. But overall, the trends have been similar to what we saw in quarter three. Understood. Understood. Okay. Thank you, sir. Thank you. All the best. Thank you. Thank you, Abhishek. Thank you. The next question comes from Resha Mehta from GreenEdge Wealth. Please go ahead. Yeah. Thank you and good evening. So the first question is basically just extending what one of the previous participants asked, that what would be your hypothesis or your informed guess about why is it that QSR is seeing lesser decline now in SSSG versus the past? And there seem to be, at least from what the listed companies have reported, some improvement in numbers, while we are not seeing that for our numbers in the casual dining space. So why do you think this dichotomy is there, and would it be of a real concern to you? Look, I think QSR and CDRs are two separate business segments. If I can pinpoint a couple of differences which are very apparent is the share of delivery dining, depending on the company you're talking about, but broadly, QSRs would be at around 50% delivery business, whereas in our case, it is around 15%-16%, right? And delivery in general has done better, and dining has not done that well. If you look at our delivery same store sales growth, it is in positive territory. It is, in fact, mid-single digits. And on our dining business, our numbers have been lower by around 2 percentage points. Now, if I look at, I've not actually seen the dining business performance of QSRs, but if you look at that business, I'm sure there is some slow trend in our dining business that we have seen. So if you look at the mix of these two, you will see the differences. Second, as I said, the SSSG should not be just looked in isolation. SSSG in our industry also leads to margin expansion because of operating leverage, right? And if SSSG is there without any margin expansion, then in some cases, these SSSGs also come from increased marketing spend or discounts. In our case, it's very difficult for me to speak about QSR, but in our case, I think all these metrics have been under very tight control. And if I look at our same store Meta performance on a nine-month basis, it's in a positive territory, right? SSSG is important to also protect your margins, right? So I think that's a conscious call that we have taken, and we are happy with that. If it does concern us, yes, obviously, we would like to see our overall store throughput to be on a high basis, but does it concern me that there's something absolutely wrong? No, absolutely not. I think there's no metrics which I'm seeing which is giving me that indication. We obviously keep doing our work on this experience to drive dining business. We keep doing our work on margin improvement through various cost initiatives and also keeping an eye on growth through this store expansion. I think in all the three verticals, we are happy with the way it's going. So based on your internal studies that you all may be doing, right, how are you all faring in the casual dining space, the dining part, right, versus your other like-for-like peers? So it's very difficult to get the same store sales data, but in terms of revenue CAGR on a five-year basis or on terms of margins, I think we are among the best in the industry, despite that almost larger base of 2x to 3x of some of the other larger names. Right. And see, would you say that the competition, the supply side, has really intensified in the casual dining space? Because we see a similar trend and intensifying competition also in the QSR space. So here, would you say that in the casual dining space, there has been much more intensified competition, or has it now kind of started cooling off over the last, let's say, a couple of weeks or quarters? No, it had intensified a lot after the demand contraction phase that we saw in 2023. We saw a lot of supply coming in 2024, 2025 financial years. And now the demand environment has been tough for pretty much everybody in the food service industry. So a lot of smaller CDR players also are feeling the heat. And at least from the market perspective, some of the sites that we found to be very non-doable from the rental perspective are getting into the realm of something that we should consider for our own brands. So to that extent, I think there has been some green shoots on the easing of the overall rentals in some of these places. So we hope that the new supply phase growth is not as strong as we have seen in the last two years. Thank you. So the line for the current participant has been dropped from the queue. So we'll move on to the next question. The next question comes from Vivek Kumar from Bestpals LLP. Please go ahead. Can I have an audible there? Yes, Vivek. Sir, just same question continues with what Rohit has asked. You had just mentioned that there's a huge supply and we are facing demand problems. And you also mentioned in the previous con calls and across annual reports that you want to be celebration destination for celebration. So just wanted to understand that what can we do because we can't control the external supply nor the incomes or the GDP growth or the short run. What are we doing so that the customers are you calculating or do you keep track of how frequently customers visit? How do you make sure that they come to you? And how do you make sure that our brand doesn't get diluted? And that's what we can do, right? Better. And then how do you innovate on these things? Also, if you can throw some light on how the competition is faring because you were told that many copycats have come. How are they faring? Is there anybody who's doing better, and we have to match up to them? These kind of things because this is what is in our control. We can throw more light on because that's our question. That's my question, sir. So I think what we need to do is just keep working on our best experience. And this is what we have done for the last one and a half decade. We have to keep ensuring that our food experience and the culinary experience of guests is among the best in the category. The services that the guests expect from us are also among the best in the category. We have been able to dispense this over 200 of our restaurants in Barbeque Nation. And also maintain our assets freshness and look and feel, right? And this is what we have been consistently doing for the last few quarters. In terms of many other formats who are similar Barbeque on-the-top formats, we clearly are market leaders. I think the number two player would be maybe one-fourth of our size in terms of store count. It's not that we have seen any other player who is doing extremely well in terms of this category. I think we continue to be market leaders. We continue to add more stores on this and have the widest presence in the country. So you're throwing around INR 100 crore cash, 30 to 40. But you're trying to add around 50 restaurants next year. So will you go for that, or are you confident that you'll throw higher cash next year? So we are looking at around 40 to 45, which will lead to around INR 120 crores of Capex here and another INR 20 crores for maintenance and company furnishings, around INR 140 crores of expected cash. At last year, say at 10% just of operating margin, we would generate this amount of cash. I think the delta that will be there is highly INR 15-20 crores. So if the operating cash is not as much as 140, then we will take some debt. And our balance sheet is not leveraged. As I said in my earlier part of the call, the net debt is approximately INR 20-odd crores only. We have read in some news articles that you've not just this, you've also had some new restaurant, bar and restaurant open Bricks. Is it true, or is it some other thing that just got misquoted? Is it a misinformation? No, it's true. Bricks is a bar and restaurant concept that we have opened up in one of our existing restaurants. We have two floors of Barbeque Nation. We converted that to one floor of Barbeque Nation and one floor of this format called Bricks. Now, again, this is something that has happened without having any incremental rental or any incremental cost towards local license. So the previous experience on these are very handsome. And this is just an experiment to see how it goes. So this is, anyway, very small to even talk about. Sorry, sorry. But no, no, that's right. The initial response is very good. Yeah. No, but this is not a strategy. I think, like I said, we have three distinct verticals. We have Barbeque Nation in India, we have international, and we have premium CDR, and we are focused on doing these three from our operating cash. Sorry, Toscano? Most of the premium CDR will be in Toscano, or both Salt and Toscano both equally? Or it will be more tilted towards Toscano? Around 20 stores in Toscano and balance is Salt. Thank you, sir. Thanks. Thank you. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please restrict your questions to each participant. If you have any follow-up questions, please rejoin the queue. The next question comes from Gopinath Reddy from PNR Investments. Please go ahead. Sir, given the present environment, are we looking at the new Barbeque Nation stores of smaller size than what we have currently, or is it the same size? And where are we opening them? Is it which area of this country? Yes, we are looking at smaller size, a reduction of maybe 20%-25%. We are largely looking at the new expansion in the metro and tier one markets and are very selective about tier two, tier three markets. Are we looking into South India also, or how are we going in South India specifically? No, we look at Pan-India. We are already operational in around 25+ cities. So I think more than any specific region, what matters for us is whether the trade area is attractive for us and what is the throughput that we will take in the new store that we open up, and also what are the other commitments like rent and store upgrades. Okay. Which area of India is having this slowdown in same-store sales growth, sir? Especially the maximum. Which area is it? South has been down the most. Is it because too many copycats are there, or any other reason, sir? Specifically South, what may be the reason? South definitely has higher competition than other regions, but the attribution can also be to some decline in corporate demand in all these locations. Any area in India where we are growing, sir, in same-store sales growth? Oh, yes. We are growing in two of the regions out of four, and one region is slanted. Okay. That's it from my side. Thank you. Thank you. Thank you. The next question comes from Pritesh from Lucky Securities. Please go ahead. Can you list the reason for store closures, these three, four stores in the year? Some of these were not performing to the extent that we wanted. They were loss-making, and based on our numbers, we believe that they will not turn profitable in the near future. And the comment that you made about regional growth and regional decline, so two regions in India growing, one is flat and one is declining. So that one decline is so significant a decline for you to have a -2 SSG, yeah? Yes. The other two positive also are close in the regions. Yeah, it's okay. Even if it is low single-digit, it matches your SSG, closer to your SSG, right? So the question is this one-fourth, so 25% decline is likely to be has to be a double-digit decline. So can you give out the key reason for such a large decline and what exactly should happen in the system for it to rectify? Or what you should do to rectify, either the system or you, whatever be the case? One, I think we don't give regional level same-store sales growth numbers. So I won't be able to comment on your double-digit number there. But like I said in the earlier part of my call, the effort that we are taking for same-store sales growth has been consistent across all locations. And we are working on these experiences to increase the cover growth on the downside. These are the efforts. So what efforts have to be taken then? Like I said, you have to keep working on your guest experience. You have to keep upgrading your food experience. Like I said, we did two food festivals during the quarter, which is, we launched three dessert menus. Keep up with your service levels in the restaurant. But sir, these efforts are normal for a casual dining sort of for a dining business. These are normal efforts that typically go in for a customer experience, right? Right. Any other areas of improvement that should happen, in your opinion? Or it's just environment? No, I think it's very difficult to pinpoint which is what, but we have to keep up, keep delivering the same experience to the guests and keep improving on it every time so that guests keep coming back, and to some extent, it is also environment. Can you just tell the nine-month operating cash flow? How much cash did you generate in nine months? I think it's around INR 65-odd crores. Bijay or Amit, can you please confirm that number? Yes, sir. That is around INR 65 crores. And for the full year, did you say INR 140 crores is what I heard, or I did some error in this? For next year. For next year, I'm saying the Capex target at 40 stores is INR 140 crores. And if we do around double-digit return margins, we will have enough cash flow to fund that. If the margins are lower, to that extent, we'll have to borrow debt. Okay. So next year, store addition is INR 40 crores, and to which the total CapEx is 140, with some INR 15-20 crores of maintenance included in it, right? Yes. So the store Capex is 40 into INR 3 crore, about INR 120 crores + 20 crores for maintenance. Yeah. Okay. And what is your store addition this year? We have done 13 new, and we expect to add around 7 more in quarter four. So around 20. Okay. Okay. Okay. Thank you. Thank you, Pritesh. Thank you. The next question comes from Manjeet Buaria from Solidarity Investment Managers. Please go ahead. Hi. Thanks for my follow-up, Chance. I have three questions. One was, do we have any agreement to buy out the remaining stake in Willow at a predetermined valuation and within any predetermined time period? The second question I had was, while I understand the need to experiment to create growth vectors as you explain, but is there any formal policy or a cap where you say it's over a rolling five-year period, we won't invest more than X% of our operating cash flows in these experiments? Was the second question. And finally, if you could just explain what synergies you were mentioning on the kitchen side, etc., because they were not clear to me. And how does this brand go from only 4 crore revenue to, say, a 100 crore revenue brand if one takes a longer time period? These were my three questions. Thank you. Yeah. So there is pre-agreement to buy, but not in terms of shareholding, but in terms of quantum of retails. So we have an option to buy a stake worth INR 2-4 crores over the period of next 10 years from them, but no obligation to even invest this amount of money in adding to more of stake. In terms of there is no formal policy as such, but at a board level, we don't want to invest more than, say, approximately 20% of our operating cash in some of these newer initiatives. And in terms of efficiencies, like I said, they have an existing setup from which they run their existing three cloud kitchens in Bangalore. As a Barbeque Nation group or a company between all the three brands, we have around 35 kitchens in Bangalore. We expect to take this particular brand in at least 15-20 of our existing kitchens, depending on space to carve out for these brands. And then for the balance part of the city, we'll have to contract cloud kitchens, which have got attractive economics. So that is our plan on this particular brand. Sorry, sir, Rahul, if I got this correct, you mean that you'll sell this brand via your existing kitchens at Barbeque or other restaurants via the aggregators. It's not to sell in your existing restaurants, basically. Yeah. Yes. Not in my existing restaurants. These are premium artisanal ice cream, so I think since Barbeque Nation is all you can eat, we can't. No, that makes sense. Then it makes sense. Sorry, I was confused. So Rahul, let's say you take this across whatever 30 stores you have, roughly, right? What is your expectation on how big will the revenue be on this brand within, let's say, next one year? Look at 30 cloud kitchens, even at, say, average of INR 7-8 lakh per month on each cloud kitchen. This can become approximately 25-odd crore sort of revenue business for us. But we'll have to see through the journey of this particular brand. I think we are very happy with what we saw in terms of this experience right now, and we'll have to obviously execute this. This comes with the execution risk that it will take. Sorry, and just one last one. When we take these bets, why do we take a 51% stake and not a sub-50% stake? Because let's say if an experiment does not work out, as the majority owner or the promoter, exits become much more complicated. So why won't you first experiment with a sub-50% stake, and then if it starts working out, have the call option to buy more stake? Look, we are long-term holders of these brands, and we don't expect to sell this. We expect to build these brands over the years as we have built, say, Barbeque Nation out of nothing and Salt now. And you're right that some of these may not work also. And if it doesn't work, then we obviously have an option to sell this or divest this from our portfolio. And to that extent, if you're operating control or the shareholding control at 51%, this becomes all the more easier to do that. So that's the broad philosophy with which we operate. Okay. Thank you so much. Thank you, Manjeet. Thank you. The next question comes from Naitik from NV Alpha Fund. Please go ahead. Hi, sir. Thanks for the follow-up. I just had a bookkeeping question. So I see your adjusted EBITDA, which is down 4% year over year, and at the same time, your employee cost is up at a similar amount. This is despite adding four new stores. So I just wanted to ask, is the rental expense of these new stores not yet kicked in fully? No, rentals have kept in, but like I said, we have done a lot of cost-efficient projects, which are all sitting in occupancy and other costs. And employee costs have gone up largely because of the new stores that we've added. Right. Okay. Got it, sir. Thank you. Yeah. Thank you. Thank you. The next question comes from Rohit from iThought PMS. Please go ahead. Yeah. Yeah, sir. Just a couple of questions. So incrementally, as we open stores, especially in Barbeque, would you have any mix in terms of tier two, tier three versus the tier one cities? That was one in your mind. The context being, I'm assuming maybe the competition would be much lower in the tier two and tier three markets. So if you can share that. In the past, I think you mentioned some of these concepts have not worked in these tier two and tier three cities. So I just wanted to get your sense. Have we changed anything for these formats, or is that even something that we're looking at? That was the first question. Second, typically for us in the barbecue format again, what is the rent to sales that we have, and how would that be different from, let's say, top eight cities versus the rest of the markets? So in terms of our expansion, we'll continue to largely operate in metro and tier one markets. Tier three markets, it's not that they don't work. We still have around 45-50 restaurants in tier two and tier three markets, and they're doing fine. Just that some of these markets take longer to grow and mature, and that's why we prefer some of these new markets that are developing in metro and tier one markets. So going forward also, I expect to sort of have the same ratio of 25%-25% in metro and tier one markets. In Barbeque Nation, rental to revenue ratio for overall Barbeque Nation would be around 11%-12%, out of which top eight cities would be maybe a couple of percentage points higher than the rest of the country. Understood.