Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir. Thank you. Welcome to Jubilant FoodWorks' quarter one FY 2022 earnings conference call for investors and analysts. We are joined today by senior members of the management team, including Mr. Shyam Bhartia, Chairman of Jubilant FoodWorks; Mr. Hari Bhartia, Co-Chairman of Jubilant FoodWorks; Mr. Pratik Pota, CEO of Jubilant FoodWorks; and Mr. Ashish Goenka, CFO of Jubilant FoodWorks. We will commence with key thoughts from Mr. Bhartia. Mr. Pota will follow him with perspectives on JFL progress and strategic imperatives. After the opening remarks from the management, the forum will be opened for question and answers. A cautionary note. Some of the statements made on today's call could be forward-looking in nature and the actual results could vary from the statements. A detailed statement in this regard is available in Jubilant FoodWorks' quarter one FY 2022 results release and earnings presentation, both of which are available on the company's website under the investor relations section. I would now like to invite Mr. Hari Bhartia to share his views with you. Thank you, and over to you, sir. Thank you. Good evening, everyone, and welcome to our quarter one earnings call. The recovery momentum that had commenced in the second half of financial year 2021, as you know, was interrupted by the second wave of the pandemic, mostly in April and May of this year. The second wave has taken a grievous toll, both in terms of lives and livelihood. During a quarter where every day brought new challenge, we have been gratified by the resilience and adaptability with which our team members not only delivered on business continuity but also rose to the occasion and lent their support to one another in time of this unprecedented health crisis. We swiftly responded to this crisis and offered all possible assistance to our employees and their families. As the COVID caseloads increased, we were faced with multiple restrictions. Dine-in operations were largely shut across the country. Mobility restrictions severely impacted our takeaway channel. State-specific delivery restrictions enhanced the on-ground challenges further. However, despite the reduction in operating hours, reduction in operational stores, and the impact of restrictions on dine-in, our sales recovery in Domino's was led by strong growth in our delivery channel. In this challenging environment, we are happy with our performance in quarter 1. When compared to respective period in FY 2020, our revenues for Domino's had almost fully recovered by June 2021, resulting in sales recovery for quarter 1 at almost 94%. With easing of restrictions, our restaurant operating hours will increase further, which will result in sequential improvement in operating performance. We opened 29 stores in India. This included 20 new stores of Domino's, three stores each for Hong's Kitchen, Ekdum! and Dunkin' Donuts. The lockdowns and allied restrictions due to the pandemic presented a lot of on-ground challenges, and it interrupted our store expansion momentum, leading to a lower number of new stores compared to the last quarters. Going forward, we expect to see some significant structural changes in the category, which will play to our strengths. The pandemic has accelerated the push towards digitalization and the early movers which continue to invest in their digital capabilities will benefit in the long term. A fair share of portion of delivery growth will be incremental as tier two and tier three cities has adopted well to the delivery in an accelerated manner during the pandemic. Dine-in with a different consumer cohort will mostly add to and not cannibalize the overall growth. Consumers will increasingly look to trusted brands and those with proven quality and hygiene credentials. Restaurants will increasingly look to build their own digital channels and gain control and insights on their customers' data and grow in a sustained and profitable manner. As these trends play out, JFL is well-placed to lead and participate in the growth of food service industry with our fundamental strengths in delivery, growing digital capabilities, varied product offerings and deep understanding of consumers. As we look ahead, we are excited at the growth potential that lies ahead. Towards that, we will be making two significant investments in our supply chain network. That is increasing our capacity in Bangalore and Mumbai. We also intend to accelerate our new store openings and plan to open at least 150-175 stores this year. Before I conclude, I'm happy to share with you that we are progressing well on our vaccination drive. Our endeavor is to vaccinate all our employees and their families to ensure theirs as well as our customers' safety. This is quite simply the single most important priority for us. With that, I would now request our CEO, Mr. Pratik Pota, to continue this discussion by sharing his perspectives. Thank you, Mr. Bhartia. Good evening, welcome to our Q1 FY 2021 earnings call. I trust that you and everyone around you are safe and well. I'm glad to share our performance for Q1, delivered in the face of significant difficulties on account of the COVID second wave. Revenue from operations was at INR 8,790 million, a growth of 131.1% over last year. Domino's witnessed 131.4% sales growth during the quarter, with a growth in delivery of 123.7% and takeaway growth of 116.7%. Dine-in growth on the low base of last year was 475.5%. Against the corresponding base of FY 2020, which will make for a more meaningful comparison, Q1 FY 2022 saw recovery of 94%, driven by delivery recovery of 149.1% and takeaway recovery of 99.9%. Dine-in remained challenged with a recovery of just 12.3%. EBITDA came in at INR 2,115 million and EBITDA margins stood at 24.1%. Profit after tax at INR 626 million translated to a profit margin of 7.1%. Will now share some of the highlights of last quarter. Growth picked up post the easing of the curbs on operations in the second wave. The momentum in June was markedly stronger with almost complete revenue recovery. We opened 29 new stores during the quarter, including 20 new Domino's stores, which marked our entry into five new cities. We also opened nine stores for the new brands, three each for Hong's Kitchen, Ekdum and Dunkin' Donuts. While the store opening was lower than the earlier quarters on account of the pandemic-related challenges, we intend to accelerate the store opening momentum, as Mr. Bhartia said, and with a target of opening between 150-175 stores this year, on ground conditions permitting. Continuing our focus on driving our own digital assets, our app installs during the quarter were 6.8 million. We continue to build upon our digital capabilities and made some changes on our app and our PWA with a focus on enhancing user experience. Our dominant and growing share of our delivery orders continue to come to us from our own assets. We also reintroduced the Hello Domino's toll-free number to allow customers to call and use voice to place orders. While a dominant majority of our ordering will remain online, there is a small cohort of customers who are much more comfortable with telephone ordering, and this functionality will help address that need. On the international front, Sri Lanka and Bangladesh registered a sales growth of 55.4% and 111.2% over FY 2021 respectively. We opened four new Domino's stores in international markets, two each in Sri Lanka and Bangladesh. Both these markets delivered strong EBITDA margins last quarter. Our performance in the new brands, especially in Hong's Kitchen, was encouraging and improved sequentially through the quarter. We now have a total of 11 Hong's Kitchen stores in Delhi NCR. Looking ahead, we are tremendously excited by the possibilities that lie ahead. The food service market has come upon an inflection point. We believe that the next few years will see a period of market making and strong growth. We are excited about our own future. We are confident that we have the right strategy to drive hyper-growth for JFL. Domino's will continue to power ahead. We see a clear potential of 3,000 stores in India in the medium to the long term for the brand. We will invest in expanding our portfolio of brands through Hong's Kitchen, Popeyes, Ekdum, Dunkin' Donuts, et cetera. Aim to own a much larger share of occasions. We will also grow our business profitably in the international markets. Bangladesh and Sri Lanka have exciting potential. We will use our knowledge and our best practices to rapidly scale up in these markets. Our growing strength in technology and our digital transformation will help us improve the customer experience and improve the employee experience. Also drive efficiencies. To summarize, we believe that we have the right strategy for driving profitable growth in this exciting category and to transform into a multi-brand, multi-country food tech powerhouse. With that, I would like to call upon the moderator to initiate the Q&A session. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from the line of Abneesh Roy from Edelweiss. Please go ahead. Thanks for the opportunity. My first question is on store expansion. You mentioned 150-175 in FY 2022. Wanted to understand for the non-Domino's, if you could give us a breakup. Also, you mentioned Hong's Kitchen performance has been more encouraging. What is working better in Hong's Kitchen vis-a-vis Ekdum, if you could elaborate? Thank you, Abneesh. Thank you for your questions, and I hope you are well. On your first question of our estimate for store opening estimate for the new brands, we don't have a number to share with you yet. We are looking to expand the network, and as you have seen, we have opened stores both in the last quarter and the quarter before. We'll be gradually scaling up our network to begin with across Delhi NCR and then in the other towns. That's on your first question. On Hong's Kitchen and Ekdum, I think we are very pleased with the performance in both the brands. Hong's Kitchen, with the benefit of a longer runway of experience and of learning that we have had, has done better for us. We have seen a strong revenue recovery. Revenues are back to pre-COVID levels. We are seeing an encouraging trend in order volume growth, both in new customer acquisition and also in getting repeat customers. Our customer satisfaction levels, our NPS scores, are also trending up, strong and trending up. Our plan, like I said, is to scale things up in a calibrated way, and do that for both Hong's and for Ekdum! Two follow-ups on this. One is Dunkin' Donuts, three new openings, and after few quarters, there is no closure. If you could discuss on the profitability, how things are right now? Second, Bhartia sir mentioned Bombay and Bangalore, there will be a scale-up in terms of the overall system. Again, if you could elaborate, is it a preparation for Hong's and Ekdum into these markets? Abneesh, on your first question, on Dunkin' Donuts, as you're aware, Dunkin' has traditionally been a model that's been more centered on dine-in. In the last 15 months, in the face of the COVID headwinds, we had to do a pivot and have the business driven a lot more on delivery. We've done well to recover a large part of our pre-COVID revenues. Once dining restrictions are eased, we will see our dine-in revenues stream come back. We will see a greater mix of beverages and of food come back. Our profitability on Dunkin' is under control. You would recall the journey and profitability of Dunkin' where we were earlier and where we transformed to in the recent past. Our resolve of growing Dunkin' profitably remains, and we are confident that as dine-in restrictions are revoked and as we are able to drive a lot more of dine-in revenues and beverage revenues and coffee revenues, we will see strong growth and profitable growth on Dunkin'. Bombay and Bangalore, these are investments we are making in expanding our commissaries and growing their capacity. As of now, these will obviously service the large network of stores of Domino's. Prospectively, however, we are creating headroom in these commissaries to allow to service other stores and other brands as and when we enter these markets. Sure. My second and last question is on small restaurants bypassing Swiggy and Zomato and starting their own app and through third-party delivery. What would be your thought process? Do you see this becoming mainstream or this will be niche? Second is on your own endeavor of MTU at this juncture. What is driving that? Abneesh, on the first question, I think it is understandable that restaurants seek to gain greater access to their own customers and get a lot more control on their business, to get a lot more access to customer data and therefore on customer insights, and we believe that this trend will grow. Restaurants will look to invest in building their own digital channels, even as they partner with aggregators. This will not be an either/or decision for restaurants. We will see restaurants play in both spaces, partnering with aggregators, while at the same time investing in building their own digital channels to be able to get customer data, to be able to have much more control on their business, and also to help improve their margin profile. Aggregators are a high-cost channel for most restaurants. This will also help them mitigate that headwind. I see this as a very clear ongoing trend that will continue. On the toll-free number, I think I made the point in my remarks as well. I think this is just in response to customer feedback from a small but loyal band of customers who believe that they would like to have the voice ordering experience back. Some of them are not comfortable. They're older customers. We responded to that request, and that's why we got the toll-free number back. Sure. That's very useful. That's all from my side. Thanks. Thank you, Abneesh. Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. Hi. Good evening, everyone. Two questions. First, your store guidance of 150-175 for FY 2022, that is despite 20 store additions in first quarter. That essentially means about, let's say, 45-50 stores every quarter. Do you think that in the current context, that is something achievable, one? Second is the rush also because you are getting attractive deals from the landlords and which is why there is a rush to build those stores? Vivek, thank you for that question. I think our store opening guidance of 150-175 stores, despite the fact that we opened 20 stores, is a reflection of our confidence in our ability to be able to execute and to open these many stores. If you look at the preceding two quarters before just this one, we have, as you know, opened 50 stores of Domino's each. We have the capability, we have the bandwidth, we have the ability to be able to go and open that many stores. We don't expect, therefore, this to be a challenge. Of course, short of something completely unforeseen happening, we think this is well within scope, and we will get to 150-175 stores in this financial year. Is it in response to opportunistically? No, not so much. I think we've always talked about the fact, we talked about it a couple of quarters ago as well, that our confidence that this is a category and ours is a business that is poised for hypergrowth. We see a lot of opportunity for opening Domino's stores in existing towns. We see opportunity for opening stores in our new untapped markets, and our accelerated ambition is in response to that demand and that opportunity, not something that is more short-term or more temporary. A quick follow-up, Pratik. Will it also lead to cannibalization because of the store splitting, and is that something that we should bear in mind while forecasting? Vivek, you have seen our performance in the few quarters where we've opened aggressively new stores. We have called out separately the impact of some of these stores, and we, as you know, introduced a measure of like-for-like growth as well. While there may be some cannibalization if you split stores and open stores in existing micro markets, between the stores that we opened and the old store, there is significant incrementality in terms of revenue, in terms of profitability, and in terms of customer experience. Got it, Pratik. The second question is, with Yum!'s two franchisees looking to list and looking at aggressive growth, how do you think about competition? Because you are by far the market leader, but do you think there could be some customer fatigue from a Domino's standpoint and does that change in some ways the market share equation? How do you think about this market share bit as the two franchisees of Yum! get aggressive? I think whether it is competition from traditional competitors in the QSR space or whether it be investment being made by the platforms in the food tech marketplaces, we believe strongly that any investment being made in the category and in driving category growth is good for the category. The discussion we should be having, Vivek, is not a market share discussion. It's a market size and a market growth discussion. In a country like India, where the penetration of the food service category is still low, frequency is very low, any investment made in the category in driving behavior, in creating more excitement, in driving innovation, creating incremental supply, all of this will play to this growth category. Given our strengths, our towering strength in delivery and a strong presence on the ground across the country, as the category grows, it will give us incremental growth opportunities. Far from fatigue, we are actually excited by the opportunity that lies ahead. Our customers do not feel any fatigue. They are looking for more and more innovation from us. I think as investments go in this category, it will be good for the entire ecosystem as it will help grow the category. Got it, Pratik. Vivek, you will recall that only until 2018 and 2019, we went through, as a category and as JFL, a period of intense competitive activity with aggregators resorting to aggressive discounting to grow their size and to grow orders. Despite that aggressive competitive context over those two years, JFL actually emerged from it stronger with a higher market share for Domino's. We've been through this phase, and we are undeterred by it. We believe that any investment like this will help grow the category. Got it. Last small question. Pratik, you mentioned inflection point in your opening comments. That is essentially because of what? Is it because of the trusted brand factor, or is it because customers are more used to ordering and therefore, as world normalizes, they will be ordering more? Inflection point to me looks like a very strong word, so there has to be a strong reason why you believe so. Several reasons, Vivek. The first one is that in a category like ours, which has been predominantly unorganized in nature, we believe that COVID will prove to drive a much faster movement from the unorganized to the organized sector. That's the first point. The second point is within the organized sector, consumers will navigate and seek trusted brands whose quality and hygiene standards they can take almost for granted, whom they can believe in, and that will again drive the share upwards of these credible, trusted brands, number two. Number three, customers have got used to omni-channel behavior and have embraced delivery and embraced takeaway in the last 15 months. That behavior change will for the larger part endure, which means that we will see over time incremental locations and a lot more omni-channel behavior, four th point, digital. Customers have got used to and have embraced digital means of ordering and digital means of participating in the category. Again, this will mean that there'll be a fundamentally new kind of customer, more comfortable with trusted brands, more comfortable with delivery, more comfortable with digital. All of these trends point to a fundamental inflection point, and that will, of course, as you can imagine, play to our strengths. Got it. Thank you very much, Pratik, and wish you all the very best, team. Thank you, Vivek. Thank you. The next question is from the line of Manoj Menon from ICICI Securities. Please go ahead. Hi, Pratik and team. I just have only one small observation which actually turned into a question as I was going through the current quarter presentation as well as the previous one. I'm actually referring to the last slide which talks about the key focus areas of what you have presented this time versus the previous one. There seems to be two subtle changes. I'm sorry if it is even relevant, actually. One important thing that I find is you are now talking about the journey to a food tech powerhouse, which was really not there earlier. Which means that there is something you are incrementally trying to convey. Second, there is one pillar which was really not there previously, since I'm just comparing as we speak. It used to talk about build digital strengths earlier. Currently, it's all about digital and data strength. Just two things here. One, what exactly is this change about digital and data currently versus digital? Is it too subtle to just ignore? From a decision tree thought process point of view, the second question is what's your take on differential pricing as a strategy? Is it feasible in India currently given the data strengths which you have? Thank you. Thank you, Manoj. Let me respond to your first question. On what you see as the slide that we called out and the changes we made, I think the fact that we called out food tech specifically in our ambition it refers to our intent of making digital and making technology at the heart of everything that we do. We intend to use digital and more generally technology to completely transform and revamp our customer experience, our internal employee experience, and to drive operational efficiencies and business efficiencies. Towards that, as you know, we are building a strong digital team. We have built a large team, and we are investing even further, both in product and user experience and in technology. We also are building a strong digital data science team, and that speaks to your second point about how we nuanced the pillar as digital and data strength, because we are investing in building much stronger data science capability. We also intend to invest in growing our ML and AI capabilities. All of these are the reasons why we believe that we called out specifically the fact that our ambition is to transform into a food tech powerhouse. That's your first question. On your differential pricing question, I want you to clarify, how do you mean differential pricing? Do you mean by channel? Do you mean by department? Do you mean by geography? How do you mean that? Just to give you an example, honestly, what I had in my mind, looking at your, let's say, the last quarter number of, let's say, INR 5.7 crore or 57 million downloads. You know exactly, let's say, as a consumer, XYZ's behavior whether an XYZ actually clicks on the discount button or doesn't, or what he or she actually orders, etc. Based on the actual data availability what you have about a customer or the consumer rather, in your case, is there an opportunity to actually do differential pricing directly to me if I am a consumer? Manoj, if I may sort of build on the larger theme and talk about that. The fact that we've access to a vast reservoir of customer data, their ordering behaviors in the past, the way they've responded to new products. The way they've responded to promotions and discounts allows us to personalize experience a lot more. The broader theme of personalization is a critical work stream that we are sort of working on. Within that, prospectively, we can separate customers in different cohorts by their purchase propensity and their discount affinity. The customer is more discount-driven versus the customer who is less discount-driven. We can prospectively serve up different offerings to them. To that extent, we will be able to target discounts a lot more efficiently to customers, where we can be fairly certain that there will be incrementality of that discounting spend. Sir, understood actually. It is feasible. My question here is, this is more from a volume-driving point of view, if I understood correctly, that you're really able to, let's say, push messages to me if I'm not using, et cetera. That I understood part of the volume side. From a value maximization point of view, just simply on a price, basically, just to put it simply, is it even feasible to think about actually using this as a lever to let's say, even reduce discounts? If yes, the question there is from a decision tree point of view, is there a consumer dissonance angle which needs to be kept in mind? Thanks, and that's the last question. Thank you. Yeah. No, look, I think before we get to differential pricing by customers, I think there are opportunities available in looking at differential pricing by geography, by channel, by daypart, and those are areas that we can certainly evaluate. I think before we get to pricing for each customer or customer segments very sharply, I think there are these opportunities that lie before us. So certainly we'll be evaluating some of these opportunities before we get to anything that will create, like you said, consumer dissonance. Got it. Thank you. Thank you, sir. All the best. Thank you very much. Thank you. The next question is from the line of Percy Panthaki from India Infoline. Please go ahead. Hi. Good evening, team. My first question is, since we are now sort of having the aspiration of sort of becoming a food tech company, not becoming, but going in that direction even more strongly, I would really request if you could share metrics which are relevant to food tech companies. If you look at companies like Zomato, Swiggy, et cetera, the kind of data that we would also expect from you is something like what are the monthly active users, how many are the monthly transacting users, what is the average ticket size? If you could share any of this data, either on an annual basis, quarterly basis, to whatever extent you can, that really helps us to analyze, and it also sort of brings you in line with the industry in terms of data sharing. In this call, is there anything on these aspects that you would be willing to share? Percy, thank you for your feedback. It's certainly something we will discuss and evaluate internally. That said, you can be sure that these are messages that we look at very closely internally. We look at the monthly active users, we look at the Monthly Transacting Users, we look at the active base. We have, of course, a very close look at the conversion funnel. These are data points that we track very closely. We will certainly discuss internally and evaluate whether or not we will be sharing them with a larger investor group or not. We'll come back to you on this. Thank you for your feedback. Sure. That will be useful. Secondly, I just wanted to understand from the portfolio point of view. You have a portfolio of several brands. What I see missing here is burger. You can say that you are playing burger through Dunkin' Donuts. You might be able to play it partially through Popeyes, but this is rather a tangential sort of play to this big industry of burgers. Just wanted your thoughts on this. Would you be open to entering this via separate format organically or even inorganically, if any opportunity exists? Do you think that, no, you would just play burger through your existing format? Percy, we have, as we speak, an exciting portfolio of brands, all with tremendous potential. Whether it's Domino's or Dunkin', Hong's, Ekdum!, Popeyes. We have a large number of unique and large number of locations with these brands. Like you rightly said, on burgers specifically, two brands play, Dunkin' and Popeyes will play as well. Beyond these brands and beyond this, we have no plans of entering the burger market. Right, sir. My third and last question would be on your variabilization of costs, especially employee costs. Does this work just because we are in a pandemic and employees do not have too many options outside? What happens once everything is normal and in normal sense, there is a variability in your SSSG, like, let's say, without any pandemic, without any one-off, just a normal variability, your SSSG for a year goes into a -1 to -2 kind of level. In that case, does this initiative really help you to sort of protect you from the operating leverage sort of hit that you would normally have gotten years, four to five years ago? Does that really help, or this is just a pandemic kind of measure? How does this even work? Your employees are not gig employees, they have committed their entire time to you. If there aren't orders and you're paying them lesser to that extent, does that really create a problem for them? Percy, conceptually, what manpower utilization does is it allows us to match the manpower deployment very close to the demand pattern and the demand curve. If we have fixed manpower, then there is a huge amount of wastage at the shoulders, and sometimes we end up servicing the peak suboptimally. The moment we variabilize the manpower, as you can imagine, we are able to match them a lot more closely and therefore drive a better customer experience in the peaks and much better efficiency in the troughs. This is a conceptual point that is unrelated to the pandemic. I think the pandemic, the peaks and troughs were sharper and more aggravated, the troughs especially. The conceptual point remains valid even in a period that will be post-COVID or unconstrained by COVID. Is this done by getting more gig employees or sort of contract labor versus your permanent roles? Every employee or every person who comes and delivers to a customer's house has been screened by Domino's, has been trained by Domino's, and is on- roll. I think the way this works is that we have a large pool of manpower, and we roster them for differential times depending on the need. Okay. I'll probably take this offline. I really wanted to understand this a little better. Thanks anyways. Thanks a lot. Thank you, Percy. Thank you. Thank you. The next question is from the line of Jaykumar Doshi from Kotak. Please go ahead. Yeah. Hi, thanks. My question is on what is the format of stores that you will open? 150-175 Domino's stores this year. In terms of size and revenue potential, will it be comparable to the size of store the number of DELCO stores which will not have comparable revenue potential? Well, thank you, Jaykumar. I think as we said in the last couple of calls, the stores that we open are a combination of stores that are full service stores and stores that are optimized for delivery and takeaway. The 150 stores plus that we intend to open this year will similarly be an assortment of these kinds of stores. However, given the context and given the fact that in our existing towns, the growth will be led by delivery, a larger share of these stores will be smaller, more compact, more efficient stores, which are delivery/carryout focused. The few stores will typically be in the smaller towns. We do not expect these stores to have a lower revenue structure than existing stores, and we don't expect them to have any differential payback from what we have seen in the past. That's very helpful. In case of new brands, can you give us some color in terms of what is the average size of stores? What is the kind of CapEx that you incur for HK and Ekdum? How is the revenue potential for these stores, the ones that have matured as of now, and how does it compare versus Domino's? Yeah. Jaykumar, on Hong's and on Ekdum in terms of the store format, the Hong stores are a combination of full service standalone stores and are combined with a delivery carryout store that is a combination of Hong's plus Ekdum plus Dunkin'. Some stores are shared stores with delivery carryout focus. We also have some standalone stores. I think it'd be unfair to compare Hong's Kitchen's financials with that of a brand like Domino's, which has many years of experience behind it. I think the intention and the objective is for Hong's to, with its own order volume, be profitable and be sustainable, and therefore be scalable. We feel good about where we are on Hong's, especially in the older stores where we've obviously been open for a longer time, in terms of the overall business health and overall store-level economics. Understood. I gather that your current arrangement with Dunkin' Donuts allows you to open a single store which also has Hong's and Ekdum brands, a DELCO format. Is that right understanding? That's right, Jaykumar. Can you also include Domino's in that store at some point of time? A single location with four brands, all DELCO format? If there is a market like that which requires a delivery carryout focus on Domino's, of course, we can potentially do that as well. Understood. Thank you so much. That's it from my side. Good luck. Thank you, Jaykumar. Thank you. The next question is from the line of Ashit Desai from Emkay Global Financial Services. Please go ahead. Yeah. Hi, Pratik and team. Thanks for the opportunity. My question is on your sales recovery. If you look at June recovery, it seems a little lower compared to what we heard from other consumer companies. When we look at June versus May, the recovery seems a bit lower. If you could throw some more light on that in terms of what has been the impact maybe region-wise, we've seen different levels of lockdown. And you may also have a different level of stores being operational throughout these three months. If you could put some color on that'll be helpful. Thank you for the question, Ashit. Actually, I have a bit of a disagreement with the question and the premise of the question. I do not think the revenue recovery that we had in June was lower. I think we should just go back in time to what we went through in April and May, in terms of the sudden onslaught and the severity of the second wave and the environment of fear and anxiety that had set in. I think pulling back almost total recovery was a reasonably good performance, especially given the fact that if you look at the dine-in recovery in the months of May and June, May dine-in was pretty much 0, and June, it was under 10% compared to the FY 2020 numbers. Given just the onslaught of the second wave of COVID and its impact on a large revenue stream of dine-in, I think a recovery of almost 100% was reasonably robust. Of course, there was a pattern of distribution, that some towns recovered stronger. The smaller towns had a slightly higher recovery than the metros. As you know, the channel-wide delivery, our own assets did better than the aggregators. I would say the overall recovery was very robust. No, I would add what, Pratik, you said, the operating hours available still in June was lower than a normal month. Absolutely right, sir. Just to add to that, we had a significant reduction in operating hours through all the three months, including the month of June. While there was some relaxation in restrictions in June. Nevertheless, I think the performance of 99.5% recovery was delivered in the face of major restriction in operating hours. Okay, was there a material change in the number of operational stores? If I look at your overall number of stores, these were higher by 10% versus Q1 FY 2020. Yeah, I think Q1 FY 2020 also, of course, did not have the COVID-related restrictions. In Q1 FY 2022, the quarter just gone by, we had several restrictions in terms of stores being inoperational in corporate parks, in education campuses, and travel and transport locations. Plus the curtailment of operating hours in stores that were even operational as well, whether it was in terms of restrictions on the weekend or closure by 8:00 P.M. Effectively, the operating hours were far lower than what we had in FY 2020, despite the stores being higher. Got it. My second question was on competition. Beyond the increased options to consumers, you now have a lot of QSR players which have announced big expansion plans. Based on that, wanted your thoughts and outlook on employee and rental inflation. What is the outlook on these two cost lines ahead? As far as the impact of growing competition on employee cost line, I think it's important to recognize that when we look at our talent pool outside the delivery manpower, our talent pool is not limited to restaurants and to QSRs. We hire from companies across the board, FMCG companies, other consumer companies, technology companies increasingly. Therefore, as far as the non-store manpower is concerned, the fact that there is greater competition emerging from QSRs will not have any material impact on employee costs. As far as the store manpower is concerned, we have been living over the last few years in an environment where there's been a dramatic growth in delivery, not just in food service, but in e-commerce space in general, across delivery spaces. We have refined the playbook on how do we deal with employee costs when there is much more demand for delivery manpower. You'll see that reflected in all our productivity measures. The fact that we moved from fixed manpower to full-time flexible manpower, the fact that despite our revenues being so variable, we've been able to pull back on employee costs in a very agile way and not impact margins and avoid operating de-leverages, I think is testament to that. Clearly, I think as far as employee costs are concerned, we don't expect that to play out materially. Rentals? Oh, I'm sorry. On the rentals part, Ashit, again, given the fact that there is a very clear market and a very clear kind of stores that we are looking for, we do not expect to see any rental inflation. If anything, I think what has happened in the last 15 months is on account of COVID, there have been significant closures, not just of restaurants, but of small businesses and retail businesses in general. Therefore, there are many more options open in the market in terms of real estate, both in larger towns and metros and in the smaller towns. We don't expect the fact that restaurants are expanding faster to have any material impact on rentals either. Okay. One last quick check, if I may. Since you mentioned that some of the new stores are smaller in size and offer delivery carryout, but you look at a similar revenue potential. Given these are smaller and may have lower rentals and lower employees also, do these operate at a materially different higher margin profile than versus your full-service restaurants? If you could give some sense on that based on stores that you have already opened in the last one year. I think it's difficult to answer the question Ashit, because in the last 15 to 18 months, the last 15 months, especially, there's just been a fair amount of noise. Therefore it's hard to sort of clean up the noise and talk about what could be a long-term sustainable margin profile of these stores. I think the encouraging part is that despite the constraints and despite the headwind from COVID, the stores that we are opening and that we've opened in the last 15 months have delivered on target and delivered on plan. Okay. Thanks, and all the best. Thank you. Thank you. The next question is from the line of Arnab Mitra from Credit Suisse. Please go ahead. Yeah. Hi, Pratik. Congratulations on the strong recovery in June. My first question was on the new brands, and you mentioned that some of the stores will be more delivery takeout stores. Do these brands also have a potential to purely go into a dark kitchen format, in which there is no frontage at all? Would that be a part of the expansion as we go ahead over the next three years in these few formats? Arnab, we talked earlier about the importance of building consumer trust in this new category. That's especially true of our emerging brands and our newer brands. We believe very strongly that one critical way of building that trust would be to have a physical presence of stores, even if they are delivery, carryout focus stores, for customers to come and see and experience the brand. Dark kitchens, while they may offer some economy will not allow us to engender and build that trust. The way we see our model going for the new brands is a combination of full-service stores along with some delivery carryout stores, which are smaller and more efficient. We don't expect to see completely dark kitchens form a material part of our portfolio. Sure. One related question to that is with today, the food aggregators having increased the radius of delivery, the number of stores you actually need to, let's say, cover a geography like NCR, if it was, let's say, I don't know the number, but if it was 100 stores in Domino's, is it possible to today physically cover the total PIN codes of NCR with much lesser stores given the aggregators' larger radius of delivery? I think the most important thing, Arnab, as we plan the store footprint in any market is the customer experience. We know that time is the enemy of food. We have to ensure that we give our customers food that's hot and that's fresh, and that allows them to have a great experience. The more we expand the delivery radius, the less we're able to offer that. We have to be efficient, but we also have to ensure that we provide the right customer experience. Sure. One last question from my side. From most of the food aggregators, what we have seen is that the monthly transacting users are still not back to pre-COVID levels, the business is back to pre-COVID levels and above. I know you don't share MTU data exactly, in general, is your customer set or the number of customers back to the pre-COVID levels? There is still a big gap between where you were before COVID and where it is now, given that order values could be higher now? Arnab, let me answer your question in two parts. I think given a very conscious strategy of building our own assets and driving our own app installs and our own performance marketing strengths, in the last one year, we have seen a very strong recovery on our own assets. We have seen significant delta growth compared to the rest of delivery channels on our own assets. We have seen customers and orders recover and grow over the pre-COVID levels. I think as a brand, given the fact that dine-in has been constrained, the recovery on orders is still below 100%. Okay. Thanks so much, Pratik. All the best. Thank you. Thank you very much. Hello. Can you hear me? Yes. Yes. You move to the next question. The next question is from the line of Amit Sachdeva from HSBC. Please go ahead. Hi. Thank you so much for taking my question, congratulations on a good set of numbers. Pratik, my question is on the new formats, but more specific to, say, Popeyes, and how one should imagine the next five-year journey. I know maybe it's still too early, I just want to sort of see, given the format is well set, given this is like market development work is already done in this category quite a lot for many years, and given your already pan-India presence with Domino's and network rollout is already in place, you have deeper consumer insight. Should we assume that Popeyes, once this initial phase is over, should get a trajectory of 100 plus stores a year like Domino's, and in five years' time, picture could look very sizable presence in India. How one should think about Popeyes' vision for next five years. Can you please help us think through it? Thank you for the question, Amit, and I must say that we are extremely excited by our partnership with Popeyes. We believe that, and we know that the chicken category is one of the largest segments in the country and one with a very strong growth potential, both on penetration and on frequency. Given that India is a largely non-veg market and largely poultry-driven market. We have the Popeyes team in place, and the team is hard at work trying to put together the launch mix and to get to the market before the end of this year. Given the fact that the chicken category is established and therefore investments in building the category will not be required. Even as we launch, we are fairly clear the trajectory of Popeyes in its scale-up would be faster than what we see some of the other brands that we have. This is a category that's growing and established, but with a lot of run rate for growth even now. When we launch Popeyes, we believe that once we have our learning curve behind us, we will scale up faster on Popeyes. Specific store opening number, I think certainly the runway would be faster. Okay. No, that's very helpful, Pratik, for getting that understanding because this is something that probably because the market is already developed, so I think the opportunity could be captured sooner than probably other new formats like biryani or for example, maybe Hong's Kitchen, which may have larger element of dine-in, for example. Thank you so much. Second very quick question is that, I see that margin profile has changed in part because of delivery fee and given that delivery is doing so well. At the same time, do we see that the value capture this category is now giving you 24%-25% kind of margins? The level and gross is 77%-78%. Are we sort of in a zone where these margin structures are more permanent or are we looking at this is a one-time impact of because of COVID and consumers are willing to pay for convenience, safety, and trust and everything, and that's the reason these margins are sort of one-off? I'm not saying that whether you give us guidance for lower or higher margin, but is it just a new shift, and you are happy to operate at that level of operating economics for the stores? It's a broader question. It may have delivery is more profitable, dine-in is slightly less, costs are higher. It could be many moving parts there, but I'm just asking whether you are happy to operate at 78 or would you much rather have revenues throughput coming at the expense of margins as well? How would you think about this in the next three years as the COVID recedes? Amit, I think the one thing we've seen us do is that even as revenues have moderated on account of COVID. We have taken a number of steps that allowed us to deliver strong EBITDA margins. More recently, we've done that even in the face of increasing inflation and increasing food cost. We look ahead, there'll be several pushes and pulls on our P&L. We see inflation playing out now, but will moderate in the longer term. We are seeing some impact on account of fuel costs, et cetera. There'll also be investments required to be made in digital, in technology, in driving innovations, improving customer experience. The same time, of course, we'll be driving efficiencies and ensuring that we are able to run a very tight operating ship. Now, where this will land up in terms of operating margin, EBITDA margin, is hard to forecast and hard to tell. The one thing I think it's fairly clear that this is not a "one-off" like you said. These are not one-off margins. I think we've come out of the pandemic, I think more efficient, stronger as a business model, and more de-risked. We have been able to insulate ourselves against a revenue reduction and against channel mix changing significantly. We feel good about where we are, and we don't think this is a "one-off," like you said. Okay. No, that's very good to hear that. My question was also purely from the gross margin point of view. At 78% odd, which is slightly, but probably highest in QSR, if I may say. Would that be a good margin to sort of continue with? Or would you rather say, well, this is because of the situation, because delivery is high, and we are able to charge delivery fee. Eventually, what you're comfortable with? One is cost efficiency at the EBITDA level, but at the gross level, are you okay to sort of drive purely from 78 kind of margins, largely coming from Domino's, I assume, but is it a comfortable margin structure for you at the gross level? Let me pull back and answer the question a little differently, Amit. I think our objective and our singular focus as a brand has been and is remaining offering value money for our customers. We have, as you know, been very careful and very guarded about taking pricing despite having inflationary headwinds. Our NPS scores on value for money remain very strong, and we keep a very hawk's eye on the way customers evaluate us on value for money. That's our primary objective. The good part is that we've been able to deliver great value for money while having healthy gross margins. That's the balance we strike as we go forward. It will not certainly be margins at the expense of value for money or vice versa. Okay, I got it. Thank you so much, Pratik, and all the best to you. Thank you very much. Sorry. Thank you. A request to all the participants. Please restrict to two questions per participant so the management can address all the questions of the participants. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. Right. Thank you. Hi, Pratik and team. Basically, my question is an extension, I think, of the previous question. Wanted to check, were there any kind of price changes that you initiated over the last month or so? Also, have you seen any specific changes on the promotional intensity dynamics with the market reopening? Thank you, Latika. Thank you for the questions. In response to your first question, we have taken a small pricing action recently, towards the end of June. That's a very small correction that we made in prices, and this was in response to some of the inflations that Bindresh spoke about earlier. That's something that will only help us cover for inflation. We don't expect that to have any impact on margins materially. On your second question, on the promotion intensity, yes, there has been some increase in promotions and in discounts. Nothing that is out of the ordinary, nothing that we have not been exposed to earlier, and nothing that we've not responded to earlier. Of course, given the unlock that has happened post May, there is some increase in promotions and discounts, but I think we are well-placed to handle that. Sure. Thanks for that. My second question was, generally, you keep coming out with new products from time to time. It seems much of them seem to be more on the value-added side. Is there any change or any kind of a measure in terms of salience of value added or better margin products in your portfolio that you could talk about? Sorry, Latika, can you say the question again, please? Do you mean in terms of- We do keep seeing some of more value-added, higher-priced variants being launched from you time to time in the Domino's portfolio mix. Is there a meaningful change in the salience of such products from a consumer acceptance perspective? Yes, Latika. I think as we've introduced some of our new value-added products, depending on the product, we have seen acceptance and greater acceptance of the new product, and which has helped improve our mix over time. Very recently, we've introduced two new innovations in the last quarter. We introduced an extension of our lava cake, the lava cake on the platform of Lava- Licious. We also introduced the stuffed garlic bread, one vegetarian version and one non-vegetarian version, pepperoni version. Both of these new launches have seen encouraging adoption, and both of them have led to an increase in the platform purchase. In other words, we have seen an increase in the stuffed garlic bread platform with addition of these two new variants, and the lava cake variants together are now larger than what chocolate lava cake was earlier. We do see increased adoption. We see some of these innovations landing well with consumers. Sure. Thanks, Pratik. Thank you, Latika. Thank you. The next question is from the line of Aditya Soman from Goldman Sachs. Please go ahead. Hi. Good evening. First question was on delivery fees. I noticed that there was some increase in delivery fees. When was this increase taken, and is there any sort of impact on one to two numbers due to this? Aditya, thank you for the question. We had a small correction in delivery charges that we did towards the end of June. This was in response to the increasing fuel prices. We rounded off our delivery charges from INR 32 to INR 35. Because that happened mostly towards the end of June, we don't see the impact of that into the Q1 P&L. Thanks, Pratik. Another thing on this I noticed was that at the lower end, the delivery fee seems to scale rather more. I remember in the previous call, you indicated that there was obviously an increase in volume growth at the lower end or at entry-level price point. Is this something that you're trying to address, where you're seeing the mix or lower-end volumes go up, then to offset that, you're seeing delivery fee go up disproportionately at the lower end? Aditya, no. I think the fact that we have a structured and a sort of a tiered delivery charge is a reflection of the cost of delivery and what it takes to recover that cost. We believe that, if you remember until a year and a half ago, we used to have a minimum order value of INR 300 as a threshold to enter a blank and to enter the category. We've broken that, and we've allowed customers to place orders of any value, and we service that. That has led to, like you said, increase in orders and increase in volumes. However, because those orders come at a cost. Our delivery charges being tiered, let's just recover that cost. We have seen from all our research and all our work that customers are not averse to paying the high delivery charge because that's something that they want at that point of time. If you're a single user looking to order one pizza or just one side and a beverage, the fact that we are able to deliver it to her, all we get a small delivery charge, I think the customer is comfortable with that. All the changes that we made have been post extensive customer validation. No, I understand. Very clear. The impact of this would be felt from 2Q onwards, right? The impact of the slight increase in delivery charge would be felt from Q2 onwards. However, the clear delivery charges have been in operation since earlier. I understand. For my second question, just a quick one on Domino's Eurasia. We noticed that now you sort of include the associate income from there. Is this now profitable this year given the increase in SSG? If I look at the financials for the past two years, they were not profitable. We clearly see an addition to the profit in this quarter. Thank you for the question. I think, as far as questions on DP Eurasia are concerned, we would request you to refer to them. They are independent listed company, and we would not be able to offer any comments on their financial performance. You may refer to their most recent release, which they put out last week for their revenues and for the performance of the last quarter. Yeah, thanks, Pratik. The reason I ask is because that release, that's just a sales release, right? They don't talk about profit, I'll take it offline. That's right. They will talk about it when they're signed as, when they do, and we can't comment on that ahead of that. Fair enough. Thank you very much, sir. All the best. Thank you. Thank you. The next question is from the line of Tejas Shah from Spark Capital Advisors. Please go ahead. Hi. Thanks for the opportunity. My first question pertains to, Pratik, the vision that you shared on your PPT, and you spoke about it also on becoming a food tech company. You explained the vision broadly on how you want to put a layer of tech in everything that you do. That looks internal vision or internal application of the vision as of now. Perhaps the logical end of this vision will be to leverage our front-end digital assets, which is actually growing quarter and quarter, and especially after pandemic, to leverage the digital asset for all the brands and perhaps on a super app that we briefly tested in the last two calls also. First of all, is that part of our vision on this food tech company journey? Is it part of the vision timeline? If yes, how far we see that? It could be three to five years, that's okay. Is it part of that timeline or not? Tejas, our focus and our work around food tech I spoke about earlier. With respect to your question on super app, I think our priority right now, as we spoke on the earlier call as well, is to ensure that we build these different brands individually. We have a long runway to grow, to grow Hong's, to grow Ekdum, to launch Popeyes in the country, even as we scale up Domino's faster. That's our number one priority. The super app is a question that we'll come to eventually, but I think we are a little premature talking about a super app. We don't rule it out, but that's not for now. Sure. That brings me to the second question, which is the kind of primary capital which is chasing the whole food service industry and QSR in particular. In that parlance, you mentioned that Domino's as a format has survived much hyper competition in past also. That format is relatively safer. Looking at the competition and the capital which is coming, do you see the need to expand your new brands portfolio, be it Hong's Kitchen or Ekdum, very fast? What is the limiting factor there? Because we have capabilities to open 100 stores. We have shown it in past also. We have cash flow. What is limiting factor there to expand it faster than what we are doing today? Tejas, most certainly our aspiration for hypergrowth is not limited to Domino's, and we intend to scale up our new brands rapidly. There was a question asked earlier by Amit about Popeyes, and we spoke about the fact that we can have a much faster runway to grow Popeyes. Absolutely. Similarly, we intend to grow Hong's and Ekdum and Dunkin' as well. There is nothing that has come in the way of growing. We intend to make sure that we have the right store level profitable model. In the last 15 months, there's been obvious reasons why we've been curtailed and we had some challenges, but as we work around them, you can be sure that our ambition for growing our new brands rapidly remains. As much as we grow Domino's, we grow these brands as well. Thanks. This was very helpful and all the best. Thank you, Tejas. Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead. Hi, Pratik. Thanks for the opportunity. My question is that you have talked about the tailwinds from the pandemic and thus the confidence towards the growth opportunity. What I want to understand is, of the three, what has changed the most for you, which is from a new customer acquisition point of view, frequency of purchase and average order value? If all these three were X pre-COVID, where are they now? What is giving you the most confidence? If you could give us some insights on that. Sheela, actually, I'll have to nuance the answer a little bit because the answer is a bit of yes for all three. Let me tell you what I mean. Given the fact that with dining having been curtailed over the last 15 months, differentially over the quarters, and the fact that therefore revenue has moved to the delivery channel, there has been obviously an upward impact on the average bill value or the AOV. They have moved up significantly, that's certainly been one driver. Equally, we have seen a significant tailwind in our delivery growth and our delivery order growth, and within that, our delivery order growth on our own assets. While overall orders have yet to come back to pre-COVID levels on account of dining being curtailed, delivery orders have shown strong momentum, and that momentum has sustained even as dining has reopened in parts. Your first point about frequency, we see customer cohorts where frequencies have actually increased. As much as we see customer cohorts where frequencies have dropped because of dining channels being curtailed. We see all of these, and we see green shoots in each of these three indicators. It gives us the confidence. By the way, just to add to that, it's not just these three. There's also pops data that metro versus the smaller towns. We see a very strong recovery in the smaller towns, which were more dependent on dining. They've come back very strongly on delivery. Whichever way we look at, we see strong tailwind and we see strong green shoots, which will help us grow much faster as a category and as a company once the COVID situation normalizes. Okay. Any quantification here from X to where they are now? No, Sheela, no quantification, please. Okay. We don't do that traditionally, as you know. Thank you. Ladies and gentlemen, we will take the last question from the line of Avi Mehta from Macquarie Group. Please go ahead. Hi, sir. Thanks a lot. I just had 1 clarification on the margin front. Now, especially, I want to clarify the risks to margin not expanding, because I can clearly see tailwinds from delivery price increase to pass on the cost inflation clear, the fact that dine-in opening has traditionally not hurt delivery. I'm failing to understand why would margins not expand. Is that not a rational explanation to take forward? Not the quantum, but at least the direction should be expansion. Avi- From 1Q levels. Sorry, come again? From the 1Q level, sir. What we saw in 1Q FY 2022, from here on, it would be rational to expect margins to expand as reopening spurs dining to come back. What are the negativity or what is the risk that I'm missing out? I want to just kind of understand that, because all those investments are something that are ongoing. We've always been doing that. We've never used any pandemic to let go of investments. That's my understanding. Would appreciate your response to this, sir. Avi, I think it's important to recognize that obviously even as we attempt to improve our margins sequentially, there are these various cost pressures that could come in play. There could be personnel cost pressures, there could be investment required to be made in driving marketing, and I think we have discussed extensively early in the call on the increased competitive intensity and the need for us to scale up faster. There could be investment that we call upon to be made to drive marketing investments, to drive bigger promotions, to drive greater digital assets and greater digital sort of downloads. All of these will have a role to play, even as we try and extract even more efficiencies, and even as the impact of pricing flows through. Where that land manages, we can't be sure, and which is why the call will be made on the margin. No, fair enough, sir. Just one bit, if I may clarify or if I can delve on is the employee bit now. Clearly there's been a lot of work that you've been doing from the start and not just pandemic. Pandemic has just accelerated that. This variabilization of employee cost, is this not structural in nature? Or what is the risk which you're kind of guiding towards? Is this more a macro risk that you are alluding to? Or is this more that as reopening spurs, there would be a demand for more employees? Is that what you're guiding to? I'm not very clear on that part. A bit of that, Avi, also the need for us to invest in building new capabilities and invest in building new strengths where we want to go forward, such as in digital, such as in technology, such as in data science. There'll be calls called upon to be made. On the store front, yes, the variabilization is a structural change that we need. Okay, sir. Okay, perfect, sir. That's all from my side. Thank you very much, sir. Thank you, Avi. Thank you very much. I now hand the conference over to management for closing comments. Thank you, and a very brief closing comments. Thank you for joining us on the call today and for taking time out. I hope that we've been able to answer your questions. In case you have any follow-up questions or any clarifications, please feel free to reach out to our investor relations team. Thank you. Have a great evening and stay safe. Thank you very much. On behalf of Jubilant FoodWorks Limited, that concludes this conference. Thank you for joining us. You may now disconnect your call. Thank you.