Ladies and gentlemen, good day, and welcome to the Jubilant FoodWorks Limited Q2 FY24 and H1 FY24 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 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. Deepak Jajodia. Thank you, and over to you, sir. Thanks. Good evening, everyone. Welcome to Jubilant FoodWorks Q2 and H1 FY24 earnings call for investors and analysts. We are joined today by senior members of the management team, including our chairman, Mr. Shyam S. Bhartia, our co-chairman, Mr. Hari S. Bhartia, our CEO, Mr. Sameer Khetarpal, and our CFO, Mr. Ashish Goenka. We will commence with key thoughts from Mr. Hari S. Bhartia. We will then turn to our CEO to share his perspective. After the prepared remarks from the management, the forum will be open for questions and answer session. A cautionary note: Some of the statements made on today's call could be forward-looking in nature, and the actual result could vary from the statements. A detailed statement in this regard is available in Jubilant FoodWorks earnings documents. We will share the replay of the call 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, Deepak, and good evening to all of you, and welcome to our earnings call. The strategic direction that we have taken in the current environment can be well summarized into three broad points. Firstly, we continue to pursue order-led growth and also have really bolstered our value offerings. Secondly, we continue to improve our system and processes to ensure that we emerge stronger in our operations as we grow our store numbers. Thirdly, we take a long-term view and continue to make investments for our future growth. We are happy to share that we are progressing well on all these three fronts. In addition to the order-led growth for the past few quarters, we have also arrested the year-on-year decline in the average ticket size. The ticket size has started to grow sequentially for last two quarters. The response to our loyalty program continues to delight us. 19.5 million customers have enrolled on Domino's Cheesy Re wards, and their order contribution in September was almost 50.1%. As you may recall, we became the first QSR company in India to launch regional menu innovation last year, starting with a dedicated East range during the Durga Puja festival in Bengal. This year again, Domino's introduced Kasundi Mutton and prawns, thereby adapting to local preferences, and this was launched again during the Durga Puja festival. We are continuously looking at improvements in the existing systems, processes, and way of doing things. As a result, several structural interventions are being effected within Domino's. This will transform us into even more agile organization as we move ahead to realize our medium-term potential of more than 3,000 stores. As shared with you earlier, we continue to make the required long-term investments. We have started the work on Mumbai commissary. However, after Greater Noida and Bengaluru, this will be the third mega commissary, and our subsequent investment in commissaries will be of a much lower CapEx. With that, I request Sameer to share the key performance highlights and progress on our initiatives. Thank you, Mr. Bhartia, and good evening, everyone. A warm welcome to our investor call today. My greetings to you and your family for the lovely festival season ahead. I have organized my opening remarks to share with you five key message, messages, from my end, where I will talk about revenue, channel update, network growth, investments to be future-ready, and lastly, the margins. Number one, by now, you would have analyzed our results. It was a soft quarter. However, given the current operating environment and when viewed in context with our strategic response, we see multiple green shoots. The top line grew at 4.5%, was softer than what we were planning internally. But the encouraging part is that we were able to limit any further decline in like-for-like growth for Domino's, which came in at -1.3%. Notably, average daily sales for mature stores registered sequential growth for second quarter, as it grew by 1.4% quarter on quarter. We remain focused on executing our strategy on excelling on delivery. The channel, this channel delivered positive like-for-like growth, providing convenience in dine-in channels, growing the app user base, and investing in teams and culture. We are on track to achieve the target to reimage 100+ stores in this financial year. I'm happy to share with you that we've also launched a flagship store format called ACE 2.0, with the first inaugural store being in Sector 29, Gurgaon. Similarly, we'll continue to invent new formats which increase our penetration, presence, and experiences like that we have in IIT Bombay. Let me now turn towards network growth. We, we relooked at our new store opening processes and further fortified our new store opening process by embedding even more data streams to arrive at a new store location. For instance, we have started utilizing out-of-delivery area pings from customer of our very large, which log on to our app, but are unable to identify a store nearby. This, along with a series of other improvements, is leading to new store openings, a tighter new store opening process, leading to higher week one and month one sales, than new stores opened in the previous year or even a year ago. We opened 73 new stores in Domino's for Domino's India in H1, and are on track to meet our guidance of 200+ Domino's stores in this financial year. In Popeyes, we opened 9 stores and have entered 4 new cities in H1. We are on track to open 30 new Popeyes in the current financial year. The customers are enjoying the bold Cajun flavors of Popeyes, and we continue to remain humbled and encouraged by the response that we are getting. In Hong's Kitchen, all metrics continue to report an encouraging trend and are ahead of our internal targets. We have opened 6 new restaurants in H1, and now have a network of 18 stores across 3 cities. In Dunkin, 11 out of 21 new restaurants or 21 restaurants are now coffee first format. Point number three, Domino's is known for its strong execution and delivery experience. With nearly 1,900 stores in Domino's, the existing 4 regions in India were managing, we were managing a very large portfolio of Domino's stores with ever-growing complexity, which came with network densification. To meet our medium-term ambition of 3,000 Domino's stores and the runway beyond, we have made adjustments and investments in Domino's regional management structure for even sharper on-the-ground execution to become more agile as an organization. We have now invested behind 3 new regions, i.e., we have taken 4 regions to 7-region structure, for Domino's. This incremental investment in new structure will go a long way in further bolstering our key competitive advantage in best-in-class operational prowess. The launch of dedicated app for store manager to manage their stores, this is a big thrust towards digitizing the operations, which in turn will also lead with one of the four pillars of being data and technology-forward organization. This app empowers our operations team and helps everyone benefit from deeper penetration of data and technology across all layers within the Domino's world. The second leg of investments, as you are aware, is on building large commissaries, which will help service ever-growing network in future and drive long-term growth with industry-leading margins. We recently held the groundbreaking ceremony for a new state-of-the-art commissary in Mumbai. Lastly, we are aware of our responsibility to manage the short term, while not depriving the business from making timely investments for lasting long-term benefits. As we discussed, a number of efforts are underway to improve organic like-for-like growth, and in the near term, we will gain on margins from the operating leverage. Through Project Vijay, we are deploying multiple levers to relook at our existing cost structure, systems and processes. This paves way for continuous improvement and innovation while yielding benefits on margins. As you are aware, we got very good traction in our gross margins without affecting any price hike, and were able to meet then offset the impact of high inflation on vegetables and high inflation in vegetables. We made conscious choice to invest incremental operating margins this quarter in number of areas which will improve the overall health of business in times to come. Investing in new regions, hiring more frontline team members, investing behind improving dine-in experience, continued investment in technology to improve not only consumer facing, but also back of the house processes, are some of the areas of investment which will help achieve sustained long-term growth while delivering interesting EBITDA margins. With that, let me turn on to the moderator to initiate the Q&A session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchtone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Yes, thank you so much, and good evening to the management. So three questions from my side. First is on the gross margin bit. You did allude to it, and while it's a small improvement versus last quarter, where we are seeing a contraction, and it's not that any of the raw materials have seen any deflation. So what are these initiatives which in a way have reversed the trend of gross margins despite the raw material inflation being elevated? So, no, I think interesting question. I did allude to Project Vijay and, while the inflationary trend continues to be elevated, we've looked at various internal efficiencies across all line items. To give a few examples, we are using data and technology to sharpen our discounts, therefore leading to better realization for the same product. Number two, again, we are using data and technology to sharpshoot our offers to improve penetration of combos, which has led to increase in average ticket size, like I, like Mr. Bhartia alluded, quarter-over-quarter for two quarters. Number three, we've looked at all commodities, all materials, and found ways for better buying and also local sourcing. For example, corn, we are now sourcing locally. We were earlier importing. So without affecting any change in pricing or increase in pricing, we've looked at internal efficiencies and use of data technology to improve ticket size and localize to improve our gross margins. Sounds as something helpful. Just any targets you all are keeping to improve either of the gross or EBITDA margin by a certain percentage under this initiative? So I think I had shared this in my last earnings call, that we believe our right place is to be anywhere 150 to 200 basis points higher than our current levels of EBITDA. We've held on to EBITDA levels for last two... This quarter versus last quarter. In last quarter, we improved by nearly 100 basis points. I do see, but this quarter we did, we did invest in the frontline teams. Like you said, we got that money that we were saving, but we chose to invest for Domino's for future, especially in the frontline teams. And also, this quarter was affected by salary hikes. So which despite the salary hike, despite the investment, we've held on to the EBITDA margin, which I think is a very positive story. That's helpful. The second question was that this is second quarter in a row, where we are seeing a big divergence between dine-in and delivery sales. I, I know dine-in was impacted by a small proportion of stores which were renovated. But what is the read-through you all have of this divergence? Because it was significantly positive in Q2 when you were seeing a dine-in surge. But now, since the last two quarters, delivery has been doing much better. Nihal, I think firstly, I think wherever we are investing, we are seeing the results. Let me just first assure you that. As you would recall, three quarters ago, we pushed on the pedal to get to 20-minute delivery. We are beginning to see results. Our store densification strategy is leading to higher share of delivery, and we've done several initiatives behind delivery to get positive like-for-like growth in delivery. Dine-in is also an important area for us. India is still very young, and I keep on telling this to my team, that the story is even yet to begin in India. So, improving dine-in experiences, having more presence in where customers congregate or go to, we need to, we'll continue to improve on that presence. So, so dine-in, my own sense is we will continue to invest on both and dine-in as we open stores. The store reimaging piece is on track. We will reimage 100+ stores this quarter, this fiscal year. Wherever we are reimaging store, we are seeing the benefit also. ...Sure. Just last question, we are 21 days into the World Cup. Have we seen any significant improvement in our ADS, which is different from trends that we generally see in October? Yeah, I think it's hard to tease out pure World Cup impact. Q3 generally has a higher ADS versus Q2. And we see that during India matches, we see that during Dussehra, et cetera. So it's a little early, just a few, about 3 weeks of data in Q3, and which was also a headwind of Navaratri. But yes, India matches, we definitely see an effect. Sure. Thank you so much. Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Hi, good evening, team. Sameer, good evening. Thanks for the opportunity. Hi, Shirish. Yeah, just two questions in the beginning. We have been able to manage to erase the decline in LFL, decline. Now, starting this month, or if I look back two quarters, we started with the menu innovation, we started with Cheesy Rewards, we started with analytics. So does that mean the second half would be significantly better because second half last year was very weak? So is that the LFL is in our control, saying that definitely it will be in a positive territory for second half, starting from Q3? I think that definitely our endeavor is to have positive LFL, Shirish, and it is not. I think it's—I will not give a guidance over here. I think what I will for sure assure you with is that a lot of our—many of our initiatives, like, zeroing on delivery, improving our delivery accuracy and convenience, investing behind stores reimaging, Cheesy Rewards, always being ahead on the curve of technology versus the competition. Those put us in good stead to be at least ahead, both in terms of growth, same-store growth and the margins, so versus the competition. I would still say that not everything is also rosy, because the inflation level has not come down. The cheese and vegetable prices continue to be, or we were hit by vegetable prices in the last quarter. So, hard to still declare victory, but we are, I'm more, I'm more optimistic, to be very honest, in the second half. Okay. My second question is on slide 9. You have mentioned that you have reimaged 33 stores, and you are on track to build or reimage 100 stores by 2024. Why this is backended in the second half? That's one question. And to follow up, what is it that you can qualitatively give us? Because you have mentioned that higher LFL and significantly improved customer experience. So in terms of quantitative, anything you can share with us? Yeah, I think it's a little bit of getting organized to this. Firstly, reimaging a store is harder than opening a new store, because you have to take an existing store, shut it down, break it, and then build it from scratch, right? So it is a little more complicated than opening a new store, where you get a bare shell, and you can just, the queue comes in and builds it up. So having said that, Q2 is a season where we have very big days, right? In fact, starting August, we start getting into season. Therefore, Q4 is the best time to kind of do this from a loss of store days perspective. Since a little bit post Diwali, we get a little bit of a window before the new year, and then in the second half of January and February, we get a window. So we have chosen so that the loss of store days and the impact is minimal to the business. That's the only reason. We have planned it that way. Okay. What is the difference in the ACE 2.0 stores versus ACE store? Yeah, I think it's. We are constantly innovating services to make our experiences better. The big difference is, or let me say, firstly, is where there is no difference. There is no difference in the area, but there is a difference in the amount of furniture or the covers we've been able to put in the same area. So they are better ergonomically designed for dining. Second is, we've been able to optimize the back of the house to improve our processes. Say, for example, as much as possible, the delivery associates don't enter from the front, they leave from the back, and they enter from the back, they leave from the back. Similarly, we've made the point of sale or the counters more amenable, more colorful. We have a bit of a private seating, like a booth seating also wherever we can. So it is, I would say, an upgraded version of ACE design. The stores have slightly more comfortable furniture, more covers in the store. Back of the house is more designed to segregate delivery, but have high amount of delivery also, and yet the experience is very functional. I think they are more modern and contemporary. Every four or five years, the design or the palette for design changes, we're adopting to more vibrant, more colorful design, without adding to CapEx or store sizes. Okay. My last question on Popeyes is, by when do you think you will be able to share some quantitative numbers on Popeyes in terms of store dynamics with ADS and other thing? ... we are already now across 20. Tej, I think the brand is still at a rudimentary stage. It's still an early days. I think we will allow it to mature to some level of critical mass before we are able to start sharing the amount. They've just completed a year. I think it's still is 20 stores. Yeah, and I think many of the stores have not even completed a year or so. But let me assure you from a from the opportunity of chicken and the product, the palate, the taste, and our ability to now go to even the smaller, like not Tier 1 cities in South. So take, for example, Madurai, Manipal, Coimbatore, these are all massive successes for us, and we remain bullish that we have at least found the right product for Indian consumers and the format also. Wonderful. Thank you, Sameer, and all the best. Thank you so much. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi, thanks for the opportunity. A couple of questions from my side. Sameer, the store opening has definitely improved on QoQ basis, but looking at the target of 200-225, the ask rate from second half looks high. So just wanted to know any, any insights you can share why we made it, second half heavy this year? And, what are the chances of you meeting the upper end of this target at, 225 stores? Yeah, I think the band is because the band is like 200 or 225, it's hard for me to be so precise whether we will end up at 200 or 225, but obviously, we want to open the stores in the right locations, and Tejas. So, so if you even see our historical performance, the Q1 is typically slower because we are more mapping our strategies, we are building the pipeline. As I communicated in the last call, that the number of 23 was an aberration, because we were getting more organized. You see the pace from 23, we moved to 50. I'm confident that we will be, we will definitely be closer to 200 or more than 200 or closer to 225. In that ballpark, we will end up. More important thing, Tejas, over there is to open stores in the right location with high quality, and we are finding enough pipeline for Domino's to do that. Sure. Clear. Second, in Bangalore, it's been almost two quarters or more than two quarters since we rolled out TCBS. So last quarter, you had highlighted how the SSG in Bangalore city is trending far higher than our company average. If you can share some similar numerical or qualitative insights on consumer experience or total promoter score, how everything is panning out in that city. Yeah, I think we... Not only that, we are also, like, improving, or marching towards 20-minute cities in several other cases also, which I had shared last time also. So wherever we do, we get to a certain threshold of 65%-70% of deliveries under 20 minutes. Our like for like growth in those cities are positive. In fact, tier one cities, this quarter was positive in terms of our like for like growth, purely on account of very superior delivery, despite being the rainy seasons, that we were able to deliver one of the best performance on delivery this quarter. Okay. And last one, if I may. So we have opened 22 Popeyes stores over six cities. So just wanted to get some insight on why we are spreading the store count so thin among so many cities instead of going deeper into the existing city or state? So, it's not a question of a choice for me. It is, and we have a, we've invested in a commissary in Bangalore. In Bangalore, we have 11 stores, right? 11, seven or 12 stores. So wherever we are finding opportunities. So take for example, I mean, when we opened Chennai, we found opportunity. In Madurai, from Bangalore, we found opportunity, Manipal, Mysore. So we are looking at all towns, big towns to cover and organize to completely organize in terms of our BD pipeline, logistics support, store teams to cover entire South India. And we will be expanding beyond that, too, of course. I don't think it is like we are spreading ourselves thin, and we will open stores to cover the entire city. Wherever we find good property which suits our customer profile, we will go ahead and make that investment in South India. I think the important thing to note is, are customers liking it? Do we have the lines on the opening day? And answer to that question is yes. Okay, thanks. Thanks and all the best for coming quarters. Thank you. Thank you. The next question is from the line of Varun Singh from ICICI Securities. Please go ahead. Yeah, thank you. Sir, my first question is on like-for-like average daily sales for matured store, which is positive, but it has come down to 1% compared to, you know, 3% level where it was during last quarter. So any reading out here? I mean, what explains this like instead of improving from 3% the number coming down to 1%? Yeah, I think it was this quarter had few headwinds on fasting days, right? And exams, et cetera. So other than that, no particular reason. I would say that it is not that we did not execute well, but I think the positive side, it is growing. It is now in 80,000, which I believe is a good benchmark for the category and the industry, for the size and the footprint that we have. No particular reason to between 3% or 1%, to be honest. Okay. So my next question is on the dine-in segment. I understand the store re-imagination and faster delivery is helping. Plus, I think the deeper, the more fine-tuned menu that you make through regionalization, kind of shifting from four structure to seven structure, et cetera, that will help to improve SSG. But still, given a significant chunk of our revenue from delivery, like, one simple observation of mine was that there is a significant pressure on store to deliver the product to customers. As a consequence, you know, you see a significant amount of, for example, the boxes, et cetera, at the inside the store, which makes the dine-in experience relatively not as superior compared to Pizza Hut, which is also aiming to become a relevant player in the value segment where we already belong to. So other than the re-imagination, plus ACE 2.0 design regionalization of menu. So I just wanted to understand that, you know, given this, both delivery, which is our strength, but also having a cost of customer experience for the dine-in set of cohort of customers. So, given this context, when do you expect meaningful recovery in dine-in in our business? Like, maybe one or two quarters down the line, or what should be that, you know, that green shoot for you, for example, after store re-imagination of X level, or how should we read that when a positive or a significant meaningful recovery in the dine-in business for us to happen? I think I, I wish I could mathematically tell you this, this quarter, this week, this day, this time. I will refrain from doing it, but, but more importantly, see, wherever we reimagine, we get high double-digit growth in terms of dine-in. It is less. I I think some of the things that you are pointing out, we have to get sharper on correcting delivery and or segregating delivery and dine-in, and this one of, one of the reasons for ACE 2.0 is actually I, I alluded to, is to it, it segregate even sharper. And this is not something that we have learned right now. I think we are getting better at with our designs in this space, 1,200 sq ft that we want to operate in. Third, I think the dine-in also, we, we are looking at our processes. We have constituted a massive mystery audit exercise that we do in the teams. We have gone ahead and trained multiple of our restaurant managers and the men and women who man the counter or who are at the counter how to upsell, cross-sell, and also serve the customers. There's a massive process, not only store design, on multiple levels that we are fighting. I'm very encouraged by the results that we are seeing, by the way. While there is a general tendency or like a sentiment leading to lower ticket sizes, I would say we've seen the sharpest increase in ticket size actually in dine-in. So that gives me the confidence that whatever we are, wherever we are investing behind, we are beginning to see results. Unfortunately, it's hard for me to say whether it's this next quarter or two quarters later. But let me assure you, it is not also a five-year program that we are working on this. Understood, sir. Just one last question. Our pace of new city addition that has also come down to kind of two or three cities since last maybe 2-3 quarters. So, anything to read out over here, or you think that 15-16 new city addition is a normal course, which should which may be from next quarter onwards? Firstly, we are reaching 400 cities, which itself is- Yeah. We are the most penetrated QSR chain. We are not, we are not slowing it down purposefully. In fact, we, we have always been very positively surprised by all new stores that we open, because we are, we become, in some sense, a destination in that city to go to. As we speak, our team. As we speak over here, our teams are in the markets scouting for, for new cities that we need to enter to. So there is, we are not discriminating one city versus the other. Our goal remains a certain threshold of sales, CapEx, and the store economics model. If that makes sense, we will open stores. We are not shying away from opening stores in new cities. That's it from my side, sir. Thank you very much. Wish you all the very- Thank you. All the best. Thank you so much. Thank you. The next question is from the line of Robert Marshall- Lee from Cusana Capital. Please go ahead. Hello, can you hear me? Please go ahead. Hello. Yes, Robert. Yeah, I'm just trying to understand the kind of the labor cost dynamics as part of the kind of the operational deleverage that you've seen.... So could you, are you able to break down what's happened in the kind of more like-for-like labor basis and, and separate that out from kind of new ventures? What-- Can you just basically disaggregate the, the changes in labor costs that we've seen over the, the last couple of years? So, if I've got your question right, Robert, you're saying, can we de-average the labor costs? Yes. I mean, obviously, you've seen a lot of operational deleverage below the EBITDA line, so from the payroll costs in particular, you know, we can see why the depreciation costs have gone up in terms of the investment you've made and so on. But, in terms of breaking down the cost of the rise of your labor force, could you help to explain why that's been so steep? If you look at a longer term period, I mean, couple of years, then of course, there has been a structural change in our labor force itself, because as we have moved to more variabilized manpower costs, a part of that cost has shifted into manufacturing another cost in the way we report. And therefore, there has been a reclass of labor costs into that. But of course, this has been a phenomena which has happened almost six, eight quarters back. So if you look at a more short-term phenomena, whether you're looking at it versus last quarter or last year, then this structural change is not reflecting there. What is reflecting there is, of course, the efficiency that we have been able to drive in our, in our overall cost structure, as part of the projects, which, which Sameer was alluding to earlier. Of course, there has also been a headwind, but on account of the wage inflation that we have seen across in you know both formalized and informalized labor in India. So I think. And the third, of course, is the investment that we have made as part of the new structure that also we talked about. So I think if you were to look at it, we have headwind on account of the fact that we have bolstered our structure. We have headwind on account of the fact that there is wage inflation, and of course, there is tailwind on account of the fact that we have driven efficiency harder. So if you were to disaggregate that, yeah, what are you seeing on a like-for-like store basis in terms of labor inflation? Minimum wages inflation, is that your question? Yes. So if I'm looking at an existing store basis, so separating out some of the other factors that you talked about, what are you seeing at the underlying basis? Of course, the underlying network increase in wage costs is in line with the minimum wages increases and the salary increases that are in there, which is typically in the range of 8%-9%. We have not seen any abnormality there. And therefore, we have been able to absorb that, as I said, partly on account of the fact that we have been driving higher efficiencies as well. So what is your expectation from here? Given the higher growth that you've been seeing in the personnel expenses versus other areas, are you expecting that to stay at a high level? I think we should be able to continue with the levels that we are. There'll be some pluses and minus, but I think by and large, we will be able to land at the levels that we are currently. Okay. Thank you. Thank you. Thanks for your question. Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead. Hi, sir. I just wanted your view on a medium term, let's say, on a, over a five-year period, averaged out. What do you think a strong brand like, Domino's, could, sort of generate as a LFL growth? Yes. Yeah, I think it's a question that we model all the time, Percy. So, 5%-6% growth is in the realms. That's what my belief is driven by, I think, three factors. One is, we are multi-channel or rather omni-channel across dine-in, carryout, aggregator, our own app, and we are adding more channels like IRCTC, et cetera, to the same store. So there is enough headroom to grow across channels. Second piece is, the use of technology makes de-bottleneck the store, and with 20-minute delivery, some of these pieces also get impetus. And number three is, at some point in the future, I'm not saying right now, we also take calculated price increases, right? Therefore, together with these three, I think anywhere from 5%-6% is a good number to aspire. Right, sir. Right, sir. And see, next quarter, anyways, your base becomes favorable. So hopefully, if all goes well, your LFL on a YoY number will turn positive. But what I wanted to understand is also how this translates to overall growth, because between LFL and SSSG, there is maybe a difference of anywhere between 2%-3%. And then again, what happens is that the new stores which you open open at a lower sort of throughput versus the company average. So if you're adding number of stores in the region of about 10%-12%, I'm saying, let's say, averaged over the next 5 years or so, and there is a 5%-6% LFL, in my calculation, that should translate to a 10%-12% kind of overall sales growth. Would that be sort of in the ballpark of what you also have modeled? ... Yeah, I think it's our internal push is to get closer to 15%. That's how we model and 5%-7%, 5%-6% of SSG, and about 12%, 12% of through network expansion. If we can get these two, then we get closer to 15%. Right. And this would be only on Domino's, and what you do on the other stores, other formats would be over and above this, right? Of course, of course. That is correct. Right. Right, right. My second question is, on, the other brands, Hong's and, Popeyes. What would be your medium-term targets? Let's say, five years out, how many stores would you, think that, Hong's would have? I think I'll talk about Popeyes, right, where the model is internationally proven. Chicken is a large market, and we have a benefit of learning from through the sharp brand proposition and the experience of RBI, which is our partner who owns the brand Popeyes. So therefore, we have a good start. We've said that we'll get to 250 odd stores, right, in the medium term. On Hong's, I would, like I did mention that it is beating all our internal targets, but I will refrain from giving any such guidance till the time I am comfortable, and I've seen the store in multiple locations at a base of 40-45 stores, where which have been operating for at least six months, for me to come to give a very sharp answer on that one. So maybe in a couple of quarters, I will be able to give you a good answer on Hong's stores. Okay, okay. Yeah, that's all from me. Thanks, and all the best. Thanks, Percy. Thanks, Percy. Thank you. The next question is from the line of Ashish Kanodia from Citigroup. Please go ahead. Hi, sir. Thank you for the opportunity. So, sir, just on Popeyes, right? I just wanted to understand that, you know, if you have to take this 30 store expansion in FY 2024 to maybe 70, 80 stores in FY 2025, right? What is the biggest, you know, maybe bottleneck or what's the, you know, equation which you are trying to solve there? Is it because from a real estate perspective, at least my understanding is, given that you have 1,900 Domino's store, you know, the understanding of real estate market is much better. You are already opening 200- 220 Domino's store. So is it just that the demand environment is muted, or is it the supply chain? You know, what would be that, you know, equation which you need to solve if you have to surprise us on Popeyes store expansion next year? Yeah. I think the first, we have a very strong project execution team, which can open 100 stores in a quarter, and we have delivered those numbers. So, that is not the constraint. I think the constraints are, number one, the Domino's has a far higher top-of-the-mind awareness and recall versus Popeyes, right? So you have to open stores more in a more naturally footfall congregating area. So that is one constraint. So we are very conscious of where we open the stores. As we enter the new cities, we also want to open larger flagship store, because that's how you build the brand. The best building of brand is where customers see a large frontage, and they walk into the store. So, that we'll have to rely on that tactic. Number three is the supply chain. We use fresh chicken, we do in-house marination, and all of these require a strong back end, food factory and the logistics to supply at the right temperature. So those are the constraints, right? And I think what is the good part is we have a good consumer value proposition. It is, and therefore, it is a matter of time to get to the supply chain and also the right store location that's where we want to be. Sure, sir, that's helpful. And I believe the supply chain will partly get addressed through the Bangalore commissary, right, sir? Yeah, for South, it will be Bangalore, then for North, we will look at Greater Noida facility or some other facility. So I think it is again, like we built Domino's through regional commissaries. We will follow the same model and leverage the same infrastructure by the way. Sure, sir. Sure, sir. The second bit was on the demand. So, you know, I think, if I go, you know, during the call, you talked about two, three things. One is that, tier-one cities are doing relatively better. They report, they kind of reported positive, like-for-like growth. And then also on the, you know, the last 20-25 days demand, if I, you know, read it correctly, I think what you're saying is, on some of the days when you have Dussehra or, you know, India matches, you are seeing that uptick in demand, but the core underlying demand, you know, which is excluding some of these days, continues to remain muted. Is that understanding correct? I mean, any other, you know, differences you see in demand that, you know, or maybe how big is the difference in demand in, say, Tier 1, Tier 2 cities versus smaller cities? Yeah, I think I was more alluding to the point that we invested behind store densification, delivery infrastructure, back-of-the-house processes to improve our delivery credentials and performance in tier-one cities, which led to positive growth. That was the fundamental point making. But I think your question is broader. How are we seeing the demand, especially in light of festive season and World Cup? I think, like I said, on days where India is playing, we do see an uptick. We also are able to go inside the stadium and actually create big opportunities for serving or taking store inside the stadium. So those pieces are actually working quite well for us. We just got off Navaratri, and the last few days has been good for us. Let me just stop here and not give any more color for this, for the current quarter. Sure, sir, that's helpful. And lastly, you know, we discussed earlier on, you know, new product development in terms of, you know, adding, new venues of, footfalls, within Domino's, right? That, while pizza is more, kind of a meal, you know, how can we add more products? So just on the new product development, I wanted to get a sense, if you know, if, if there is anything, in the pipeline to, you know, kind of add new, footfall driver. And secondly, is the... You know, when you look at the kitchen, especially, from a Domino's Pizza perspective, the kitchen is much more simpler, right? So, does the existing infra of Domino's store network, is agile enough to add new products? That would be the last question. Yeah, I think, I call our kitchen as a platform where we can launch multiple items. Our core oven and a make line is actually very versatile to handle multiple products over there. We've shown that from the same make line and the, oven, we can produce a chocolate lava cake, we can produce a bread, a garlic bread, or a sandwich, or a pasta, or a, or a, or a wonderfully tasting pizzas. So I would say we are, at the moment, not thinking of adding any equipment to the store. Having said that, India is a, is a land of opportunities, and customers are looking for experiences, across day parts. We have a good pipeline of products internally, and this quarter we launched—for the first time, we launched mutton and prawns, right, into the pizza toppings for East. I think so you will—And we also had Champaran Mutton, which is a more addition Bihar. So we'll continue to our teams on many, many Indias serving local tastes. That is one piece. There are other opportunities that the team is very actively working on, will be launched in this quarter and next quarter and the next quarter, so... But we'll announce it once we have launched. Sure, sir. Very helpful. Thank you so much. Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead. Hi, good evening. So I have just one question on margins. So if we look at the margins pre-COVID, we used to do around 16, 17%. And you mentioned the margin, let's say, in the near term, you are modeling at around 15%. And I presume that this split stores, which may not be a very big factor pre-COVID, and both Popeyes as well as Hong's Kitchen is an additional stuff. So I think a few years back, you used to mention the drag on margins because of newer additions. So any number would you like to give on that front, that how much margins is being compromised because of this new initiatives, plus split stores? This gap of 200 basis points versus pre-COVID levels, how should one look at it? Thanks. Ashish, you may want to start, and then I can add. So, Resham, I think, we would not like to put a number in terms of what is the investment behind this new opportunity. I think suffice to say that, they're comparable with base, so there is no incremental, basis for an investment that is going into these new brands. And as I've, I've said in the past as well, that if that number becomes material, of course, we will come back and, and, and make a disclosure. But as of now, they're pretty much in line with what we have been doing over the last two years. And of course, I think comparing margins pre-COVID to now, I don't think would be, be fair, because there's so much which has happened in between. I think the business structure has changed significantly. The cost lines have shifted materially. We have had unprecedented level of inflation over the last couple of years, and this is really reeling with that. It's not that they have softened. So I think those margins are not even comparable. We were also... and of course, we have an operating deleverage in our business, given the fact that we have been having negative LFL for the last couple of quarters. So I think a lot of, lot has changed in the business pre-COVID to now. The good news is that, of course, we have, even despite the challenges in inflation and operating deleverage, we've been able to hold on to our EBITDA margins for the last two quarters, at the same time, growing our gross margins. So things should only improve from here. And you've – as Sameer was also saying, that this is despite the fact that we've also made investments for growth on our overall org structure as well. Okay. Thank you. All the best. Thanks, Resham. Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead. Yeah, thanks for the opportunity. My first question is on Cheesy Rewards. So it's been about six quarters, you enrolled almost 20 million customers. What percentage of customers have actually claimed rewards by ordering more than six times? And what is your assessment of the costs and benefits now? And do you see a need to make any adjustments to the program? ... Yeah. I think firstly, there's always a room to innovate, right? I mean, I think this is firstly for a QSR company in India, this is a historic first that we launched a Cheesy Rewards loyalty program with full fanfare with a media campaign behind. We also celebrated one year of Cheesy Rewards this quarter with a TV campaign. And it just shows that we are invested behind this particular program in terms of what it delivers. Nearly half of the orders come from customers who have enrolled themselves to this loyalty program. And in fact, our new customer addition on the app, through the app, has been the highest. And I my fundamental belief is that a lot of this is also word of mouth and new customers enrolling on the Cheesy Rewards program and ordering. So I think it's a very positive thing as we see. It cushions us from... Customers who claimed one, who are gotten to six times and therefore claimed one, are actually the stickiness is tremendous high. There will be days or occasions when our service will fail. It could be a rain delay, it could be a store shutdown, it could be an oven breakdown. There will be days when for a very high frequency customer, one in, like, say, 100 occasions, our service may not be up to the standard. Therefore, these customers who claim Cheesy Rewards as a program as a benefit, actually are the most loyal customers. They are more forgiving, they understand who we are, and have some of the highest NPS ratings in our system. So, so very satisfied with the program. We'll continue to see how do we grow this and make this more meaningful to the customers, and we are learning also from worldwide, Domino's, which are also doubling down behind this program. Just to add to that, Kunal, I think- Sorry, yeah. Yeah, sorry, go ahead. Yeah, I'm just saying that on, on your question on cost and benefit, I think the benefit far outweighs the cost. Because as, as Sameer was saying, we see reduced churn on account of the existing customers. We also see a much higher frequency of the customers who are enrolled on this program versus who are not. Also, there was a lot of concern when we had launched the program, and I remember these earlier calls where there was a fear that our discounts would really go up because of this program. But we've demonstrated that we've actually been able to, you know, optimize on our discount, which is reflecting in the gross margin improvement while running the program and expanding the program. So the cost benefit clearly weighs in favor of the benefit. In fact, this is the best customer to give discount to. So you are actually sharp shooting your discount to customers who are most loyal, who come back, who want to, give you a larger share of wallet. So from that perspective, I feel this is the best laser sharp sorted discount strategy. Thanks. Just to... If, if you can share, like, some insights on how many actually are able to claim, because of the 20 million, and that number was 7 million a year back, is it like 10%, 20%? Any insight which you can provide on how many are actually claiming, and what kind of expense you are incurring? We'll refrain from it, but let me assure you that number is significant, right? It's not a small thousand et cetera. So that number is quite material, and growing, ever-growing. Understood. My second and last question is on the growth potential. On a 4-year CAGR basis, store addition is about 10%, the sales CAGR is about 8%, operating profit is flat. So while, the, like, longer term outlook, medium-term outlook, you mentioned, like, LFL growth can be 5%-6%, store additions can be strong. But, and many of the factors which you mentioned as positives, were existing even 4 years back. What's gone wrong in the last 3-4 years? And what's giving confidence that in the next 2 years, you can actually get to the 5%-6% LFL and 15%+ growth? Yeah, I think it's a little bit laid out in our strategies. I'll not be able to do justice to the question in this call on fully delayering what happened in the last four years. Let's look at our last three or four years. I think we are opening stores at a faster clip, in better locations, with higher sales per store for the new stores. Our technology assets are building to results. Our conversion, monthly app usage, Cheesy Rewards program are at an all-time high. Number three, we didn't have new brands. And while I always talk about Popeyes, I don't talk about the other two for certain reasons. But let me just say, we have a much better portfolio of brands what we had versus four years ago. I think the team is far stronger, digitally savvy and operationally agile, and we have enough lever, like 20 minutes, et cetera, to kind of grow at a much faster clip than what we have done in the past. Thanks. Just a follow-up on this, do you think the rise of aggregators and has given way for more unorganized competition, and has that played a role? Is that a big reason, or you think that's not really a reason for the slow growth? No, I don't think so, to be honest. I think we work with all. We want to serve customer wherever they go, right? And that's been our strategy. And whether it's aggregator, we were one of the first ones to aggregate, to go on to aggregators in the Domino system. We invested far ahead versus the competition on our own app, and we are improving dining experiences. We are on IRCTC. So from that perspective, I think we want to go where customers are and be that neighborhood store, which can serve all the consumer needs, and that's what we are executing on. So aggregator is a good thing for ecosystem, and delivery is growing, right? At the end of the day, they've also democratized delivery, so I'm thankful to them for their partnership. Okay. That's it from my end. Thank you very much. Thank you very much. We'll be able to take one last question. We take the last question from the line of Aditya Soman from CLSA. Please go ahead. Hi, good evening, and thanks for the opportunity. So firstly, just in terms of volume growth, can you give us a sense of, that is pre-COVID, to now, what would be the rough level of volume growth, for the company and, and, and maybe, for perspective, even for the industry? And the reason I ask that is because we've had several moving parts, right? We've got changes in, because some changes take place because of COVID. We've had We've had obviously, a very sharp inflation and changes in pricing. So I just wanted to understand, volume growth at a system level, for pizzas. Or another way to put it, if that would be better, is the number of pizzas sold. We don't give that, but let me give you some color. From an order standpoint, this was our best quarter ever from orders that we served. Our delivery order volume has been one of the best in this quarter in a long... when I look back 4 or 5 quarters. So from that perspective, it should give you color that the volume growth is real for us, and we invested behind this particular growth four quarters ago by launching our value range of pizzas or relaunching our value range of pizzas at INR 49 extra. So all of these, we are confident that along with the commissary model, we will stand for value, we will stand for great taste and fastest delivery when it comes to ordering at your home or your work, workplace. So volume growth continues to be strong. Understand. And just to follow up on that, so when you talk about sort of some pressure on ticket cycle overall, I mean, not specifically for this quarter, but in general, I think would it be fair to assume that part of it is just or is it people consuming smaller pizzas or lower value pizzas, which is the way to think of it? I think the ticket cycle is more because I think our—we have. Okay. Our ticket sizes. Yeah. Okay, maybe I didn't understand the question. So I think ticket sizes, yes, customers have chosen to downgrade from a large to medium or medium to regular. We, we do see that trend, but volumetrically, the items or quantities per order is not degrowing, right? So they're still consuming the same amount of calories or same amount of number of items, but they're choosing a lower price point item, which is, which is actually works for us, to be very honest, in the current demand environment, that at least we are retaining our customers, we are growing the customer base, and their frequency continues to grow. Understand. Right. Yeah. So just to be clear, so we have higher total number of orders, lower order value because people are ordering low value pizzas, not necessarily less pizza. Would that be right? Correct. That's correct. And also, I think, like I said, the ticket size has also been arrested or decline in ticket size has also been arrested, and we have grown on the ticket size for the last two quarters. Understood. And would this be an industry phenomenon or this is something that is specific to Domino's? I will wait for others to declare the result and compare notes. So, we believe that it is our use of technology, data and our processes, but I'll wait for others to learn when they declare the results. Understood. Thank you. That's all for me. Thank you all. Thank you very much. We'll take that as the last question. Thank you. On behalf of Jubilant FoodWorks Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.