Ladies and gentlemen, on behalf of Nuvama Wealth Management, I would like to welcome you to the Q3 FY 2023 earnings conference call of Restaurant Brands Asia. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. I would now like to hand the conference over to Mr. Prashant Desai, Head of Strategy and Investor Relations. Over to you, sir. Thank you, Ray. Thank you, everyone. Welcome to the Q3 FY 2023 conference call of Restaurant Brands Asia. We are four of us today with us. We have with us Rajeev Varman, our CEO. We also have with us Sumit Zaveri, our Chief Business Officer and Chief Financial Officer. We also have Kapil Grover, our Chief Marketing Officer. I am Prashant, heading Strategy and IR at RBA. I will now hand it over to Raj to give you an update on the India business, Indonesia business. Also, he'll give you an update on the launch of the Popeyes business. Then we'll take it from there. Over to you, Raj. Thank you, Prashant. Good evening, everyone, and thank you for your interest in our company as well as your time joining us here this evening. Highlights and summary for the India business first, and then I'll go into Indonesia. Same-stores sales growth was 28.1% for the nine months ending in December. For Q3, it was 8.6%. Slightly softer Q3 close versus, you know, the run rate from the previous two quarters. Revenues nine-month FY 2023, INR 1,074 crores, and that was against FY 2022, where we had INR 670 crores. This is a massive, you know, growth of 59.2%. Strong SSG obviously at 28%. On top of that, we had new restaurants growth as well. The third piece is the revenues of Q3, which is FY 2023. We ended at INR 370 crores. This versus Q2 FY 2023, which is the previous quarter at INR 368, which is a flat kind of quarter we had. The expectation was to be at a significantly higher number, but kind of ended up flattish in this quarter in terms of revenues. Gross profit, we continue to drive 66.4%. I think the last three quarters we have been reporting to you 66.4%. This is despite all the inflationary pressures on our business, we continue to maintain a decent gross margin. I can also tell you that this is, we have not taken any price increases in this quarter. It is just through driving efficiency in our business. Restaurant level EBITDA, this is again post Ind AS 116. The nine-month FY 2023, INR 181 crore, 16.9% against the previous year nine months, which was at INR 105 crore. That was at 15.5%. That's an improvement of 40 basis points. Q3 FY 2023, INR 71 crore. That is 19.2% against the Q2 FY 2023, which was at INR 60 crore, which was at 16.5%, which is again at 270, 70 basis points. Company EBITDA, again, this is post Ind AS numbers. Nine-month FY 2023, INR 123 cr, which is 11.5% against the previous year at INR 60 cr, which is 8.9%. This is a 260 basis point improvement. Q3 FY 2023 for the quarter was at INR 48 cr, which is 13% against INR 42 cr previous quarter, which is 11.4%. Another 160 basis points improvement. If you look at the, you know, the in spite of the slightly softer, you know, quarter in terms of revenues, our margins both at company level and at restaurant level have improved significantly. Great, good job by the entire operations team and the growth team. On the growth front, we are at 379 restaurants as of 31st December 2022. Opened a net of 45 restaurants in Q3 FY 2023. These 45 restaurants, majority of which opened towards the last week of December, that I just wanna make sure we highlight here. We additionally have 23 restaurants that are in construction and another 40 restaurants are in our pipeline. BK Café, we have been talking about being at 250 cafes by the end of this fiscal year. We actually achieved that already. December 31st, 2022, we are now at 252 cafes, adding 72 cafes in this quarter. That's a good job done by our development team. The BK APP front, again, you know, we have been reporting quarter-over-quarter, you know, improvements and increases for the past seven quarters. This quarter is no different. We increased revenues by 16% this quarter again. 5.5 million app installs. 17% growth over last quarter in installs again. That's on the front of the India business. Again, just summarizing, in spite of a softer Q3, very good results in margins. All line items were improved on our P&L, we were able to deliver a improved gross margin, improved restaurant operating profit, as well as our company EBITDA. On the Indonesia front, there's a couple of things I wanna update you. We'll come to Popeyes business later. Just overall, Q3 FY 2023, we did about 296 billion IDR. I'm talking about Indonesia rupiah. Versus Q2 FY 2023, which was at 293 billion IDR. This is approximately 156 CR. It was a very flat Q2 over Q3. Now, on the company EBITDA front, again, here I think we did a very good job, again, tightening up our belts. In spite of the fact that you will see that Q3 loss was at 34 billion IDR over the Q2 loss of 31 billion IDR. This loss was actually only 22 billion IDR. The other 12 billion IDR that is added on there is the launch of our Popeyes restaurant which the three restaurants we opened were on 29th, 30th, and 31st, and then we had another opening on 2nd of January. Totally we have four Popeyes right now. Just quickly, I want to spend a few minutes today on Burger King strategy in Indonesia, just so that everyone is updated on a business that we are building there for the long, long run. F our basic strategy pillars that we are working on. One is we are going to be, and we have started this work and, in fact, the product level work is already completed, which is to build the Whopper franchise. This is through both, you know, existing Whopper, the product that we have and innovations of the product that we do, which is we call the limited time offers, the LTOs. Both this focus, the Whopper is already ready, it's tested, and it's already moving into the restaurants. Then we are moving into the product innovation piece. The second layer that I wanted to talk about is the chicken business. The chicken business today is sitting at about 30% of the Burger King sales. When I say chicken, I'm talking of BIC, which is bone in chicken concept that we sell over there. That's at about 30%. We think that we can more than double this business. The steps to take to move this is unlike the competition which offers, you know, two levels of chicken, a spicy and a base classic level, both the competitions over there offer the same product of both classic as well as spicy. We only have one product there that we have been offering for the last several years. We are now launching the spicy version of it as well. We will have this one additional BIC that we will launch. We will strengthen this layer, start building this 30% business onwards. The building of the premium layer. Beyond the Whopper, unlike here in India where we have a King's Collection that Kapil has built, our CMO has built over the last couple of years, in Indonesia, we have just started that process, where we are now building a King's Collection layer over there, which will be premium burgers that will be available. That work is in place, and we should be able to get that to fruition before April first, so that we are able to install that menu into our restaurants. The final piece is about the portfolio. There's two work streams that we are working on. One is obviously rationalizing the existing restaurant. As you know, a lot of our base over there is built in, traditionally, from 2008, in malls. If you see the consumption habits in Indonesia, it is more outside of the malls in freestanding drive-through locations. Our movement strategy over the next five years will be to rationalize what we have in our mall restaurants, and then to continue our growth in towards the freestanding drive-through locations. These are two things that we will be working on, and the four pillars is what we are kind of moving forward on. Then comes the Popeyes. Popeyes launch in Indonesia was one of the best Popeyes launch that there has been globally for Popeyes. we were informed that our transactions in the first day in the first restaurant broke all records around the world in all Popeyes that were opened. I would like to congratulate our team in Indonesia, led by our president over there, Sandeep Dey, who's done a fantastic job building the products and launching that brand over there. we are going to build 30 rest stores till 31st March 2024. These stores right now, if you look at the four stores we have opened, they are doing IDR 60 million ADS. This is a fantastic, you know, business that we have started up. These 30 restaurants as we build them, we expect to do a very, very high ADS compared to Burger King. We have also experimented one of the restaurants, Popeyes, by putting that Popeyes along with Burger King. This is a Burger King that was doing about IDR 23 million in ADS, IDR. We put a Popeyes that was doing north of IDR 40 million in IDR ADS. Combined is north of IDR 60 million. They same rent and this strategy seems to work. It'll not work everywhere, obviously space constraints and all that. This is another thing that we are exploring as we kind of continue to build that business. Strong Popeyes launch. The turnaround has started towards the Burger King business. Work is in place to build a strong menu in the premium side, and then to continue to drive the value strategy that we have instilled in the last quarter. With that said, I'm going to hand it back to Prashant, who will carry you through the India business update. Over to you, Prashant. Thanks, Raj. Raj extensively shared an update, I'll quickly go through a couple of slides. One on the store opening status. As all of you will notice, we had very strong openings across the quarter. This quarter, we opened 45 new stores, taking us to almost closer to 380 as a number. As you will recall, our guidance for the current year is about 390, we are absolutely on track to deliver you 390. Another thing to highlight that we've had 12 closures in the second quarter. Despite that, we will deliver a net addition of up to 390 this year. Coming to slide 11. Despite the 5% reduction in ADS because of the headwinds that Raj spoke about, we've still been able to maintain overall revenue trajectory, thanks to the growth in cafes as a business, as well as the store openings. As Raj mentioned, a lot of our store openings happened in the last week of December, so the impact of that will happen in the next quarter. Our dine-in and delivery mix is almost very similar to what we had in Q2, which is 58% dine-in and 42% delivery. I now hand it over to Sumit to take you through the financial performance. Thank you, Prashant. Good evening, everybody. I'm actually just continuing from all the things that we had discussed last time when we were discussing our quarter two results, actually. We from the perspective of revenue, we saw that we are very similar to in terms of revenue over quarter two as compared to quarter three. We've certainly seen a shift in some of the cost lines, and I'll talk you through that. Kind of go back a little bit into last quarter's conversation as well, so that you would realize why that shift has also happened, and also understand that it will be sustained going forward. Firstly, as far as gross profit is concerned, we continue to remain at 66.4% consistently. We've literally been able to kind of manage the inflationary pressures and deliver fairly robust gross profit margins. As far as store EBITDA is concerned, we've moved up from 8.2% to 10.4% on a pre-Ind AS 116 basis. I'll just now kind of go back to last quarter. You know, when we were discussing about our performance during last quarter, we'd mentioned that there were certain initiatives which we aggressively ramped up there. We had to kind of, in order to make sure that we deliver the right experience for for the launch of those initiatives, which is one was Cafe. You saw that we kind of ramped up and achieved our target early. The second one was improving the revenue through different day parts, the morning and the evening, breakfast and the late night day parts. In order to make sure that we are able to, you know, train the team properly, we have right resources as we ramp up fast. We had structurally got more people into our system. We've now kind of as we've now rolled out and gone to a large base, we have now come back to the normal levels of staffing at all our stores. Effectively the headcounts, if I would say, or in terms of INR terms as well, there is a reduction on a per cost, per store, per month basis of around 16%-17% over quarter two to quarter three. That is something which is sustainable going forward, we believe there. The second one is, partially it is on account of seasonality, but partially also we've now started looking at our utilities very, very closely, and we believe that we can get some efficiencies there. We're working on that. The efficiencies have started to be getting reflected in our results for the quarter as well. That is what has helped us improve the store EBITDA from 8.2% to 10.4% and a company level EBITDA moving from 3.2% to 4.2%. Just quickly summarizing the India performance. We were at a revenue of INR 370 crores, very similar to what we had in quarter two, with gross margins at 66.4%. We can very clearly see employee-related expenses now coming down by 1.2%. The other efficiencies getting reflected in occupancy and other expenses. We've been able to improve our pre-Ind AS EBITDA to 15% on a company level and early double digits restaurant level EBITDA for quarters, quarter three, which is an improvement over quarter two. With that, I'll hand it over to Kapil to take us through some of the key initiatives that we kind of carried out during the quarters. Thank you. Good evening, everyone. I'll start with talking about the Whopper. It's our core signature product. While we continue to build our value programs, we stay focused on building our signature Whopper equity as well. This quarter was the launch of the Boss Whopper. It is one of our most popular innovations or limited time products on the Whopper. It's an indulgent big eat, which is apt for the festive season. Also happy to share that Whopper has been selected as one of the winners amongst 50-odd menu innovation ideas that were evaluated by Nielsen BASES as an independent study. It's amongst the top 10 most innovative products in India. Relevance and uniqueness were the two key criteria used for the evaluation. That just reinforces our confidence to stay invested in building the Whopper franchise. On the next slide, BK Café continues to expand rapidly and is perhaps one of the fastest growing cafe concepts in the last year. We've added 217 cafes in the last three quarters and now have a strong footprint of 252 cafes. This incrementality continues to be there in a relatively young concept. You know, just the average age of our cafe is about 5.5 months. This portfolio will help us build incremental revenues and margins in years to come, and will add fundamental strength to the business in terms of building new occasions and frequency with customers. The winter season, we launched some limited time season specials. You know, I've shared those pictures there. These are cinnamon flavored drinks. More importantly, we've added Masala Chai, which now completes our hot beverage portfolio in the cafe menu. The next slide talks about the new initiative we rolled out in the last quarter to build relevance in southern markets. This is the Chicken King menu, which brings together our chicken favorites for our guests in Bangalore, Hyderabad, and Chennai. We understand that the audience in South overindexes on non-veg consumption, and there is a liking for spicy flavors. We put together the assortment of our chicken burgers, fried and grilled, our wings in three formats, boneless, fried, and in grilled, with flavors of spicy and a lemon chili flavor. All these variants were put together in a program called the Chicken King Menu. We've seen early, you know, good signs of consumer feedback. People are really liking the whole assortment, and there's a lot of trials happening, and we keep focused on this menu and keep you updated on the same. Last but not the least, we continue to build a brand focus on millennials and Gen Z, through a variety of engaging programs on social media. I've shared some examples here on how we celebrated international festivals like Halloween or an Indian festival like Diwali, with our fans through a very interesting online version of a locally popular game. With this, I'll hand over back to Prashant to talk you through the outlook. Thanks, Kapil. As you will see in the outlook slide, no significant change from the outlook that we have been sharing with you. We continue to remain committed on our store opening targets. This year we'll deliver surely 390. Next year, the target remains at 470. On our same-store growth, we are all set to achieve our 25% same-store growth for this year. Next year we continue to currently maintain a 7%-10% SSG, particularly in light of some of the macro headwinds that we've seen. Should we decide to change or upgrade this, we'll come back to you when we come back to report the full year numbers with you. Our gross margin guidance remains the same 67% for this year and 68% for next year. The cafe guidance that we had given for full year, we've already achieved. One of the other thing that we want to highlight to you is all the new stores that we are now opening, they are all opening with the cafe. Prima facie, no major change in the outlook as we speak. We'll come back to you with a revised one if required next year. I'll hand it over to Sumit now to give you some details on the Indonesian operations. Right. Thank you, Prashant. I'll kind of just go a little part here because Raj in his earlier part has covered Indonesia in terms of strategy. We continue to still remain at an overall ADS in terms of Indian rupee terms of INR 96,000-98,000. This is our endeavor is to kind of improve these from the current levels and take it closer to where we were on a pre-COVID level. That's something we are working on, and Raj has already spoken about the strategy there. We currently have 179 stores. Our idea going forward, at least for next 12 months, is to have a close look at the portfolio and if there is a need, rationalize the portfolio. We, at this point in time, are not looking at any substantial growth as far as Burger King Indonesia is concerned in the coming year. Our full focus would be literally to kind of turn the existing portfolio around. As far as Indonesia is concerned, we did a revenue of INR 152 crores, in Indian rupees. Had a, at the company level EBITDA, we were at INR 28 crores in terms of loss. This INR 28 crores includes a one-time cost that we incurred when we launched the brand for Popeyes Indonesia. The brand was launched towards last week of December, so obviously there is not much. The revenue is not reflected here. We've got a fantastic brand launch. First month ADS of the four stores that operated through January averaged around 60 million in terms of ADS. You will realize that that's actually three times what currently we have in our other brand, and that only kind of shows the potential that we have on the Indonesia brand side. I'll not detail out slide 23, 24 because Raj has spoken about the strategy. Just a quick quick summary of overall consolidated revenues. We are at the INR 526 crore revenue for the quarter, very similar to what we did in Q2. to kind of turn this business around, especially in Indonesia, so that we can kind of show improved performance at a PBT level, which currently stands at a loss of INR 56 crores. So with that, I'll hand it over to Parshant for the questions. We can now take questions. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may 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 a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Sagar Shah from PhillipCapital. Please go ahead. Good evening, sir. Thank you for the opportunity. My first question was related to our India business. In this quarter, our ADS has fallen from one lakh 27,000 to 120. Any reason for the same despite of being so many festive day and actually incredible strong from the quarter on the front page level? Yeah. Sorry, I think you were talking about the ADS drop from 127 to 120. There's a couple of factors. Yes. One, the traffic was softer. In the month of December specifically, we usually have a very, the industry has a very high December. We did not see that kind of a high December. That was one of the major reasons. Mall traffic was also muted, wasn't the kind of traffic that we have seen in the past. There's also, you know, this whole bunch of stores that we opened that kind of fell into the quarter, right? For 45 stores. When, you know, we are now opening a significant amount of these stores in high streets and so forth. They obviously take time to ramp up. Even if you look at last year, if you look at the entire year from January 1st to December 31st, we opened 100 restaurants in the year, right? These are all young restaurants that are opened, that will ramp up over the next year and so forth, right? This cumulative impact is where, you know, the sales ADS didn't make the cut. Again, I'd, you know, bring you back to the earlier comments we made, which is despite, you know, the drop in ADS, you know, the team has built up and worked very hard to, you know, put some systems and processes in place. We have made some sustainable changes to way forward, which is both in the labor line and the other operational expenses line, delivering a higher restaurant level profit EBITDA as well as a company level EBITDA. Anything else you want to add, Sumit? Yes. You had another question, I think. Sagar? Yes. Basically, so the India business, do you expect the ADS to remain in the same level next year and even in fourth also? Since we are in a developing state, maybe what you're pointing out is gradual recovery. Can we expect a similar kind of ADS in the next year? Sagar, as we mentioned in the outlook, right, currently we remain confident of delivering a 7%-10% same store growth for next year. And as I said, should the situation change, we'll come back to you with a revised guidance when we come to you with the March numbers. Okay. Okay, sure. My second question was related to our Indonesia business. Our Indonesia ADS has remained almost quarter-on-quarter at the same level. You had said that the Indonesian recovery is lagging Indian recovery by around two quarters, two-three quarters. Going ahead, do we expect the recovery of Indonesian operations to continue in the subsequent quarter or it will take even more time? You're absolutely right. It was a flattish quarter there as well. We have highlighted that in our presentation. You know, you can again appreciate the fact that we have started tightening the business with our cultural way of operating. We saw, you know, a significant decrease in the losses there from, you know, IDR 31 to IDR 32 down to IDR 22. The IDR 34 that you see over there is actually IDR 12 billion that we spend in opening up the Popeyes location. We are tightening our process systems there. Our efficiency from the restaurants has improved. You know, there was a little softness there as well in December, which was the same here in India. We experienced it over there as well. Look, I've outlined a very clear strategy on what we are doing there, right? We already had a value price platform, you know, that we rolled out right after taking over the business. We continue to work on that platform and build it. It will take time to build that platform. We have now instilled the Whopper platform with the product development that we have done in the last quarter. We are also now working on the premium, which will take another quarter. By April, we should be able to launch the premium side of the menu as well. On the best side of this is the chicken BIC improvements that we are making. This is going to receive... Today, that business is about 30% and the market average of that business with the market is about anywhere between 60%-70%. We can double this business and what we didn't have was the product to do it. We were only selling one, you know, BIC product there. Now we will have a spicy version and a classic version. We think that with those two versions as well as the strengthening of the Whopper as well as the premium products, we are setting up the business to grow in the future. Okay. Basically you are expecting the in the menu innovation part, basically the contribution of chicken portfolio will move from at least 30% to 60% in the next one-two years. That's what you are just telling, right? Yeah. See, this is, we're not gonna move in a quarter, by the way. It will take time to build that business. That's why I said it will take a couple of years to do that. Yeah. It will take some time to build that business, right? That's a strong business. We think, you know, it's a business that we have left out there in that business, I think we need to capture that business. It's an audience that doesn't walk in today, right? It's gonna be additional traffic coming in, additional sales coming in. Yes, it will take time to build that business. We are just building that product. We will be rolling that out into the restaurants and then, you know. Okay. My last follow-up question on the EBITDA front was, EBITDA is currently negative for Indonesia operation. Can you give a guidance for Indonesia EBITDA, at least at what levels of margins are, will we expect to achieve in the next two years, at least for Indonesia operations? Sagar, Prashant here. As you know, both for the India business and in Indonesia business, we don't provide guidance on an EBITDA level. Given the number of initiatives that we are running, you know, we've at Burger King, we've chosen to kind of provide you guidance purely on a gross margin level. Indonesia, as the business is still recovering and initiatives are taking place, as we speak, we have chosen not to provide a guidance on the Indonesia business. Okay. Okay, sir. Sure. Thank you so much. Otherwise, all the best. Thank you. Thank you. Our next question comes from the line of Akshen Thakkar from Fidelity. Please go ahead. Hello. Hi, Akshen. Hi, team. Just some quick questions. You know, if we go back to the original investment case, one would have thought that a brand like yourself, you earn 10% EBITDA margin, and we've added cafe which, you know, should be margin accretive steady state. You are at about 4% margins today on a pre-Ind AS basis. Clearly your guidance is, and I'm just looking at the Ind AS right now, the gross margin moves up 100%. Let's say, you know, the cost structures remain the same, then you get to 5%. Is 7%-10% SSG enough for you to move towards, you know, the 10% margin? You think the path to get to 10% margin slightly longer? I mean, I know you generally don't stay away from giving EBITDA guidance, but how do we look at margins getting to double digits? That's sort of potentially the question that I have. Thanks. Thanks, Akshen. Akshen, one of the things as we have interacted in the past, we've tried to impress upon you that at Burger King we like to believe to do things which are very solid from a longer term perspective, whether it is with respect to the menu and the menu architecture that we've built, whether it's the launch of Stunner Menu, continued investments on the Whopper and the King's Collection. You know, our imperative to launch cafe, we believe it will be a significant value addition to the overall business over a longer period of time. Some of these initiatives has led to us, you know, investing in the interim, which is exactly where Sumit mentioned. You know, two, three things, Akshen. If you broadly structurally see from where we are seeing this business, from a pre-COVID to post-COVID, one big change we have seen is our check sizes have gone up significantly. We are still to recover from dine-in traffic compared to where we were pre-COVID. As we continue to invest in the brand, it's our hope that, you know, we'll soon get the traffic back. If you get the traffic back with the kind of check size that we have, you will see a robust growth in ADS. Difficult part of our business, it's tough to predict this on a quarterly basis. If you look at it from a broader trend over the next, you know, two, three years perspective, you clearly see all of this panning out. We've been very focused to ensure that, you know, we don't slip up on our gross margin, which is really actually the qualitative side, the way we've built our business, including product mix, the way we've built our supply chain from scratch. As a result of this, you know, despite not taking any price increase, we've been able to maintain our gross margin at 66.4%. As Sumit mentioned, you know, had it not been for all the initiatives that we have taken, probably our EBITDA margin that we reported this quarter would have been little higher or lower. Akshen, coming to the point that you answered. You know, from where we were sitting when we spoke that there is a probability of us coming closer to a double-digit EBITDA margin for next year, given all these initiatives that we have taken, maybe probably instead of a 2024, we may probably go to 2025 to give you a double-digit company level pre-interest EBITDA next year, maybe in the range of about six-seven. I keep communicating, right, where we are over here is we are here to build a solid business on solid foundation. Numbers will flow through six months here and there, largely because of some of the initiatives that we have taken. Some of the macro challenges have also kind of contributed to this. Again, I will repeat over here, we kind of take you through a flavor of the business. I would just urge, everybody listening, this is not the guidance that we are giving. This is broadly the direction that we see this business. You are right, Akshen. Instead of 24, we may look at a double digit in 25. Thanks, Prashant, for the candid reply. Lastly, you know, just on Indonesia, you know, given where your business stands at, do you see EBITDA breakeven happening in 2024 or that again, given that you're also bringing up Popeyes now, we should be thinking about EBITDA breakeven or there in 2025? Thanks. Akshen, again, request to everybody listening on this call, going forward, especially in the next year, we would like all of you to look at our Indonesia business now as two elements. One is the Burger King Indonesia business where the team is doing a lot of foundational work to not just get back the revenue to its trajectory when we acquired on a pre-COVID basis, but also significant work to improve the margin profile of the Burger King side of the Indonesia business. The second side of the Indonesia is the launch of Popeyes, which as Raj mentioned, has been phenomenal beyond our widest expectations, the way the Indonesian public has responded to Popeyes as a chicken brand. Mind you, as we had spoken to you guys when we acquired the business, the largest player in Indonesia continues to be KFC now with over 800 stores. Given the response that we have got for Popeyes, you will see very, very strong numbers being delivered by Popeyes in FY 2024. We've spoken about 30 store openings in FY 2024 out of Indonesia. A large part of that store openings will come out of Popeyes because we currently continue to monitor the Burger King Indonesia side of the business, rationalize the stores there in favor of freestanding drive-throughs. As the Burger King Indonesia side of the business is in our control, we'll open new Burger King. A large part of our store opening strategy is going to be Popeyes and Popeyes in Indonesia together at the same place as Raj mentioned. From where we stand today, Akshen, I can only say that we will be disappointed if this business loses money next year. High probability we won't lose money next year. We'll probably deliver some reasonably decent EBITDA next year on Indonesia pre-interest. Thank you. Ladies and gentlemen, we request you to restrict yourself to two questions per participant. Our next question comes from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Yeah. Hi, good evening, team. Thanks for the opportunity. I'm referring slide 16 where you have given some math around how the stores have expanded. Maybe I'm looking if you can help me, what kind of growth as a percentage of revenue has grown, or is there any transaction size you can meaningfully say or any meaningful number on the growth on ADS? It will be helping us to model in the financial model. Shirish, are you talking of the Cafe slide? BK Café slide, where you have shown, from last one year 18 stores to 252 stores. Shirish, as we have mentioned in that slide, as you will see on the second bullet, currently cafe relatively young. We are still doing an incremental revenue of about INR 7,000, which will be roughly about between 5% and 6% of the total ADS at a company level and about 8%, 9% or 10% at a store where cafes are operational. Still very early days. We are also experimenting a lot. As we mentioned in the previous call, even at an incremental INR 7,000-INR 8,000 of cafe ADS, our paybacks on cafe is about two years, and this is only going to improve as we go forward. No, I got that. I read that. The reason why I'm asking this question, let me repeat. You said that now all the new stores will definitely have the BK Café in that. Correct. I think is that the way you look at, that BK from seven can move to 14 in next, the new stores? I mean. I wish I could guide you on the cafe business. Currently, as I mentioned, we want to stick to the overall company guidance of between 7% and 10% on the same store basis, which includes the cafe business as well. As I said, you know, the whole industry is currently facing some macro headwinds. Give us at least another quarter or so for the macro headwinds to kind of move up. You know, we've opened a lot of cafes over the last two quarters in our business. We need to stabilize the cafe business. Let the stabilization happen over the next quarter or two, we'll come back and revisit the 7% to 10% guidance for everyone. Sure, Prashant. My second and last question on the new product development. When I look at the Chicken King menu, which you specifically said in the South. Is that specifically on certain states where you've introduced and, is that the price laddering strategy you are expecting or you are really wanting to get your foot in the chicken segment? Sir, it's Kapil. I'll take that question. This menu is in Bangalore, Hyderabad and Chennai. It's a pilot that we're running in these markets. These are products which are already there on the menu. We put together an assortment as a campaign for the consumers to absorb that there are so much variety available at Burger King for chicken burgers and also for wings. These are products that are already out there on the menu. We intend to now continue to promote it and grow this awareness of these products, grow trial of these products, and build this layer as an incremental business in the start. Kapil, that's helpful, but, let me hop on that. Is that chicken brand has worked anywhere in the developing, developed countries which can share some meaningful thing or it's just a product innovation we are trying to get more footfall? No, this is our own concept. It's not a concept borrowed from any other market. It bases the local consumer insight. We see there's a preference of chicken in a certain flavor, so we're using that, leveraging that insight to promote a product layer. Sure. Thank you. All the best to you and the team. Thanks, Shirish. Appreciate it. Thank you. Our next question comes from the line of Kastu Pavkar. I'm sorry. From Prateek Poddar from Nippon India Mutual Fund. Please go ahead. Three questions. One is, could you just share the experience of the 18 cafes which were opened in Q3 FY 2022? What kind of ADS are we witnessing after a year which has passed by? That's one. Second is also on your corporate and SGA costs, right? There's been a substantial increase on a quarter on quarter basis from 18 crores to 23 crores. That is question number two, if you can call out as to what has happened over a year. Lastly, you know, you guys were quite hopeful of the price, the Stunner Menu as well as the Prateek campaign which happened, which should have driven Q3 walk-in sales. When I see the dine-in sales on a Q-on-Q basis, it's quite flat. Maybe if you can talk about what happened over there. These are the three questions. Thanks, Prateek. I'll let Raj take the first and the third one and then Sumit, you know, end with the explanation of the corporate and SGA. One on the café, the original, cohort of 18 cafes that we opened, and second on the stunner campaign, Raj will answer. I'll just do it. Okay, Sumit, go ahead. I'll actually take the first two and then Raj can take the third one. Good evening, Prateek. Firstly, the stores that have opened early in terms of café Prateek continue to grow. As we've seen, you know, and we've been saying that we've not reached stable state revenues in our stores in the same way we've not reached stable state revenues in those cafes as well. Those cafes that we've opened in our early stage, of them, their ADS, overall café ADS, would be at least anywhere between 1.7 to two times the average ADS that we do at a system level on café part there. They continue to grow. We've not seen. That is one part. The second part, you know, just that while we were building through the scale for Cafe, we've so far not promoted Cafe outside of our store at all. We've so far, whatever incremental sales that we've got is purely on the basis of upselling and promoting the Cafe through our in-store promotions. Mm. You know, in the past, we've said that once we get scale, we will literally start talking about café as well outside of the store, and that is something which we believe should help us push the sales of café further because we see very strong potential on that side. The second question on the corporate SG&A. The increase in corporate SG&A is on account of the piece of grants that were done during the quarter. It's a non-cash. Mm. -adjustment, to the number. How much is that, sir, if I may ask? Roughly the impact of that is around a crore and a half, anywhere between INR 1.5-2 crores. The rest? INR 3 crore decrease, that goes to INR 20. The rest of the INR 3 crores? Sorry. 23.1 versus 18.7. One and a half crores is ESOP, which goes around to 20-ish. The last two and a half is what? The balance is there were some corrections in the salary at the senior level which was effect of start of the year, which got kind of provided in quarter three. This is for which year, sir? FY 2023? FY 2023. Okay. Okay, it's accumulation of three quarters which you have provided? Accumulation of, three quarters, that is also provided. T wo impact ESOP and some adjustments to salary, effect of, Got it. My last question on the Stunner Menu and why we didn't see, or at least I was hopeful that the Stunner Menu should have got you a lot of traffic. Yeah. The dine-in is flat. Actually Mr. Poddar, thank you for your question. Actually, when we did the campaign, if you remember in the month of June and July, right? See this year our marketing budget was at about between INR 60-70 crore. You appreciate that we have done a lot of work on the app and new restaurant openings, so there's a lot of LSM spending as well, and then we launched cafes and so forth. We are not, we didn't go back to that campaign during the month of November, December, which Could have been effective if we had the marketing fund to do that. Next year, you will appreciate that our marketing fund goes up by about almost 40%. That's, you know, the campaign did well. You know, we were up about 10%-15%, I think closer to 15% in terms of traffic during those two months compared to pre pre pre-advertisement. It did well. We continue to, you know, work on our stronger menu. We will continue to highlight. Next year you will find that we will work on several streams. We will not outline here what the strategy is, what we will do, but you will see that there will be extensive marketing campaigns next year because of the increase in budget that we will use. Also, the money that we used this year in terms of LSM and our app and so forth, those will be available as well. We have a strong marketing program for next year, so you'll see this continued work in all these directions. I have, Raj, two questions for you. You know, the experience which you shared on these 18 cafes, right? Yeah. 2x ADS. Yeah. A year down the line when you have these 250 cafes, which would have been again had a vintage of a year... Yeah. Is it fair to say not 2x, but 1.5x kind of ADS, which this entire bucket can give you? Look here, you know, we were giving you a guidance on all items except this cafe for a long time. There's reasons for it, right? We don't know the ceiling. Those restaurants that we opened, the 18 restaurants that we opened are doing very good. They're doing very strong. We'll share those numbers when we wanna share those numbers. Right now, you know, we'd like to keep that comparative information to ourselves. We are seeing those restaurants much stronger than the ones that were just recently opened. I mean, we opened 70-plus cafes just this last quarter, right? There's a reason we continue to open these cafes. There's a reason that we opened 250 cafes. We saw a very strong performance in the cafe sector. We will start sharing those, you know, information in some fashion with you moving forward. Just for comparative reason, we are just holding back. There's a market in the north where the only cafe in QSR available is Burger King, and we wanna protect that as we move forward. Mm-hmm. I think you appreciate what I'm referring. No, no, sure. Surely, sir. Sir. Sir, lastly, can you confirm pricing interventions being taken on the Whopper portfolio? Is it pan-India? No, no, we have not taken any price increases in Q3. No, Q4. Sorry, I meant January. Q4 we have taken, you know, some kind of very minimal price increases. It's minimal across the portfolio. We haven't taken it on every item. We don't do that way. We were significantly lower in many items compared to the competition. We have just kind of caught up a little bit on those. Mm-hmm. Mm-hmm. We don't have a pressure to, you know, take pricing because of gross margins. You know that, right? Right. We deliver good gross margins. We don't have any pressure on the company to take pricing to drive gross margins. We are a company that's still young. We want to work on traffic long-term. That's what's going to be sustainable when you know, drive that many number of people into your restaurants. That's why, you know, we are able to, given our efficient, you know, distribution system, our efficient buying, to sustain slightly lower prices and build the traffic in the long run. Okay. Sir, sorry, last. Sumit, could you just guide me as to this corporate overheads? Next quarter it mean reverts in the sense it will fall back down because there are v one-offs, right? The next thing. ESOP. Prateek, ESOP is now will continue because it'll get amortized in that. There. Cash level, we will still remain the same in terms of cash because this is non-cash adjustment. Yes, on cash level basis, we'll revert back to where we were. The INR 23 crores is a steady-state run rate to assume going forward? Yes. Yes. Non-cash it is. Including cash and non-cash, yes, INR 22.5 crore, INR 23 crore is the run rate that we should assume. Prateek. Thank you and all the best, sir. Thank you. Thanks, Prateek. Thank you. Ladies and gentlemen, in the interest of time, we would request you to ask one question per participant. Our next question comes from the line of Vatsal Dujari from CLSA. Please go ahead. Hi, thank you for the opportunity. I just noticed that there was a gross margin contraction in the Indonesia side of the business, both on a year-on-year and on a quarter-on-quarter basis. Wanted to know the reasons behind that. Yeah. Vatsal, this is, you know, in last quarter we had spoken about going very aggressively with the value menu. We promoted GoGrill very aggressively during the quarter. That has led to higher high levels of discounting in order to kind of build traffic there. We've now moved away and kind of moving to the strategy which Raj spoke about. We will be able to kind of build back the traffic. We have been aggressively promoting through the discount and the coupon route, which is what we did, and we did see a drop in margin there. We know that as we kind of pull back and move to the strategy that Raj spoke about, we'll be able to pull the margins back to, you know, where it was earlier. Okay. Yeah. Thank you. Thank you. Our next question comes from the line of Manjeet Buaria from Solidarity Investment Managers. Please go ahead. Hi. Thanks for taking my questions. I have two questions for Raj. Raj, the first question, you know, as an existing shareholder, where we are a bit concerned is, you know, we have a promoter who's looking to sell out because of end of their fund life. Are there any pressures on the professional management team to take actions which you wouldn't take, which, you know, if you had a more five, 10 year kind of view? That's question one. I appreciate last eight years you have built a fantastic franchise, you know, thinking long term. At this time today, this is a question which concerns us. The second question, I think two quarters back, you mentioned, you know, this business is very simple to the extent the only key driver is getting ADS probably to 150,000 and then 200,000, right? All the margins start falling in, on, you know, in place on its own. You know, to get to that kind of ADS, what are the key challenges you see today as you run this company? These are the two questions. Thank you. I appreciate your questions. Again, guys, I said this at every time I meet anyone. See, we are an independent company. It's a public company. It's led by me. We have an independent board. We operate very independently from any investors, promoters. Please feel confident that all decisions we make are made by guidance from our at large Burger King system worldwide. All the learnings come from there. Whatever strategies we do, we get a lot of learnings from different markets. You will see that those are the kind of ways that we move forward. Everything is tested. Kapil does menu testing, he does advertisement testing. He was talking to you earlier about, you know, the Hrithik Roshan ad. It was completely tested, right? It came flying colors on all three matrices, which is rarely seen in any ad made around the world. We operate independently. You can be rest assured, and there's no pressure from anyone on the way we move forward. Your second question was. What is the second question, Raj? The key challenges, Raj, you see today to get to the 200,000 sort of ADS and how, you know, it may take five years, it may take six years. I'm not worried about how much time it takes, but, you know, as a brand, are there any specific challenges which Burger King faces to get to that ADS which you see today, and how do you address them, was my second question? If you look at our portfolio, right? Very young portfolio. The average tenure of our 379 restaurants must have even gone below. It used to be at 3.5, you know, the last quarter when we spoke to you. Now we've got another, you know, 70 odd restaurants which are at younger tenures, it must have brought down the average. You know, we are working with a very young population of restaurants. Post, you know, building all the ones in the malls, you know, heavy, the growth is now coming in the in-line restaurants, which are high streets as well as, you know, this drive-through restaurants on freeways and so forth, right? We have to give this time to, you know, to develop and people get to know where it is. You know, when it's on the freeway, people pass by it, then slowly they get to know it's there, and then it becomes a routine. It's all these things take time for us to build this business, especially the dine-in business. The delivery business, as you can see, you know, it's the day you turn on the lights of the restaurant, you're on the app and you're accessible, right? The dine-in business takes a little while to build. You know, we do a lot of marketing this year. We spent a lot of money on local store marketing to introduce these restaurants in the communities we build them. As we mature, you know, from three and a half to a 10-year kind of a portfolio average, you will find that these restaurants will mature significantly, right? The guidance we have provided, again, you know, questions are coming on the 7%-10%. Guys, we are not planning that into our management MBOs. We are planning to do much better. This is the kind of guidance we give, which is to be a responsible, you know, company in terms of results. Yes, we are all striving to do a much better job in terms of delivering both top line as well as bottom line. You saw the efforts in one quarter, on the labor line, on the utility line, on the, you know, the other operation expenses line. These are, you know, not things we are doing ad hoc, right? These are sustainable long-term kind of things we are doing. Then we are continuing to perfect and move a very young brand into the country. Thanks, Raj, thanks to this team for all the effort you guys have been putting for the last nine years. Thanks a lot. Thank you, Manjeet. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I now hand the conference over to the management for closing comments. Thank you everyone for taking the time and joining us on the this evening on the Q3 FY 2023 conference call. We appreciate, you know, your time and as you know, we are available here should you have any questions. Do drop us an email and we'll come back to you. Thank you. Thank you, sir. On behalf of Nuvama Wealth Management, that concludes this conference. Thank you for joining us. You may now disconnect your lines.