Ladies and gentlemen, Good Day and Welcome to the Q4 and FY24 Earnings Conference Call of Sapphire Foods India Limited hosted by Orient Capital. As a reminder, all participants' line will be in 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. Please note that this conference is being recorded. I now hand the conference over to Ms. Shivani Karwat from Orient Capital. Thank you and over to you, ma'am. Good evening, everyone. Welcome to the Q4 and FY2024 earnings phone call for Sapphire Foods India Limited. From the management, we have with us Mr. Sanjay Purohit, Group CEO and Whole-Time Director, Mr. Vijay Jain, CFO, and Mr. Rahul Kapoor, Head Investor Relations. I hope everybody had a chance to go through the results and investor presentations which were uploaded on the exchange earlier today. Before we proceed, a reminder that this call may contain some forward-looking statements which do not guarantee future performance and involve unforeseen risks. A detailed disclaimer has also been published in the presentation. I will hand over the call to Mr. Sanjay. Over to you, sir. Okay. Good afternoon, everybody. Great to have all of you all on this call. We are going to be talking about our quarter four and our full- year FY24 performance. I'll go straight to page number six where I will let's first talk about our three-year scorecard. In December 2021, after we listed, we had guided that our aspiration is to grow revenues by 25% year-on-year, grow EBITDA by 30% year-on-year, and double the store count over a three to four-year period. If you look at three years since our listing, we've been able to achieve most of achieve all our objectives. Revenue has grown by 37%, EBITDA by 92%, and we've almost doubled our restaurant count. When I look at specifically, When I look at specifically performance for the full- year FY2024, we've grown restaurants by 17%, restaurant sales by 15%, adjusted EBITDA has grown by 3%, and adjusted PAT has declined by 44%. What are the highlights of the year? When you look at the entire QSR industry and you take all four parameters into consideration: revenue scale and growth, EBITDA margin and growth, and a fifth parameter of new restaurant additions, we believe that we've delivered the best all-round performance. When revenue scale has grown by 15%, our EBITDA margin of 10.5% has grown by 3%, and we've added 129 stores. So from an all-round perspective, revenue size, scale, EBITDA margin percentage, and growth, we feel that we've delivered the best performance in the industry. Within that, KFC Sapphire has delivered our highest-ever annual EBITDA margin of 19.7%, and we've had our highest restaurant additions at 88. We are quite proud to say that underlying these financial results is a maniacal focus on execution and improving customer and operational metrics. We are ranked among the top three franchises by Yum on, in both KFC as well as Pizza Hut on our customer metrics and our operating standards. We're also quite proud that we were ranked the number one QSR in India on our ESG score rated by Dow Jones Sustainability Index, and we are 95th percentile among all QSRs globally. We also achieved this is an internal metric, but I'd like to share with you. We also achieved our best-ever employee engagement score since 2018 that we have tracked. And today, we are placed at the 88th percentile of all companies surveyed by the Global Gallup Engagement Survey, all companies that they survey worldwide. When I look at specifically the quarter four highlights, our consolidated restaurant sales at INR 630 crores grew by 13%, EBITDA at INR 110 crores grew by 7%. And really, the story, as we indicated even in February, was that demand across all consumer product categories remains constrained. And now we've got the private final consumption expenditure metrics released by the government. Over the last six quarters, it's been the worst it has been over the last two decades. In quarter four, we added 23 KFC restaurants, and our total count is 872 as of 31st March 2024. Consolidated restaurant EBITDA declined 5% year-on-year, and margin was 13.6%, down 260 basis points. Consolidated EBITDA at INR 110 crores, 17.5%, grew year-on-year by 7%. Adjusted EBITDA, that is Ind AS 116, at INR 54 crore in the quarter, 8.6%, declined by 3% year-over-year. Consolidated PBT of INR 8 million or INR 80 lakh, 0.1%. Adjusted PBT was INR 8.3 crore or 1.3%. PAT was INR 2 crore or 0.3%, and adjusted PAT, that is the non-Ind AS 116, PAT was INR 7.6 crore or 1.2%. I'm going to quickly take you through KFC. KFC, during the quarter, also continued to perform well in a tough demand environment. Over the quarter, I'm referring to page number 20 here. Over the quarter, we grew revenue by 16%, and we added 23 new stores. Our brand priorities continue to be those six priorities: increase fried chicken category relevance, build craveable taste, continue to expand on our value offerings, offer the customer a frictionless experience both online as well as offline, improve our operations, and improve accessibility. In the, In the month of April, so in quarter four, we relaunched our pizza LTO. That did well. This quarter, we've taken our burger game to the next level by launching five new burgers: American, Caribbean, Mexican, Indian, and Indian veg and Indian non-veg. We've relaunched also, which you will discover only at the store, the Indian veg option, a Paneer Zinger. But the other four burgers are also, if I dare say so myself, absolutely outstanding. We launched 23 stores in this quarter, so we are on track to double our restaurant count by the end of the year. I'll hand it over to Vijay Jain, our CFO now, for the financial numbers. I'm on slide 25, which covers channel-wide sales contribution. Our delivery mix remained steady at 39%. Moving on to the next slide, SSSG came at -3% and ADS at INR 114. Just to clarify, the ADS is also impacted by new store additions, which we over the year almost had 25% restaurant additions. And as we called out, generally, the new stores take time to scale up, and their ADS are generally lower initially the first year compared to the brand average. Overall revenue grew by 16%, and while gross margins improved by 150 basis points, the negative SSSG meant that it impacted restaurant EBITDA, which came at 18.7% for the brand, down by 40 basis points year-over-year. Slide 28 gives you a four-year annual performance and five-quarter trend. You can clearly see Sapphire KFC delivered an industry-leading performance with 88 new restaurants, 18% revenue growth for the year, and highest annual restaurant EBITDA at 19.7%. Let us come to Pizza Hut now. I want to first reiterate that Pizza Hut is our second pillar of growth in our multi-brand restaurant operation strategy. The quarter continued to be challenging on Pizza Hut, where system revenue grew by, sorry, declined by 3% year-on-year, and SSSG declined by 15% year-on-year. We had called out that we have got a simple and clear strategy on reviving consumer interest on the brand. In a tough demand environment, added pressure of high competitive intensity, we said there are three things that we want to do. One is, how do we stoke consumer interest behind the brand? And to do that, we've got to be able to launch relevant market innovation, which is backed by significantly higher marketing spend. In February, we had called out that you should be able to expect new innovation to come out in the next one, two quarters. On February 29th, we launched Melts. Melts is an absolutely unique product. It is a folded handheld pizza concept, and it is aimed at extending the pizza consumption to in-between meal occasions. So it doesn't take on pizza directly, but it's trying to expand the number of occasions that pizza is consumed. And we backed that and have continued to back it with a multimedia marketing campaign. Apart from Melts, I'm now looking at slide number 31. You can see the other innovations also that were launched. We had a range of pastas, and we launched a very interesting thin and crispy crust pizza also. This is, I would say, the start of the journey on the brand. We are quite excited with what is in store on the brand over the next couple of quarters. The second part of our plan, we said, is, how do we improve our internal continue to build on our customer scores as well as our operational metrics? Our Dragontail kitchen planning tool rolled out in 100% restaurants. We have seen improvement in service levels, especially on delivery. This Dragontail is integrated with the aggregator platforms. It's a first-time-ever kind of an integration. And we believe that this muscle is a unique muscle that we are building. Our lunch daypart activation also was rolled out, and now 90%+ high street restaurants are open for late-night deliveries. And in line with what we said, we'll be cautious in I don't know where we lost each other, but perhaps I'll just cover the last part of what I discussed on Pizza Hut. In line with our cautious expansion strategy, we had net zero store additions in the quarter. Now I'm going to ask Vijay to please share the Pizza Hut financials. I'm on slide 35. Delivery mix came at 50% for the quarter, and dining mix improved to 35%. SSSG was -15% for the quarter, and overall revenue declined by 3% for the quarter. While gross margins improved year- on- year by 120 basis points, the impact of negative SSSG and higher marketing spends meant that the restaurant EBITDA came at -2.7%. If we exclude the additional marketing spend done during the quarter, the brand broke even at the restaurant EBITDA level. Slide 38 gives you the 4-year trend. Clearly, the brand is facing a challenging time. With the initiatives planned on the product side, which is backed by investments both in marketing and improving or strengthening the consumer experience, we are confident that the brand will emerge stronger in the medium term. Quick update on Sri Lanka. So we are seeing green shoots of revenue growth. So SSSG grew by 4% and system growth of 8% in Sri Lankan terms. However, store operating cost inflation was a drag on profitability, and it is a challenge. But we remain confident that FY25 should be better. And then when you look at the brand strength, and I'm referring to slide number 41, it is undoubtedly the number one QSR brand in the country, both from a name recognition perspective, from an accessibility perspective. So as the economy improves, we have great faith that our Sri Lanka business also that we are seeing revenue starting to improve will come back on track. Slide 42. Lanka business channel-wise mix. The delivery mix was largely stable at 37% for the quarter. The SSSG, which was the heartening piece for the quarter, was 4%. Overall revenue in Lankan terms grew by 8%, and in Indian Rupees, it grew by 22% for the quarter. While gross margins saw also an improvement even in Lanka business, up by 90 basis points quarter-over-quarter, restaurant EBITDA came at 12.3%, impacted by, as Sanjay mentioned, the cost inflation which we experienced on the operating expense side of the store. Slide 46 gives you a four-year trend. We can see the green shoots of demand recovery in the country, which is reflected in the form of SSSG. The quarter one has also started well for Sri Lanka in terms of SSSG. So we expect FY25 to have an improved performance over FY24 for the business. With this, we can open the floor for questions later. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset 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 Jay Doshi from Kotak. Please go ahead. Hi. Thanks for the opportunity. My question is, over the last 45 days or 40 days or days in this quarter, directionally, are you seeing any stabilization of same-store sales trends for KFC? Is it deteriorating, or is it improving? Can you give us some idea in terms of how the year has started? And based on what you see right now, how do you sort of what's your outlook for the first three to six months? So hi, Jay. Good to hear from you. As you know, I think generally, we won't give you guidance for the quarter. But however, having said that, if I look at how the first 40 days or so have started, April is not a comparative month for us from a KFC perspective because this year saw the full impact of the Chota Navratra. And during this time, both our north and west businesses get impacted significantly. May is significantly better than either Jan/Feb/March quarter. But I mean, it is more or less in line with the improvement that we see on a year-on-year basis. Sequentially, this quarter so sequentially, this quarter is a better quarter if I remove Navratra. And we are seeing trends along those lines. We are not seeing even further or we are not seeing further improvement on KFC. On Pizza Hut, we are seeing improvement compared to what we saw last year. But because the brand has undergone a fragile few quarters, I'm still wanting to see how it pans out. And perhaps before the next or during the next quarterly results, we should give you concrete evidence that indeed, we are starting to turn the corner on the brand. Just to clarify, Sanjay meant sequential improvement which we traditionally see in this quarter we are seeing on the KFC brand. And we are seeing that better upliftment compared to last year in Q1 versus Q4 on the Pizza Hut brand. I think he referred somewhere year-on-year, or he meant sequentially. Understood. So basically, the March to June seasonal uptake is in line with the usual seasonality this year so far. And in Pizza Hut, it's a little better than what we saw last year. Yes. Perfectly said, Jay. Sure. Thank you. One more question, if I may. In your conversations with aggregators, what is your reading of the fact that aggregators seem to be doing fairly well in terms of YoY growth rates? And overall, QSR industry has started lagging meaningfully. Even the brands that used to do much better about a year ago, that gap is widening. So how do you see this? Is this more of a structural trend, or is this a temporary phenomenon? And how do you interpret this? Yeah. So one is that right now, we get only data from one of the aggregators. And undoubtedly, their growth rates have been higher. When we drill down from a QSR so there are two parts that they seem to be saying. One is there has been an expansion of options and restaurants that they have taken on board. So there are more restaurants that are being served today. That is number one. And secondly, they're getting better growth out of high-value transactions. And that is largely happening through the earlier casual-store fine-line restaurants who've come on board and now are looking at delivery in a meaningful manner. Having said that, if I just look at our two brands, KFC's performance also is in line with the kind of growth that we are seeing the one aggregator delivering. Exactly. So what I understand from you is the growth for aggregators, outperformance versus QSR is largely a function of if I were to sort of at a higher price point, premium restaurants, luxury restaurants are seeing more their growth is driven by that and not the mid-price restaurants that QSR falls. Yeah. So do we have touched on only one of the two reasons? One is, yes, what Sanjay is saying, that SSSG is driven by whatever component. So if I look at the Q3 results of one of the aggregators, 27% is what they grew by, 7% SSSG, which is largely driven at a premium end. The 20% came through restaurant additions. And if you look at the comparable number, KFC also grew by 18% for the year. So yes, it's largely driven through additions and a component of SSSG driven through premium restaurants. That's very helpful. Thank you so much, and good luck for FY25. Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead. Hi. Good evening. I just had two questions. One was on Pizza Hut. So in light of the changes that you're making, and you also said you'll kind of relook at stores, etc., could this be a fairly muted year in terms of expansions? Is that the fair way to look at it? And if there is any number, if you could share on that. Thank you. Yeah. So again, we won't give out annual numbers. or else, We have given out guidance December 21 where we said we could double the count of both the brands over three-four years. We could clearly see KFC tracking on that for three years, in fact, rather than four. Pizza Hut, I think we are taking an extremely cautious approach. So yes, it would be muted. Now, what that muted would be is subjective. But yes, it would be fair to say it would be muted. Got it. Got it. And the second question was on inflation. So some of our trackers suggest that you've seen some reduction in the overall inflation environment in Q3 and Q4. I just wanted to get your sense of what's the kind of scenario you're seeing going into FY25, and is there a potential price increase likelihood or in the current environment that's a bit too far-fetched? So whatever benefit had to come into the P&L in terms of gross margin improvement, I think that's locked largely starting Q3 of last year. And if you see sequentially gross margin, we had called out that it would be range-bound, plus-minus few basis points. I think going forward, we expect the same. The gross margins would be range-bound, plus-minus few basis points. And we don't see any price increase, material price increases happening. There could always be small revisions, but we don't see any material price increases happening, at least in the H1. Got it. I'll come back tomorrow. Thank you. Yep. Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Hi, sir. Good evening. Thanks for the opportunity. You mentioned in the beginning there is a competitive intensity is also one of the. Sorry to interrupt you, sir. Can you please come nearer to the mic and speak, please? Hello? Yes, please. Go ahead. Yeah. Better. Yeah. Go ahead, Shirish. Yeah. No, I was just referring to your initial comment that that competitive intensity is there. So I just wanted to see that, and your comment specifically, is it gone up substantially in Pizza Hut and lowered in KFC, or it's similar? That's my question. Basically, I wanted to understand whether these new innovations, what we have launched in the market, will it drive the consumer occasion what we have been planning to bring them to more footfall to other stores? Yeah. So the competitive intensity is not a quarter phenomenon but a 2-year phenomenon. And last quarter also, I mentioned that we look at a 2x2 grid to determine competitive intensity. One is the size of subcategory within QSR. The larger the size, greater the competitive intensity. And the ease of kitchen operation the easier the kitchen operation, the easier or perhaps the greater the competitive intensity. So if you look at a 2x2 matrix, perhaps pizza is the largest category. And relatively, kitchen operations are easy. Relatively, it is easy. And therefore, that is why we are seeing competitive intensity. I also called out that it's not as much physical infrastructure that is put up. So brands don't have omnichannel presence. Rather than, we are seeing a multitude of cloud brands. And when we look from a fried chicken category perspective, while now it is almost the second or it's a large category, the complexity of kitchen operations means that to produce great product is so much more difficult. And therefore, competitive intensity there is lower. Perhaps if I look at burgers, the competitive intensity is significantly higher than fried chicken and perhaps even coming close to now pizza. Having said that, I think the idea behind Melts and in general, innovation on the Pizza Hut brand is to both revive consumer interest and therefore pull a little bit of market share from all the other pizza players. Also, through Melts, there's an additional benefit of increasing the number of pizza occasions beyond mealtime occasions. And therefore, in between meal snacking occasions also, the brand or this launch is meant to do that. Okay. The second question is that in the mid to long term, maybe another two quarters. Shirish, your voice is very soft. No. My second question is on the SSSG. Though we have now taken a pause for opening more stores on Pizza Hut, do you expect that next two quarters, the revival will happen positive for SSSG for Pizza Hut business? I think there's no silver bullet on the brand, Shirish, much as I would like to give you a very optimistic outlook. But I think we are optimistic about the direction that we are taking, but it is going to take time. There's no doubt about that. It's going to take time. And it is not helped by a demand environment that is so soft. And again, when we look at all the quarter four, many of the consumer product companies also that have come in, I think some of them are in some of their results are indicative of the pressure that we are seeing on consumer demand. Understood. Thank you and all the best. Thank you, Shirish. Thank you. The next question is from the line of Karan Taurani from Elara Capital. Please go ahead. Hi. Thanks for taking my question. My first question was on KFC EBITDA margins. I think despite the improvement in gross margins, thankfully, the margins have been stable as compared to peers, maybe in the burger and the pizza category, where we are seeing margin disruption. So what's your take on margin going ahead? Do you believe that margins will remain stable, or do you believe that there's a potential for expansion as well? Karan, are you complimenting us, or are you saying our margins in KFC have not been as good? So I just want to know. No, I'm complimenting as being stable. I'm complimenting as being stable. But are we expecting too much that what is the potential for an expansion, if at all? Yeah. Yeah. No, so Karan, again, the overall long-term guidance on KFC margins, we have called out that we would like to be in that 20% zone. If it goes higher, the idea can be expanded even faster and invest in the new stores because we are quite comfortable with the ROC, which we generate at a 20% margin level. That's the long-term guidance we have always called out. Right now, it's come down to 18.7% because the SSSG is not helping. So if the SSSG remains challenging, then yes, the margins would be under pressure. But the moment SSSG is back, and if it's positive in the range of 3%-6%, we expect the margins to be, again, going near to 20%. But no, we don't intend to take it beyond 20%. In that case, we will expand it faster. Got it. That's very helpful. Second question was on competitive intensity. So there have been players like Popeyes who are now looking to expand on a pan-India basis. I think Wow! Chicken is also somewhere scaling up in metro cities. So do you foresee that because of potential competitive intensity, this could lead to prolonged pressure on growth, which could in turn lead to more margin pressures over the medium term? I mean, what's your sense on competitive intensity in general? Yeah. So two parts to the answer. Number one is if you saw what we are trying to achieve on KFC, how do we grow KFC is to enhance relevance of the fried chicken category. So from that perspective, competition actually creates positive noise around the category, and we should see greater adoption of fried chicken going forward. So in that sense, competition is only good. Now, the second part to that question is that, however, at the scale that KFC operates, we undoubtedly have economies of scale also. So it is difficult for any competitor to come in and be a cost leader and therefore impair margins. So I don't think that should happen, point number two. The bigger question to ponder over is similar to the scenario that Pizza Hut is in. Pizza Hut, over 25 years, has got a very strong equity in the consumer's mind. But as a number two player in the large pizza category, still needs to clearly differentiate itself from the market leader. And that's our attempt. And we can see as to it's not even then, it's not easy, even with the size and scale that Pizza Hut brand has. The important part, therefore, to see is that are the upcoming brands offering anything that is different to KFC from a consumer proposition perspective? I'll leave the judgment to you. If you ask me, I would say no. But some of them can undercut in terms of pricing. This could put pressure on growth. This could put pressure on your margins. I'm trying to play devil's advocate. Can that scenario play out? Yeah. In fact, I mentioned that in my second point, that to be able to do that, either you're going to take a significant hit on your margin, and therefore, you're going to be out of pocket. And even for a large player like the number one player in pizza, it's going to impair their margins. And because they don't have the economies of scale, the economies of scale are at two levels. One is not only the sourcing economies, but also at a store level, if you don't have a critical ADS, critical sales per store, then also your store operating cost as a percentage of the store P&L go up quite high. So again, in this entire I don't think it's the QSR category. Generally, we have seen someone coming in and being price leader because in food, people play the opposite game and be perhaps INR 1 or INR 2 more premium and show quality rather than the opposite way. So I think, Karan, it's unlikely. Got it. Thank you. That's it from my side. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. Should you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes, sir. Hi. Thanks for taking my question. I wanted to check. Sorry to interrupt you, sir. Your voice is little less. Can you please use your handset? Sure. I'm already using my handset. It'll be a bit louder. What is the, within the 3% SSSG decline for KFC, what is the kind of transaction growth or decline that we have seen this quarter? Again, we have seen a transaction decline as well. We have not given out a specific transaction growth number even previously. Yes, it's safe to say that transactions have also declined. Generally, in the similar range, I would say single digit, low single digits only. Got it. Vijay, I wanted to check how aggressive are we going to protect our order count share here? So we are seeing that the leader in the pizza segment at least has waived delivery charges just to, in my opinion, gain the order count share. So I wanted to check for KFC, we are the leader. How aggressive are we going to protect our order count share here? How aggressively you're going to protect what? Our order count share. As in how can we? Transactions. Yeah. Transactions. Yeah. Yeah. So today, we are not finding too much of a difference between our same-store sales growth and our transaction growth. Our pricing has been largely stable, Devanshu. So the specific example that you took off is one tactic that one player has used. Not necessarily that tactic works for everyone else. Suffice to say that our biggest play that we are making is in ensuring that pricing is kept to an absolute minimum. That's the front-foot batting that actually we are doing. And then our launch of our Snackers range at INR 99. We've got a full lunch range at INR 149. So there are enough and more value options that will drive transactions. So I think we are being aggressive in trying to grow SSSG off the brand, undoubtedly. Did that answer your question, Devanshu? Yes, it did, Sanjay. Second, I wanted to check our CapEx at about INR 385 crore is similar in FY 2024 while we have added lesser number of stores in the year. So just wanted to check what is the reason for that? So again, it's a combination of a couple of things. It also depends upon what kind of refurbishments you have taken this year versus previous year, what kind of other CapEx on tech investments you have done this year versus previous year, the number of closures this year versus previous year. So all those factors come into play when you're comparing CapEx this year versus last year. As I've called out previously, if you look at a CapEx per store per format, so KFC CapEx is generally in the range of INR 2 crore per store for a 1,500-1,600 sq ft. Pizza Hut, we are seeing it in the range of INR 1.4 crore-INR 1.45 crore per store on Pizza Hut. Got it. Vijay, can you call out as in where a major part of the difference has gone in terms of refurbishment or technology? Devanshu, if you can come back to you on that particular thing, on exact details of it. Sure. Sure. Thank you so much. Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity, sir. My question is with regards to the Pizza Hut margins. Now, despite the lower demand scenario and negative leverage, we decided to go for an aggressive marketing campaign leading to actually a bit of loss. So in this scenario, given that the near-term demand also looks weak, how are you looking at the overall margins for Pizza Hut for the coming couple of years? So again, without the additional marketing investments, you're broken even. And with the kind of uplift we are seeing and again, as I said, too early in the quarter. But the kind of uplift we have seen, combined with the seasonal uplift, we don't see the brand going into negative on a full-year basis in the coming quarters as we move forward. However, we do expect the restaurant EBITDA to remain in a single-digit restaurant EBITDA, what we experienced prior to this quarter. Until the ADS level goes back to that 50,000, 55,000 level, we expect the restaurant EBITDA to be in single digit. Yeah. If I just add more color here, Gaurav, on the brand, the issue is improving or the answer is improving demand. We have been quite forceful in saying that we are not going to be victims of the low demand environment, but we are going to try and put ourselves out there and actually try and change the trajectory of the brand and hence the emphasis on greater level of innovation and marketing investment. This is indeed the way to go on the brand. Now you look at how many brands will be able, in a scenario like this, to actually put in the additional investment. This is a great opportunity for Pizza Hut rather than looking at it in a negative manner. Sure. Sure. No, sir. Just wanted to get a perspective on what level the tolerance level is for the margins. I mean, what is the balance that you would like to keep between the marketing strength and the margins? So that was the broader question. Yeah. So I think we are quite comfortable as long as the brand is not losing money on an annual basis and we cannot get a cost in isolation. We are quite comfortable spending that kind of money because at the end of the day, the idea is to get the ADS and an SSSG up. It doesn't really matter if we are hitting 5% restaurant EBITDA mark or 3% or 7%. How do we get the ADS up and get the restaurant EBITDA back to double digit? That's the objective. So yes, it will be a single-digit restaurant EBITDA. And as long as we are not losing money on the brand on an annual basis, I think we are quite comfortable. Sure. So that helps. My second and the last question, sir, is with regards to if you look at the absolute ADS numbers also, I mean, for the year. I mean, the ADS numbers are actually lower versus even the COVID-impacted years as well. So what should we gather from this? I understand that it is impacted because of the stepped demand scenario. But do you also think it is also a function of the store sizes that we are going to cut down and now somehow it is impacting us because the printup has gone down, the delivery has also resumed to normalcy? So how should we look at these ADS numbers? You are referring to KFC or Pizza Hut or both in general? Both. Both in general, sir. Both in general. Let me take the second part first. So it's not impacted by us cutting down the size of the restaurant. A lot of our restaurants would still be delivering significantly higher ADS than the brand average. So capacity is not at all an issue. The ADS reduction is a function of two parts. You keep adding 20%-25% restaurants every year. Typically, as we have called out earlier, the new restaurants come at 70%-80% of the brand average in year one. They would take three years, four years to mature and move towards the brand average. So a 25% addition would typically take down the ADS by 5%. However, generally, that gets offset by a 5%-7% SSSG, which the brand could generate in a general scenario, which keeps the ADS steady. So if you are not getting the SSSG, as has been the case with Pizza Hut for last six quarters and KFC for last one year, the additions are diluting the overall ADS. But the balance in terms of new store additions combined with the overall cost management meant that we have still improved on our profitability for the KFC business and delivered the highest ever restaurant EBITDA. Sure. So just to follow up on this, I mean, so if we continue on this 25% kind of a store addition for both the formats, that is, and as you mentioned, that their usual impact is around 5% on the overall system. Yes. So additions would lead to 5% impact that can get offset if there is SSSG of 5%-7%. Then the ADS remains steady. That's broad thumb rule. So even if we, for example, do a 5% kind of an SSSG going forward, it will still be fair to assume that then the ADS could remain flat. And to drive higher ADS per store, we would right I mean, we would have to do a higher kind of an SSSG. Would that be right? It would be required because if it's additions which are planned and SSSG of 5%-7%, which we are quite comfortable with to deliver the margins of 20%, those ADS levels are fine. While we always love to have higher ADS, but those levels are completely fine for us to deliver a targeted number or aspirational numbers. Yeah. So my question is not on margins here. It's largely on the ADS bit only. So I mean, as you said, that 25% addition. Sir, may I request you to please rejoin the queue for your follow-up question? I'm just completing this point. Oh, no. We can connect again offline again if we have time. Sure. Sure. No worries. Yeah. Okay. Thank you. Thank you. Thank you, Gaurav. Thank you. The next question is from the line of Akshen from Fidelity. Please go ahead. Hi, sir. Most of my questions have been answered. Just one question on Pizza Hut. I saw that there are no store additions this year, and I think you had flagged that that's something that you would do if you see ADS going below a certain level. So just when we think about getting back onto store addition for Pizza Hut, what are the markers you would have us look at? Should we be looking at a certain level of ADS? Should we be looking at a certain level of margins before which we start adding capacity? Yeah. So we have no additions for the quarter because we somewhere called out for the year. So for the year, we still have the additions. The year gone by, we added 33 restaurants for Pizza Hut. Yes, for the quarter, zero additions. And for the previous quarter, it was 8. As we called out, the expansion will be cautious. We are not saying we are going to be zero or pausing completely. It will be extremely cautious. Suffice to say that. I would say three markers which we would track internally. One is certainly looking at can the SSSG come back on the brand. That's the first. Reasonable ADS at a store. So moving towards 50,000 ADS level marks, again, gives us some comfort, which helps us to manage cost more efficiently and deliver some sensible level of profitability. And the third would be the profits itself. I think moving toward 8%-10% mark restaurant EBITDA gives us confidence to increase the pace of expansion significantly. Till that time, I think we would be cautious on store expansion. Okay. Great. And then last year, we had quarter by quarter, things were a little noisy because demand was slowing down, and then you had, you know, impact of Sawan, Adhik Maas, all that sort of stuff. Now, when we look at S25, what would be the best way to gauge underlying trend? I'm not asking for a guidance at all. I'm just trying to say, would a year-on-year metric be a better way to look at it? Would a sequential build-out be a better way to look at it? Because you follow what I'm saying, right? Last year. Yeah. So I guess answer like in combination of this because unfortunately, over the last three to four years post-COVID, every year and every quarter, there have been some of the other exceptions. As a result, the trends which are sequential trends or year-on-year trends, there are some quarters where it gives out a good picture. Some quarters, they are not strictly comparable. So this year, if I look at quarter one as a Navratri falling in April, last year, it was across two quarters. Adhik Maas would not be there this year, which should help the quarter two. But quarter three last year had some impacts on Shradh, which is moved to quarter three. This year, it probably will be in quarter two. So that will be negative. So yes, especially for KFC, those seasonal impacts, unfortunately, quarter-on-quarter, we'll have to judge. Looking at annual, nothing like it. That's the best way to look at it. But yes, some people may not be comfortable in judging a brand annually. But quarter-on-quarter, there will be exceptions which have to be carved out to come out at a real SSSG for that quarter. Thank you. The next question is from the line of Dhiraj Mistry from Antique Stock Broking. Please go ahead. Yeah. Good evening, sir. Congrats on good performance for KFC. So my question is on Pizza Hut. So if I look at this SSSG decline, can you divide that between AOV and transaction value for this and whether the fun flavor pizza and the other value innovation which we have done, has it really led to the transaction growth? So again, while we are not giving out specific numbers, we have seen double-digit SSSG impact. And yes, the transaction impact has been also close to double-digit. So largely, you can say it's a transaction-driven impact which we have seen on the brand. The Flavour Fun, the growth which we saw on both ADS levels and transactions level in the initial period, what we have seen right now, we have not been able to sustain that upside which we gained in H1 of FY23. Right now, I wouldn't say any particular impact coming from Flavour Fun after it has lacked that last year. If anything, we saw a degrowth in transaction year-on-year. Having said that, again, it's not been a reason why the brand is losing SSSG or transaction. When we look at our analytics and the customers who have actually bought Flavour Fun, vis-a-vis the customers who have not bought Flavour Fun, I think that first set is doing better relatively vis-a-vis the other set. So it has definitely helped the overall brand. Without Flavour Fun, the numbers could have been far worse for the brand. Got it. Got it. And second and last question on the slide number 30, which you have mentioned on real estate of Pizza Hut, that 3%-5% portfolio correction you would be taking in next two quarters and 10% refurb. Can you elaborate on that? What kind of correction you would be taking and with stores, basically? So, what you meant by. Is it related to size or? No. So what we meant by portfolio correction was basically closure of loss-making stores which have been there, and if we have carried them for a long time, we will use this opportunity to close down some of these stores. The action has already started. We believe by H1 of next year, those actions should get completed. H1 of this financial year, sorry, the action should get completed on portfolio correction, which is essentially closure. Refurbs basically mean that stores which have gone old beyond five years, we will do a refurb so that consumer experience doesn't take a hit. So that's what we meant by refurbs. Okay. Okay. Perfect. Thank you. That's it from my side. Thank you. Thank you. The next question is from the line of Saurabh Kundan from Goldman Sachs. Please go ahead. Yeah. Hi. Thanks. My question is on. Sorry to interrupt you, sir. Your voice is very less. Can you come near to the mic and speak, please? Yeah. Can you hear me now? Yes. Yeah, Saurabh. Loud and clear. Go ahead, Saurabh. Yeah. Yeah. So my question is on Sri Lanka. What is now the aspiration on ADS as well as margin in that business? If you could give us something like you gave for the Pizza Hut India business, that ADS needs to reach about 50-55 for margins to sort of recover. So again, I think upcoming year, the key would be whether we can deliver a SSSG of that 5%-7% range. That would help us take care of the cost inflation. Hopefully, there are no further shocks on the cost inflations from the economy side. We have seen it quite steady. I think the last piece was on the operating cost inflation, which happened between Q3 and Q4 of last financial year. So if we are able to see that kind of SSSG, we believe we should be in terms of margin in mid-teens on that particular brand. Post that, if that's a steady state, we can take a call on how we will go about our expansion. Until then, we'll be again very cautious on our expansion. You could see it a single digit in terms of a store count addition for the financial year. Right. And what is that comfortable margin level? For Pizza Hut India, it is 8-10. For Sri Lanka, it would be. So Sri Lanka, at least getting it back into those hitting those mid-teens level, I think, would be key. So being at 15%, I think in and around that 15% would be a good place to again look at expanding aggressively. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Yeah. Thank you, everyone, for joining. Just to reiterate, from a three-year perspective, we had called out revenue. We had said our aspiration was to grow revenue by 25%, EBITDA by 30, and double the store count. Over a three-year period, currently, we have clearly beaten that aspiration. A year might be up and down, but we hope to continue at least our revenue and EBITDA trendline. And given a tough year in FY2024, yet we believe that all factors put together, which means the combination of revenue scale, growth, EBITDA margin growth, and net new restaurant addition, on an overall basis, Sapphire clearly is the best-performing QSR company. So with that, I hope to see you all next quarter and have a good summer vacation. And thank you for joining us again. Thank you. On behalf of Sapphire Foods India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.