Ladies, and gentlemen, good day, and welcome to the Q1 FY 2025 Earnings Conference Call of Sapphire Foods India Limited, hosted by Orient Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shivani Karwat from Orient Capital. Thank you, and over to you, Ms. Karwat. Good evening, everyone. Welcome to the Q1 FY 2025 Earnings Conference 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 presentation, which was 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 now hand over the call to Mr. Sanjay. Over to you, sir. Good afternoon, everybody. Welcome to the Sapphire Foods Quarter One FY 2025 financial highlights. This quarter has been a steady quarter of performance for us. KFC, like I said, saw steady performance, and we had marked improvement in the performance of Pizza Hut and Sri Lanka. More details to follow. Our quarter one FY 2025 consolidated restaurant sales grew by 10% to INR 717 crores, and our EBITDA increased by 1% to INR 124 crores. While we have seen discretionary consumer spends at the same subdued levels as the past few quarters, specifically, Sapphire KFC has been impacted by the shift in dates of the Navratri festival compared to last year. This year's Navratri was entirely in April, where last year it was entirely in March. In quarter one FY 2025, we added 13 KFC stores and one Pizza Hut restaurant in India. Our total count is 886 as of 30th June. Our consolidated restaurant EBITDA margin was 15.1%, down 210 basis points. As I said earlier, consolidated EBITDA grew year-on-year by 1%. It was down 150 basis points versus last year, and our consolidated adjusted EBITDA of INR 71 crore or 9.9% declined year-on-year by 8.8% or 190 basis points. Our consolidated PBT at INR 12 crore or 1.7%. Consolidated adjusted PBT was INR 24 crore or 3.3%. Consolidated PAT was INR 8 crore or 1.1%, and consolidated adjusted PAT was INR 17 crore or 2.4%. With this, I'll take you to the KFC page. I'm referring to page 17 and 18 of the investor deck that we had published. KFC delivered a revenue growth of 11% with -6% SSSG, and a large portion of this -6% SSSG was in the month of April itself. As you know, among all QSR brands, KFC is impacted the most during vegetarian festival days because more than 95% of our menu contribution comes from non-veg, and Navratri, Shravan, Shradh do impact the brand substantially. We are focused on 4-5 areas to grow our business. One is we continue to enhance fried chicken category relevance through building the lunch occasion. We have lunch special menus at INR 149 and INR 199 and INR 249, and these were advertised meal bundles. So that's one area of focus. The second area of focus is value and addressed through the INR 99 and the INR 149 price points, both individual and group meal offerings. We then launched the International Burger Fest, which was a range of five burgers in different sauces. One of the interesting new additions to this burger range was the vegetarian Paneer Zinger also. In July, we have launched additional variants to our range of chicken rolls, and we believe that this is a important new addition, new permanent addition to our menu. It gives us an option to play in the snacking day part also. We opened about 13 stores to take the total KFC count to 442 stores, and now I'll just hand it over to Vijay to talk us through the financial numbers. I'm on slide 23. KFC had delivery mix of 40% versus 36% last year. The SSSG was -6%, and the ADS came at INR 122. The ADS number includes the 23% restaurant additions, which we had over last one year or so. Overall revenue grew by 11%, gross margin improved by 10 basis points. The restaurant EBITDA came in at 18.8%, which was last year it had a drop, because of the operating deleverage which we had. Slide number 26 gives you a four year and a five quarter trend. As can be seen at 18.8% for the quarter, despite Navratri, is quite a steady performance for KFC, and the overall brand still remains quite strong. We had called out in December 2021 that we would double the store count in three to four years' time. Quite happy to say that we are on track to double the count in three years' time, so by end of December 2024, we should be close to 500 restaurant count. Over to you, Sanjay. Yeah. On Pizza Hut, we have seen six to seven quarters of declining ADS trend, and we have said that in the light of this performance, which has been exacerbated by competitive pressures, we need to up the ante on the brand, revive consumer interest to product innovation, marketing, and customer service and operations. In line with the above, we launched a differentiated folded handheld pizza concept called Melts in March 2024, along with a strong mass media advertising campaign starting in the month of April, right through the quarter. And this has helped us improve consumer interest and has reversed the ADS decline of successive quarters. Typically, from the January, February, March quarter to the April, May, June, we see a seasonal uplift in the region of 6%-8%. This year, the uplift that we got was close to about 17% or so. But this is just the start of the battle on Pizza Hut. We need to continue this, as we said earlier, over and sustain it over a much longer period of time. We opened one store to take our count to 320, and if you can see the slide number 29, that gives you a screenshot of the mass media television campaign that we ran on Melts. Perhaps we are. The brand came back on television after many, many years, and this has enabled us to lift initial momentum on the brand. Quickly, Vijay, could you talk us through the financials? Slide 31. Delivery mix remained same as last year for Pizza Hut at 50%. In terms of SSSG, -7% for the quarter. The ADS came in at INR 48,000. As Sanjay called out, a big improvement, sequentially 17% over the previous quarter. Overall revenue grew by 3%, so again, previous quarter we had seen brand decline at overall revenue level, so this was a positive for the quarter for the brand, where we grew by 3%. Gross margin improved by six- by 100 basis points, and overall restaurant EBITDA came in, came in at 4.6%. Again, compared to the previous quarter, where we actually had a loss, 4.6% was quite a healthy margin compared to the previous quarter. And just a call out for this 4.6%, includes additional marketing investments as well. Slide 34 gives you four quarter and four year and five quarter trend. As can be seen, that up, even after a low ADS in the previous quarter, which was Q4 of last financial year and a loss, the brand has come back quite strongly, with ADS of INR 48,000 and the restaurant EBITDA of 4.6%. Over to you, Sanjay. Our Sri Lanka business also continues to improve. This quarter we've had really strong SSSG performance of 11% growth, backed by, even higher transaction growth. This transaction growth really bodes well for the business going forward. The brand and the company, we continue to lead the QSR industry, and as you can see in the slide 37, the readers of the business magazine LMD, which is Sri Lanka's biggest business magazine, has voted Pizza Hut and our company there as the best and the most loved brand as to company in the, in the country. ... Yeah. Slide 38, delivery mix came at a 38% for Lanka business, again, similar to last year. SSSG was 11%, backed by double-digit transaction growth. Overall revenue increased by 13% in LKR terms and 19% in Indian rupees. Gross margin improved by 10 basis points, and overall restaurant EBITDA came in at 13.2%, which is a 20 basis points improvement over last year. Slide 42 gives you a full year and five quarter trend. As can be seen that, because of the double-digit growth on SSSG as well as the transaction growth, we were able to deliver small improvement on the margin as well, 13.2%. And this SSSG, and transaction growth augurs well for the brand as we move forward. In closing, I just wanted to also talk about our ESG initiative. On slide 43, you can see that we published a third ESG report under GRI, SASB and BRSR standards. We're really the only Indian QSR company to publish a full-fledged ESG report, and this year we also obtained limited assurance on our BRSR and ESG report on a voluntary basis. The other achievement we are quite proud of is to receive a Indian Green Building Council Gold Certification for one of our KFC restaurants. We believe this is the start to you know to build far more sustainable stores. We are the only company in the Indian QSR in the retail segment to achieve this feat. Both the ESG report and now the annual financial report for FY 2023-2024, both of them are now available on our website, sapphirefoods.in. With this, we will open the discussion to question and answer. 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 the 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. The first question is from the line of Saurabh Kundan from Goldman Sachs. Please go ahead. Yes, thank you for the opportunity. My first question. I have two questions. The first one is around KFC. The SSSG trend has been worsening in the last three, four quarters. -6% is quite a large decline. I understand the impact of Navratri calendar shifts, but are you getting a sense that adjusted for Navratri, is the trend improving or is it stable or deteriorating? Yeah. So apart from April month, I would say it is still steady, still a little bit negative, but marginally negative. It's in April, when those ten days impacted or those nine days impacted the brand significantly. Even if you adjust for Navratri and you, if you take this Navratri impact into a quarter earlier, the two quarters, which would be Q4 and Q1, would be similar. So that would give an indication that it's steady. It's neither improving nor worsening. Q4 and Q1 average is roughly -4. Is that something that would be representative of what's happening? Yeah, more representative. We've not done the adjustment, but yeah, it can be representative. Oh, okay. Right. Marginally better, perhaps. Understood. Understood. Fair enough. And, sir, for Pizza Hut, the sequential improvement is quite encouraging, and I just wanted to double-check with you. After fourth quarter, you had mentioned that there will be no step up in the store additions until you reach 8%-10% margin. So I hope... I mean, does that still hold, the guidance holds? So what we had called out at Pizza Hut, there are three parameters which we are looking at before jumping into a aggressive store expansion or aggressive store expansion. One we said was SSSG, the second was, can the ADS move towards 50,000 mark? And the third was, can the profitability move towards 8%-10% mark? So it's not that the, each of the three has to actually hit and then only we'll start the expansion, because there could always be opportunities to open few stores. Having said that, the current status remains the same. We are going to be extra cautious in store opening, and we don't see a big chunk being opened in this particular financial year. Yeah, but it's not gonna be zero for us. I think there are opportunities to open a few stores, but we'll be far more cautious with our store opening. In the first six months of the calendar year, it has turned out that we have opened just one store, and I'm just looking at January to June. But the idea is to be cautious, and I don't think we've ever said that we will not open any store. Right. Thank you. Thanks a lot for your answers. Thank you. Thank you. Thank you, Saurabh. The next question is from the line of Nihal Mahesh Jham from Ambit Capital. Please go ahead. Yes, good evening, Sanjay and Vijay. Three questions. First is, if I look at the dine-in revenues for KFC, that has seen a sharp deceleration. What explains this trend, just to get your thoughts? ... Yeah, so, first, Nihal, welcome in a different avatar. I hope you're doing well. Thank you, sir. So I think you're right, that in general, across the industry, we are seeing a decline in dine-in. Overall, overall delivery still seems to be holding up, and that's perhaps a consumer trend that we are, you know, we are seeing. So I think this is across the industry, not only related to us. Having said that, there are many steps that we are taking to improve dine-in, including specific menus, value offerings. Our lunch advertising is all around getting people to come into, you know, come into our stores during this important dining occasion. We are also there are very early experiments with coffee that are taking place. We are not sitting back and allowing macro trends to overwhelm us. We are trying to do our best to get consumers back into our stores, including some of our refurbishments that we have done, make just these stores far more attractive also for consumers and give them a good experience. Just a clarification. When you mention coffee, is that an indication to look at cafe as an offering in KFC? Yeah. No, so perhaps the expression of it might be very different from what competitors do. This is just very early days there. Got that. Second question was on KFC itself. We do know that last year in Q2, you had the impact of an extended Adhik Maas. So is it that you expect the base terms favorable, and that could be at least optically giving you a better SSG in Q2? Yeah. So, the Adhik Maas was actually impacted us in July last year, and in July it was about 18 days or so that we got impacted, North region especially got impacted. I think therefore, like I said earlier to Saurabh, I think the underlying trends remain similar if adjusted for all these plus, minuses. Got that. Just if I could take one final question is on Pizza Hut. The sequential improvement in ADS is encouraging. If I just, you know, try looking at the Q3, Q2 quarter of last year, which was similar in terms of ADS and top line, versus that, margins are still like 300 basis points lower. So is this the incremental marketing spend that is leading to this? Because at least stores-wise, there is not that much of a difference. Just to comment on that. Broadly, but we are not giving out exactly, but broadly, yes, there is a big impact of marketing over there. Also, from a year-to-year basis, costs also change, Nihal. You have new minimum wages. So you won't have a similar flow, flow-through of 48,000 ADS in the previous year and a 48,000 ADS a year later. With the cost inflation side, especially the wage inflation, yeah. Got that. So that was it for my end. So it's a combination. A big portion would be marketing, extra marketing investments, and partly would be the wage inflation impact as well, wage and other cost inflation. Understood. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead. Hi, Sanjay, Vijay. Thanks for the opportunity. Just one question. Wanted to know, what will be the contribution of non-vegetarian in our Pizza Hut franchise? Roughly, I would say 75, 25, veg, non-veg. So then from that perspective, if we extend the headwind that impacted the KFC, the vegetarian portfolio of Pizza Hut would have done much better than what it appears at aggregate level. Is that so? Much better is perhaps not the right, you know, correlation. The way that I look at it is in Navratri, non-veg consumption gets impacted. Normal food continues. It doesn't increase or anything. No, Sanjay, what I meant that, that let's assume that the 30% of business would have got impacted in Pizza Hut also. Uh- The 70% would have done much better than what the aggregate number suggests, right? I don't have the exact answer to that, but yeah, it could be, you could be right there, Tejas. I don't have the numbers. Perfect. And second, your peers have actually called out some geopolitical issues still hurting sentiments on some of these brands. Any read through there? ...So the fact of the matter is that there is an impact. There's. I don't think we have, we have not called it out in the past, because these are things that perhaps we just have to live with. It's not right across the country, but there are pockets where we have got impacted. We continue to get impacted. There is no letup, there's no letup or, you know, no bounce back that we see in some of these pockets. Got it. That's all from my side. Thanks, and all the best for coming quarters. Thank you, Tejas. Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Hi, Sanjay. Good evening. Thanks for the- Hello, Shirish. Yeah. I'm just reading out two, three data points. If I look back quarter four, we had monthly active users of about 1.25 million for KFC, and Pizza Hut was 0.89. This quarter, we have moved to 1.5 million. And when I look at the store addition on a Y-Y basis, it is about 23%. And so right now we have 442 stores. Last year, we had 358 stores. But the question is that the ADS has declined almost 12%. Understandably, partially, you have mentioned about Navratri. So the question here is that if the monthly active users has gone up, could be the fraction because of the number of stores which has got added. Do you think over the next two to three years, KFC will become in a positive SSG territory? So there are two separate things. When you look at our overall ADS that we report, that overall ADS is inclusive of new stores. And like we said in the past, new stores start at much lower than the average of the brand, and then over a period of time, they catch up to the brand average. So if you see the pace of expansion that we have had, and we have doubled the number of stores roughly over the last three years, if the new stores are going to come in at much below brand average, then the brand average is unlikely to see any growth in the you know at an overall basis. Having said that, SSSG is absolutely important, and we don't think that this environment of negative SSSG should continue into the future. And we are we believe that we are taking all the necessary steps to improve brand cadence. So two separate, you know, parts to two separate answers to your question. Okay. The reason I'm asking, because you said that you're bringing a lot of occasion to improve the consumption, and therefore, rightfully, you have brought the burger range and even 99. So I was more curious, is this enough to drive the traffic, and that would, at some point of time over the next two, three quarters, will lead to a positive effect? Because I'm giving the benefit in this quarter that Navratri has eaten up some SSG. Yeah. So I guess there are two parts to this. One is, we are doing everything that we can, and sometimes it is not about doing 100 things, but doing three or four things that we feel are impactful and really putting marketing muscle behind it. So, in our mind, we are quite happy with the initiatives that we are putting out. Having said that, there has to be some improvement also in the macros. And, I don't think the macros, especially the private final consumption expenditure, is going to be muted for eternity. It has to start improving in the next couple of quarters. Combined with the efforts that we are taking, I think we should be positive about same-store sales growth on KFC. All these are in the end cycles, I believe. So you go through periods where you've got really strong SSSGs and then periods when you've got a little weaker same-store sales growth. I think we are in one of those cycles. In such a cycle, what we do and what we put out in the market, I think is far more important, and I think we are taking the right steps there, Shirish. I got that. We just heard the other, not directly, but the other player in the morning. Now they are offering two burgers at INR 79. So I think is the market conditions are not yet looking right. So that's why this question I made. Anyway, I'll take it offline. My second question and last question to Vijay: What are the margin levers? Because I was expecting some bigger margin expansion, because though gross margin is improved only by 10-20 basis points, but that is not reflected into the EBITDA. Going forward, what are the levers we have for KFC? The overall company? So, again, if I break it down, the KFC got impacted by the negative 6%, right? So typically, a negative 6% would lead to a bigger drop at a restaurant EBITDA level with the kind of flow through our business has in terms of the operating leverage. We were able to actually limit that downside by actually delivering quite a bit of cost efficiencies across our labor cost, the operating cost, electricity cost, the gas cylinder cost, and that helped us deliver this 18.8% despite the negative 6%. Otherwise, typically, a negative 6% could lead to a bigger erosion on the margin. Okay. That's it from me. Thank you. Thank you, Shirish. Thank you. The next question is from the line of Gaurav Jogani from Axis Capital. Please go ahead. Thank you for the opportunity, and, I would congratulate you on a resilient margin performance in a difficult time. So my first question is with regards to, the gap between, you know, the SSG growth and the ADS growth in the Pizza Hut segment. Now, that gap seems to be narrowing, and this seems to be also narrowing because of the store, the muted store opening that we see. So in that context, you know, how should we look it ahead, given the fact that, you know, the SSGs are still negative, and we might expect a muted store opening for the year? How, how, how do you look at this metric going ahead? So again, while we don't give out a specific guidance on quarter or a year, we have always called out the general trend, how the ADS movements are likely to happen. We typically at a 5%-7% SSSG and a 20% kind of a store additions, we expect the ADS to remain stable. Now, if either of the parameters goes up and down, it will have an impact. So if you have a negative SSSG and you continue to open stores, it will actually bring down the ADS. Right now, what we are seeing, we are seeing stable ADS because we are not adding stores. So to hold on to the ADS level, a 5% kind of a SSSG and a 20% kind of a store additions would help you actually deliver a muted or, or a stable ADS, not the muted, a stable ADS. Having said that, in Pizza Hut, all the attempts are in terms of product innovation and the marketing investment is to get the ADS levels up, because these current ADS levels are not sufficient enough for us to move towards double-digit SSG mark. And as Sanjay said, you are looking at investing behind product innovation and marketing over several quarters, and this is not just a couple of quarter activity. Sir, just a follow-up on the marketing bit. You know, as you've already mentioned, that is elevated. So can we expect this to elevate further the marketing spends as we approach the festive season, or at least it is expected to remain at the current levels? We expect it to remain at the current levels for quite a few quarters or several quarters, but I think we are quite happy with the current level of spend which we are incurring, and which allows us to go on mass media. So- I think the idea is to be consistent here, Gaurav, over a period of time. Sure. Sir, in addition to this question, you know, Pizza Hut, what kind of store opening one should build? You know, while you know the three to five-year targets for you might remain the same, but in the near term, given that we have only opened one store in this FY, what kind of store numbers at least, you know, you can help us guide for at least for this year, particularly? So again, this year it will be a, a muted store opening. We have called out that we are not comfortable giving a three year, five year projections right now, when we are... Where for the last six months, we haven't opened a single store in that sense, or over last one year, we opened 18 restaurants. So I think we'll take it a quarter by quarter. Once we become more comfortable on the brand margins and the ADS, I think that's the time we'll engage in a conversation on how the, the store openings are likely to go over the next three to five years. For the time being, you can just assume the way we have operated over the last one year, and I, I would ask you to take a trend over the last one year or so, to build in how the next 1 year could look like. But that's a very broad answer I'm giving you. The right way would be to wait for a couple of quarters, and then we can give you more definite guidance. Sure. And the- It's not going to be zero, is the point, Gaurav. Yeah, I said this, the only thing is, if not zero, I mean, whether it be 10 or 20, because generally we have been opening 35-40 stores or- It will be lower than that. That's why I said, in the last one year, we opened 18, so maybe that can be taken as a reference point, maybe. Got it. Got it. Got it. And sir, the last bit on the KFC now. You know, KFC, though we can understand the impact of the Navaratri in this particular quarter, but any sense in the remaining period, that is the May and the June month, are you seeing any uptick in the core consumer consumption in terms of say, either the ticket size or in the footfall, any which ways KFC can improve them? No, Sanjay called it out, right. So we are largely at a similar position. We are not seeing a trend which is either moving in a positive direction or deteriorating further. I think we are in a steady situation, which is if I look at quarter three, quarter four of last year and quarter one, I think both were negative. We are in a similar trajectory. There could be slight up and down in terms of numbers. This is where the festival fall. But again, Q3, Q2, again, as Shravan, while it's one less this time, you are not really seeing an uptick. You are at the same situation. Got it, sir. Thank you for answering my question. Thank you. The next question is from the line of Jaykumar Doshi from Kotak Bank. Please go ahead. Hello, Jay. Jaykumar Doshi, please go ahead. Are you there, Jay? Jaykumar Doshi is not online. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead. Yes, sir. Hi, thanks for the opportunity. Sanjay, I'm not sure if these are right macro indicators, but just wanted to check if employment growth in the country or wage hikes sort of relevant metrics that you track internally for sort of tracking improvement in demand. Any sense on these metrics for FY 2025 if you are tracking these metrics? Well, so we haven't really tracked these two metrics as in specific. I think the broader metrics which we track, it is private final consumption expenditure metrics, along with the GDP data. So that gives an indication, over last, I think, six odd quarters, the private final consumption expenditure has been below the GDP growth rate. And something like this happened for such a long period was maybe couple of decades ago, if I recollect correctly, 2003, 2004 period. And it took couple of years for things to turn around. So we are just hoping, that maybe we are probably closer to the turnaround then rather than later. But if you have any indications on these two data points, maybe you can share with us. Yeah. And many of these data points, Devanshu, are also hindsight data points, so it doesn't help us in the moment. In the moment, I and I've, I think, said this in the past, all that we can do is try and put the best possible marketing plan, you know, in front of consumers and back it up with great customer service. So that's all that we can do. And then I think what we see in our stores perhaps plays out when the government releases some of the messages, but it doesn't help us in foresight. Got it, Sanjay. Very clear. Second, I wanted to check, typically, so we are at 122 in KFC ADS, which was 135 in 2023. So is this entirely due to, weak macros, or there is some bit of, bill size reduction also because there has been a focus on value launches? Or there is some increase in competition, from that perspective. So any color on this, please? So largely it is because of the new store addition. We have saw that our new stores actually come at 75%-80% ADS levels of the brand average. And our, our run rate, if you have doubled it over last week, largely over three years, which means 25% addition. So that's one, one prime reason why the ADS gets pulled down. Typically, what happens when you are doing the additions at such a large scale, of 5%-7% SSG helps you to balance that particular ADS drop caused by the new stores. And that kind of SSG, we have not seen over last 5 quarters or so. In fact, the last 3 quarters have been negative. So that's what has caused down the overall ADS to come down. Primarily new stores, and second, not helped by the fact that the SSG has been flat to negative. Got it. So, does that indicate at least for mature stores, barring the impact of new store additions, it is... Okay, so SSG, you are saying it is negative, so that includes mature stores. Sorry, my bad. Yeah, correct. Yes. Yes. So SSG is an indicator of mature store performance. Okay. And, Vijay, last question from my end. I wanted to check, there's no sequential improvement in margins for KFC despite a healthy pickup in the revenue. Because gross margins are also stable sequentially. Well, gross margins are stable. What you, what you don't see is that when you typically get into a new year, there is a wage inflation which comes into the picture. Also, when you compare Q4 versus Q1, the seasonality kicks into the picture. So Q4, typically from a utility cost, electricity cost, it's a quite a soft month in terms of those costs, because the winters across the country. And this year, April, May, June, from a utility cost point of view, has been brutal. Add to that wage, wage inflation. So these are the two areas which primarily causes gap vis-à-vis quarter four. A third point which I can add to it is the delivery mix. When you look at the delivery mix of quarter four versus quarter one, the quarter one is slightly higher than quarter four, and delivery is definitely, while profitable, it's slightly lower profitability compared to other channels. So these are the three prime reasons. Okay. Out of these three, I guess utility, you may see some moderation in the coming quarters, but, other than that, these are more, structural, right? The wage is, the wage cost and the delivery is, yes. Yeah. Okay, got it. Thank you. Thanks for taking my question. Thank you. The next question is from the line of Prolin Nandu from Edelweiss Public Alternatives. Please go ahead. Hi, sir. This is Prolin from Edelweiss Public Alternatives. The question is on marketing spend, right? So, what we have seen is that some of the mature consumer brands would spend on marketing when the environment is right, in terms of macro environment, right, in some sense. But we have continued to probably spend on marketing, maybe slightly higher than what we have been doing in the past. So, I mean, just wanted to understand, is it still that QSR as a category or KFC as a brand is yet to reach that maturity, and it still needs those marketing spends to bring in the kind of footfall or sales number that we are witnessing? Or, or how do you, you know, look at marketing spend continuing to be at a higher level in a weak macro environment? So in a weak macro economic environment, and especially if a brand is not performing as well as it should, then there has to be some intervention on the part of the brand to regain consumer interest. In such circumstances is when additional marketing, but however, spent behind relevant areas of interest for the consumer will help the brand. So I don't think there is a generalization that we can make that mature brands spend less in difficult environments and more in better environments. I don't think that's a generalization that holds. In the case of KFC, we have continued with the same level of spend. It is in Pizza Hut where we have increased the advertising spend. Sure. So, I mean, this question was more to understand this macro slowdown, right? So, maybe the other way to put that, put this is that, especially in KFC, is it fair that whatever numbers that we are getting is because of some marketing spend and things could have been quite worse, if we had not been spending the same amount of money? I mean, it's a hypothetical question, really. I don't know how to answer it. Our level of spend on KFC is similar, but there are macro headwinds that we are facing. Sure, sure. That's it from my side. Thanks a lot. Thank you, Prolin. Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead. I, thank you for the opportunity. My first question was, did you take any price increases for KFC during the quarter? We had taken a very small price increase of 1%, and it was not across the board. There was some opportunity of price corrections on some of our SKUs. That's what we did. So it was close to 1%. Nothing on Pizza Hut. Nothing on Pizza Hut. If that's your next question. No, that was not. Considering you're trying to get the, get, you know, turning it around. The second question was on this dine-in weakness. Could you elaborate a bit more on the nuances of this, you know, sequentially? Have you continued to see this deteriorating, stabilizing, improving, and how will you kind of, you know, cut it or differentiate it away from probably a structural move of consumers more towards delivery, versus the macro factor? Any nuances, any region-wise disparity, you know, large cities or smaller ones, anything that you could, you know, give some more color on? So, I think there are two parts here. One is, on a structural basis, yes, there is a move, but that move is a very, very slow move, I would say, from dine-in to delivery. There is another important part that has improved our delivery contribution, which is that today most of our stores in both KFC as well as Pizza Hut are open beyond the 12 hours. They're actually open for late night, and that's the time of the day part that we don't do any dine-in sales and, it's only delivery. So we have added this late night day part, which is 100% delivery, and that has also contributed to the increased, you know, relevance of delivery in our mix. I would say that that has had a bigger impact than, you know, a structural change between dine-in and delivery. Okay. And last question was, any sense of number of openings for KFC this year? We should have the- Could you come again, Latika, please? Your voice is breaking, Latika. Hello? Hello, Miss Latika, your voice is not clear. Thank you. The next question is from the line of Chirag Lodaya from ValueQuest Investment Advisors. Please go ahead. Yeah, thank you for the opportunity. Sir, my question was on, you know, cost containment. So overall, what we see in KFC is despite 6% negative SSG, our restaurant margins are, you know, pretty healthy, 18.8, and you mentioned, you know, few of the cost control measures, et cetera. But, you know, going ahead, how to see if, suppose, hypothetically, -5, -6 SSG persist for, you know, more two, three quarters, will we be able to maintain this kind of restaurant operating margins? No, the answer is no. So, there is a limited opportunity which can be available on the cost efficiency, right? So if the environment continues to be -5%, -6% for a long period of time, we will certainly see an impact on the margins. We saw that in case of Pizza Hut. So it's, we would hope that our initiatives which we are taking to get the SSG back, actually fructify in the next few quarters. Right. And if I want to understand, what percentage of, you know, store operating costs would be fixed in nature? Typically, the way we call out our business model is flow through. Roughly, and what we mean by flow through is that for every INR 100 of sale, we end up getting INR 35-INR 40 to the bottom line and vice versa. Okay, okay. I'll, I'll take it offline and detail later. Second was on store opening plan. So, you know, just wanted to understand from KFC point of view, how do you look at this? If, say, slowdown persists, will we, you know, change trajectory in terms of store opening, or will be, you know, opening the guided number of stores? So we have always called out our Sapphire way on how we approach the store opening. So, that’s paramount. So if there is a persistently negative SSSG, and there is a huge impact on the EBITDA or the restaurant EBITDA, certainly you have to revisit your pace of expansion. And And we had called this out quite early in case of Pizza Hut also. First we went slow, and then we became extremely cautious. So the same stands true for KFC. So if you are going to see a persistently negative SSSG, and an impact on restaurant EBITDA, EBITDA which is significant, then we will have to and we will re-approach or revisit the store expansion plan. Right now, we are still in a okay zone, or we are still in a comfortable or reasonable zone. We have always called out, we would like our KFC margins to be 19, 20, near to 20. If it goes significantly below that, yes, we will revisit our expansion strategy. Right. Just lastly, on overall, you know, consumer slowdown. So as we were discussing, you know, in the previous participant's question, that, you know, what we see is delivery across all QSR format is, you know, doing pretty well. The issue is with dine-in. So at a consumer level or consumer behavior, you know, is again, you know, at aggregate, is there that shift in consumer is happening from, you know, dine-in to delivery for format like us? Is it where that the overall, you know, weakness is? How do you read the situation? But clearly, in the previous, you know, in the previous question, in our case, there is a shift, but there is also an additional day part that has opened up over the last 12, 15 months, which is only delivery. So from a contribution perspective, the impact of that has, is a little more than perhaps the consumer shift from, you know, less dine-in. This is operations after 11 P.M. in the night, so- No, the reason I was asking that question again was, if I look at per store delivery revenue, it is a ballpark 1.6, 1.7. So even if there is a positive delta of that, there is no significant uptick seen there. And the other way to look at it is probably the additional time period or operational period wouldn't have been there. You would have seen even the delivery sales probably de-growing. So- But that number... Okay, fine. Fine. Thank you, Chirag. Thank you. The next question is from the line of Jaykumar Doshi from Kotak Bank. Please go ahead. Hello, Jay. Hi, thanks for the opportunity, and sorry I couldn't, sort of, some problem earlier when my name was called out. My question is just a follow-up on the previous questions itself, but a very brief one. Do you think that there was an impact on dine-in because of extremely hot summer this season? Or do you see this dine-in delivery shift, trend continue in July as well? I've not looked at... I've not compared the two numbers, Jay, so let me not try and answer something that I'm not sure of, but we can get back to you if necessary. Sure, understood. Thank you so much. Thank you. The next question is from the line of Dhiraj Mistry from Antique. Please go ahead. Yeah, thank you for the opportunity. Sorry if I missed out on this, like, can you give the similar time what you witnessed in KFC, that underlying demand excluding of this one-off, like Navratri and Onam remains stable at -3% to -4%. How do you see month-on-month SSG for Pizza Hut? Is there on month-on-month basis, there is some improvement in Pizza Hut or whether it remains same across months? So again, the way to look at would be that how are you looking at the ADS improvement? Because SSG, depending upon the base, it can go really up and down. And last year, Pizza Hut was, ADS was on a declining trend. The 48,000 ADS, the idea is that there could be small impact in Q2 because of the seasonality. Otherwise, Q2 for us is largely similar to Q1. So if it stays there, you could see still a slightly negative SSG, even in Pizza Hut, because of the base effect. Got it. Got it. Second question on delivery and dine-in channels. Sorry to drill a bit more on this, but if I look versus last year for Pizza Hut, the contribution from delivery and dine-in channel is broadly similar. So we have not witnessed any major difference between dine-in and delivery channel. And am I reading it wrongly or it's the same case? You are, you are right there. So, a big jump, the 17% sequential improvement and the improvement vis-à-vis last year, has been across the channels. The benefit which we have seen in that upliftment, on account of marketing promotions backed by the product innovation, the Melts launch, we have seen upliftment across the channel for Pizza Hut. No, sorry, I meant I was comparing with the last year versus this, this year. ... Not on sequential basis for Pizza Hut. Our answer is true for last year versus this year and even the sequential. It's largely remained at 50%, and yet we have improved our ADS by 17%, which means across the channel, the improvement has been similar. Got it. Got it. And the trend would be similar for KFC as well? So KFC, we have seen it the other way around, right? KFC, we have seen delivery mix improve sequentially as well as over last year. So which means the dining has dropped a bit and delivery has performed better than dining. Got it. Thank you. Thank you for, that's it from my side. Thank you. The next question is from the line of Ashutosh Parashar from Mirabilis Investment Trust. Please go ahead. Yeah, thanks for the opportunity. So just a couple of questions. So first question is on the line of corporate costs. So last few quarters, this has ranged between, like, INR 32 crore-INR 34 crore quarterly run rate, which jumped to, like, INR 38 crore-INR 39 crore this quarter. So any sense on the progression of this in the coming quarters? How should we see this going ahead, and what sort of leverage can we get on this front? And the second will... Yeah. Go ahead. Go Go ahead, go ahead. Yeah. So second question would be on the, so, you had store addition front. So like, we understand that the addition will be quite muted over the next, couple of quarters, at least, given the demand trends, and this would be true for, both the franchises in India. So given this muted trends of store addition, how is, Yum! thinking about, its, growth strategy in India based on your conversation with the, brand owners? So any sense on that would be helpful. Yeah, so on corporate costs, what's actually comparing is the previous quarter versus current quarter. We are not factoring in the wage inflation, which would typically happen in April, when you give an increase in salaries. So that, that's the increase, along with the slight increase in additions of the count because of the increase in the overall store base. That's the only increase. Now, from here onwards, quarter on quarter, you should see largely a similar number for corporate costs, as was seen in the previous quarters as well. So once the Q1 base gets established, typically that remains largely the similar across the year. And coming on to the Pizza Hut question?a Yeah. I think so, Yum! and us, we are completely aligned on what needs to be done on the brand and the need to improve the brand before, you know, before going on the same pace of store expansions as earlier. So these conversations are not a unilateral decision. So these store opening calls typically are a conversation which happens with Yum! We are also guided by a development agreement. How do we renegotiate that agreement, and how do we go about the next few quarters is a joint conversation which happens along with Yum! So Yum! is fully cognizant of the current status of the brand performance, and they are fully on board. Got it, sir. Thanks. That will be all. Thank you. That was the last question. I will now like to hand the conference over to the management for the closing remarks. Yeah. Thank you everyone for attending. Like I said, it's been a steady quarter for us. Steady on KFC, if I exclude the Navratri impact, and material improvement in Pizza Hut as well as Sri Lanka business. We continue to make our own destiny, continue to focus on improving consumer interest in our brands. And with change in the macros from a consumer spend perspective, I think we are well positioned for the future. Thank you very much and look forward to speaking with all of you all next quarter. On behalf of Sapphire Foods India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.