Hey, good afternoon, everybody. Thank you for joining us today for the second quarter, 1st half, 2023 results briefing of Jollibee Foods. I'm Carissa Mangubat of Regis Partners, and I'll be your host and moderator for this afternoon. From JFC, Mr. Richard Shin, the CFO, will be presenting the results, followed by Q&A. Joining him as well is the investor relations team, headed by Cossette Palomar. I'll turn over first to Cossette for some housekeeping before we move on over to the presentation proper. Cossette? Yeah. Thank you, Carissa. Good afternoon, and welcome to Jollibee Foods Corporation's second quarter 2023 earnings call. I am Cossette Palomar, Investor Relations Head of JFC. As Carissa said, joining us today is our Chief Financial Officer, Mr. Richard Shin, and following his presentation, we'll open the call to questions. Before we get started, let me just remind you that this earnings call may include forward-looking statements that are based on certain assumptions of management and are subject to risks and opportunities or unforeseen events. Actual results could differ materially from those contemplated in the relevant forward-looking statement, the JFC group gives no assurance that such forward-looking statements will prove to be correct or that such intentions will not change. All subsequent written and oral forward-looking statements attributable to the company or persons acting on behalf of the company are expressly qualified in their entirety by the above cautionary statements. Today's call is being recorded, and the replay will be made available on our corporate website. Our presentation deck will also be available on our website. With that, let me now turn over the call to Mr. Shin. Thank you very much, Cossette, and again, a big thanks to Carissa and the Regis Partners team for setting this up. A very good afternoon, and for those of you joining us from other parts of the world, good morning, and perhaps even a very good early morning. Thank you again for the time you've allocated to listen to the update over the next hour. I hope that beyond the presentation, we can really get into some good dialogue around the Q&A. I'll do my best to try to provide answers, and if we can't, as always, we will certainly get back to you within a very reasonable time to address all your questions and concerns that you may have. Let me start with the summary, as usual. was a record-setting quarter in many aspects in that we had reached the highest level of revenues, system-wide sales, and our same-store sales performance was also rock solid for the quarter at 9%, as you can see here in the top left corner. And of course, equally, if not more important, that drove a very positive gearing performance and operating income of 31% for the quarter. That added with the first quarter, where we had incredible growth, in particular, as we were lapping on a lower base in the Philippines in 2022, Q1, as there was still impact of COVID lockdown. We were lapping through that, but Q2 was in fact a record quarter for us last year, led by the Philippines domestic business. We're again incredibly pleased with the results, given that it was a strong Q2 last year as well. You can see here, 50% up on the first half of the year in terms of operating income. What drove this growth? For one thing, it's, sorry, same-store sales, efficiencies and growth throughout our markets, not just the Philippines, but throughout our international markets as well. In addition, we added 270 new stores. As you can see, 40 in the Philippines and 230 in the international. We continue to outpace investments in new stores in our international market, as we know that the importance of the U.S. and China in particular are very high for us strategically. We stand now today at 57% of our 6,600-plus stores being franchised, and within the Philippines market, two-thirds of our business is franchised. If you now move to the top right-hand corner, let me just give you some highlights, starting with our engine, our Philippines domestic business. Again, very strong results. In particular, you can see our OPM of 10.2% in Q2. That, of course, was led by the Jollibee brand, which grew at 11.9% same-store sales. Net-net, all the other brands in our portfolio in the Philippines delivered a 11.3% same-store growth. Addition of the new stores that I just referred to, in total, 14.5% growth. We move down here to China. We did have a very strong top-line deliverables, and it did deliver an incremental positive EBITDA, meaning last year was not positive, and we're now in the positive zone. I do want to caution that, just like all other industries and all other businesses in China, there are incredible macro headwinds that I think we have to be mindful of and navigate through. I do want to sort of balance the enthusiasm of a 77% system-wide sales growth and 35% same-store sales growth in the quarter. I want to balance that also with the reality that China is a challenging market for all due to the macros. We move to North America, let me talk a little bit about Smashburger first before I move to our star of North America, which is our Jollibee brand. Smashburger had a very strong quarter, boasting a growth and system-wide sales growth of 13.4%, a same-store sales growth or rolling base growth of 8.3% for the quarter. Jollibee, the brand itself in the U.S., we're now 66 stores strong, all 100% company-owned. We've started the migration into Gen Pop, not just enjoying our presence in the Phil market, expanding outside. You can see system-wide sales growth of nearly 27% and a strong rolling base growth of 7%. In the context of the U.S. market, this is a very strong number. In totality, North America delivered 15.1% and same-store sales of 2.6%. The reason for the drag here that you see, even though our Jollibee brand and Smashburger had high numbers, is because we have hit some headwinds with our secondary brands of Chowking and Red Ribbon, but we're working through those, and we'll ensure that they are cash contributors as they're not our strategic focus in brands. Nonetheless, there was a bit of a drag. In addition, as it's North America, our FX impact on Jollibee Canada stores also had a negative impact for us in the quarter. Moving down to CBTL. We had a solid system-wide sales growth of 10.3%, and modest decline of 0.4%, and I'll explain the rationale behind that a little bit later. In short, it's due to the fact that we had a very high base in 2022, Q2. In particular, our two markets where we have the highest concentration of company-owned stores and the highest contributor to our P&L, vis-a-vis the fact that it's nearly 200-plus company-owned stores in Singapore and Malaysia, or accounting for about 20% of our network. The border openings in Q2 of last year had contributed a very high top line, so as we cycled through that, we fell a little bit short on that. Nonetheless, first half, we're up 14.3% in terms of system-wide sales and same-store sales growth of 3%. Let's go a bit more into the details of the top line and our network. Graphically, you can see here from 2018, divided by four quarters, cycling through the COVID period of 2020, 2021, coming out last year, and of course, Q1 and Q2 of this year. You can see PHP 85.5 billion is a record-setting system-wide sales number for us. This is billion PHP. The Philippines business, of course, contributed PHP 52 billion or the majority, slightly, slightly over majority of PHP 50 billion. Our international business, not just a Q2 record, but an all-time high of PHP 33.3 billion. If we look at it by key businesses, again, we're focused on top line, so this is system-wide sales growth versus the same quarter last year. This is same-store sales growth, so rolling base, new store contributions, and FX impact. Of course, on this side, we've got the consolidated first half numbers. Let me start with the first half first. Right across the board, all regions delivered a positive system-wide sales and also a positive same-store sales growth. For Q2, you can see that we have three businesses here, and I've highlighted, I, I wanna be able to walk you through what happened in these three markets/businesses. Nonetheless, a global system-wide sales-- Sorry, same-store sales growth of 9%, broken down, 2/3 or, or more from transaction counts, and 2.4% coming from average check. Let's go one by one. North America, Asia brands, so that consists of Jollibee, Chowking, and Red Ribbon, and that's the U.S. In Canada, we have Jollibee. What we see here, again, as I mentioned in my summary slide, 7.2% was the rolling base for the quarter, and for the first half, it's 6.3%. It continues to grow respectfully, you know, in context of QSR segment. I think this is a solid number. You can see here, the impact of Jollibee in Canada, as well as, Chowking and Red Ribbon being, negative growth, and so therefore, it was a drag, resulting in a, North America comp, Sorry, same-store sales growth of, -0.8, or a decline of 0.8, I should say. Nonetheless, we'll continue to grow our network and expand, as you can see here, 16.2 in System-Wide Sales. For the half, we are still, positive, even though we have some, weaker brands that we're dealing with, and, we'll continue to focus on that in Q3 and Q4. CBTL, the softness here of 0.4, although system-wide, sales-wise, a double digit of 10%, is mainly driven by this higher base in Q2 of 2022 that I mentioned in Singapore and Malaysia. When you look at Superfoods, so this, as you know, we've divested out of PHO24, so this effectively is now our Highlands Coffee business. We continue to expand, so 7.6% for the quarter and 17.2% for the first half in system-wide sales. We had a modest growth of 4.9% in the first half, led by the first quarter. In Q2, the macros of Vietnam started to become quite challenging, and I, I put a footnote here to describe some of the details to that. What we did see, however, versus our competition, is that Highlands Coffee's ADS was although down by 7% for the quarter. Our second largest coffee chain-- coffee and tea chain in Vietnam, Phúc Long, had a decline of 23% in their average daily sales. Relative to that, we had a lower decline in a very challenging macro environment. The next decline here, Coffee House, 17.7%. What we decided to do for Q2 onwards is to accelerate our footprint through ahead of plan builds of our new stores. The reason for that is because we're still getting a very good payback in this business, and we know that as we cycle through this headwind, and we believe it's around Q4 that we'll be cycling out of it, we'll be in a much stronger position with a much larger footprint. We will continue to gain market share in this very important coffee market in Vietnam. Footprint-wise, again, 6,617 stores as at the end of June, which is which represents a 5.1% growth, led by international, 8.9% growth. Philippines, we continue to focus on driving our existing network very hard, and being very selective in our new store openings. Nonetheless, we're building out 40 new stores for the quarter, for the half, sorry. Moving on to financial summary now. We talked a little bit about system-wide sales. I think you can just see the growth numbers here, 17% for the quarter, 23% for the half, delivering revenues of 17%, so in line. For the half, 22%. Strong middle of the P&L, our margins continued to grow, outpacing slightly our revenue growth at 17%, and for the half, nearly 29% absolute growth. Operating income were up 31% for the quarter, so this is from our regular business, and it does not include the other income or other items such, as such, so this is pure growth. For the first half, it's a near 51% growth to PHP 7.6 billion. Just as a reference point, last year, 2022, we delivered 12 months at PHP 9.9 billion. We're currently on a pace to significantly outgrow last year. EBITDA, you can see PHP 8.3 billion, which is a 6.7% growth for the quarter and 7% growth for the first half at PHP 15.9 billion EBITDA for the first half. If we back out those land conveyance one-time gain that we enjoyed in 2022, which in the quarter was PHP 1.1 billion, and in the first half is PHP 2.9 billion. There's still more to come. As last year, we disclosed that we had PHP 4.9 billion of one-time gain from going asset light on land and putting that into our CentralH ub REIT, where today we are enjoying profit returns from that REIT. This PHP 2.9 will continue to come up, and it will, on a like-for-like basis, make our Net Income After Tax look like a decline, but in fact, it's an adjustment given the gain that we had last year. Adjusted, so if you were to look at the business on an adjusted basis, on pure what the stores are delivering, we had an EBITDA growth of 24% for the quarter and 33% for the half. Just moving below EBITDA now to Net Income. This is where those one-time gain impact comes through. You can see here, -82%, and our net income attribute to equity, all this of the parent comes down at 16%. That's the headline that you will see, 16% decline for the quarter and 14% decline for the half. Again, adjusted for the PHP 2.9 billion one-time gain, we in fact have a growth rate of 99% or double of last year's run rate business, and for the quarter, we're up nearly 35%. Let me share with you now more details on EBITDA by region and business section, segments. The headline here really is China's Smashburger's turnaround is now adding cash to our system and is cash positive. You can see our international operations now accounts for 29% of our total EBITDA for the quarter, up from just under 12% last year. Let's go one by one. Philippines, this negative again reflects the land gain, because that happened in the Philippines, so that's PHP 1.1 billion impact in there. It's actually a growth, as you can see the footnote down here, adjusted for that. Philippines actually grew their EBITDA by 1.6%, which also denotes that we are investing quite a bit back into technology and other investments in our very important Philippines business. If you look at it, for the half, this -14% adjusted is positive 11.2%, if you take the one-time gain out. EBITDA accretive in both cases. China, 167 positive versus a - 191, last quarter-- sorry, Q2 last year, and just over PHP 400 million for the first half, which is an increase of 39%. Smashburger has turned around on an EBITDA basis, and is now near PHP 240 million of positive cash or EBITDA contribution. Our coffee and tea segment, which includes The Coffee Bean & Tea Leaf, Highlands Coffee and Milksha, you can see, again, as explained earlier, what we saw in CBTL, we're slightly up 9.5% for the half, and slightly down for the quarter. Again, I, I wanna reiterate that we continue to be very optimistic about the direction of The Coffee Bean & Tea Leaf. We believe it will be a mega brand. We're almost there in terms of what we call the Salience Program. That's brand, product, clustering, our geography so that we can be a lot, lot higher contribution through franchising in the U.S. in particular. We're about half and half at the moment. All these programs are coming together very nicely. We've onboarded new executives, not only the CEO, who's now coming to one year at the helms, but we've also onboarded world-class Chief Development Officer, who is responsible for the franchising program in both the U.S. and international markets. We're seeing a lot of very positive things coming through, and we're not at all concerned about the investments that we're putting back into our business, as you can see here. The rest of the world, which comprises of North America, Asian brands, so that's Jollibee, that's Chowking and Red Ribbon, as well as AMEA. You can see a significant growth in the quarter, as well as a turnaround in the first half. Let's go through some key KPIs here. Let's start with gross profit margin, so 10 basis points better for the quarter, despite the fact that our food and packaging cost is 40 basis points higher than the same quarter of last year, so it's 47.4 versus 47. For the first half, it's not shown on this chart, but for the first half, it's 46.9 versus 46.3. There is still an inflationary impact that we're working through. You can see the fact that we have increased our margin means we're getting further efficiencies from our operations, whether it's at the store level or commissary level or, or warehousing and supply chain level. We continue to run those programs and continue to get savings. We've had modest price increase, but we've also benefited from price increases of last year that are flowing through into the first second quarter of this year. Our operating profit margin, OPM, is up 70 basis points to 6.6%. Earlier, I showed you north of 10% of Philippines business. Our adjusted EBITDA, you can see, this is the only one I've shown as adjusted, because I think it's important to understand that the land gain should not be, you know, it should not be a hurt this year, rather, it was a help last year. You can see here, 80 basis points up. Our free cash flow margin is now at 12.8% for the quarter. Before we get into free cash flow, I just wanted to show you a slide on where we are with our AMP investments, because last year, in particular in December, we had a catch-up month where it caused quite a bit of concern. I guaranteed last year that this year we would have a much smoother management of AMP. You can see in the second quarter, compared to as a percentage of system-wide sales, 2.4, right in line with second quarter last year. Over here, you can see the issue was first quarter last year, as I've explained in past calls, where the Philippine market, due to the lockdown, was underspending the AMP, of course, because of COVID lockdown. There was a catch-up, and you can see last year, the catch-up amounted to 3.2% in the fourth quarter. Of course, we're managing it so that we don't have a curve this way in our fourth quarter. In the first half of the year, you can see we're very balanced at 2.2. Last year, it was 2.1, and you can see it broken down by quarters where we are. We're not holding back on our investments. We continue to invest behind the four pillars, which is chicken, beef, Chinese cuisine, and coffee and tea, and all the other brands sitting in other segments or sectors, we are converting them to cash generators. We are upscaling our AMP into our champion brands of Jollibee, Coffee Bean & Tea Leaf, Smashburger, and Tim Ho Wan, and moderately investing in the other brands. This is just a OPM chart. I think the point of interest is over here at the right, at 10.2. We have dipped, our international OPM has dipped, and again, that's both due to investments that we're taking on some of our businesses, but also recognizing that it is tougher to play in places like China as well. Free cash flow and balance sheets. Let me start with the highlight, which is 12.8% compared to 9.9% same quarter last year. For the first half, you can see we significantly improved last year from Q1 to Q2, but you can see in the first half this year, we're even ahead of that curve at 10.2%. On the CapEx basis, we are in line. About half-- sorry, about PHP 5 billion invested in CapEx, which are being very selective, making sure that we're getting quicker paybacks and driving the existing store boxes a lot harder. We're investing behind also technology and other enablers that's going to help us drive those boxes harder. The way we get to this PHP 12.8 billion, of course, is our cash EBITDA here. There is no big one-offs. This PHP 1.1 billion I mentioned earlier is the conveyance. We don't have any anything of that sort. No big swings for us on our fixed income instruments. You can see our cash being generated from operations is a high of PHP 11.4 billion versus a PHP 9.4 billion contribution same quarter last year. Now let me move on, move on to our fortified balance sheet metrics. Again, I've talked a little bit about inflation. I talked about the macro headwinds in places like China, et cetera. As you can see, in our cash and cash equivalent, we, sorry, we maintain a stronger cash position, and these are deposits as well, so it's not idle. It is actually giving us a decent return compared to the cost of debt. Our net debt has come down as we continue to make repayments on a timely basis. Our working capital management, we're putting a lot of work and effort into this. I think the last quarter that I presented was 17, then down to 15, and now down to 13. Same period last year, we're at 15, and we're now 13. Our inventory days, I wanna qualify this number. It is up by two days, but if you looked at our June 30th snapshot, our inventory level is significantly down to the tune of over 20% down, given our top-line growth. The reason why it's still two days up is because in the earlier months, because this, of course, is an average, on our earlier month, for the first half, we did continue to hold slightly higher inventory for unknowns, but we're now starting to bring this level down on all key materials. You'll see this number continuing to come down, but for the first half, it's, it sits at 51. Days payable, it's more or less in line. We have strategic vendors as well, so where it makes sense, we do pay slightly more favorable to them, but that also guarantees our pricing and our quantities. All the key ratios, just as a reminder, covenant has us at pre-breach, and you can see it is significantly below, and the movements are coming down on all in all measures. So we are in a good place on our balance sheet and our cash management. Let me conclude now before I take on Q&As. The guidance for 2023 remains, and most likely we are on track to exceed those guidance, and those guidance were 5% growth in our network. Our CapEx will continue to manage, and if it is not necessary, we will not spend all of the PHP 17 billion. Of course, we're not cutting back on future. We're just being very selective on our investments. System-wide sales, we gave the guidance of 15%-20%, and we're outside of the high-end range. Same-store growth, we gave a guidance between 7%-10%. First half of the year, we're exceeding that on the high end. Operating income growth, we gave a guidance of 20%-25%, and for the first half, we delivered 51%. With that, let me just stop sharing and open it up for any Q&As. Okay, thank you, Richard, for that very detailed presentation. We can now jump into Q&A. For those on the call, you may type in your question in the Q&A box. You can also raise your hand. Just in the interest of time, so we're more efficient, I'll shift in between the queue, the dial-in queue, and the Q&A. Sorry, the Q&A chat. Perhaps I'll start off, Richard. Maybe let's talk a little bit about inflation, right? You did mention that you are still feeling some input cost inflation across the various markets, and I suppose the commodities that you employ. You also alluded to a price increase in the second quarter. By how much did you raise prices? Is it enough to cover the cost inflation that you're experiencing? I guess moving forward, how do you see the cost trending, and how are you managing this? Yeah. Great. Okay. Thank you, Carissa. Just as a reminder, last year, our, our basket of goods, at one point, were running somewhere around 11.5%-12% inflation impact. If I look at it from Q4 last year to where we are today, what we're seeing on the food and packaging side is a 1.43% increase. That's why I say inflation isn't over yet for us. If you then factor into that, you know, currencies and, and all the other variables that impacts us as a center of gravity Philippines business, that is manageable, and we've, you know, obviously managed rates like that in the past. Our time-adjusted price increase in the first half of the year is very minimal. It's around 1.5%. We are covered. We certainly don't want to pass on more pricing to consumers than necessary, so we're also offsetting that with efficiencies. Specific to, I guess, some of the key parts of that food and packaging, and I think people will be curious around chicken and other key proteins. I won't go into all of them, but let's just talk about proteins. We're seeing 1.26% rise in our cost of protein. Again, I think everything is within manageable ranges, as I've shared earlier. 40 basis points on second quarter increase is manageable, and we're doing that through efficiencies and through pricing, again, which is very modest. Thank you, Richard. I think, you also, discussed earlier that, you did get, get some efficiency gains, on the operating side, with your OpEx, now... Well, some key OpEx items fortunately lower. Yeah. So is this sustainable? There's, there are a few questions here in operating margin, I guess. You know, do you think you can bring, you know, operating margins higher- Mm-hmm. Over the near term? And if you have any OPM targets for the year and next year, and the drivers for that across each business segment. Sure. Just to finish off then on gross profit margin. Last year, we were delivering consistently around 250 basis points of efficiencies every quarter. This year is slightly lower, but nonetheless, we're still delivering and offsetting this cost. That's why we maintain an 18% total gross profit margin. That includes running the stores, et cetera, not just the food costs. Moving on to the bottom line or OPM, I think the key is really to continue to grow a very efficient domestic business. You can see we're north of 10% OPM in the Philippines, although we have several brands. It's not just Jollibee, but we're several. We're, we're, you know, obviously, excelling in certain brands, and other brands, we're supporting slightly. Nonetheless, at all of them are cash contributors for us in the Philippines. We also want to demonstrate that we can manage portfolios, and we are managing a portfolio. We're more targeted in international. We don't have as many brands outside of Philippines. What's good here is, on a unit basis, our margins are higher on our international business. Of course, our beverage business is the highest, but our better burger business, Smashburger, is also very high, so it's around 73%. When you have businesses that are running at a good margin, the opportunity for our group OPM to rise above 6.6% is to really get the international piece coming up. Our, our headwind at the moment is the uncertainties we see in China in terms of the recovery and the bounce back. It is getting very competitive in that market, I think, for all players, given that most of the business is done on digital, and there's a cost to aggregators, there's a cost to digital advertising and so forth. We are managing through that, but at the same time, the growth rates that we're seeing, the top line, doesn't necessarily translate directly to the bottom line. I think we have to cycle through that. It's not a company issue. I think, I think it's a market issue at the moment. Those, those would be my, I guess, take on driving this OPM. We're very disciplined. We are, as you can see, very careful with our CapEx, and we're trying to drive our existing stores harder, both inside the four walls and outside the four walls. We're very targeted in our digital marketing spend as well, with a lot of data to support and increase the probability of success when we do invest in these platforms. Okay, thank you, Richard. We do have some specific questions here on since we're on this topic of margins and cost inflation. Question here on which brand or geography would be most sensitive to price increases? I guess it's in terms of price elasticity across and how does this vary across the different brands? Mm-hmm. If you can elaborate on that. Sure. I'm gonna split between food and beverage because we're seeing different data points suggesting different behaviors. When it comes to coffee, i.e., discretionary, in the U.S., we are seeing that price is a consideration point for people because people are making choices. When we're looking at food, in particular, fast casual, we're seeing the growth rate of that category actually going faster than the QSR category. When we look at China, again, because I think... And everyone knows the macros, I'm preaching to, to the choir here when I say that their exports are down. It's not just the macros of GDP that we're interested in, but their exports are down. Consumer confidence is down. Real estate sector and, and the confidence that that gave, or the stock market, and the confidence that gave to people to spend on discretionary. We're seeing the China market being quite price sensitive at the moment. Because there are more outlets coming through, in particular, digital outlets, we're seeing that the cost to customer acquisition is changing as well. I think price sensitivity in China for the food side seems to be one that, you know, we're not totally surprised, but to some extent, you know, it, it's a, it's a tough nut to crack at the moment because it's not you build beautiful stores and, and people come and dine in. You know, 75% of food in China is sold through delivery, so you've got to work through that channel as well. there, there are nothing out there that we are, you know, giving up on. We still believe that we have the right strategies and the right categories and right brands at the moment. We just gotta work through it. It, it just takes a little bit of time and hard work in China at the moment. Okay, understood. Just two more specific questions on cost. One is that, you know, I guess we've all seen the news that rice prices around the region are starting to go up, including the Philippines. How does this affect, number one, your cost structure, Jollibee, or JFC as a group, and number two, consumer sentiment in the key markets, where rice is a, is a key, key staple? Sorry, can you say that one more time? Yeah. In the context of increasing rice prices around the ASEAN region. Mm-hmm. How does this affect Jollibee's cost structure? Mm-hmm. Is it a significant portion of your cost? Mm. Second, what is the knock-on effect on consumer sentiment in the key markets like Vietnam and Philippines that you've seen in the past in these types of situations? I recognize that rice prices are moving, it is not in the top five of our concerns. It, it's not a huge cost or contribution to our entire business. Specific to the Philippines, I have not seen this being an issue for us. In fact, we have a brand such as Mang Inasal, where we give unlimited rice, and I think that's also creating traffic flows in. Our pricing is good. We're market leaders in several categories, and we don't see rice as an issue for us specifically. Okay, thank you. We do have one question in queue here. Divya, you may now ask your question. Hi, there. Am I audible? Yes, yes, now you are. Thanks. Thanks, Carissa. Hi, hi, Richard. I just wanted to ask two questions. The first question was on the international margin, specifically for Smashburger. I mean, while we see the year-on-year improvement, we can't help but notice that sequentially, the EBITDA is at about PHP 46 million for this quarter, compared to PHP 195 million in the previous quarter. Could you help us understand why the big sequential decline in EBITDA for Smashburger? Mm-hmm. What the outlook for Smashburger be for the second half? Sure. That's, that's my first question. My second question is on Philippines. Could you talk about the same-store sales growth trend in July, August? I mean, given that the GDP number came out extremely weak, you know, people are trying to get their heads around how, you know, we've shown a very strong same-store sales growth number. Given that consumer sentiment seems to be weaker, are we seeing that in the July, August numbers? A related question to Philippines also is that considering how well the business is doing and the 10% operating margin we're seeing, why aren't we opening stores more aggressively in the Philippines as well? Okay. These are great questions, so let me try to do justice. So let me start with Smash. Q2 had a combination of three things. One is, some catch-up-... one-time cost. I, I, I shouldn't use one time, but catch-up cost, for example, audit fees and professional dues, which in Q1, it did not come through, but Q2 it came in. If you were to spread that over 12 months, you would probably have seen less of an impact. Second, we are seeing further investments in Q2 as we're starting to see top-line growth, and we're starting to narrow down. We have 240 stores now, which is four less than the last number I reported in the first quarter. As we're getting, you know, getting tighter with our gaps between quartile one, very profitable stores, and quote quartile four, where we had some negative EBITDA stores. As we're getting tighter on that, we're starting to accelerate our investments, in particular around people and also in technology and digital marketing spend. That drives incremental. The last thing, this one will be something we need to crack over the next couple of quarters, is we're seeing the cost of delivery about 200 basis points higher than where we like to see it, meaning the way we've sort of targeted. The reason for that is because we have combination of aggregator costs for delivery and our own platform. As we start to get more traction, and that costs money to get that traction, to get people into our own apps, the delivery cost ratio will come down. Right now, we're not at optimal yet. That was... In terms of numbers, that was the largest significant impact that gives you that delta between Q1 and Q2. On Philippines, I think there were several questions, if I get to the crux of it, it's clearly outperforming every other business, both geographically, and if you were to carve that out into Jollibee Philippines, specifically, it's outperforming every other brand market combination. I think your question is, why not accelerate that? I think there are two reasons. One, we're trying to balance, as we kept saying, 80/20 rule. We're trying to balance our, our longer term return investments in international and our, I guess, immediate, return opportunities. We're trying to balance that, so it's a bit of a deliberate. The other way to look at it is in Metro Manila, we're not fully saturated, but it's 88% saturated. For us, I think, in order for us to get the, the lift on the Philippine OPM, it's gonna come through renovation. That won't necessarily be all in this year, but I foresee that going into 2024, we're gonna have to make some choices around how quickly we renovate our aging stores. Because studies have shown that renovated stores and changing the model to more digital platform as well, kiosk, virtual drive-through, throughs, et cetera, point of sale material, all that is CapEx investment. We, we do see ADS going up. I think that's how we're going to look at Metro Manila. Outside of Metro Manila, which is about 13% penetrated, we are looking for, you know, continuation of good franchisees that will represent us. This takes a bit of time because we don't have corporate franchisees taking on 100 stores at a time, but rather it's pockets. I think the nature of the provinces is such that we can't go and open 300 stores right away. That one takes a bit of time, and we're very careful in Metro Manila on how we invest. Lastly, I would say is, if the macros turn on the Philippines, then we will be incredibly over reliant on a single market. We're very careful with the single market reliance as well. Got it. Could you comment on the, you know, the recent same-store sales growth trend in the Philippines, given the GDP slowdown that we've seen? Yeah. We're pleasantly surprised because we thought it was gonna be single digits, maybe mid, but we ended up with 11.3% for the Philippines, specific to Jollibee, it was 11.9%. I think the only way to really explain that is, I guess we have a very good team, very good products, and we're doing, you know, the basics. We're doing things like mix and match, where we're offering very, you know, good price points and the option for consumers to actually add on the sides or drinks or dessert. Although it's slightly lower unit gross profit, we're getting a lot more TC popping up from programs like that. We'll continue to do that. July looks strong, and we'll continue to do that for Q3 and Q4 as well. Got it. Thank you very much. Okay, thank you. Okay. Thank you, Divya. Next up on the queue is John. John Tay, go ahead. Hey, thanks, Carissa. Thanks, Richard. Thanks, John. Three questions. The first one is on... The first one is more maintenance. In the EBITDA slide, there is the rest of the world that had a really small EBITDA last year, but it jumped about PHP 1 billion this year. Which specific brands actually drove the turnaround, and why? I'll go over the questions one by one, so maybe you could address that first. There were several, but, I think the biggest impact we're seeing is China being positive EBITDA and Smashburger being positive EBITDA versus last year. Yeah, sorry, Richard. That was the rest of the world line. Oh, sorry. Rest of the world. Okay. Mm-hmm. Rest of, rest of the world is AMEA and North America, Asia brands. I could tell you North America, Asia brands, the one that's really contributing is our Jollibee U.S. Then for AMEA, we're getting really good growth out of Vietnam Jollibee, where I think now 164 or 165 stores. Closing the gap to KFC is 170. We're getting real growth there because it's a 100% local management, except for one person, and it's 100% local consumers, and we have products that's very tailored towards the Vietnamese palate. We're seeing consistent growth coming out of Vietnam. Our Middle East Jollibee is also doing very well, as is our Southeast Asia Jollibee businesses. In Singapore, Brunei, and Malaysia has less losses. It's only a year and a half old, this business, but we're seeing the pickup of the Southeast Asia Jollibee as well. Thanks, Richard. Is that just mostly, I guess, operating leverage and scale? Because last year it was barely profitable, and this year it, it was PHP 1 billion, in excess of PHP 1 billion EBITDA. Just trying to understand where that is mostly coming from, at least from a- Yeah -standpoint. I, I would say, I would say it's both. I'm not gonna put a percentage, but I would say partially scale, but I think it's more coming from better box economics from our existing, our store levels. I see. Thanks, Richard. Two maybe high-level questions. First is on the franchising head for CBTL that you just hired, and congratulations. Maybe we could talk about a little of his background and- Sure What he can potentially deliver to the table. Okay, Mr. Yousef, he's from Bahrain originally, he has quite a bit of experience in the Middle East, as well as in other parts of the world, including having worked and lived in Asia. He spent a long tenure with McDonald's and has developed businesses right across the board. He has also served a bit of time as the CEO of Americana, and as we know, Americana was in the news some six to nine months ago when they IPO'd in two indexes in the Middle East. We are seeing increase, of course, naturally in our franchisee sign-up in the Middle East, but he's given us a comprehensive plan actually to expand internationally over the next five years. I think one of the things, I could possibly do that, that might be very interesting and helpful is, invite our CEO, John in de Braekt, to one of these earnings calls. He probably will do better justice than I in, in summarizing, his vision and the roadmap for this brand. I could tell you, it's very exciting at the moment to see all these executives coming in with clarity on growth. No, that would be definitely exciting, Richard. Thanks. Last question is on the CEO departure of Smashburger. Mm-hmm. Any plans. Yeah -following his departure? I, I thought- Yeah he was a big part of the turnaround. Yeah, I mean, Carl Bachmann is a good guy and, and certainly, you know, there's no reason to, you know, say anything negative here. He made his own decision to move on to a different opportunity. What we've done is essentially we brought in Pepot Miñana, who used to run the North America market, and right after we bought Smash, and we stepped up to 100% control, Pepot was, in fact, in charge of that for a short period of time. We brought somebody who's very familiar to the management team there, so he's holding down the fort and doing a fantastic job. He's 20+ years in JFC. He's also a chief sustainability officer, we're getting really good traction and clarity. I have, I have no doubt that we'll be in a better shape. Of course, a brand like Smash has opportunities to go international, and therefore, you know, it'll be wise for us to bring in a world-class executive to run that business as well. We're very excited about the opportunities for Smash, and the team is solid, and they're all pretty much all there. Yeah. Unfortunate that Carl left, but we did not miss a beat in getting Pepot there. All right. Thanks for the feedback, Richard. Okay, John. Thank you. Okay. I'm so mindful that there's about 13 questions in the queue. Yeah. I'm not sure how we handle. Yeah. I'll, I'll consolidate some of the, some of the common questions here. Maybe we can jump into store expansion. There's a couple of questions on that here, in relation to CapEx. I'll just, you know, what is the breakdown of your CapEx program for the year? And where do you, you know, which brands will be taking priority for the new store rollout? I guess from a bigger picture perspective, if you could rank, you know, where to invest capital or open new stores by order of attractiveness of return, what- Okay. What would that be? What would that order look like? Wow. That's a lot to untangle, but let, let me start with the best return that we get is on coffee and tea businesses, and it could be as low as a year and a half to two years. That's why even though Malaysia is not necessarily our biggest TAM, it's actually a very profitable market with 143 company-owned stores because their return is so quick. We'll continue to invest, and the footprint to expand in markets like that still exists as we trail Starbucks. You can see clearly that there's still opportunities. Singapore and Malaysia would fit into, into that category. Before COVID, and I, I guess, if the, the bounce back was different, China would be another market where we're getting, you know, depending on the store model type, we, we were getting two to three-year paybacks. We'll continue to invest in those markets. The number one brand for us and our focus on both Philippines and international is clearly Jollibee. We believe that Jollibee should be a much bigger footprint, much more accessible brand in many more markets, and even in places where we are, like the U.S., there is an opportunity for a wider footprint. That's not necessarily only through CapEx, but that's gonna be through strategic franchise alliances. We're spending a lot of time on cluster approach, so taking areas, breaking it down by key cities and looking at sort of a cluster partner, which then also averages down the risk of the investor, because you're now investing in a portfolio of stores rather than being stuck at a one, two, three, four, five store level. There's a lot of good thinking going on, all data driven and based. I would say the priorities for store expansion would continue to be China and the U.S., where we do get per unit margin increases versus the Philippines. Of course, Philippines has the highest probability of success for Jollibee, so we'll continue to expand our 1,100 stores of Jollibee in the Philippines as well. Okay, and the, the PHP 17 billion-PHP 19 billion CapEx, how will that? What's the breakdown of that? Any, any additional- Yeah. I don't think we're gonna get to 19, and we may not even get to the 17. You saw first half, we're up to five. The rough breakdown, the way it was allocated was to build out, two-thirds of that money was to go to build out stores. Build out stores plus renovation of existing stores, so stores. Then the other one-third was to, where needed, to build out capacity for production, in particular in the Philippines, and POS, kiosks, and other technology, apps and so forth, so technology ramp up as well. So that's the rough... We'll continue to have, I think, two-thirds store and one-third technology and capacity. Again, we're, we're seeing that, you know, there's opportunities for franchising, such as Smashburger, converting company-owned stores to franchise, and we'll continue to pursue that as a priority. I think there was an earlier question, I don't know if you get to OPMs, but I think one of the question was: What's your target or where do you aim to be? I don't know if that question came up more than once, but I thought maybe... Yeah, please go ahead if you can share that. Yeah. There's a question on OPM targets, for international this year and next year. Yeah. What we've done, as, you know, we monitor the top 30 companies, and these are publicly listed companies where we can get data, readily available. As we started to break it down into 90% and above franchised companies, such as the McDonald's of the world, and more skewed towards, you know, close, closer to company-owned strategies like the Chipotle, which is 100%, and then the mix, which is kind of where we are, 57% franchised. It was very interesting to see that the OPM rates of the best-in-class were very different. McDonald's was at highest at 40%, 'cause we all know the model there. In fact, the top two, three companies with 90% or above franchise, you know, was around the 30% OPM level. Very interesting. On the other side, even best-in-class like Chipotle is running around 12%-13%, so I think the range we saw was around between 10-13. The mix was, it went as far as, like, single digits, to mid-double digit. I think the way we're modeling our strategy really is where we have brands and markets that's highly franchised, we should be looking towards trying to get into that, you know, 20%+ OPMs. At the moment, as I mentioned, US, for example, Jollibee, is 100% company-owned, so we can't expect that business to give you a 30% OPM. We're never gonna get 30% out of North America if, if our route to market is a 100% company-owned. I, I bring that up because the targets we set is to be in the first quartile. To be in the first quartile, we're looking at where we are in terms of franchised to company-owned store mixes. When we break that, break it down by brands and by regions, we get a lot clearer. I think the short answer is, for every brand and every region, we believe that there's opportunities to only incrementally increase, because we're gonna be very targeted, and we're gonna be chasing the best-in-class. At the moment, we're not there on international yet, but the seeds are definitely more than planted. We're starting to see, you know, some green sprouts coming through. Okay. Thank you, Richard, for that insight. Unfortunately, we are out of time, but we very much appreciate this hour that you gave us to explain the results, and congratulations on the very good numbers. We look forward to seeing you again in succeeding quarters and hearing more about Jollibee. To those who have dialed in, thank you again. As Cosette mentioned earlier, if there are any follow-up questions, you may go to her directly, and they'll be happy to take your questions. That's it for now. Have a good Friday, everyone, and happy weekend. You may now disconnect. Thank you, Richard. Thank you, Cosette. Okay. Thank you. Thank you. Thanks, everyone. Thank you.