Welcome to Americana Restaurants Q1 2024 earnings presentation. My name is Sonika Sahni and I'm Head of Investor Relations at Americana Restaurants. Today's discussion will be led by Amarpal Sandhu, CEO of Americana Restaurants, and Harsh Bansal, CFO and Chief Growth Officer. We will conclude with a Q&A session to answer any questions you may have. Before we start, I would like to remind you of the disclaimer regarding forward-looking statements provided in our presentation, which applies to this call as well. I will now hand over to Amar for the update on summary performance.
Thank you, Sonika. Good day everyone, and thanks for taking the time to be with us today. We will now recap our Q1 2024 performance, followed by a Q&A session. In the first quarter of 2024, Americana Restaurants continued to focus on delivering exceptional experiences to our customers while keeping at heart our purpose of building communities around the joy of food. At the end of quarter one 2024, our portfolio expanded to 2,456 operating restaurants. We added 37 gross new restaurants in Q1 2024, mainly in our key markets of UAE and KSA that were less impacted by the geopolitical conflict. The company added a total of 288 gross new restaurants over the last 12 months, which included 263 openings for our power brands: KFC, Pizza Hut, Hardee's, and Krispy Kreme. We added another nine net new stores in April, bringing our portfolio to 2,465 restaurants.
As of 30 April 2024, we have 32 restaurants under construction and an additional 40 secured sites. In Q1 2024, our revenue stood at $493.5 million, a year-on-year decline of 16.3%. Our performance remains affected by the ongoing geopolitical situation, which commenced in the fourth quarter of 2023 and has particularly affected American brands in the region. Additionally, we observed slowing trends in the restaurant sector, most notably in Saudi Arabia. The seasonal shift of an earlier Ramadan further influenced our performance in Q1 2024. While our like-for-like sales experienced a decline of 22.2% for the quarter, the decline prior to the start of Ramadan was 19.6%. As many of you are aware, the holy month of Ramadan has a significant impact on out-of-home dining across the MENA region as Muslims engage in fasting, prayer, and reflection.
Moreover, the Ramadan period shifts 10- 12 days each year compared to the previous year, resulting in Q1 2024 having a higher number of Ramadan fasting days compared to the same period the previous year. The business generated adjusted EBITDA of $103.3 million, with a very healthy adjusted EBITDA margin of 20.9%. The year-on-year decline in adjusted EBITDA of 18.6% was largely due to increased staff cost as well as higher costs associated with home delivery. These higher costs were partially offset by lower costs of inventory and reduced marketing expenses. Americana Restaurants recorded a net profit of $28 million for the quarter, impacted due to lower sales as a result of the geopolitical situation and an earlier Ramadan, as well as higher depreciation charges and rent expenses on account of new store openings during the period.
We remain disciplined in our CapEx deployment, contributing to 4.4% of Q1 2024 revenue, thus allowing us to maintain a healthy balance sheet and a strong overall financial position. Moving on to the next slide. This slide illustrates our portfolio evolution in Q1 2024. On our restaurant portfolio, as you can see on the graph on the left, we have opened 288 gross new stores in the last 12 months. Majority of these openings are for power brands, in line with our guidance. On the right side, we present the status of our pipeline for the year. We opened 37 gross new stores in the first quarter, and another 13 gross new stores, nine net, were added to the portfolio in the month of April. We continue to maintain our 2024 guidance of 200-225 net new stores, which we had shared earlier in the year.
As mentioned earlier, the expansion will be focused on the markets least impacted by the current conflict, such as UAE, KSA, Kuwait, Iraq, and Kazakhstan. However, considering the ongoing evolution of the macro situation without any definitive indication of when the conflict will cease, we are retaining a cautious stance on our growth plans for this year. Next, I will talk a bit about the revenue performance. Our first quarter revenue was $494 million. As mentioned briefly, our business faced various challenges during this period. The conflict in the region that led to boycott of American brands continues to linger, as well as a broader slowdown observed in the QSR space, resulting in a decrease in overall consumer spending. Consequently, our like-for-like sales experienced a decline of 22.2% for the quarter. Furthermore, an earlier start of Ramadan on March 11 contributed to the negative LFL performance in Q1 of 2024.
We also saw an impact from store closures of $8 million and another $7 million FX impact due to currency movements in the Egyptian pound and Lebanese lira. On the positive, our new store openings contributed $45 million to our first quarter revenues. Our power brands continue to account for 93% of total revenues, and the stable pegged currency sales accounted for 83% of revenue, which is similar to quarter one of last year. Amidst the challenges posed by the ongoing regional conflict, we've seen a notable trend among customers in our region towards embracing digital ordering solutions. This shift has led to a rise in home delivery channel, accounting for 41% of total revenues in the first quarter of 2024 compared to 39% in the same period of 2023. I will now hand over to Harsh, who will talk in detail about financial performance of the company.
Thank you, Amar, and good day to everybody. This slide highlights the intensity of business impact across markets from the ongoing geopolitical situation. Presently, five countries, including three of our key markets, which are UAE, Kingdom of Saudi Arabia, and Kuwait, that collectively represents 85% of our business are categorized in low-impact markets. Kuwait has shown positive movement, and it has transitioned from medium impact to a low-impact category on the back of robust recovery we have seen across brands in Kuwait. Consequently, our revenue share from low-impact markets has increased from 60%-65% range to the 80%-85% range, instilling confidence in the overall revenue recovery. In KSA specifically, we have seen some softness of demand in addition to the impact of ongoing geopolitical conflict.
While there has been a general resurgence across markets, the pace of recovery has been slower than what we anticipated, particularly evident in the markets which have been most impacted by the geopolitical situation, particularly Oman and Jordan. This is one of the favorite slides for everybody. So on this, if you look at average daily sales trend per store, although there have been initial indicators of recovery, as evident from January until the 10th of March, which is the day preceding the commencement of Ramadan, as I mentioned earlier, the pace still has been slower than anticipated. We maintain a cautiously optimistic outlook and see varied recovery between different markets. We anticipate continued recovery over the next few quarters. However, at this juncture, it is very difficult to put a timeline to the full recovery. On this slide, we see the split of performance of our power brands.
LFL decline across power brands has been very similar, which is around 22%. Krispy Kreme has seen a higher decline, largely driven by the openings and the cannibalization impact of the Krispy Kreme openings, and also launch of Krispy Kreme in some of the newer markets, which had a high base effect. Across our power brands, our primary focus has been on building the transaction momentum, and efforts are ongoing around reinforcing local relevance, forging closer connections with the communities, and delivering value and quality to our customers. Concurrently, we have also intensified our digital efforts both on our platforms as well as aggregated channels to enhance engagement with the customers, particularly through the home delivery channel, which is also partly reflected in the share increase which Amar highlighted in some of the previous slides. Moving on from revenue to the evolution of cost of inventory.
In line with our previous guidance, we expect gross margins in 2024 overall to be better than 2023, despite higher focus on value and discounting. Our efforts on supply chain optimization, procurement initiatives, coupled with favorable commodity prices, and smart revenue management initiatives have resulted in a decrease in the overall inventory cost. As illustrated in the chart, we observed a 2.9% improvement in the inventory cost in Q1 2024 compared to Q1 2023. However, we had a slight dilution versus Q4 2023, largely due to focus on value and building the transaction momentum. We had some impact on the logistics cost due to the Red Sea crisis, but we have been able to mitigate that through proactive actions. Here we talk about the margins.
First, on the four-wall EBITDA, even with a 22% like-for-like sales decline, we have improved our four-wall EBITDA margins in Q1 2024 compared to Q1 2023. The positive margin improvement was on account of lower cost of inventory, revenue management initiatives, and reduction in marketing expenses. The reduction in absolute terms is on account of the revenue decline, largely driven by the LFL sales decline. To mitigate the sales decline, we have been proactively working on the cost measures and remain committed to maintaining a relentless focus on optimizing our cost structures, including supply chain, G&A, and working with our franchisor partners and landlords for reliefs. On the back of cost measures, we were able to mitigate margin impact of sales decline and Ramadan seasonality. Adjusted EBITDA margin of 20.9% in Q1 2024 compared to 21.5% in Q1 2023 has been largely driven by the proactive cost measures.
Net income, I will cover in detail on the next slide. Net income has seen 4.1% margin dilution versus last year, driven by the decline in overall revenue as well as higher depreciation charges on account of new store openings. We also had a gross impact of $1.8 million from the UAE corporate income tax, which came into effect for us from 1st of January 2024. NSO performance will improve in line with the overall revenue recovery, and we expect the impact of NSOs on net income should subside with the revenue uplift of the overall portfolio. As communicated in our last call, during the recovery period, our primary focus is to reignite customer engagement and drive transactions. To this effect, we have launched a series of initiatives to boost revenue, which include dynamic pricing. Within dynamic pricing, we are specifically focusing on event-based pricing as well as differential pricing.
We will continue to leverage our CRM platform to give us better insights in terms of customers who are not engaging, and we have been able to engage in a personalized manner with the customers and deliver relevant offers and promotions supporting an increase in revenue. On the cost side, our efforts to optimize cost and drive efficiency across our operations will continue. We are working, as I highlighted earlier, with other stakeholders, including landlords, suppliers, franchisers, and other partners, to mitigate the impact of revenue decline. On the next slide, I will talk about our working capital. So despite our revenue decline, we have been able to optimize our inventory levels, which has reduced to $137 million as of 31st March 2024.
This achievement was facilitated by promptly managing inventory and moving it between least impacted markets and high impacted markets, and working with the suppliers to delay orders and thereby minimizing the risk of write-offs. On the trade payable side, the payables have gone down to $419 million. This has decreased given we had some one-off reliefs we got from the suppliers on extended payment terms in Q4 of 2023 and also given the decline in revenue. We expect payables to normalize at these levels during the course of the year. On the CapEx side, we have spent $22 million, largely driven by new store openings, and we would be disciplined on the CapEx deployment throughout the year given the sales decline. Thank you. And on that note, I will hand it over to Amar for concluding remarks.
Thank you, Harsh. Now we would like to reiterate the focus areas for 2024, as mentioned in the earnings call earlier this year. Our revenue recovery strategy is guided by three key objectives. One is establishing trust with our customers. Number two is driving transactions. And most importantly, serving delicious and great-tasting food consistently to our guests. Trust is foundational to all our brands' engagement with customers. We're also focused on incentivizing transactions through compelling value propositions and innovative menu offerings, encouraging repeat visits and increased spending. And of course, our commitment to culinary excellence remains unwavering. We are dedicated to serving food that not only tastes great but also exceeds our customers' expectations. On our store growth plans, we once again reaffirm our guidance of 200-225 net new store openings for 2024.
We see opportunity for growth in low-impact markets, and that's where our focus for expansion would be. Further, recovery in Kuwait, as Harsh mentioned earlier, boosts our optimism in the business as well as strengthens our confidence in recovery in other markets. While we remain committed to pursuing opportunities for expansion, we are very mindful of the shifting external factors such as overall pressure and consumer spending that may impact our trajectory. This cautious approach ensures that we navigate uncertainties deftly, safeguarding our financial stability and preserving long-term value of the business. As we've emphasized previously, our dedication to operational efficiencies and excellence remains unwavering. Despite implementing discounting and value offers in the current quarter to drive transactions and enhance customer engagement, our commitment to excellence has consistently delivered positive outcomes.
Most notably, despite the strategic initiatives aimed at bolstering customer relationships, as gross margins have shown or our gross margins have shown a commendable year-on-year improvement of 2.9%, as Harsh shared earlier. On top of that, innovation, digitization, and customer-centric initiatives are at the forefront of our efforts to expand our share of wallet and share of voice. Through strategic investments in omnichannel digital strategies and continued refinement of dynamic pricing, we are driving meaningful engagement and loyalty. By leveraging data-driven insights and embracing emerging trends, we are confident in gaining market share and to further solidify Americana Restaurants' position as a leader in our markets. We persist in our quest for growth, actively exploring various avenues, including both organic strategies and inorganic opportunities.
By maintaining a forward-looking approach and staying attuned to market trends and always finding a silver lining or stitching the silver linings together in every crisis, we aim to uncover new pathways to expand our business footprint and continue to enhance shareholder value. Thank you again for joining us today, and we are happy to move to the Q&A section now. Over to you, Sonika.
Perfect. Thank you very much for the presentation. We'll now be moving to the Q&A part of the call. If you have any questions, please press star two on your keypad. Star two on your keypad if you are dialed in via the telephone. You may also ask a voice or a text question if you are dialed in via the web. Just a small reminder that we'll just be taking ideally one question per caller. So once again, star two for any questions via the phone and star two as well via the web. Okay. Our first question comes from Mr. Shadab Ashfaq from Al Ramz Capital. Please go ahead, sir. Your line is open.
Hello.
Please go ahead.
Hi, Shadab. We can hear you fine.
Yeah. My first question is regarding the recovery. So currently we have the boycott regarding the American brands. So do you plan to open your own proprietary brands to overcome this situation?
So Shadab, we currently have two proprietary brands. One is Wimpy, and the other one is Chicken Tikka. There are no immediate plans. This is all part of our overall strategic planning exercise. Will we consider proprietary brands or different segments that are not leaning on American franchise brands? Potentially, yes. But we have nothing material to share at this point other than the fact that we do have two proprietary brands currently that we are working with and growing.
Okay. Thank you.
Okay. Thank you very much. Our next question comes from Mr. Nishit Lakhotia from SICO Capital. Please go ahead.
Hello. Can you hear me?
Yes. Please go ahead Nishit.
Yep. Yeah. Thank you for the opportunity. I had a couple of questions as well. First, on the overall decline in the QSR market that you mentioned, even in KSA, other than the possible boycott and the regional issues, there is a slowing down trend. That's something that caught my attention. Now, what is exactly causing this? And does this mean that Americana will be resorting to a lot more promotions, which will affect your margins to drive the incremental sales? So this is how should we read going forward? So anything on the macro side as to what you think is causing this slowdown would be helpful and your strategy and the impact on margins from that. So that's the first question. Second, is that you mentioned that there is like-for-like pressure, and there are other factors like the slowdown.
Does that mean that there should be your guidance, what you're maintaining right now, there's a possibility that you're cautious and you open less number of stores if the situation does not improve in the next few months? So your guidance could be you may think it's wiser to not open so many stores for now. That's it for now.
Sure. So Nishit, I'll answer your second question first, and then Harsh will answer the first one. As I mentioned in the call earlier, guidance is 200-225 net new units, and we are reaffirming that guidance at this point. This is already reduced from our medium-term guidance of 250-300. I'll turn it over to Harsh to answer these.
So Nishit, first of all, on your margin question, we do expect 2024 gross margins to be better than 2023. Yes, there is a lot of focus on building the transaction momentum and value, but we still believe we will close our year with gross margin better than 2023. As far as overall EBITDA margins are concerned, that would be very much dependent on how quickly we see the revenue recovery from the ongoing geopolitical situation. On the softening of demand, the comment we made was more specifically to Saudi. And yes, we have seen some softening of demand in Saudi, which has been driven by various factors, including a lot of expansion post-COVID by international as well as local players and some pressure on the disposable income.
The focus on Saudi on value is more than other markets for sure, but we are still long on Saudi. We continue to expand. While we are focused on value, we're also driving top line, which will be an ongoing focus.
Understood. Thank you so much and all the best.
Okay. Thank you very much. Just a reminder, just one voice question per person. Any additional voice questions, star two. Our next question comes from Reem AlBarri from SICO Capital. Please go ahead, Reem. Your line is open.
Hi. Thank you for hosting this call. I just had a couple of questions. You mentioned staff cost increased year-on-year, and that's been impacting the EBITDA. Have you not done any material staff cutting to adjust for the geopolitical situation at the moment? And I just also wanted some clarification on any franchisor relief that you may have received. How material has this been? The Waterfall slide combines royalties with marketing. So I just wanted some further clarification, please.
Hi, Reem. On the staff cost, the increase is more the ratio to revenue, which is caused by the lower sales. So it's not an absolute number increase. We did significant adjustments in store-level labor immediately once the crisis started, reduction of overtime, and also not filling roles. So yes, I mean, there is a sizable reduction in team members or the store-level staffing. So this is purely because of deleverage. So the ratio is slightly higher than what we typically run. And your second question on franchisor relief, our relationships with our franchisors are very strong. They've been there for a long time, and we continue to work with them.
So one of the things we talked about is we have contractual obligations on certain marketing spends, and they gave us flexibility to reduce some of those during the thick of the crisis because it wasn't effective to spend marketing money when people are not prepared to or they're boycotting the brand. And we continue to work with them through this. So they're quite supportive. But as you can appreciate, I mean, these are principal-to-principal discussions, and each franchisor is very careful, and they don't want to disclose what the conversations are publicly.
Thank you.
Okay. Thank you very much. Our next question comes from Mr. Taher Safieddine from JPMorgan. Please go ahead, sir. Your line is open. Taher, sorry.
Yes. Yes, Taher. Good afternoon. This is Taher from JPMorgan. Thank you very much for taking the time. My key question is really on maybe post-Ramadan in terms of recovery. What have you seen maybe during Eid and post-Eid in terms of momentum? Is this average daily sales chart? Do you see the gap closing further and hence maybe more recovery? Because we have also maybe witnessed, at least in the UAE, some more active marketing campaigns from your side among other American brands. So if you can comment on that. And along the same lines, did the severe weather conditions, the flood that we've seen in UAE, Saudi, and also the outbreak of a virus in Saudi Arabia at a local chain, did this impact your performance? If you can maybe just share some visibility there.
I'm assuming the home delivery was severely impacted maybe during the floods and the severe weather conditions. If you can shed some color there, it would be very helpful.
Taher, I think you answered part of the question yourself for us. So yes, UAE was severely impacted during the floods. That week was quite challenging. However, our teams were mobilized very quickly, and within three to five days, we had, I would say, more than 95% of our restaurants, which is more than 500 in UAE, operational. Post-Eid, we have seen recovery most remarkably in Kuwait, which is very encouraging because that is one of our key countries and also the most profitable country for us, as well as we've seen some bounce in Oman and Jordan, which were the worst-hit countries during the crisis. Then more recently, there was another incident by a different brand that created a food safety scare in Saudi. So that is in the news. So that's kind of playing on the consumer sentiment, especially when it comes to the hamburger category.
There are many variables. But I think I've shared color on what's happening post-Eid in some of the key countries.
All right. Okay. Clear. Thank you.
Okay. Thank you very much. Our next question comes from Huzaifa Ali Khan from Akseer Research. Please go ahead.
Can you hear me?
Yes. Please go ahead.
Okay. First of all, thank you for conducting this call. One of my questions is, can you please share the guidance about the cost of inventory for the year going forward, as the revenue are not coming up to the mark as expected? So will the cost of inventory would rise as a percentage of revenue, or it would slow down, or it would decrease?
On cost of inventory, as I mentioned earlier, we expect it to be better than 2023 despite being focused on discounts as well as value. Cost of inventory is fully variable in nature. So it won't have impact from a revenue standpoint, leaving the discounting and value aside, and some impact of the Red Sea crisis, which had some impact on logistics costs. But overall, as I mentioned earlier, we expect 2024 cost of inventory to be lower than 2023 on a full-year basis.
Okay. Thank you.
Okay. Thank you very much. Just a reminder once again, for any additional voice questions, that we are accepting today. Star 2 for any additional voice questions. We'll give another minute or so for any additional questions to come in. Thank you. It looks like we have a follow-up question from Mr. Taher from JPMorgan. Please go ahead, sir.
Yes. So just a follow-up question from my side. I'm just looking at the revenue by country, which you disclosed in the finances. I mean, it feels that UAE and Saudi are down low single digits. Egypt also seems to be catching up, only down 7% Q over Q. I'm pretty sure the Ramadan effect is also there in terms of performance. So my question is really specifically on UAE and Saudi. Are you confident that maybe these trends will start to improve? And theoretically, on a like-for-like, excluding Ramadan, we should start to see at least a positive trend in sales and revenue, sorry, year-over-year because we also need to keep in mind that the majority of the store openings are coming through these two major countries. So I think this is the first part of the question.
The second part is really more on the profitability. I mean, it feels that below the EBITDA line, higher depreciation and lease costs are eating a lot of these improvements and dragging your profitability even lower. Do you expect this trend at least to start easing into the next few quarters? I'm not looking for a specific figure, but just in terms of trend, in terms of drop, would be helpful.
So, Taher, first of all, on the revenue between different markets, so the revenue we report in the financial statements are the total revenues, which account for new store openings. Now, from an LFL standpoint, it will be a bit premature to see, say, when we will see positive LFLs in some of these markets while the impact of the ongoing geopolitical situation is less in these markets. But still, there is an impact. And we have done microsegmentation based on the customer profile, and we can clearly distinguish the kind of demographic customers who are actually not engaging with the brands. So it would be a bit premature to comment when we can see positive LFLs in UAE and KSA on an LFL basis. On your second point, specifically on depreciation charges, yes, you're right.
We have seen an incremental dilution on the net profit, specifically given by the higher depreciation charges from lease costs as well as fixed assets. One is the number of stores we are opening are lower this year than last year. And as in when the last year openings kick in in the last year, on a quarter-to-quarter, you should see less dilution. But still, on an absolute basis, it will all be tied to the recovery, and the margin impact will subside, as I mentioned, once we see revenue uplift because new stores should perform in line with LFL once we see some level of normal levels of revenue.
Okay. Thank you.
Okay. Thank you very much. Just once again, a reminder, star two for additional voice questions. We'll give a minute or so for any additional second round of questions to come through. Okay. We'll just give another minute or so for any additional questions to come through. Okay. Thank you. We have a question from Mr. Nitin Garg from SICO. Please go ahead, Nitin. Your line is open.
Yeah. Hi. Thank you for the call. I was wondering if you have done any study or if you have any insights on the investment done by the competition post-October last year when the boycott started, I mean, especially by the local brands in your key markets?
Nitin, whatever I mean, there is nothing published, right? So it is all based on our own investigative effort in terms of openings, which brands are coming. Specific to local brands, yeah. So we have seen an emergent trend in countries like Egypt as well as KSA, primarily those two countries where we've seen more activity from local brands. But also coming out of COVID but your question is more specific to October onwards. Yeah. So there is definitely more investment, more exposure, more spend on marketing from local brands. And there's also some mischief-makers out there who it has come to our knowledge or come to our attention that some of the local brands paid influencers and bloggers to talk negatively about American brands as well. So there are a lot of different forces at play right now.
Okay. So just a follow-up. So other than the marketing, I mean, any new store openings done by the local brands in your markets? I would say in Kuwait, Saudi, and UAE in the QSR segment.
Yeah. So there are openings, right? For example, in Egypt, there are local brands that have opened new stores. But again, are they specifically did they accelerate during the boycotts? It's very difficult for us to say that. I mean, it's not easy just to open a store, right? It takes four to six months to find a site, to get all the permits, to do construction. So I'm unable to comment on that.
Okay. Thank you. Thank you so much.
Okay. Thank you very much for that question. Our next question comes from Suren Senanayake from Newlands. Please go ahead.
Hello. Can you hear me?
Yes. Please go ahead.
Yes. Sorry. Yes, I was just wondering what your thoughts are on the Iraqi market.
On the Iraq market, right?
Yes.
Yeah. So we are very positive on the Iraq market. We obviously launched two of our brands there last year, KFC and Pizza Hut. And we continue to build the pipeline. So that is one of our growth markets, the performance. It's also a less impacted market from the boycotts. And the performance of our brands is very promising and strong in Iraq. So we are quite optimistic about the market. And we have infrastructure in place. We have the value chain. We are the largest F&B organized player there. So we want to scale up Iraq.
Thank you.
Okay. Thank you. We have another follow-up question from Mr. Taher from JPMorgan. Please go ahead, sir. Your line is open.
Yeah. Sorry. I don't mean to hijack the call, but this is the last question from my side. Just maybe a quick follow-up on the inorganic opportunities. I know this has been talked about as part of the IPO strategy. Clearly, the boycotts maybe change or delay some plans. But don't you feel that it makes sense today to push through maybe or accelerate this strategy inorganically? I mean, I'm pretty sure there are a couple of brands that are not present in the region. We've seen one of your key competitors acquiring the franchise rights for one of the most famous Mexican fast food chain, if that's the right word to mention. So maybe just your thoughts on the inorganic opportunities or potentially maybe accelerating that to offset the weakness or the pressure you're seeing in your core brand at this stage.
I think the other follow-up is what we talked about also on the last call. Based on your QSR experience through different markets, is it fair to say that this boycott is more severe, more aggressive, and hence it's taking maybe longer on the road to recovery versus maybe previous boycott episodes that you've seen in different markets? Maybe your insights there would be much appreciated also.
So Taher, if you want to ask more questions, please feel free. We don't want to stop you. So in terms of inorganic opportunities, we continue to explore. We are aware of the new Mexican brand entering the market. We are studying it. Again, Mexican is a new category. It's not a highly developed category. So we are keen to understand how the consumers engage with this new brand. And potentially, there could be opportunities down the road. And clearly, the boycott has made us more cautious on these opportunities. But if the right opportunity comes along and it makes commercial sense, certainly, we have the balance sheet to take advantage of that opportunity. To your second point, yes, this boycott has been more severe than the previous boycotts. We looked at numbers going back historically to 2002 and the 2003 boycotts. And those lasted four to six months.
But again, the conflict at that time, from my understanding, didn't last this long either. Now again, back sitting in Q4, I don't think anybody could have envisioned that this particular situation would drag out for so long. The healing and the recovery can only start when this conflict ends.
Okay. Clear. Thank you.
Okay. Thank you very much. I'm seeing no further questions at this point. I'll pass the line back to the Americana team for their concluding remarks.
Well, thank you very much. We appreciate everybody's participation and look forward to meeting some of you in person over the course of time. Best wishes to everyone. Thanks.
Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.