Good evening, everyone, and thank you for joining us for Americana Restaurants Q1 2026 earnings call. I am Pujeet Parekh, Head of Investor Relations and Business Development, and it is my pleasure to welcome you on behalf of the entire management team. We entered 2026 carrying strong momentum from 2025, with continued focus on disciplined growth, profitability expansion and long-term value creation. During the first quarter, we delivered strong revenue growth, significant margin improvement, and continued progress across our strategic priorities while remaining agile in navigating a dynamic regional operating environment. Across our markets, we continued to strengthen customer engagement, scale up our brands, drive operational efficiencies, and reinforce our purpose of building communities around the joy of food.
Joining me today are Amarpal Sandhu, our Chief Executive Officer, Harsh Bansal, our Chief Operating Officer for KFC and Pizza Hut, and Rahul Mathur, our newly appointed Chief Financial Officer. Amar will begin with an overview of the group's strategic and operational highlights for the quarter, followed by Harsh, who will walk you through the financial performance and outlook in more detail. We will also introduce Rahul later in the call. Before we begin, I would like to remind you that today's discussion may include forward-looking statements based on current expectations and assumptions. Please refer to our disclosures for additional details. The presentation design has been refreshed for improved clarity and identity while the underlying information remains unchanged. With that, let me hand it over to Amar.
Mr. Amar, we don't hear you. If you can perhaps unmute, please start.
Okay. Just a voice check. Michael, am I audible?
Yes, we can hear you. Please go ahead.
Okay. I think we had a technical glitch. I will restart. You know, once again, thank you, Pujeet, and good day, everyone, and thanks for joining us today. As I was saying earlier, we entered 2026 with strong momentum, and I'm pleased to say that the pace we built in quarter four of 2025 accelerated in quarter one of 2026. The discipline and execution that defined our finish to 2025 are now translating into tangible results, positioning Americana for a year of meaningful growth. At the core of this performance is a playbook that is both simple and powerful. First, an unwavering focus on value, ensuring our brands remain relevant, accessible, and compelling for our customers in every market we serve. Second, purposeful innovation, introducing products and experiences that drive traffic and strengthen our brands.
Operational excellence, which is about relentlessly improving quality, consistency, and customer experiences across our portfolio. Finally, cost discipline, which is embedding efficiency into every layer of the business to protect margins and fuel reinvestment. Together, these pillars reinforce each other, and when they are all firing together, the results follow. As we walk you through our quarter one results today, you will see clear evidence that the playbook is working and our ambition for 2026 is very much on track. Across the quarter, our Power Brands executed with focus, driving growth through value and locally relevant occasion-led innovation. At KFC, the story this quarter is quite simple. The brand is firing on all cylinders, setting the pace in innovation, in cultural relevance, and in the kind of consistent execution that keeps customers coming back week after week.
A few examples of locally grounded launches like Firecracker Twister in Kuwait, Tuum Taki in K.S.A., and Harissa Royal and Maxi Tacos in Morocco reflect a deep understanding of local taste, which is bold, specific, and culturally resonant. The Big Kentucky momentum from quarter four of last year carried forward with the new sweet chili launch. The KFC and Cristal partnership added fresh energy in the Saudi market. Once again, bold flavors, cultural connection, and strong value perception is what keeps KFC getting the formula right. It remains our largest and most powerful brand, quarter one of 2026 reinforced exactly that. At Hardee's, the focus was on cultural energy and local pride, it landed once again. The Dera Burger in Saudi Arabia drew on genuine nostalgia, bringing back an all-time customer favorite.
The One Piece collectible campaign tapped into one of the most passionately followed anime franchisees in the world, driving repeat through collectible-led purchasing behavior. The Tornado platform kept the menu fresh and supported transaction growth throughout the quarter. All these launches helped strengthen brand distinctiveness while staying commercially sharp. Pizza Hut continued to focus on sharing occasions, bringing people together around great food. The Super Limo with stuffed crust reinforced value and made group dining occasions more compelling. Ramadan and Valentine's activations with the date cake and heart-shaped pizza created culturally and seasonally relevant offerings. These initiatives reinforced the brand's role in people's lives through family dining and shared food experiences. At Krispy Kreme, the brand continued to expand its relevance through seasonal and gifting moments. While the Ramadan range drew inspiration from Arabic sweets and regional flavors, creating strong local resonance, the Valentine's campaign drove gifting relevance.
Cream Cheese snacks built on the savory delights platform launched last quarter confirmed that Krispy Kreme can win in everyday moments beyond traditional occasions. Overall, quarter one is a clear proof point when value and innovation are grounded in local taste, cultural insight, and occasion relevance, they drive both growth and lasting customer connection. This disciplined approach remains a core driver of sustainable growth across the portfolio. Coming to our purpose of building communities around the joy of food, which remained central during the quarter. Despite uncertain market conditions, we stayed true to that commitment by continuing to support our communities, create opportunities, and deliver meaningful social impact across our markets. During Ramadan, we launched our Close to People in Ramadan and Beyond initiative across all 12 countries, distributing tens of thousands of hot meals, supported more than 1,000 families with essential food boxes.
This initiative created lasting impact beyond one-time relief, reflecting our continued commitment to staying close to people, especially during moments that matter most. In the U.A.E., we signed an MOU with the Zayed Authority for People of Determination, marking an important step in advancing inclusive employment opportunities. During the quarter, we also opened the first Pizza Hut restaurant in Abu Dhabi, operated by People of Determination, reinforcing our long-term commitment to inclusion and equal opportunity across our operations. In Lebanon, we prioritize employee safety during a challenging period by providing secure accommodation, meals, and essential support to those with urgent humanitarian needs. These initiatives reflect our purpose as a consistent operating principle, creating opportunities, supporting communities, and ensuring growth aligns with meaningful social impact across the regions. Let's talk about performance in quarter one 2026.
This is the illustration of the playbook in practice and the numbers reflect it. Our portfolio reached 2,741 stores at end of quarter one, with 173 gross new restaurants and 111 net new restaurants added over the last 12 months, reflecting disciplined expansion anchored in achieving return thresholds and strategic market fit. Revenues grew by an impressive 13.3% year-on-year to $649.7 million. Performance was driven by strong like-for-like sales growth of 6.7%, once again supported by value, localized innovation, and disciplined operational execution. EBITDA reached $160.5 million, demonstrating strong operating leverage and cost discipline across the business.
Net profit increased by 93.5% year-over-year to $63.2 million, driven by revenue growth and significant margin expansion. Capital expenditure reached $42.4 million, representing 6.5% of revenues, including the consideration paid for the acquisition of the U.A.E. subsidiary operating Malak Al Tawouk, balancing growth investment with capital efficiency. Finally, during our AGM held on 29th April, shareholders approved cash dividends of $201.6 million, equivalent to circa 92% of full year 2025 net profit. These dividends will be distributed to entitled shareholders in line with the announced timelines. In summary, Q1 2026 reflects strong momentum across revenue, profitability, disciplined expansion and shareholder returns. Once again, reinforcing Americana's resilient operating model and sustainable long-term growth trajectory. Allow me to take you through our network expansion during the quarter.
As shown on the left-hand chart, we added a gross of 173 stores to our portfolio since quarter one 2025. This was done primarily across Power Brands, which contributed 138 gross openings. In parallel, we closed 62 locations as part of our ongoing portfolio optimization, covering underperforming locations, some strategic relocations, and also some landlord re-led redevelopment projects. In addition, seven stores from Malak Al Tawouk in the U.A.E. were added to the portfolio with their financials consolidated during the quarter, bringing our total restaurant count to 2,741 as of quarter one 2026. The chart on the right highlights the strength of a pipeline for 2026. During quarter one , we opened 10 growth stores from our core portfolio and added seven stores from Malak Al Tawouk acquisition.
Consistent with previous years, the first quarter typically carries the majority of our strategic closures as part of our portfolio optimization approach. Our development pipeline for the remainder of the year remains strong, providing confidence in delivering our previously guided 120-130 net new store additions, including new brands. Expansion remains focused on high-performing markets while maintaining the flexibility to revisit guidance based on evolving market conditions and return thresholds. With that, I will now hand over to Harsh to walk you through the financial details.
Thank you, Amar. Good day, everyone. I will start by taking you through our Q1 2026 financial performance and beginning with revenue growth and the key drivers behind the quarter. As shown in the revenue bridge on the left, revenues increased from $573 million in Q1 2025 to $650 million in Q1 2026, representing a strong 13.3% year-on-year growth. Like-for-like sales remained the largest contributor, adding $41 million, supported by a robust transaction growth, localized menu innovations, and continued momentum across our key markets. New store openings further contributed $32 million, reflecting disciplined expansion across the Power Brands and the contribution from the recently opened stores. Like-for-like growth remained resilient even during Ramadan and despite broader regional uncertainty.
Pre-Ramadan, LFL growth stood at 6.4%, improving further to 7.1% during Ramadan till end of March. This reflects strong customer resilience during periods of uncertainty and continued preference and trust across our brands, across countries. Foreign exchange had a limited positive impact of $4 million, largely driven by Egypt and Kazakhstan. Turning on to the revenue mix on the top right. Our portfolio composition remains largely stable and resilient. Power Brands contributed 94% of the total revenue, which is slightly higher than last year. Growth in niche brands contributed the remaining 6%. In addition, 83% of our revenues came from stable peg currency markets, providing consistency and low FX volatility across our results. Looking at channel mix on the bottom right, home delivery increased to 51% following the increased trend from last year.
It is worth noting that given the regional uncertainty, we saw some spike in home delivery sales. This reflecting customers preferences to stay closer to home. We expect this level to normalize and home delivery shares to stabilize around these levels of 51%-52%. Kiosks continue to strengthen as a share of revenue, which is at 17%, supporting both improved customer experience, higher check, as well as operating efficiency. Overall, Q1 revenue performance reflects the strength of our diversified portfolio, strong consumer demand, disciplined expansion, and the resilience of our operating model. This has been supported by our omni-channel platform, which allows us to adapt quickly to shifting consumer needs. Let me take you through the performance across brands. Starting with KFC, revenue reached $391 million in Q1 2026, representing a strong 14.2% growth year-on-year.
Like-for-like was 7.5%, which was supported by localized innovation and multi-platform campaigns, such as collaboration with Cristal, along with the continued momentum of Big Kentucky Sweet Chili. Hardee's delivered another solid quarter with revenues of $115 million, up 12.9% year-on-year. Like-for-like stood at 5.9%, the performance was supported by strong culturally relevant campaigns and collaborations such as One Piece campaign, which clubs the customer favorite sandwiches along with their fan favorite collectibles. Pizza Hut reported $81 million in revenues, a growth of 9.2% year-on-year, and like-for-like growth stood at 4.3%. The quarter benefited from strong seasonal relevance, such as date cake in Ramadan and Valentine's Day Heart-shaped campaign, reinforcing family dining as well as occasional consumption.
Krispy Kreme delivered revenues of $23 million, up 4.4% year-on-year with a like-for-like growth of 3.6%. Performance was supported by strong innovation as well as gifting occasions like Ramadan-inspired Arabic sweet flavors and the expansion of savory platform through Cream Cheese snacks, extending relevance beyond traditional sweet occasions. On an overall level, the portfolio delivered 13.3% year-on-year growth in Q1 with a strong 6.7% like-for-like growth, reflecting broad-based momentum across our brands as well as across major markets on the back of strong execution, local relevance, and disciplined pricing strategies across markets. Moving on to profitability. Profitability improved materially across all key metrics during the quarter, driven by strong overall sales and the like-for-like growth, delivering better gross margins as well as overall margins.
Starting with full-year EBITDA, we reported an increase from $115 million in Q1 2025 to $204 million in Q1 2026, representing 29.1% growth. The full-year margins expanded from 27.5% to 31.4% in Q1 2026. Reported EBITDA grew by strong 31.9% year-on-year, reaching $161 million, margins expanding from 21.2% to 24.7%. This reflects strong operating leverage at the restaurant level and conversion of sales into like-for-like profitability. Net profit also increased significantly from $33 million in Q1 2025 to $63 million in Q1 2026, representing a growth of 93.5%.
Net profit margin expanded from 5.7% to 9.7% on account of higher sales as well as cost measures across lines. Overall, this quarter demonstrates the strength of our operating model with strong revenue growth, cost discipline, as well as execution capability, delivering not only top-line growth, but also bottom-line growth along with strong margin expansion. Now, we will go through some of the next slides to give additional color on the gross margin and working capital. As you see, the quarterly trend inventory costs have been well controlled despite volatility and freight pressures. In Q1 2026, our cost of inventory improved to 27.3% compared to 29.2% in Q1 2025, representing a 1.9% improvement year-on-year.
This was driven by strong procurement discipline as well as supplier negotiations and various other menu and pricing actions which continue to drive our higher gross margin. In the time of current volatility, our centralized GCC supply chain has proven to be a true competitive advantage, which has given us better control on sourcing as well as we have been able to move stocks between countries to avoid any stock-outs. Our long-term strong vendor agreements have also given us the flexibility to get the first preference given the size and scale and relationships we have. It is also important to note that despite recent geopolitical developments and pressure across logistic routes, we have been able to navigate without any material impact on our invest-inventory costs during Q1.
We do see some impact coming in in Q2, especially on account of rate surcharges as well as commodity volatility given what's going on. This quarter demonstrates the strength of our operating discipline and our ability to navigate difficult situations while continuing to perform on top line and on margins. Moving on to working capital and capital deployment. Our balance sheet remains strong, with disciplined cash management and continued investment in growth. Starting with net working capital on the left-hand side, NWC remained at - $230 million as of March 2026, representing -8.9% of revenue, which is broadly in line with Q1 2025, showcasing efficient inventory management as well as supplier payment terms.
Turning to gross CapEx on the right-hand side, CapEx increased to $42.4 million in Q1 2026 compared to $27.7 million in Q1 2025. $42.4 million also includes $16 million for the consideration to acquire the U.A.E. operations of Malak Al Tawouk also. Our approach to capital deployment remains disciplined and return led to make sure we balance growth as well as shareholder returns. On that note, I will hand it over to Amar to take through 2026 guidance.
Thank you, Harsh. Before we move to the next section, let me briefly reiterate our 2026 guidance. Our outlook remains aligned with our strategy of disciplined growth, strong returns, and scalable platforms while maintaining the flexibility to respond to evolving market conditions. On revenue growth, we continue to guide for mid-single digit like-for-like growth, supported by strong brand relevance, sharper local execution, and culturally resonant campaigns across our markets. While we are seeing some moderate softness in top-line performance in U.A.E., this is balanced by momentum across other markets, supporting the resilience of our overall portfolio and the countries of operations. On network expansion, we maintain our guidance of 120-130 net new store openings in 2026, including new brands. Expansion remains focused on high-performing markets with flexibility to adjust rollout pace based on market conditions.
On profitability, we expect gross margins to remain broadly in line with 2025. As of the end of quarter one 2026, we have seen no material impact on margins from the current geopolitical situation. However, we remain flexible to revisit margin expectations based on the operating environment and external market dynamics. We take a similar approach toward EBITDA and net profit, balancing growth with prudent cost discipline. As delivery mix increases during periods of market uncertainty, we remain focused on closing the gap between profitability on digital channels and in-store economics without compromising on customer experience. On category expansion, we continue to explore both organic and inorganic opportunities, particularly within Arabic food categories. Malak Al Tawouk was the first step, and we remain open to further opportunities where we see strong long-term strategic value.
Finally, on efficiencies, we remain focused on menu engineering and supplier negotiations alongside streamlining G&A to further strengthen our cost base. Overall, our focus remains on disciplined execution, profitable growth, and operational agility to adapt as market conditions evolve. Before we close, allow me to introduce our newly appointed Chief Financial Officer, Rahul Mathur, who joined Americana Restaurants in April 2026. Rahul brings more than 25 years of international experience with leadership roles spanning Europe, Asia-Pacific, Middle East, and Africa. This transition reflects the strength of internal progression within Americana.
Harsh Bansal, who has made oversized contributions towards Americana Restaurants’ growth story and provided steadfast leadership as our CFO for the past many years, has now assumed the role of Chief Operating Officer for KFC and Pizza Hut, where he will continue to do what he does best, which is to drive performance across two of our most important brands, which is KFC and Pizza Hut now. This reflects our belief in developing talent from within, creating positive leadership movement across the organization and ensuring we continue to strengthen both our operational and financial leadership as we scale for the future. I am super excited to have Rahul join us, and I will now invite Rahul to introduce himself to all of you.
Thank you, Amar, and good evening, everyone. I'm delighted to join Americana Restaurants. Over the past few weeks, I've spent time getting to know the business closely, our operations, our markets, and what truly drives our performance. What stands out to me is the strength of this platform, with strong brand partnerships, leading positions across the region, and a very strong track record of consistent execution. I've also been truly impressed with the quality of our teams and a very strong culture of ownership. My focus will be to build on these strengths with disciplined capital allocation to support our growth plans, driving operational excellence and upholding high governing standards. As I transition into the role, working closely with Harsh, I look forward to engaging with you in the coming months. Thank you, and back to Amar for concluding remarks.
Thank you, Rahul. You're getting a free pass for this quarter, you'll be handling the financial section of the earnings in quarter two. As we conclude, this quarter gives us confidence in where we are headed. The foundation we built in 2025 is holding, our playbook of value, purposeful innovation, operational excellence, and cost discipline continues to deliver stronger profitability, sustained growth, and deeper consumer connection across every market we serve. In a period of regional uncertainty, including disruption across key logistics routes such as the Strait of Hormuz, we stayed agile and proactive. Yet again, our brands and countries of operations stood the test of resilience. We activated our business continuity frameworks early, strengthened cross-market coordination, secured alternative sourcing routes, and leveraged our centralized GCC supply chain to maintain operational stability.
Our diversified footprint, local sourcing strength, and omni-channel capabilities continue to provide resilience, allowing us to serve customers without any material disruption while protecting margins and supply continuity. As we mentioned during our last call, 2026 is a year of momentum. We'll keep growing with discipline, innovating with purpose, and staying laser-focused on execution, creating awesome experiences for our customers and amazing value for our shareholders. Thank you all for joining us today, and we will now welcome your questions.
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, that's star two on your keypad and wait for your name to be called. We'll give a moment or so for questions to come through. Thank you very much. Our first question comes from Mr. Taher Safieddine from JP Morgan. Please go ahead, sir. Your line is open.
Yeah. Sorry, good afternoon, gents. It is Taher from JP Morgan. Again, congrats on a very strong set of numbers. I have two questions, Amar, if I may. The first one is just really on, you know, the regional conflict, which started in early March. I mean, looking just at your performance and the likes for like you've shared, the business was quite resilient, fair to say in March. Maybe just a bit of color on trends going into April. The point here is U.A.E. is the biggest market within your portfolio. It makes up around 33% of your sales. I just want to understand what kind of trends are you seeing in April versus March? Particularly maybe I am interested to see, you know, how much are you impacted by tourism?
I know there's the argument that, you know, fine dining is maybe taking the biggest hit and QSR seems to be in a sweet spot. Maybe just your thoughts on how trends are working through in April, that would be helpful specifically for the U.A.E. Then maybe I can follow up with the second question, if I may.
Taher, we were taking bets that, who would be the first one to ask a question and, I think I won.
Okay. All right.
Always good to hear from you.
Thank you.
I think you've also provided some color on the U.A.E. situation because you're familiar with the market. Definitely the QSR brands remain strong. There's some moderate softness and it's more in the touristic areas and obviously brands that are heavy on dine-in, like casual dining, we are seeing a bigger impact. Of course, that is a very small portion of the overall portfolio in U.A.E. I would say performance remains relatively strong. Is there some softness compared to pre conflict which started on February 28th?
Yes, some moderate softness, but we're also seeing week over week growth even across, for example, the brands that are heavily dependent on mall traffic, whether it's Peet's Coffee or TGI Fridays. We see continued improvement week over week. On the QSR side, yes, we are seeing some impact in the tourist areas around Sheikh Zayed and, for example, JBR Marina, et cetera. We are also seeing very strong performance, for example, in Northern Emirates, in Al Ain, in Sharjah, in Abu Dhabi. Once in a while we get pleasantly surprised, let's keep it that way.
Okay. Perfect. Maybe just the second question is, on just, you know, the guidance. I remember in the Q4 call you said 50 basis points- 100 basis points EBITDA net profit margin expansion year-over-year. I mean, just on that side, I think there are, like, two concerns. Number one is, you know, the pickup in home delivery, which we understand is a lower margin sales channel compared to others. Maybe just some color there. The second point is just on the supply chain. I remember you said, you know, in other calls that you may be using land routes through Saudi to get some product availability into Kuwait and U.A.E.
Can you just maybe share some color in terms of how should we think about the margin profile given the increase in home delivery and also maybe higher sea freight costs and so on?
Sure, Taher. First on home delivery, while, yes, home delivery is a lower margin channel, but we have also been taking pricing on home delivery as a channel which net-net, I won't say nullify, but significantly reduce the margin impact given the higher pricing. While there will be some impact on margin, but large part of it would be covered through higher pricing on home delivery channels, which we have been doing it from last year and will continue to do it. On supply chain, we are seeing some as I said, yes, we are using land routes as well as tapping into various other ports to get our products in. We have been able to navigate through it. There has been some impact, especially in the logistics, given the freight costs as well as the war surcharges.
We do not expect that to materially change our gross margin, while for sure, if you compare to Q1, there'll be some impact in Q2 in terms of gross margin. Having said that, we still believe we are on track for our guidance, which is better gross margin as well as 50 basis points -100 basis points better EBITDA margins compared to last year.
Perfect. Very clear. Thank you very much. I will come back in the queue later. Thanks.
Thank you very much. Our next question comes from Mr. Sultan Al-Shaalan from Jadwa Investment. Please go ahead, sir. Your line is open.
Yes. Hi. Thank you for the presentation and congratulations on the great results. Two questions from my end. The first would be, if we look at Saudi in the first quarter did not grow as much as the other main markets, but sequentially, it wasn't impacted as much. I'm just wondering what did you see in Saudi, and how do you see the Saudi market performing going forward? Maybe on the like-for-like, how much of the like-for-like growth is driven from pricing versus traffic or transactions?
Sultan, on your observation on Saudi, you're spot on that the growth in Saudi has been lower than other markets. Having said that, other markets had a big carryover given quarter on quarter last year, we saw good momentum. In Saudi, we are actually seeing positive like-for-like sales, and it is a difficult market, as you know, very price sensitive and highly competitive. We have been able to gain share in Saudi, and we are positive like-for-like. Even in April, we have had a strong month in April in Saudi, which is again backed by strong like-for-like performance. On your second question, which is the split between transactions and check.
See, given the higher share of home delivery, the check has contributed to the most of the growth because check on HD is higher compared to other channels. Transactions have been kind of flattish, slightly positive, but most of the growth actually has come in from a check.
Clear. Just one last question for you, if you don't mind. On the closures, it seems over the last 12 months you closed around 64 stores and out of that 50 was of your Power Brands. It seems like a big number. I'm just wondering where are these closures happening and what are the reason for them? I think you're anticipating another 40 closures during 2026.
Sultan, the closures are very much in line with, you know, what we've been closing each year, right? There are three primary reasons for closures. One is some, you know, underperforming stores where, you know, we believe that the location is the main reason for the underperformance, and it cannot change. The second is we do some strategic relocations where trade areas have shifted, restaurants have been there for a number of years, and rather than reinvesting and remodeling those restaurants, we are better off building a new one, you know, maybe perhaps in a adjacent facility or, you know, somewhere in a new trade area.
The third is, you know, force majeure where, of course, a lot of that happened recently in, you know, primarily in U.A.E. and Saudi, and to some degree some, you know, occasional situation in Kuwait, where landlords, we've been there a long time and real estate moves on and, you know, the landlords want to repurpose that area. In a way they don't want to extend the lease or renew the lease because they want to repurpose or redevelop, you know, those areas. Those are the main reasons. Our closures are very much in line with what we do every year. It's no one particular country. You know, 50 to 60 closures on a portfolio of, you know, 2,700-2,800 restaurants every year is pretty much in line. It's actually pretty good.
Great. Thank you so much.
Thank you very much. Our next question comes from Mr. Adnan Muqeem, Al Rayan Investment. Please go ahead, sir. Your line is open.
Hi, this is Mohammad Adnan from Al Rayan Investment. I have a question related to the like-for-like sales. What I remember, the like-for-like sales are soft, usually soft in Ramadan, so how it's greater than the other two periods is because of the pricing. My second question is regarding to the inventory cost as a percentage of sales. It's well controlled this quarter, but what about this quarter? Like, will it increase because all over the commodity prices has been increased? We will see the impact in this quarter?
[Bansal].
Mohammad, first is on inventory, as I mentioned earlier, in Q2 we do expect a slight increase or some increase compared to Q1, but we remain on track to our guidance of our better gross margin compared to last year. Now, on your first question on Ramadan, we have adjusted for seasonality. If you look at 7.1% on Ramadan, it's Ramadan to Ramadan. It's apple to apple comparison. Anyway by end of Q1 we were largely even because Ramadan was, while moved it moved 10 days, but during Q1 to Q1 it was fairly even.
Okay. Okay. Thank you. Thank you so much.
Okay, thank you very much. Our next question comes from Mr. Abdullah Al-Buainain from Emirates NBD Asset Management. Please go ahead, sir, your line is open.
Hello, am I audible?
Yes, please go ahead.
Yeah. This is Abdullah Al-Buainain from Emirates NBD Asset Management. Okay. I have four questions. The first one is regarding the margin. When we noticed the guidance at the beginning of the year, you were mentioning 50 basis points to 100 basis points increase in margin, but the increase in margin in the first quarter is 3%. Keeping the guidance intact, does that mean you're expecting the margin to not only to decline from the current level but from year over year? Because you're having a very strong first quarter to even out to the guidance, you're expecting some quarters to be weaker or you're just not changing the guidance out of conservatism. That's the first question. The second regarding the margin again.
The raw material savings is around 1.9% from that 3.1% margin enhancement. What are the other components of this? The other thing is that the home delivery breakdown. Could you break down the home delivery between third party and your channels?
Thank you, Abdullah, for your three questions. On the first one, we say our margins are 50 basis points- 100 basis points. That's because if you look at this slide on cost of inventory, as you see, even during last year, our quarter-on-quarter cost of goods sold reduced. We'll be comping on a higher base in terms of cost of in terms of gross margin. While we expect to do better on a full year basis, the base will vary given the improvement last year. As I said earlier, we believe we will be in line to our guidance earlier, which is 50 basis points- 100 basis points. The second is on a cost of inventory. There are multiple initiatives. One is, we continue to diversify our supply base.
The second is there are menu and pricing initiatives. The third is we have also taken higher pricing on home delivery channels. The fourth is also some of the menu rationalization exercise. There are multitude of factors which contribute to even with pricing during Eid we take, so that also impacts it positively. That is on cost of inventory, improvement in Q1. The third is home delivery. In terms of share, it is 2/3 or probably 3/4-1/4. Three fourth is third party aggregators and 1/4 is our channels. That is just for the customer acquisition. We still use our own riders for delivery, which gives us the leverage to stay connected to the customers outside of Saudi.
Saudi is the only market where we don't deliver. It is with aggregators due to regulatory constraints. Across all major markets we do our own delivery, for example, U.A.E., Kuwait, and some of the other markets. From a revenue or from an acquisition standpoint, it is 3/4-1/4.
Okay. On the margin, going back to margin. It's true you are, you will be growing from a high base, that's mainly in the fourth quarter. Speaking on the second quarter, last year it was similar to inventory cost of the first quarter. Do you expect similar or at least close improvements in the second quarter year-over-year, similar to the first quarter? You expect it to be a completely different picture?
We do expect Q2 2026 to be better than Q2 2025. When you compare Q2 2026 to Q1 2026, we may see some dilution, especially given the war surcharges and some of the emergency purchases we had to do, given the overall situation. From a full year perspective, we expect to be better, but it may not be same as Q1 2026, given the headwinds we had on logistics as well as on the sourcing side.
Okay. Thank you very much. Wishing you all the best.
Okay, thank you very much. Our next question comes from Avishay Mehra from Jefferies. Please go ahead, sir. Your line is open.
Hi, it's Avishay Mehra here from Jefferies. Thank you for the presentation. I have a couple of questions. How do you see competition versus fine or casual dining evolving? You know, apparently there have been some near-term share gains as fine and casual was not exactly geared to the shift to online. How is it changing now as fine and casual are also launching home delivery channels, and we're also seeing more advertisements from aggregators? Secondly, how do you manage fuel cost pressures for your 1P home delivery channel? Are you planning on raising delivery fees for any customers to compensate?
Hi, Avishay. The, your first question on fine and casual dining. I think fine and casual dining is what is impacted the most during, you know, these, this recent geopolitical situation, especially in U.A.E. That allows QSR to gain share, you know, because we are mass brands and, you know, there's a lot more frequency is higher. Again, fine and casual dining launching delivery is not new. They launched delivery during COVID. You know, it's been six years. That is not what their forte is. You know, people go to fine or casual dining for an experience, not to get, you know, food delivered at home. We don't really see that as a threat.
I think as Harsh had mentioned earlier in his financial overview, home delivery costs, fuel surcharges or the cost of home delivery, we've taken pricing and, you know, that is how we mitigate on the cost side of the business.
Very clear. Thank you for that.
Okay, thank you very much. Our next question comes from Mr. Bijoy Joy from Qatar Insurance Company. Please go ahead, sir. Your line is open.
Hi. Thank you, gentlemen, for the call. My question is on your Pizza Hut operations. We see that the Pizza Hut pickup in the Pizza Hut operations have been quite slow, given the ramp-up in the number of stores. If you can throw some light, how do you see the traction on the ground? Is it other brands like, you know, Domino's or Papa John's or some other local brands, are more favored than Pizza Hut?
Bijoy on Pizza Hut, we have two big markets, apart from some small markets, which is U.A.E. and K.S.A. It's a very different mix in terms of country mix compared to KFC and Hardee's. Now, within U.A.E. and K.S.A.., Pizza Hut continues to be a strong brand, especially in U.A.E., where we are by far the market leader, and we are outpacing the competition in terms of share gain as well as in terms of our like performance. Having said that, Pizza Hut as a brand has been a bit more impacted given the situation in U.A.E. because the customer of Pizza Hut is a slightly different customer. It is more families compared to KFC and Hardee's. There has been a bit more impact on Pizza Hut compared to other brands.
In Saudi, while Q1 has been a strong quarter for Pizza Hut, and in general, as a category is very competitive, as you all know. Pizza Hut, we are continuing to build our presence and gain shares. We have slowed down the openings compared to what we have done in the last few years. A lot of focus on getting the unit economics right, but we are selectively still growing and still gaining share in Saudi as well. Overall brand stays strong. We are by far the market leader in U.A.E. as well in some of the other markets, which include Jordan and Bahrain. In Saudi, we continue to build our shares.
Thank you. That's it from my side.
Okay, thank you very much. Our next question comes from Mr. Rashad Kawan from Morgan Stanley. Please go ahead, sir. Your line is open.
Hey, guys. Yeah, this is Rashad from Morgan Stanley. Thank you, and congrats for around the results. Another on margins, please. If I look at your gross margins, this quarter and last, I think it's the highest two quarters of gross margin delivery since listing. I think Q4 you talked about, you know, dynamic pricing, particularly in December being leveraged, which probably helped. I think Q1, the delivery here really comes as a surprise, particularly in the context of what you guys were talking about around, you know, the higher share of home delivery, et cetera, that we've seen. I guess a two-part question. I think, one, how should we think about the long-term gross margin of this business?
Two, in terms of the evolution of the cost base over the next couple of quarters, given the supply chain disruption we're seeing. I mean, you mentioned you haven't really seen a material impact to margins from the situation. Can you just talk us through what's embedded in the guide at this point, right? Are you making any assumptions around, you know, status quo between now and the end of the year or things easing? Just, you know, anything you can kind of share around that would be helpful. Thank you.
Rashad, on gross margin, as I said, we expect on a full year basis to do better than 2025. In terms of on your question on what are the assumptions, we don't have a crystal ball, but if the situation continues for another quarter or so, that may have an impact on the gross margin. For now, we have visibility on our stock situation till end of June, and we do the cost base for that. After that, depending on how the situation evolves, it will have either positive or a negative impact on the gross margin. In terms of home delivery, home delivery at a gross margin level actually has no material impact, if any, is positive because the cost of home delivery sits below gross margin.
That has not been the key driver of improved margins. It has been largely driven by the lower food and packaging costs as a percentage.
Thanks, Harsh. Just if you think about kind of the longer term, I mean, taking this kind of conflict to the side, if you think about kind of the longer term gross margin of this business is kind of the, you know, Q4, Q1, is this kind of the right way to think about where this business could land longer term?
Yeah, I would say ± 50 basis points. That would be the kind of range which, at least we look at in the longer term or the medium term.
Got it. Thank you very much.
Okay. Thank you very much. Just a reminder once again, star two for any additional questions. Our next question is a follow-up from Mr. Abdullah from Emirates NBD. Please go ahead, sir. Your line is open. Okay, we'll come back to that shortly. In the meantime, we'll take the follow-up question from Mr. Taher from JP Morgan. Please go ahead, sir. Your line is open.
Yeah, sorry. Start again. Maybe a question on, you know, just the recent acquisition of Malak Al Tawouk, and you guys reiterating that you wanna create something around it in terms of the Arabic, you know, QSR category. I just wanna maybe hear your thoughts on two things. How big can Malak Al Tawouk grow for you? You have, you know, long-term agreement on the franchisees. You know, you've managed to get the franchisee rights across multiple markets, including, you know, the existing 10 branch network in U.A.E. and Saudi. Maybe just help us understand where could Malak Al Tawouk be, you know, two, three years from now. Is there any sort of guidance that you can maybe share with us on that front?
The second question is just on the category expansion. I mean, the balance sheet is very strong. There's no leverage. Does this conflict maybe create some further opportunities? I wanna say maybe distressed sales or you guys becoming maybe even more aggressive to take on some new brands. If you can just maybe walk us through the M&A on the Arabic QSR, if there's, you know, anything that we should think about on that front.
Taher, you are extremely perceptive. I think I'll answer your second question first. Yes, we are constantly evaluating opportunities for M&A, especially on the Arabic front. Nothing to disclose at this point. As and when that happens, we'll keep, you know, everybody informed. Regarding the expansion of Malak Al Tawouk, without getting into specific numbers, we are very optimistic about the brand, especially given that, you know, the brand has been in U.A.E. and K.S.A., and we have visibility to the performance of the existing restaurants. You know, yes, only a handful, you know, seven in U.A.E., three in K.S.A., with the performances, you know, are very impressive. We are building a strong pipeline for expansion.
Hopefully there'll be more to talk about, you know, by the end of the year on Malak Al Tawouk in these countries, and also, you know, we would be launching in a new country as well this year. So we are excited about this acquisition. Beyond that, as we have stated before, we look at Arabic in four categories. One is Tawouk, the other one is chicken rice, the third is shawarma, and the fourth is Levantine, you know, cuisine. We continue to explore that, and we want to continue to build the Arabic platform. Two primary drivers of growth, of course, the enterprise brands. Yet again, you know, through every crisis, our enterprise brands have proven their staying power.
You know, KFC, Hardee's, Pizza Hut, I mean, they have been around. I mean, KFC has been around more than 50 years, right? It has gone through, you know, many crises and, I would say, you know, headwinds, and yet it is one of the strongest brands globally. We will continue to drive that brand along with Hardee's now is a clear number two in the burger segment in the major GCC countries. We are quite, you know, pleased with the turnaround from five years ago of the Hardee's brand. Of course, Pizza Hut is, you know, something, we entered Saudi about three and a half, four years ago.
We are up to 110 in our restaurants, and we will continue to grow that brand and, you know, gain share in the pizza category as well.
Thank you. Very clear.
Thank you very much. Our final question is once again, a follow-up question from Mr. Abdullah from Emirates NBD Asset Management. Please go ahead, sir. Your line is open.
Hello, am I audible?
Yes, please go ahead.
Yeah. When we dissect the like-for-like growth for the first quarter, we notice that most of the improvement is coming from Kuwait mainly as we look at the revenue per store, mainly it's coming from there. Do you see this continuing for the rest of the year, or you are penciling other areas or other regions growth to achieve the mid-single-digit like-for-like growth?
Hi, Abdullah, can you hear me?
Yeah, I can hear you.
Abdullah, Kuwait for sure has outpaced in terms of like-for-like. As Amarpal mentioned earlier, U.A.E. was also doing very strong in January and February. We had some impact in U.A.E., especially in March, in the tourist locations as well as malls, for example, Dubai Mall as some of the other malls. That's why there has been some slowness in U.A.E. Overall, across the board, be it Qatar, be it Oman, be it Bahrain, be it Jordan, we are seeing strong like-for-like and also Saudi. The whole portfolio has delivered strong like-for-like. For sure, Kuwait has been stronger than others. Even Qatar, for example, we are at very strong like-for-like. Oman, we are comping about 20% like-for-like. It has been very strong across the board.
Okay. Thank you very much.
Thank you very much. We have no further questions. I'll be passing the line back to the Americana Restaurants team for the concluding remarks.
Thank you all for joining today's earnings call and for continued interest in Americana Restaurants. We appreciate your time, your engagement, and the continued trust you place in our business and long-term strategy. I would also encourage you to download Americana Restaurants IR app, where you can access all our disclosures, financial results, presentations, and stay up-to-date with all our investor communications in one place. We look forward to continuing the dialogue with you in months ahead. Thank you, everyone.
Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.