Good evening, everyone, and thank you for joining us for Americana Restaurants' Q3 and nine-month 2026 earnings call. I am Pujeet Parekh, Head of Investor Relations, and it is my pleasure to welcome you on the behalf of the entire management team. Joining me today are Amar Sandhu, our Chief Executive Officer, Rahul Mathur, our Chief Financial Officer, Harsh Bansal, our Chief Operating Officer for KFC and Pizza Hut, and Ashish Krishna, our Chief Information Officer. Amar will begin with our business updates for the quarter and nine months, covering brand initiatives, new platforms we are building for growth, and our network expansion. Rahul will then take you through the financial review. Amar will then return to present our dedicated digital update, followed by the way forward for 2026. One point to flag before we start, this quarter, we have included a new section on our digital business.
It gives you a closer look at our scaled, fully owned digital platform and our in-house last-mile delivery fleet. Please note that this is a one-time deep dive to give you a better understanding of this important part of our business. Going forward, we do not plan to include this as a standing section in our quarterly presentations, but we will definitely revisit it on an as-needed basis. Before we begin, I would like to remind you that today's discussion may include forward-looking statements based on current expectations and assumptions. These are not guarantees of future performance, and actual results may differ materially. Please refer to the disclaimer on slide 3 for further details. With that, let me hand it over to Amar.
Thank you, Pujeet. Good day, everyone, and thanks for joining us today. The third quarter capped the strongest first nine months in our history. Record revenue crossing the $2 billion mark in just nine months for the first time ever, and momentum that did not just continue through the quarter, it accelerated. When we spoke to you in summer, we mentioned the first half was our best. During the third quarter, we advanced further. Growth in our existing restaurants stepped up. Profit, once again, grew far ahead of sales, and margins moved higher. It all starts with the enduring strength of our brands. These are brands that families across our region have grown up with and keep coming back to generation after generation. That equity is earned every day at Americana Restaurants, and this is what keeps our brands relevant, compelling, and resilient, no matter what the conditions are.
As everyone is aware, geopolitical uncertainty continued across our region, and input costs kept rising. In times like this, many businesses look to hold their ground. However, Americana kept moving forward. That is the real proof of the durability of a model. A business diversified across markets, built over more than six decades, and sharpened through every difficult cycle. Our development engine continues to deliver a disciplined, return-led pipeline that gives us clear visibility on growth. Our digital platform is now at scale, deepening our relationship with customers and driving incremental value. Most importantly, our people, the teams and operators across every market and brand, turn our strategy into consistent execution every single day. Tying it all together is a playbook that is simple, proven, and powerful. Compelling value, purposeful innovation, operational excellence, disciplined capital deployment, all underpinned by very tight control on costs.
We are also building the next engines of growth. Malak Al Tawouk is already expanding, and Taco Bell is now part of the Americana family. Both give us a longer runway for growth in the years ahead. Let me start with our brands. In the third quarter, the theme across the portfolio was simple: value-led innovation amplified by sharp campaigns to drive transactions. At KFC, the focus was on accessibility, making the brand an easy choice across every need, occasion, and price point. The Worth It menu sharpened our everyday value. The Hot Honey Burger and the Extra Twister brought bold flavors that created excitement and drove trial. The Baloot Box tied a crowd-favorite meal to one of the most loved social rituals in Saudi Arabia, the card game of Baloot.
Value, innovation, and local relevance working together, and that is exactly what makes KFC stand apart as a global icon that captures the hearts and delights the palate of millions across generations. At Hardee's, innovation was about expanding reach and feeding new need states. The Gold Star Wraptor delivered flavor and value. The Low Carb Burger opened a new door for customers looking for a high-protein, lower-carb choice. The Bugles chips collaboration in Saudi Arabia brought a playful, locally relevant twist to the menu. A refreshed range of summer beverages rounded out the meal and expanded choice. Pizza Hut continued to build flexibility into its value proposition, serving individual diners as well as the family table. The small pizza created an accessible entry point for individual meals. My Box offering packed variety and convenience into a complete personal meal.
Crafted Flatzz added a differentiated format that brings Pizza Hut's core pizza credentials to life in a new way. More occasions, more price points, and a stronger position for both individual and shared meals. Krispy Kreme did what it does best, turning the biggest moments in culture into irresistible donut experiences. For the World Cup, football team donuts in matchday-inspired packaging let fans celebrate every game. The launch of Eclairs opened a new chapter of innovation for the brand. The Pokémon collaboration with six themed donuts in collectible-style packaging connected Krispy Kreme with fans of every age and made every box part of the fun. The bottom line is that we use customer insights to find the occasions that matter. Our brands lead with a compelling value proposition, and we amplify differentiated products through targeted campaigns.
While our core brands keep growing, we are also building the next engines of growth for Americana. These are platforms that diversify our portfolio and open new avenues for the years to come. We have secured exclusive development rights for Taco Bell, bringing one of the world's most recognized Mexican-inspired QSR brands into our portfolio. We'll start in the UAE, and we'll do it the Americana way. Disciplined site selection and the right operating and supply chain infrastructure from day one. Once the UAE is established, we plan a phased expansion into other GCC markets. At Malak Al Tawouk, our entry into the Arabic category, we have already opened three new restaurants within a short period after integration, and we also have visibility to a good pipeline in UAE, Saudi Arabia, as well as planning the launch in Kuwait.
This shows how quickly we can plug an acquired brand into Americana's development and operating engine and turn it into real network growth. Taken together, Taco Bell and Malak Al Tawouk give us differentiated growth in attractive categories, and they reflect a disciplined approach to building the portfolio and creating long-term value for our shareholders. Next on community development. As everyone knows, our purpose is building communities around the joy of food, and this is what guides how we grow and the impact we make in every market where we operate. This quarter, Pizza Hut opened its 16th People of Determination enabled restaurant in the UAE, and this is done in partnership with Sharjah City for Humanitarian Services. That takes the total across our portfolio to 23 restaurants. These restaurants are about far more than jobs.
They create an inclusive environment where People of Determination build their skills, grow meaningful careers, and play a real part in the customer experience. We are committed to scaling this initiative and embedding inclusive employment even more deeply across our operations. Now the numbers. The third quarter was strong, and it built directly on the momentum of the first half. Revenue grew 14.4% year on year to $712 million, and like-for-like growth accelerated to a strong 8.6%. That shows momentum in our existing restaurants is healthy and broad-based, driven by the strength of our brands and our customer propositions. Topping this is the growing network of new restaurants and brands. Profitability grew even faster. EBITDA rose 24.8% to $174 million, with margin improvement of more than 200 basis points to 24.4%.
Net profit increased an impressive 63% to $70 million, and net profit margin expanded close to 300 basis points to 9.8%. This is operating leverage at work, supported by tight cost management. A very strong top-line momentum converted into a significantly stronger bottom line. Capital expenditure was $27.6 million in the quarter, or 3.9% of revenue. Focused on restaurant expansion and technology investments that will support the next phase of growth. We closed the quarter with 2,769 restaurants. We added 32 gross new restaurants in Q3, and 101 restaurants are currently under construction, giving us good visibility of the pipeline for the balance of the year. Stepping back to the first nine months, the momentum is sustained, and the numbers speak for themselves. For the first time ever, we crossed $2 billion in revenue in the first nine months. Strong underlying growth, continued expansion, and meaningful margin improvement.
Revenue grew 12.9% to $2.08 billion, with like-for-like growth of 7%. Our customers keep coming back, supported by strong brand propositions and a network that keeps getting bigger. Once again, profit grew well ahead of revenue. EBITDA increased 26% to $522 million, with margin up 262 basis points to 25.1%. Net profit rose 60.4% to $217 million, and net profit margin expanded 310 basis points to 10.5%. Scale and efficiency are compounding, and you can see it clearly in our year-to-date earnings. Gross CapEx was $95 million, or 4.6% of revenue. That covers both organic and inorganic growth, new openings, projects under construction, and the acquisition of Malak Al Tawouk UAE and Saudi Arabia. Over the last 12 months, we added 167 gross new restaurants and 112 on a net basis, taking the portfolio to 2,769 restaurants.
Let me take you a little bit deeper into how we are scaling the network. As I mentioned earlier, over the last 12 months, we added 167 gross new restaurants, 126 of these across our power brands, 31 across growth and niche brands, and 10 Malak Al Tawouk restaurants through acquisition. We closed 55 restaurants over the same period, taking the net addition to 112 and the portfolio to 2,769. The majority of those closures were intentional. We exited locations that did not meet our performance and return thresholds because a stronger network matters more to us than a bigger number. Our pipeline gives us strong visibility with 101 restaurants under construction, 31 more secured sites, and an additional 26 sites that are approved for expansion. As in previous years, our openings are naturally weighted towards the fourth quarter as projects under construction move to completion before year-end.
Based on this pipeline and after-plan closures, we are confident in delivering 120 - 130 net new restaurants in 2026, which is consistent with the guidance we provided earlier in the year. Our approach does not change. Expand selectively, prioritize the right brands and markets and locations, and keep improving the quality of the portfolio. With that, I will hand over to Rahul to take you through the financials.
Thank you, Amar, and good day, everyone. Let me take you through our financial performance for the third quarter and the first nine months of 2026. For the first nine months, revenue grew by 12.9% to $2.08 billion, driven by strong like-for-like sales growth and continued network expansion. Like-for-like sales growth of 7% contributed $128 million, supported by value-led innovation, effective campaigns, and continued operational improvements. New restaurant openings further contributed $114 million, while favorable foreign exchange movements added $7 million, partly offset by $12 million from closures and other movements. Turning to revenue mix, growth was broad-based, with our power brands contributing 93% of revenue. Importantly, 82% of the revenue continues to be in stable pegged currencies. Home delivery contributed 52% of revenue, which was broadly consistent with the first half of the year.
Turning to the third quarter, revenue grew by 14.4% to $712 million, with like-for-like growth accelerating to 8.6%. Growth was broad-based across all our power brands and across all our key markets. KFC delivered 15.8% revenue growth, supported by successful value-led menu innovation and strong customer engagement. Hardee's grew 12.1%, benefiting from premium menu innovation, including our new high-protein Power Wrap. Pizza Hut grew by 7.6%, with performance improving as customer traffic in the UAE normalized following softness in the first half. Krispy Kreme delivered 11% growth, supported by successful product and marketing collaborations. Importantly, we also delivered double-digit revenue growth across all of our four major markets, UAE, Saudi, Kuwait, and Egypt. Looking at the nine-month performance, growth remained broad-based across our portfolio. KFC grew 13.7%, Hardee's 13.3%, Pizza Hut 5.5%, and Krispy Kreme 10.5%.
Across all the major markets, revenue grew 9.9% in UAE, 9.2% in Saudi, 16.6% in Kuwait, and 19.3% in Egypt. The breadth of growth across brands and markets reinforces the strength of our operating platform and consistency of our execution. I would now turn to profitability. We delivered another strong quarter of very strong operating leverage. The four-wall EBITDA grew 17.4%, $214 million, with the margin expanding to 30%. Total EBITDA grew significantly faster, increasing 24.8% to $174 million, with margin expanding 200 basis points to 24.4%. Net profit increased 63% to $70 million, with the net profit margin expanding to 9.8%.
This performance reflects gross profit margin expansion, which we have taken through targeted pricing and also menu innovation, which has helped offset the inflationary cost environment, as well as is reflective of the effective operating leverage as we have managed our fixed costs in a disciplined manner, and we have delivered on several productivity initiatives. We continue to translate our strong top-line growth into even faster earnings growth. Turning to profitability metrics for the first nine months, this operating leverage is even more evident. Four-wall EBITDA grew 21.7% to $646 million, with margin expanding 220 basis points to 31.1%. Total EBITDA increased 26% to $522 million, with margin expanding 262 basis points to 25.1%. Net margin grew 60.4% to an all-time high of $217 million, with the net profit margin expanding by 310 basis points to 10.5%.
This reflects the combined healthy impact of revenue growth, improving unit economics, and disciplined cost management. Given the strong performance, we are raising our full-year 2026 net profit margin expansion guidance to 150-175 basis points as compared to our previous guidance of 100-150 basis points. We remain focused on sustaining profitable growth as we expand our network. On cost of inventories, we continue to benefit from disciplined procurement, effective pricing, and menu innovation. For the first nine months, cost of inventories as a percentage of revenue improved by 130 basis points year on year. In the third quarter, the improvement was 30 basis points, despite the continued inflationary pressures on certain food inputs. Our ability to manage these pressures through effective procurement efficiencies, measured pricing, and margin-accretive menu innovations remains an important contributor to profitability.
Turning to working capital and capital expenditure, our business continues to benefit from a structurally negative working capital model, supporting strong cash generation as we grow. As at the end of September, net working capital stood at - $254 million, compared with - $199 million a year ago, improving from - 8.2% to - 9.3% based on the trailing 12 months revenue. Moving to capital expenditure, we invested $95 million in the first nine months, compared with $78 million in the previous year, primarily supporting our continued restaurant network expansion.
Importantly, capital deployment remained disciplined at 4.6% of revenue, compared with 4.2% last year. To conclude, our strong performance reflects the resilience of our business model, the strength of our brands, and the continued focus on operational excellence. We remain committed to sustaining profitable growth, generating strong cash flows, and delivering long-term value for our shareholders. With that, I hand back to Amar. Thank you.
Thank you, Rahul. Before we turn to the outlook, I want to spend a few minutes on digital, because this is fast becoming one of the most important engines in our business. Over the past few weeks, many of you have asked us about our digital platform at conferences and in investor meetings. Last year, we spoke about our investment in self-ordering kiosks and our plan to make loyalty a core pillar of customer engagement, powered by our customer data platform. Today, I want to show you what that investment is delivering. 66% of our transactions are now digital, and this is up from 48% only two years ago in 2024. Our digital platform is fully owned and operating at scale across all our countries and brands. Kiosks are now in more than 1,300 restaurants, compared with just over 500 in September 2024.
They shorten queues, lift crew productivity, and drive higher average order values through personalized upsells. Kiosks are also becoming an important source of customer data. Every kiosk order gives us an opportunity to capture what customers buy, when, and where. As we enable loyalty on kiosks, we will be able to identify in-store customers. This feeds directly into our customer data platform, giving us a more complete view of our customers across various channels. Our loyalty program is now live across five brands, and loyalty transactions reached more than 19 million in the first nine months of 2026, up 47% year on year. Enablement on kiosks is in progress, which will allow customers to earn points as part of our on-premise growth strategy. CDP gives us one view of the customer across brands and channels, and it is driving a personalized experience across all our digital assets.
Our digital ecosystem does not stop at the order. It goes all the way to the customer's door. Delivery is a critical channel for us, and the last mile defines speed, service quality, and the overall experience. This is why we manage a significant part of it ourselves. Outside of Saudi Arabia, delivery orders in most of our markets are fulfilled by an Americana managed fleet. That gives us control over the experience, and it creates room to drive productivity as well as cost efficiency. Our fleet delivered more than 38 million orders in the first nine months of 2026. This is an increase of 14% year on year. We expect to complete more than 1 million zero-emission deliveries this year, up 50% over 2025. 83% of deliveries now arrive within 30 minutes of ordering.
Following integration, Malak Al Tawouk orders are now fulfilled by the Americana fleet, and this is another proof point of how quickly we extend our capabilities to acquired brands and capture the benefits by bolting them on to Americana's value chain. To sum up, our digital platform is operating at scale and delivering measurable results. Kiosks, loyalty, and the customer data platform are deepening customer relationships and also driving higher order values. Our own delivery fleet gives us control over speed, service, and cost. These are capabilities that are hard to replicate, and they give Americana a scalable foundation for growth, including for every brand we bring into the portfolio. With that, let me turn to our outlook for 2026. Given the first nine months, we are reaffirming our revenue and restaurant expansion guidance, and we are raising our net profit margin, as Rahul had mentioned earlier.
On revenue, we continue to expect strong mid-single-digit like-for-like growth for 2026, driven by a compelling value, locally relevant innovation, and targeted campaigns. On expansion, we remain on track to add 120 - 130 net new restaurants in 2026, including new brands. The pipeline is strong, and our focus for the rest of the year is converting it into openings without compromising long-term restaurant economics. On digital, what you heard today shows the progress we have made in building a fully owned platform across customer data, loyalty, personalization, and self-ordering kiosks. We will keep evolving toward a loyalty-led ecosystem, with loyalty as a core pillar of customer engagement, and use our proprietary customer stack of CDP, CRM, and personalization to drive more relevant interactions, higher frequency, and incremental transactions. On profitability, our performance year to date gives us greater confidence in the full year.
We continue to expect expansion in gross profit margin, EBITDA margin, and net profit margin versus 2025. Therefore, we are raising our net profit margin expansion guidance to 150 - 175 basis points, up from 100 - 150 basis points previously. This reflects the sustained benefit of operating leverage and disciplined execution while fully accounting for the input cost pressures we continue to see, including transportation and insurance. On category expansion, we are building on the momentum in our newer platforms. At Malak Al Tawouk, we will keep expanding in the UAE and Saudi Arabia and progress the launch in Kuwait. For Taco Bell, our near-term focus is securing the right launch locations and building the supply chain infrastructure for a disciplined entry into the UAE. On cost efficiencies, we remain focused on offsetting input cost pressures and raising productivity.
We will keep driving inventory savings through menu optimization and supplier negotiations, leveraging Americana's scale. Furthermore, we will leverage the scale of our portfolio and the expanding use of AI across selected processes to streamline G&A. This protects our margins and creates capacity to keep investing in growth. Following the integration, Malak Al Tawouk. As we conclude, let me be clear about what the first nine months of 2026 tell us. Record revenue, crossing $2 billion in just nine months for the first time ever, and momentum that keeps on building. It is important to highlight that this performance is structural and not temporary. It rests on a playbook that works. Compelling value, locally relevant innovation, operational discipline that is underpinned by responsible capital deployment as well as cost efficiency. Second, we are investing for the future.
A growing network, a scale digital and loyalty ecosystem, our own delivery fleet, and new growth platforms in Malak Al Tawouk and Taco Bell. Each one widens the runway. For more than six decades, Americana has grown through every cycle. This year, we are proving once again that our foundation has never been stronger. We enter the final quarter with real momentum and complete conviction. As I have said before, the best years of Americana are ahead of us. Thank you all for joining us today. We are happy to take your questions.
Thank you. We will now move to the question and answer section. If you would like to ask a question, please press star two on your phone and wait to be prompted. If you are dialing by the web, you can also request to ask a voice question. Our first voice question comes from Abdullah Al-Buainain from Emirates NBD. Abdullah, your line is now open. Please go ahead.
Hello, am I audible?
Yes, you are. Please go ahead.
Yeah. Thank you very much. This is Abdullah Al-Buainain from Emirates NBD Capital. Congrats on the very great results and on the great presentation. My question is regarding the cost of inventory. As we have seen, the cost of inventory has bottomed in Q4 last year at 27.1%, and since then it has been increasing to reach 28.2%, which is only 1% lower year-over-year. I would not ask about how that will look like in the fourth quarter, given the guidance is already given. What I know for sure is that you already go into the contract with main suppliers and vendors in the fourth quarter of the year for the next year. So how risky would that be on the upcoming year in terms of a spike in cost of inventory and its impact on margin? That is the first.
Thanks for your question. Would you like us to answer this, or would you like to enumerate all your questions, and then we can take them together?
As you prefer.
All right. We will take the question that you asked on the cost of inventory. As you rightly said, we are currently going through the tendering process or the RFP process for our contracts for next year for each of the major food commodities. What we are seeing is that the inflationary environment does continue. There are certain, in fact, food categories where this is more acute than others. Beef prices have gone up in the last couple of years and continue to do so. Cooking oil is going up. For most of the other categories, we find that with our procurement strategy, which is continued diversification and looking for, of course, the best supplier base around the world, we are largely able to maintain costs in line with this year. This is, of course, an initial view.
We are currently still going through our planning process. At this point of time, we think that we would be able to, or we are planning to be able to offset the impact of the higher commodity prices, higher input costs with our pricing measures.
Okay. If you can elaborate on how would you do that? Would you do a blanket price increase, higher dynamic pricing, or menu engineering?
We are planning very targeted measures, so it would be a combination of everything that you mentioned. The details of this, we would be able to share along with the full year results, and it is too early in the year for us to enlist those.
Abdullah, we never take blanket price increases, right? We have a very strong revenue management team of data scientists and analysts, and we look at elasticity, and it is always very targeted. We also continuously look at the menu, right? Innovations, optimizations. We look at, it is a barbell strategy. So we have value, we have core, and when we do premium LTOs, we can price them higher. So we have many, I would say, tools in our toolbox in order to offset any increase in the commodities. So it is not just pricing alone. It is a lot of other tools that we have.
Great. Very informative. Okay. I would like to ask you about the impact, if it is material for the increase in tariff of utilities, electricity, water in Saudi and other regions, and the increase of the minimum Saudi wage to be included in the Saudization. Is the impact meaningful or is it less than 1%? My third and last question is the LFL in UAE. It has bottomed in the second quarter, given the situation that is happening, and it improved a bit in the third quarter, but it is still underperforming the usual UAE like for like. How do you see that going into the fourth quarter, given that the situation has normalized a little bit on the other parts of the region? UAE is one of the
So thank you, Abdullah. I will answer the question on Saudi and then Amar and Rahul can pick up on UAE. As you are aware, on Saudi, the regulation change on minimum wage is SAR 5,000 for this year, then it goes to SAR 6,000. The impact of the SAR 5,000 is not very significant, but yes, the impact of it going to SAR 6,000 next year would be. As we go through our budgets as well as our P&L for next year, we do not see that to have a material impact on the margins because we also look at revenues and opportunities how we can optimize cost. But yes, it will be an impact on the P&L, especially the SAR 6,000. The other question on utilities and other costs, that we do not see it to have any major impact on the P&L.
We are growing our top line in Saudi and we are gaining shares. We will continue to do that. With the leverage on the P&L, we should be able to navigate through some of the higher costs coming in from utilities and others.
Abdullah, on your question on UAE, yes, you are right. Q3 was a bit flattish in UAE, but that was also because of the conflict and holidays, right? People took the opportunity to leave the country. However, October is looking very strong for us. Most importantly, the transaction growth is very healthy in UAE.
Thank you very much. Very informative. Best wishes. Thank you.
Thank you. Thank you very much. We are now moving to the next voice question that comes from Rafae Mehboob from Axior. Please go ahead. Your line is now open. Rafae, please go ahead. Rafae, you are audible. Please go ahead with your question. [Non-English content] Let's move on to the next question from Nishit Lakhotia from SICO Bank. Nishit, please go ahead. Your line is now open.
Yes. Hi. Am I audible?
Yes, you are. Please go ahead.
Yes. Thanks for the opportunity and congrats on a fantastic quarter. I have a couple of questions. First, on the recent Fazza partnership that Americana has done in UAE. How do you see that affecting your margins? Because the promotional discounts are going to be quite significant, at least for the new members within Fazza. How do we look at that for your UAE part of business, and would that be anything material either ways? If you would like to share, that would be helpful.
Second question is on the current Saudi operations. Third quarter looked pretty strong. There was acceleration in Saudi, and I also see Pizza Hut also improving. Is that within Saudi Arabia, that Pizza Hut has also improved and accelerated the overall revenues? What is working there within Saudi? Maybe Harsh wants to elaborate a bit more on that. That is the second question. Third, on the capping of aggregator commission in Kuwait, would Americana benefit or you were already below that cap, so the benefit is not really there for your distribution on this? Thank you. That is it for now.
Okay. Hi, Nishit. I will take the question on the margin impact of the Fazza partnership, and then I will pass it to Harsh for the other two questions. We do not expect the impact to be material. We do have funds earmarked for customer acquisition through various channels, for example even for our own app. Some of those funds are now planned for the Fazza partnership customer acquisition. This should not result in a material impact on the overall financial performance.
Thank you, Rahul. Nishit, on your second question on Saudi. Saudi across brands, Q3 was a strong quarter for us, and we see that momentum continuing. KFC is doing slightly better than other brands, very closely followed by Hardee's. Pizza Hut, compared to other brands in Saudi, is not doing same LFL numbers, but still overall business continues to be strong.
On your third question, which is specifically related to Kuwait. Yes, there has been an impact on the CapEx of commissions, which also includes the marketing investments and all other investments. We are below those thresholds, but still we feel it will benefit us because a lot of smaller players who are above those thresholds will not be able to spend as much money on marketing, which gives us the leverage in terms of visibility and other things. Net-net, we believe that regulation per se should positively benefit our business in Kuwait.
Okay, and just a follow-up, Harsh, on the Saudi part. Are you seeing any logistical challenges in last one month given the conflict in getting the material supplies or that is just business as usual?
There were some challenges in the first few weeks, especially the stuff coming in through the Yemen coast or the Bab el-Mandeb, whatever you call it. But it has regularized since then. I would say the business overall has been somewhat impacted only in few areas like Jizan, Najran, and Abha, but overall, the demand outside of these regions continues to be robust. We are not seeing any demand impact for that. In fact, given schools are work from home in some weeks, that also overall impacts the business positively.
Okay, got it. Thank you so much.
Thank you. Thank you very much. Our next voice question comes from Rashad Kawan from Morgan Stanley. Rashad, please go ahead. Your line is now open.
Hey, Amar and team. Congrats on another set of fantastic results and another quarter of bucking the trend. Just a couple from me, please. One on Q4, and then one into next year. First one, I guess at the top end of your guide, so the 175 basis points of profit margin expansion year-over-year, I think that effectively implies that net profit in Q4 will be down somewhere in the kind of high single-digit range. Given the resiliency we've seen in the business so far this year, both on the top line but also gross margin onwards, would you say there's a bit of conservatism still built into that guide despite the multiple upgrades through the year and obviously the supply chain-related cost headwinds that you've talked about? That's the first question.
The second one, kind of piggybacking off of the first question that was asked around margins into next year, maybe I'll ask it a bit differently and more broadly. Your EBITDA margins are up 260 basis points plus year to date, first nine months. I guess, naturally the question is whether you think there's still scope for further margin expansion into next year. If you can kind of tease that out in terms of where you see scope for further operating leverage across the different segments, that would be great. Obviously, appreciate it's still early at this point in the year, but any kind of perspectives around that will be helpful. Thanks, guys.
Hi, Rashad. It is always good to hear from you. I am going to turn it over to Rahul to address your question, at least the first one.
Hi, Rashad. Rashad, if you look at the profitability performance with a view of 2025 as well, you would see that our profitability significantly increased in the second half of the year, and especially in Q4. In Q4 of last year, we also had some one-off benefits coming from tax litigation closures, and that creates a very high base comparable for Q4 this year. What we are guiding in terms of the full-year outlook, and therefore Q4, is that we do expect Q4 this year to be broadly in line in terms of profitability vis-à-vis Q3 of this year. If you model that, the full year, then, is in the range of about 150-175 as we have guided.
Understood.
Rashad, on outlook for next year, we are in our planning phase AOP for 2027. Obviously, our plan and our target and our ambition is to grow revenue, grow EBITDA, and grow net profit. We will be able to provide more color and probably more guidance on that on the full year earnings call. By then, we would have better visibility on our contracts, procurement, et cetera, for next year.
Okay. No, that is helpful. If I can squeeze one more in, Amar, on the digital platform and data. I think the data that you presented was very impressive, and I had not appreciated that kiosks are in almost half your stores now. You alluded a little bit to the customer data that you are probably collecting and aggregating and slicing and dicing. Can you tease out what you can do with the data? Or maybe what you have been doing so far around maybe improving innovation, or pricing, or targeting, or kind of the benefits that should accrue over time with the more data that you are gathering?
Sure. I am going to hand it over to Ashish. He is our Chief Information Officer who is building all this for us.
Rashad. Hi, Rashad. What I would say here is, we have started on this journey about two years back. We have started unifying the overall data that we have. A lot of effort has gone in in building these pipelines of connecting our data pipelines to all the source platforms we have and identifying what all customers do. I would say at this stage, we are able to identify the customers, understand what they are doing, and what behaviors they demonstrate.
Now, objective is to use this data to drive a lot of personalization, do a lot of CRM activities, do a lot of promotional activities as well. We have started some of these already. We are seeing positive returns on these investments. At this stage, it would be difficult to exactly elaborate on what the percentages are, but we will be able to throw more light in future on these initiatives. One of the things that also these customer data platforms are driving are on loyalty. We are able to drive loyalty instead of doing a spray and pray approach, we are trying to do things which are more personalized for the customer.
Makes sense. Thanks, Ashish. Thank you very much, guys, and congrats again.
Thanks, Rashad.
Thank you. Thank you very much. Our next question comes from Aaron Armstrong from Ashmore Group. Aaron, please go ahead. Your line is now open.
Yes. Hi, thank you very much for taking my question, and congratulations on another very strong quarter of results. Just two questions from me, please. One would be, if we look back over the last three or four quarters, there's been a clear change in terms of the quality of the execution, and the financial performance has been exceptionally strong over the last three or four quarters. It would be great to get your sense, looking back over this period, of what specifically has changed at the company. Ever since IPO, we've spoken about what you focus on in terms of your power brands, innovation, staying relevant to local markets, and all those things. But has anything specifically changed that's driven this period of exceptional performance over the last 12 months? That's the first question. Then secondly, obviously margins have been expanding.
The four-wall EBITDA margin numbers that you publish have been very positive, and so the unit economics at the restaurant level are stronger than they were, say, 12 months ago or a couple of years ago. Does that mean that now is the right time to accelerate the store rollout meaningfully? So when we think about the number of store adds in 2027, 2028, and so on, given that the ROI of those investments is now much higher, this is the time to really press the accelerator.
Hi, Aaron. The first question on, this is the fourth consecutive quarter with strong performance. I believe your question is what has structurally changed? I would say there are two main drivers. One big structural change is on the marketing and innovation side. There's a lot more focus on innovation, collaborating with the brand principals, but also we have built very strong in-house team on culinary and innovation and commercialization. There's a lot of background noise. If, Aaron, you can mute yourself while I'm responding to you. Whoever is typing is. One is a lot more focus on innovation, very strong capability in-house, collaboration with the brand principals both on value and premium innovations. Local relevance is the other piece. A lot of collaborations across the various markets with strong local brands that are relevant and promotions that are culturally relevant.
The third is we went from a homogenized marketing calendar across the region to country-by-country calendars. This is a structural change. Very specific. In the past or up until last year, it used to be a single brush stroke across all countries. That changed completely, and now we run country-by-country marketing calendars. The other big change is on media efficiency. About a year ago, we did a global RFP on media, and today, we are pleased to say that we have doubled the media for the same money. We didn't cut back on the spend, but we have doubled the media. You will see a lot of exposure for our brands. When you're driving value, you're driving innovation, local relevance, and the comms are right, and then you have double media on top of that is the major structural change.
Your second piece on. I would say also the other piece that is helping us is our platform is very resilient and very agile. During the geopolitical, I would say, chaos that is going on in the region and something that disrupted supply chains across the world, our teams have been able to manage this because of our presence across countries and mobilization of alternative transportation, alternative ports, inter-country movement of products. We've been able to supply all the products to our restaurants despite everything that is going on around us. Those are the two big things that are allowing us to steal share. The second thing on the store rollout, can we increase that or accelerate that next year? Yes. We are evaluating that and we are building a pipeline.
We would be able to provide more color in terms of numbers on what the guidance would be for next year when we do the full year earnings call.
Amar, can you hear me now?
Yeah, we can hear you, Aaron. Yep.
Thanks. I just wondered if there was a change in terms of decision-making that is, say, closely tied to what the global brand owners want to do in terms of, say, marketing and their approach to innovation versus your responsibility or the autonomy that you have. Was there a structural shift there? Was there a change in agreement or I think maybe in media purchasing, there have been some changes? Just kind of what was the catalyst behind these changes over the last 12 months?
Yeah. So at NTS, there was a change. I cannot go into a lot of detail because these are discussions that impact, I would say, there are implications for the brand principals. But yeah, there is a lot more onus and responsibility that sits with Americana when it comes to driving innovation and media buying.
Great. Thank you.
Okay. Thank you. Thank you very much. Given we are shortly running out of time, please limit your questions to one, two questions. Our next voice question comes from Taher Safieddine from JP Morgan.
Yeah. Thanks. Taher, go ahead, please.
Yeah. Good afternoon, gents. Yes, hi. How are you? Again, congrats on a very solid set of numbers. Always good to hear from you guys. Maybe two questions from my side. The first one is just on the platform in terms of margins. We spend so much time maybe talking about cost of inventory, but I think what goes underappreciated is really the operating leverage strength within the business. If I look at cost of inventory, it is only maybe 27%, 28% of the sales, but clearly operating leverage is something quite significant. So I just maybe want to understand high level. Is it fair to assume that there is still room to generate or to extract operating leverage benefits for the business? Assuming that you go into next year and you are able to grow the top line, it is fair to assume that operating leverage benefits will continue.
So maybe if you can just maybe elaborate on that in terms of where do you see the opportunities in terms of the costs. I know that a big portion of your costs are maybe fixed. So if you can just share some color on that would be super helpful. So that would be my first question. And the second question is really on the Taco Bell and Malak Al Tawouk. You said these are the two growth engines. Is it fair to assume that, given you have a network of 2,800 stores, it is going to take a lot of time for something to move the needle in terms of a new brand. But maybe that being said, you are talking about Arabic QSR and Mexican QSR, which are quite significant categories. How should we think about the store opportunity for these two, in terms of two new brands?
How big can these two grow? And maybe if you want to elaborate on further expanding the Arabic QSR, are there any updates on that front in terms of expanding the categories? That would be super helpful. Thank you.
Taher, thanks for asking a very good question. We expect that from you. And by the way, we were not pushing you to the back of the line. I saw your hand up first.
Okay.
We've always said our number one priority is to do more revenue out of the same box, which is to grow LFL. And yes, to your point, that is what creates efficiency to the middle of the P&L. And that happens across the line, across all fixed costs, right? Whether it's rent, because most of our leases are based on fixed rent, right? So those ratios, labor is another one, a lot of efficiency that we are driving by automation in the restaurants, right? The kiosks are driving efficiency. G&A, with leveraging AI, improving our processes. So pretty much we look at every line item. We're introducing IoT for utilities, that brings down the utility cost. So yes, with top-line growth, there is definitely a lot more opportunity in the middle of the P&L. Yes, we spend too much time talking about gross margins.
Whereas there's a lot of other stuff that is in the middle of the P&L that we need to focus on. I'm not saying not talk about gross margins, but that's not the only lever. Gross margins can be offset by your menu, your pricing, right? There are a lot of levers we have for that to manage that as well. And hopefully that answers the first question on Taco Bell and Malak Al Tawouk. Pujeet, who also heads up business development, is eager to answer that question.
Thank you. Thank you, Amar, and thanks, Taher, for this question. I think just to, let's say before I go to exact capital deployment, right, one more component of your first question on fixed leverage is definitely depreciation and amortization. Now, because of our judicious capital deployment, that is also in control. Now, let's say as you said, right, we don't give too much credits to that. Having said that, are we happy with the current 120, 130 net stores that we are opening? Definitely not. That is why we keep on, let's say, expanding into new growth vectors like ADNOC, like Malak Al Tawouk, which we have now onboarded. Taco Bell is now onboarded. So these definitely are stepping stones to go back to that levels of 250 to 300 net store openings. Are we there yet? No, maybe not.
There is a lot more room to reach there. But we always aspire to go towards that, and these building blocks will definitely help us to reach there.
Okay. Clear. And maybe just, sorry, a follow-up. I don't want to hijack the call, but given how strong the balance sheet is and the free cash flow generation, maybe this is for Amar. Do you run the risk that one year down the line, clearly you're not maybe spending enough potentially, your dividend has been quite generous last year judging by the payouts. So I just maybe want to hear your thoughts on a big geographic expansion where you take the view that you have enough brands. Clearly, there are no major big targets, maybe in the region that you operate in, and then you move geographically into a new region. Is that something that you could consider moving forward or the focus today is just only on category expansion?
So Taher, I'll take you back to the four pillars of our growth strategy, right? Number one is LFL, number one priority, more volume out of the same box. Number two is penetration, and that's core brand penetration. Still, we see a lot of runway for KFC, Hardee's, Pizza Hut, and selective growth for Krispy Kreme, right? Number three is category expansion. That's where we've added Arabic and Mexican QSR. Number four is geographic expansion.
And we've always maintained the position that if we go outside the current 12 countries of operations, then it would have to be with a brand that we already know, right, a power brand. And those opportunities we are continuously evaluating, and if the right opportunity comes along, which is both a strategic and a commercial fit, then everybody knows we have a very strong balance sheet. We have no debt. We have a fair amount of cash. We are prepared for that.
Okay. Super clear. Thank you, and congrats again.
Thanks, Taher. I think we can take two more questions. I see Sultan and Evgenii. Let's take those and then wrap up the call.
Okay. Our next voice question comes from Evgenii Annenkov from Jefferies. Evgenii, please go ahead. Your line is now open.
Thank you. Hi, team, and congratulations on the stellar results, actually. I think some of my questions were answered already. If I may, one. In case you have done any studies recently, can you please share some color on how your market share evolves across key categories? Or maybe in case you have looked at QSR penetration to category to illustrate that Mexican-inspired cuisine would have much lower penetration than chicken or pizza. Some broader question, please.
See Evgenii, there's no published data on market share because most of the brands don't contribute to any study. Anecdotally, we know Mexican is underrepresented in the region. It's a nascent category, but in U.A.E., it is one of the fastest-growing categories. So that's the reason why we are focusing on U.A.E. to launch the brand here, build a solid footprint here before we take it to other countries.
Okay. No worries. That's helpful. Thank you so much, Amar. Thank you.
Yeah.
Thank you. Thank you very much. And our last question comes from Sultan Al-Shaalan from Jadwa Investment. Sultan, please go ahead. Your line is now open.
Yes. Hi. Thank you for the call and congratulations on the solid results. Just one question from my end. How do you see regulatory changes impacting the performance going forward, such as the latest announcement in Saudi related to the tariffs of water, electricity, in addition to the changes to the minimum wage? If there are any other things happening across your markets, if you can quantify the impact, that would be very helpful.
Thank you, Sultan. On your question on Saudi, yes, there are regulatory changes, but that is not new for this year. Every year, there are changes which happen on the regulatory front. While there will be some impact on the minimum wages for Saudi, we do not believe that would be material to change the margin profile of the business. We will navigate through that while we go through our budgeting cycle for next year. There are other changes. Some are related to how we can do advertising. Some of the geographies are considering restricting the outdoor advertising for some of the QSR brands. But as I said, some of these are in place, some of these are evolving. But there is nothing which we believe would change the underlying nature of the business or have a significant impact on the business.
Very clear. Thank you, Harsh. Appreciate it.
Okay. Thank you. Thank you very much. As we have no further questions from the audience, I would like to pass the line back to Pujeet for his closing remarks.
Thanks, Rahul Mathur. Thank you everyone for joining today's call and for your continued interest in Americana Restaurants. We hope the discussions gave you a clear view of our third quarter and nine-month performance and our priorities for the rest of the year. We appreciate your time, your engagement, and your continued trust you place in our business and long-term strategy. I would also like to encourage you to download the Americana Restaurants IR application, where you can access our disclosures, financial results, and presentations and stay up to date with all our investor communications in one place. We look forward to continuing the dialogue with you in the months ahead. Thank you, and have a good day.