Ladies and gentlemen, good day, and welcome to the Westlife Foodworld Limited Q1 FY25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Chintan Jajal. Thank you, and over to you, sir.
Thanks, Kiran. Welcome, everyone, and thank you for joining us on Westlife Foodworld earnings conference call for the Q1 ended 30th June 2024. I am Chintan Jajal, lead IR at Westlife. From the management team, I have with me Mr. Amit Jatia, Chairperson; Ms. Smita Jatia, Vice Chairperson; Mr. Saurabh Kalra, Managing Director; Mr. Akshay Jatia, Executive Director; and Mr. Hrushit Shah, Chief Financial Officer. We will kick off today's presentation with Akshay sharing his thoughts on overall business progress and outlook.
This will be followed by Saurabh taking us through operational, financial, and strategic highlights. Before that, we can open the forum for question and answer. We will be referring to earnings presentation and financial details available on the BSE, NSE, and investors page of our website. I also request you to please go through the safe harbor disclosure in our earnings presentation. With that, I now request Akshay to commence this session. Thank you, and over to you, Akshay.
Hello, and good afternoon, everyone. I extend a warm welcome for joining us today to review the performance of Westlife Foodworld for the Q1 of FY25. I'm very pleased to announce that our company has crossed a significant milestone of opening 400 McDonald's restaurants this quarter. We now proudly serve customers across 66 cities, and to further expand our market presence, we successfully opened six new restaurants this quarter. Aligned to our Vision 2027, we are targeting to open 450-500 to open 45-50 new stores in FY25, with a focus on South, smaller towns, and drive-through.
In response to the challenging current environment, a sustained focus on driving guest counts by leveraging the meals platform and value remain the cornerstone of our strategy, ensuring that our customers continue to see McDonald's as their go-to choice. By continuously refreshing our menu and introducing new offerings, we kept our customers engaged and excited about our brand. For instance, we launched the McFiesta range, which spiced up our iconic core burgers, McVeggie and McChicken, for the quarter. We also launched mango-flavored dessert, which received good customer response.
McCafe food items like cookies and brownies, which were piloted over the past few quarters, are now being extended across our entire network. We aim to achieve a 15%-18% contribution of McCafe to store AUV by 2027. Additionally, to connect with our Gen Z customers, we brought the anime world to life at McDonald's.
The initiative embodies our dedication to integrating our brand with popular culture, offering unique experiences that resonate with the relevant audiences. Consistent efforts towards strengthening our brand have yielded positive results. Our Real Food, Real Good platform, which was further bolstered with the launch of Ye Hai Mera McDonald's campaign, where we collaborated with the celebrity chef Sanjeev Kapoor. In this initiative, Chef Kapoor champions our commitment to maintaining impeccable food quality, hygiene, and safety standards in our restaurants. Our digital strategy continues to gain traction, driven by the increasing preference for our convenience among, amongst our customers. As a steadfast organization, we are continuously refining our operational efficiencies and focusing on improving our financial performance to further improve operating leverage.
As we navigate, we are not merely reacting, but proactively shaping our future by being committed to the strategic focus we laid down in Vision 2027, which remains firmly intact. Thank you once again for your trust and commitment to our journey. I will now pass it on to Saurabh to share the operational and financial specifics of the past quarter. Thank you.
Thank you, Akshay. Good evening, everyone. Thank you for joining us to discuss our Q1 results. Last quarter, we highlighted that after several consecutive quarters of declining out-of-home consumption, the March quarter was relatively stable on a sequential basis, but lower compared to the same period last year. I'm pleased to share that we are seeing seeing further improvement in the underlying demand trends. Within our frequency was higher sequentially and close to last year's levels.
As retail level inflation continues to moderate, coupled with higher income being generated, we believe the frequency consumption will improve gradually. Having said that, we will continue to monitor the market trends and drive marketing and execution initiatives accordingly. Now, turning to our performance in quarter one, our top line at INR 66.16 billion was a tad higher on a year-on-year basis. Same-store sales stood at -6.7% on a base of +7.4% of last year. If we adjust the current optimized business and same-store sales as being stable, which is a good sign of momentum. But that also suggests that there has been some pressure on on-premise business. If we further dissect on-premise business, we observe that the cohort of stores that are impacted by external community-related issues continues to drag the overall momentum.
These external issues are slightly prolonged compared to our initial expectations and estimates. However, we are still confident that these are transitory. If we shift our perspective, the quarter saw continuing improvement, with exit months being better. On a sequential basis, sales were about 10% higher year 64, in line with seasonality and some contribution from new stores. During the quarter, we continued to build on our value platform to drive incremental footfall. Product innovation continued with the launch of new entry-level Chicken Surprise Burger, which we believe is an open area for us. We believe that this will help us accelerate and differentiate the value platform and our value offering in the coming quarters. Moving on to business channels, our off-premise business grew by 6% year-on-year, contributing 42% of the overall sales. On-premise business, however, declined by 3%.
Our average sales per store on a trailing twelve-month basis was at INR 61.3 million. Digital sales stood at 69%, with over 3 million monthly active users on our mobile app. My McDonald's Rewards continues to gain traction, and we expect this program to further accelerate our consumer journey and our consumer frequency. Profitability during the quarter was subdued, largely on account of unfavorable operating leverage and higher royalty. Having said that, gross margin in quarter one at 70.8% continued its upward trajectory. This despite our value platform play. This underscores the robustness of our business model in driving various value segments as well as our supply chain excellence. Restaurant operating margins and operating EBITDA were lower by around 400 bps YOY.
Other operating expenses were higher on account of elevated marketing spend, which will continue for next one or two more quarters. Depreciation normalized to 7.9% is likely to go down further with better volume. Cash PAT stood at INR 463 million, or 7.5% of sales. On network expansion, we added 60 restaurants in Q1. As of June 2024, the total restaurant count stood at 403 restaurants across 66 cities. 92% of these restaurants are profitable, and 6% are EOTF restaurants, and 20% have drive-through. Our network expansion plan remains unchanged. We will add 45-50 restaurants in FY 2025, reflecting our confidence in our in the structural growth and opportunity we see ahead. Finally, while the business environment remains tough, demand green shoots are emerging.
With robust value platform strategy and a pipeline of innovative products, we are optimistic of higher average daily volume in the H2 of the year. We remain committed to our Vision 2027 target. Thank you for your time. I now hand over the call to the moderator and open the forum for your questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. An operator will take your name and announce your turn in the question queue. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Yeah, hi, team. Good evening. Thanks for the opportunity. I have three sets of questions. Starting from the negative SSG, and now we have launched the entry-level burger. Do you think, this is enough for us to arrest the decline in SSG, or we need to do more activities, in terms of the localized promotions, and there is a need for further improvement in, new products?
Thank you, Shirish. To me, the first point is, as you would know and as you would look at our history, we've always believed that we want platforms to work. And I think we have launched our value meal EVM platform last year in June and further strengthened it in October of last year. Post that, when we looked at our situation, we saw that there was an opportunity for our, our value platform to be strong enough for snacking. And, the flavor plus platform, INR 69 for one plus one, is an endeavor in that direction.
And we believe that these platforms, along with our existing platforms, are good enough to drive not only short-term, but long-term sales. That's, that's how we've been looking at it. And then we believe that it's a part of the play which we've already committed to in Vision 2027. This includes being a leader in meals, snacking, through coffee, burgers, and chicken.
Hello? Hello?
Yeah, we can hear you.
Yeah. So that's helpful, Saurabh. Follow up to that, I think, our margins has been at the lowest. Now, if the value layer picks up, for example, you will be positive, say LFL or your same-store sales growth will improve. But does that mean that the margin, there are very limited levers at this point of time to improve from here?
So, Shirish, this is Akshay here. So from our point of view, as you've seen, we've consistently delivered an increase in both gross margin and EBITDA margin over the years. And the current, you know, drag in margin has typically come from operating deleverage, obviously, because of, you know, negative same-store sales. From our point of view, as we see average unit volume picking up, you will not only see margin grow, you will see it grow exponentially because of the operating leverage that will come in. And as we demonstrated, even if we deploy value platforms, we continue to, you know, increase margin by doing a few things. One of them being, you know, removing costs from the system, the second one being using product mix, mix effectively.
For example, you know, McCafe will only accelerate the momentum further as the coffee market is growing in our country, and we are very well positioned, both from a quality as well as a value point of view. And, number three, you know, in terms of taking pricing where required strategically. So I think that, you know, we are more concerned with driving average unit volume, which will increase operating leverage, and margins will only follow.
Thank you, Akshay. My last question on 403 stores, what we have now, and there are two parts. One is that out of the 6, how many drive-throughs we have open? And out of 403, what percentage of stores are now drive-through?
Around 20% are drive-through. So around 400, we have got around 82 drive-through in total, and we've opened one drive-through in the last quarter.
Okay. Now, the reason why I'm asking, with the overall SSG's decline, I'm sure you would be tracking the SSG in the drive-through. Is the out-of-home consumption, which was a challenge, is drive-through also seeing that similar trend?
Well, now, drive-through actually is a very small portion. While 20% drive-throughs are there, the ticket window sales has not been a substantial part, and therefore, we never reported it separately. However, to just let you know, we haven't seen any negative growth on drive-through.
Okay. Thank you, sir, and all the best to you.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Percy from IIFL. Please go ahead.
Hi, everyone. I'm just trying to understand the operating leverage in your business. So, since this is Q1, I'm looking for another normal Q1, where you were operating. So basically, FY 2024 Q1, we saw things going up, but now things have sort of moderated, either because there was some amount of event spending which has come down, or there is a general demand stagnant, et cetera. So I'm just dialing back to your Q1 FY 2020, okay? Now, on a per store basis, your sales is 20% higher than Q1 FY 2020, but your margins is still the same, exactly the same as Q1 FY 2020 currently. So why is it that we are not getting any operating leverage in this business?
The other way I can look at it is, if you want to look at something more, recent, then we can look at Q3 FY 2022, where the sales per store is actually a tad lower than what we have done, this quarter. But we had a margin of 16.6%, and now we have a margin of about 13%. So why is it—I can understand that negative same-store sales growth, et cetera, but ultimately, the sales per store, should correlate to, what kind of margins you are able to deliver.
So thank you, Percy. Essentially, when we talk about our costs obviously get created every year from that standpoint, because inflation always keeps up. 1-5 years, rent will increase. Every year there will be 2%-3% inflation on utility. So that keeps on changing. So to me, 2021, 2022 won't be the best representation. However, if you look at it, we've got 40 extra restaurants with 40 extra fixed costs. So if you were to remove that fixed cost, you will see that our unit economics is relatively been stable from last 2-3 years, if not more. So that's why you get the operating leverage or deleverage. If this average unit volume goes up further, you will see it coming down, it coming up dramatically, our profitability and multiples.
Yeah. So I understand that point, that there will be some inflation on a per store basis, but also you have many cost-saving programs being run. You have seen gross margins also go up in that period. So all these should more or less, if not completely, offset the inflation in the per store costs. Because, see, versus Q1 FY2020, it's 20% higher, so that's a 4% CAGR on a 5-year basis in your sales per store. So your costs, including your margin expansion on gross, plus your cost-saving initiatives, have also grown at a 4% on a CAGR basis over the last 5 years. That is what it means.
So I think I know really to the numbers which you are looking at right now, maybe we can look at it and come back to you. Because from our standpoint, except the COVID year, a couple of years where we had cut down on costs dramatically, we went back to our normal operating standard, which was there pre-2019 to 2022, and sales obviously commensurate along with it. We haven't changed our unit economics at all. So the numbers we can double-click on it and come back to you.
... Sure, sure. So if I just forget about the past and look ahead, let's say you are at INR 61 million right now. In the past, you have done INR 66 million, INR 67 million also. Let us say by FY 2027, you go to a INR 65 million-INR 67 million kind of number, but you also have another 50 basis points increase in your royalty in FY 2027. So this 8% margin on a pre-IndAS basis, which you have done, how much can it go up to? So let us say it is 7.5, with that 50% deducted from FY 2027 to make it comparable. So this 7.5 can go up by how much? 200, 300 basis points, if the sales goes up by, let's say, 10% on a sales per store?
Firstly, I will answer this in two in a very simple format. Obviously, you know, we used to have this number at 70, 60, 60% of EBITDA margin. Then we, our goal is to go towards 20s, 19, 20, is what we've spoken about in Vision 2027. I don't think structurally anything has changed for us, where we are not committed to that number. We are committed to that number. We see a very clear roadmap to it also. So maybe if we not get connected, maybe Chintan will help you a little bit more, if you want to have a deep dive on this one.
Okay, okay. So basically, you are saying you can see about 6-7 percentage points margin expansion on account of leverage from the top line. Just, I'll just connect offline on this, because in the past, we have not seen that leverage coming through to this extent. So anyways, I'll take this offline. Thank you very much. That's all from me.
Thank you, Patrick.
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.
Hey, sir. Hi, thanks for the opportunity. My question was, we have seen a sequential moderation in our SSG. So wanted to check if, this quarter per se, there was incremental impact of heatwaves, et cetera. And, going into Q2, we should see a relatively better sequential improvement?
Yeah. So, thanks for the question. What we maintained is that we expect H2 to be better, and Q3 to progressively get better as the years, sorry, as the years go by. Like Saurabh mentioned at the beginning of the call, we've further strengthened our value platform. We're continuing to grow our optimized business, and we're very confident that with this strategy and business model, H2 should be progressively better.
Got it. But, are you sort of satisfied with the footfalls at your stores in Q1? Or there were some impact due to extra heatwave this time around?
So obviously, we are absolutely not satisfied. We wouldn't call it our best performance for sure. There were significant amount of pressures on dining. While there was pressure in terms of consumption, climate, or whatever, whatever you want to call it, I can't quantify it. But we have spoken about that there is also a cohort of stores which was impacted and hasn't shown progress, which we expected to show progress by now. So for now, I will summarize it, and then we are yet to see the momentum coming back on that cohort of stores by this good value platform. And we believe we are setting up ourselves up for the H2 of this year to come back strong.
Got it. Saurabh, you also made a comment that your eating out frequency is now back to last year's levels. How should we read this comment? As in, does this in any way suggest that at least in volume terms we should see sort of flattish kind of SSD? Is this a right way to read this statement?
So, if you look at last year, last year we were hit by prices, and our October, November, December, average unit volume was actually quite low. From that, normally, October, November, December is the best months in QSR. So what we have, what we have been able to get is, we are far better than October, November, December, even now. So we believe that we will be able to setting ourselves up to recover quite strongly in the H2, and you will see sequential improvement for sure.
So what does it mean in SSG? That, that I can't comment right now, because, the last week, one week, has also been raining quite heavily in most of the parts of our operations. Cannot comment on the SSG, but what I can tell you is, we believe that we are putting a very strong foundation for a strong H2.
Got it. Last question from my end. Gross margins have improved sequentially. So wanted to understand, what are the drivers for this improvement, as we also launched a value chicken burger during the quarter. So if it will be helpful, if you could sort of call out the drivers of this improvement.
I will pass on the question to Hrushit, the CFO.
Yeah. So gross margin, predominantly, there is a strong governance framework that we have been able to establish in maintaining the margin, right? So that is value. What we have been able to establish is having is in terms of mitigating the entire inflation. What it also does is it builds the strength in terms of supporting the initiatives like the value driver initiatives that we have, 69 initiatives that we are launching, right? So all I can say is, there's a strong governance mechanism which has been put in place. The supply chain, it's a well-known supply chain mechanism which is running and which is contributing to the GM.
Okay, just to follow up, then, if you can call out the date of this launch, during Q1, when was this product specifically launched?
... So, we launched our value platform at the end of June, beginning of July. It's called the McSaver One Plus One, and like we mentioned in the commentary, we launched our entry-level chicken burger in June.
Okay, so this happened towards the quarter end, you are saying?
Correct.
Okay, got it. Thank you for taking my questions.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Avi Mehta from Macquarie. Please go ahead.
Hi, hi, Dean. I just had two questions. First, on the SSS growth, if you could just give us a sense on what was the SSS, if you were to, you know, remove the serious-
Your voice is very muffled, we can't hear you.
Sorry, is this better? Am I audible? Is this better now, Saurabh?
Yeah, all better.
Yeah. I just wanted to check, you know, if you were to remove the impact of these external issues, is there any sense on where the, what is the SSG growth momentum, like?
While I will not break it for you, Avi, all I can tell you is if I remove that, there is definitely green shoots both in terms of sequential and in terms of sales per square foot.
Okay. Okay, let me rephrase it. Is there a way for us to get some sense on June? Because you alluded towards a pickup, so what the FSS would be like in June. I'm just trying to get a better appreciation of what makes us optimistic about the green shoot, and quantify it to some extent.
We can't do the breakup in the call. Maybe we can read, and you can speak to them. You can-
Okay, okay. Just the second bit then, on the margin side, sort of, you know, would you believe now this, you know, this weakness has been slightly longer than what we had estimated? And while we have our FY 2027, or, you know, vision 2027 targets, FY 2025 could see flattish margins. Is that how I should see, given the Q1 commentary and given the weakness, and the pickup being more H2 driven? How, or how do you look at it? How do you believe we should look at this from a margin perspective?
So it will be around similar, is what my guess is. But, Avi, what is most important for us is, I remember similar times. It was COVID, and we had given the Vision 2022. We bounced back and, and, and we delivered the Vision 2022. To me, there is a foundational stuff which is already in place, and, and the platforms are already there. I think, we had to add a snacking value platform, which we have just added. So I don't see a big problem, as far as sales and profit from a long-term view, as far as the long-term view is concerned. This year, we will have to manage as it comes, and execute it strong. It is how we look at it.
Got it. Got it. I'll, I'll come back in the queue for the next question. Thank you very much.
Thank you. The next question is from the line of Priyank Chheda from Vallum Capital. Please go ahead.
Yeah, hi. Sir, sorry to hop again. There were two remarks that were made in the opening comments. One is the sequential recovery. While, what we can sense is there is a negative SSS, and the decline has further worsened. The sales per unit per store has also declined. So if you can just help us, what was the sequential recovery terminology related to when you alluded to? That is question number one. And two is, the external issues which you alluded to, right? Which is hurting your on-premise demand, why it's not hurting off-premise demand, right? Why the product remains same. I mean, how do we understand the two different behaviors on two different channels while for the same product? It will be great if you can help us clarify this issue.
So, so I'll take the first question, I'll ask Saurabh to take the second one. On the first one, what we clearly mentioned was that we saw the exit of the quarter being better than the first two months. And as Saurabh also mentioned, in terms of the steep decline we saw last October onwards, we're already doing better from a week-on-week perspective, and that's what we mean by sequential improvement.
Yeah. Second way to look at it also is, while we report the trailing twelve months, the trailing twelve months is not actually a reflection of sequential growth. Because when you are in crisis, your average unit volume or GCs can fall to a certain level. January month was worse than OMD, and then we recovered in a trailing basis. It, what we are calling sequential growth in that sense. Now, typically, when I look at it, there is always trends of recovery in post-COVID, it was dine-in which grew first.
Before COVID, it was delivery, which used to do more than dine-in. I think this is a first time of recovery as far as we are concerned. Because we've seen a healthy pickup in terms of the unit sales in the restaurant. Right now, it is driven by delivery. We foresee that it will, the dine-in will come. Hello, are you audible?
Yes, sir, you are audible. The next question is from the line of Krishnan Sambamoorthy from Nirmal Bang Institutional Equities. Please go ahead.
Yeah, hi. While there's been some stability in material costs, there's also been a sharp increase in vegetable costs, particularly onion and tomato in the last few months. Is this likely to hit your material cost line over the next couple of quarters? And if so, then is there a possibility of price increases going ahead?
So just quick comment on material costs. I think there is seasonality on some of the vegetables, which is every year. I don't think anything out of normal has happened this year. There was a little bit of crisis in terms of lettuce, which we managed quite well. We do not see any pressure as far as inflation is concerned. It was more around availability in the last quarter, but it's got through. I think our supply chain stood up quite strongly to it, and we do not foresee any major changes on account of vegetable costs in the P&L beyond what we have already done.
Okay. On AOV growth, you mentioned price growth as the third lever that you would like to use, right? Under what sort of scenario would you be looking at a price possibility for price increase in the current year?
So on that one, what we've always maintained is we do scientific price increases where required to ensure that, you know, we sustain the cost of doing business, without impacting, you know, customer inflow into our restaurants. So currently, as we always maintain, we take around 3%-5% price increase, and, usually we stay at the lower end. So, you know, that's what we anticipate in the coming year as well.
Got it. Thanks.
Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.
Yeah, hi, good evening. My first question is a clarification. You know, when you mentioned June is, has been better, are you also talking about that cohort where, which was impacted by externalities? Or is it only on the other cohort which has been largely demand-led?
That cohort for us, as expected, that it will become better. We haven't seen any much movement on that cohort of store. However, on the back of, like I said, value and snacking, we did see some green shoots emerging in the other cohorts.
Got it. Got it. Okay, understood. The second part is on the value offering side. So, do you assume that this is the first of a few things that you're going to do in this space? You know, you obviously did the chicken burger, you have the INR 69 value offer as well. Is it the first of few, or is it, this is, probably what it's going to be for the near term? The reason I ask is there is obviously a twofold impact, one on gross margins as well as on, probably on marketing spend as you push this, you know, as you push these offers, you know, forward. Just wanted to get your sense on how you're thinking about it from a slightly medium-term perspective.
Yeah. So to answer the question, you know, as we maintained, as Saurabh mentioned earlier in the call, we have always been a leader in value, and what we wanted to do currently was further strengthen our value platform. So we started with the extra value meals which we launched last year. We further strengthened this at the end of last year with a stronger proposition, and we more recently, like, Saurabh said, wanted to strengthen our proposition in snacking as leaders in the category. So we launched a, you know, entry-level chicken burger, as well as our, one-plus-one McSaver meals, which a McSaver , a snacking combo. Which, you know, is not new for us. In fact, we're kind of rehashing a similar concept that we've done in the past, and this will also strengthen our platform.
So in that sense, you know, we feel the platform for value is already very strong, and we offer value across multiple categories, whether it's coffee, whether it's chicken, whether it's these combinations. And, you know, as we also maintain, we do a lot to ensure that our gross margin allows us to improve operating margin through operating leverage, as well as through removing costs, as well as playing the product mix. So that's how we looked at the current situation.
Got it. Those are my two questions. Thank you.
Thank you. The next question is from the line of Gaurav Jugrani from Axis Capital. Please go ahead.
Thank you for the opportunity. My question is with regards to if you dissect the growth, between, the ticket size or the consumer footfall, which one, you think has, you know, faltered more? In terms of the average ticket size, if you can give a sense, you know, whether it's lagged, it's grown, or how things have moved, over the past quarter.
So Gaurav, as we've maintained, we don't break out these numbers, but, as, you know, you can see from our results, there's obviously been pressure in terms of customers entering our restaurants due to multiple reasons that, you know, we've spoken about already. And, you know, we continue to work on both bringing in customers as well as, you know, trading them up to improve our average unit average order value, sorry. And, you know, that's how we look at driving same-store sales growth.
Yeah, and just a follow-up to this, the question was in context, you know, if you look at the pizza category as such, that has kind of seen a sequential improvement on a QOQ basis. So is it because of the externalities that is impacting you more? Or, you know, is there some loss in the competition in terms of the category? What would be your sense on this?
So if you look at our tracks, I don't think we've lost market share amongst fast food players. In fact, if anything, we've been strong and we've been marginally gaining share within the category. Obviously, the results everybody is seeing, and some of the players have done well. But we do not look at it from that standpoint. How we would like to look at it is that from our standpoint, our AOV has to improve. Our AOV is anywhere almost double than any other competitor, so we need to continue moving the momentum on what are doing to play.
Okay, sure. And the second question is with regards to the margins again. You know, I do appreciate the fact that the negative leverage is kind of, even of, the margins for you. Otherwise, on the cost front, you have done a really good job. If you can also break out, you know, what is the elevated market spend impact during the quarter? Because, you know, you have been very frugal in terms of the cost and the other line items.
So as we always maintained, is roughly around 5% for the year, and we don't break it up, you know, quarter-over-quarter. But that is where we, you know, usually guide towards. But in this last quarter, there was an incremental marketing spend, roughly close to around 1%.
Okay. Thank you, Hrushit.
Thank you. The next question is from the line of Ritesh Vaidya from Motilal Oswal. Please go ahead.
Oh, hi, sir. Am I audible? Hello?
Yes.
Hello.
Yeah, but please go ahead.
Yeah, yeah. So my question is regarding our top line. So since our SSG is negative, our sales growth seems to be buoyed by new stores which have been opened in last 12 months. As a result of which, revenue per store of the new stores in the last 12 months exceeds the revenue per store of stores opened, you know, which are, which have a vintage more than a year. This has happened for the first time in the last two years. Can you tell us the reasons for the same, and are these stores in the same cluster, or are these the on-premise stores that is, you know, contributing to our growth?
If I understand your question right, you're asking whether our average unit volume of the new store is better than existing?
Yeah. Yeah.
No, it is similar, a little lower, which has always been the case. So, there is no, no difference. But obviously, we opened 40 S1, that caused a little bit of growth, which has happened with same-store sales growth being negative. So right now, at the growth level, some of the stores we sort of partly covered for that, but are they our system average? No, that's not the right assumption.
Okay. Okay, understood. That's all from my side.
Thank you. The next question is from the line of Nihal Mahesh Jham from Ambit. Please go ahead.
Hi, good evening. Am I audible?
Yes, yes, yeah.
Sir, two questions from my side. The first was on our chicken offering. Is it that we've taken the product, the bone-in chicken, now beyond South, or it still remains mainly towards the Southern region, and what are the plans ahead on that?
So, it remains in the south. You know, like we've always said, the reason for the launch was that in the south, customers and the customer proposition of fried chicken was essential to win the meal daypart. And, you know, we've done it very successfully, and as a result, you know, we've continued to keep it in the south, and we're kind of further strengthening the proposition. And we have it in select stores in the west, you know, where we felt it was relevant, but the proposition is primarily for the south.
You will shortly also see, like I said, a strengthening of the platform. We have the Mc Spicy fried chicken. We will be, over the next quarter or two, launching a new platform called the crispy chicken as well, and that's gonna make the platform of chicken in the south even better.
Understood. So the plan is just to keep it to south and some select west stores, not to take it to the entire 400-store rollout at this point in time?
Correct. Correct.
Got that. The second question was, if I look at, you know, the last three years, the effort on the gourmet launches two years back, plus the EOTF, I thought was in a way an effort to, you know, premiumize the brand, as such. Now, when I look at these value launches, is this an effort just to stimulate current demand, given how the situation is, or are these permanent launches and you're gonna see more value offerings coming ahead?
So Nihal, how we look at it is, as a brand, you know, as a brand that's a leader in the space, we need to lead across the pricing ladder as well as the category ladder. Which is why we've done burger, chicken, coffee, we've done premium stuff like EOTF, McCafe, and also, you know, value is what we stand for. So it's actually all about value for money, which is not only about price, it's about the price that you get, it's about the product quality that you deliver, as well as the experience. So all of them come together, and they offer the customer the best value for money.
So how we looked at our, you know, premium launches, whether it be, you know, the mixed spicy in the past or the, you know, gourmet launch or EOTF as a platform, is to ensure that we're giving the best quality product and experience to the customer at the right price. And similarly, we look at the value platform as giving the customer the right value or the right product at the right price, and that value, obviously, from a price point, point of view is lower, but it still means value for money.
That's, that's clear, actually. That was it from my side. Thank you, sir.
Okay.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question.... The next question is from the line of Nilay Bansal from ICICI Securities . Please go ahead. The next question is from the line of Saurabh Kundan from Goldman Sachs. Please go ahead.
Yeah, thank you for the opportunity. I just wanted to ask you if internally you track your affordability, affordability of your menu versus QSR in general or like competition, and where are you now versus, let's say, a year back when you started launching value? Yeah, so that's the first question.
Yeah, Saurabh. Hi, this is Saurabh this side again. So from us, as far as we are concerned, you would have seen that, our real competition is actually us, because our available volume is almost double of the competitors. So what we have to look at is, are our platforms good enough to attract consumers to our restaurant and good enough to retain them for a long, long time? So when we look at that mix, we felt that we had to do a job as far as the value meal proposition, was concerned, in which we launched the extra value meal everyday platform, which was a INR 149 platform. And now we believe that snacking was a price point, we needed to have to get more consumers in for a snacking business.
And therefore, McSaver Plus is our platform as far as the snacking big part is concerned. So really not bothered about what competition does, what it doesn't. We would really look at saying: What is really value from a consumer standpoint, and can we sustain? Because I don't think we have ever played a game in which if somebody does X price, I undercut, and they undercut, and I undercut. I think it's about long-term sustainability. One of the considerations goes into a platform is, is it long-term sustainable? And for us, both McSaver Plus and EVM are platforms which we are committed to in order to make sure it drives value to our consumers.
Right. Thank you. And the second question is actually around some announcements made in the budget. I just wanted to check with you if the announcements around the employment claims incentives are something that the government will help companies with on the ETF side. Does it impact, I mean, does it positively impact you at all or it's not relevant?
So we are still analyzing... We are in the process of analyzing in detail, right? But preliminarily, our assessment is we don't see a major impact flowing in from this budget into the financial.
Okay, great. Thank you. Thanks a lot.
Thank you. The next question is from the line of Abhishek Kumar from Sanctum Wealth. Please go ahead.
Hi, good evening. So I have a question related to the general demand scenario. I just wanted to have your understanding of the same.
Sorry, you're barely audible.
Just hold on a second. Am I audible now?
Yeah, better. Hello?
Audible.
Hello?
The participant seems to be disconnected. Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments.
Okay. Thank you everyone for joining, and we look forward to seeing you next quarter.
On behalf of Westlife Development Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.