Note that this conference is being recorded. And I hand the conference over to Mr. Anup Pujari from CDR India. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you for joining us on Devyani International's Q3 FY25 earnings conference call. We have with us Mr. Ravi Jaipuria, Non-Executive Chairman of the company, Mr. Raj Gandhi, Non-Executive Director, Mr. Virat Joshi, CEO and Whole-time Director, and Mr. Manish Dawar, CFO and Whole-time Director of the company. We initiate the call with opening remarks from the chairman, followed by key financial highlights from the CFO. Post that, we will have the forum open for a question-and-answer session. Before we begin, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier. I'll now request Mr. Ravi Jaipuria to make his opening remarks.
Good afternoon, everyone. I warmly welcome you to our earnings conference call to discuss the business performance of DIL for Q3 2025. We are optimistic that the recently presented Union Budget 2025, particularly the new personal tax regime, will bring much-needed relief for the middle class in the country. In our view, the budget should enhance purchasing power, leading to improved consumer spending. This is great news for the consumption sector, including the QSR industry, as it could drive stronger consumer sentiment, leading to further expansion of the industry. I'm delighted to say that DIL has successfully met its store expansion guidance, crossing an impressive milestone of 2,000 stores in the recent quarter across all brands and geographies, ahead of the original target. This achievement further enhances our market presence and reinforces our strategic position in the QSR industry. It also offers our customers greater access to our brands.
Reflecting on Q3, our store expansion strategy has been a key driver of the company's growth. We remain committed to this approach, ensuring a balance between expansion and store-level performance. In Q3, we added 111 net new stores, bringing our total store count to 2,032 as of December 31, 2024. Our core brands, KFC, Pizza Hut, and Costa, added 107 stores in Q3, thereby further strengthening our brand performance. DIL consolidated revenue for the quarter stood at INR 1,294 crore, reflecting a 53.5% year-on-year growth. We have also seen slightly better margin performance because of better SSSG and certain fresh cost optimization measures. I'm glad to share that our brand continued to demonstrate consistency and excellence. In recoG&Ation of this, KFC was awarded the Most Admired Retailer of the Year for Market Expansion at the Pepsi Images Food Service Awards 2024.
While the overall consumer sentiment remained a little subdued during the festive season, our QSR in general and DIL witnessed some green shoots of recovery in metro and large cities. For the budget-conscious consumers, value menu items such as KFC Roll variants and Snackers were major attractions during the festive season. KFC Epic Savers and Pizza Hut discounts offered help in driving volumes, with both brands experiencing recovery in demand by clocking highest-ever-day sales of big festival days. Our food court business is gaining momentum, with new locations being added during the quarter. As we expand our footprint, we remain focused on tapping into strategic opportunities. A key development during the quarter was the opening of the first food court in Kota, established under the Devyani Ravi Jaipuria arrangement with PVR INOX. Our international teams also contributed to the overall growth of the company.
In Thailand, we successfully added nine net new stores, totaling 305 stores in Q3. To conclude, I'm glad that despite the relatively quiet festival season, DIL has remained focused on store expansion while continuing to explore new and innovative ways to connect with consumers. As a leading player in the Indian QSR space, we are uniquely positioned to capitalize on the sector's recovery, with market conditions expected to turn positive. In the coming quarters, we are confident that our efforts, having doubled our store count to 2,000 in just over two and a half years, will yield strong and further strengthen our position in the industry. With this, I would like to conclude my address and now hand over to Manish for the financial highlights. Thank you.
Thank you, Mr. Jaipuria. Good evening, everyone. A very warm welcome, and thank you for your valuable time for attending DIL's Q3 and 9-month FY25 earnings conference call. Our 14th such call since our listing in August 2021. DIL has achieved a siG&Aficant milestone of 2,000 stores in Q3 FY25, ahead of the guidance given in the past. The total store count at the end of the quarter stands at 2,032 stores. Our core store footprint has now exceeded 1,900 stores, comprising of 1,052 KFC stores, 651 Pizza Hut stores, and 209 Costa Coffee stores. The operating revenue for Q3 FY25 was ₹1,294 crore, representing a growth of 54% versus Q3 FY24. The current year numbers include the Thailand business, which was acquired in January 2024. The Indian business witnessed a growth of 9.6% year-on-year, mainly due to store expansion.
Revenue was INR 873 crore, with growth of 4.4% versus the previous quarter. The gross margin for the consolidated business was 68.7%, a drop of 60 basis points versus the previous quarter. The impact on gross margins was primarily due to food inflation that we've seen in core brands, driven by rising oil, chicken, cheese, and coffee bean pricing. The brand contribution for Q3 FY25 stood at 14.3%, higher by 70 basis points versus the previous quarter. Improvement in brand contribution was mainly on account of sales leverage and fresh measures on cost optimization in the Indian and Nigerian operations. Consolidated operating EBITDA on a pre-Ind AS basis was INR 131 crore versus INR 114 crore in the previous quarter. The pre-Ind AS margins for the quarter for the consolidated business were 10.1%, an improvement of 70 basis points versus the previous quarter.
The consolidated reported EBITDA on a post-Ind AS basis was 16.9% versus 16.3% in Q2 of FY25. The Nigerian currency is showing signs of stabilization and broke its continuous weakening trend in Q3. The PBT for Q3 FY25 on a consolidated basis was INR 9 crore versus a loss of INR 4 crore for the previous quarter. The improvement in PBT is primarily on account of better EBITDA. Moving the discussion to our core brands, KFC in India added 44 new stores in Q3 FY25. With this, the total store count for KFC in India stands at 689 stores at the end of Q3 FY25. Average daily sales for Q3 FY25 was flat at INR 96,000 versus the previous quarter. Revenue at INR 570 crore increased by 4.8% on a quarter-on-quarter basis. Gross margin for KFC during the quarter was 68.6%.
The brand contribution margin at 17.2% for the current quarter saw an improvement of 60 basis points because of better sales leverage and cost optimization measures. During the quarter, Pizza Hut added 51 new stores, reaching a total count of 644 stores in India. Revenue for Q3 FY25 was INR 190 crore versus INR 185 crore in the previous quarter. ADS for the brand was INR 35,000. Gross margin for the quarter was 76.2%, and brand contribution for the quarter was INR 4 crore with a margin of 2.1%. Costa Coffee added two new stores during the quarter, reaching a cumulative store count of 209 stores.
Q3 FY25 revenue was INR 52 crore, which grew by 5.4% over the previous quarter and 30.2% on a year-on-year basis, mainly due to expansion of new stores. The gross margin for the quarter was 75.5%, an improvement of 50 basis points over the previous quarter.
Brand contribution in Q3 saw an improvement and stood at 16.9%. We opened our first food court under the strategic tie-up with PVR INOX at Kota. DIL has an economic interest of 51% in the new company. Please note that this entity shall be consolidated in accordance with Ind AS 28. Total number of international stores was 374, with the addition of 9 new KFC stores in Thailand and 1 Pizza Hut store in Nepal in Q3. The international revenue for the quarter was INR 430 crore, with growth of 9% versus Q2 FY25. Gross margin was 64.1%, a drop of 100 basis points versus the previous quarter because of Thailand currency impact on closing inventory valuation. Brand contribution margin at 16.6% saw an improvement of 60 basis points versus Q2 FY25. The reported EBITDA was 14.9% during the quarter versus 13.4% in Q2 FY25.
To conclude, we've been executing our expansion strategy in a very calibrated manner while ensuring healthy paybacks in our core brands. A key driver of this has been our focus on small-format stores over the past few years, which are highly capital-efficient and offer stronger payback potential. While SSSG performance has impacted returns in the short term due to subdued external environment, such trends are also typical during phases of accelerated expansion. Nevertheless, we remain confident that our strategy will drive sustained growth and profitability in the medium to long term. On that note, I would also like to request the moderator to open the forum for any questions or suggestions that you may have. Thank you very much.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on your touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Gaurav Jayani from JM Financial. Please go ahead.
Hi. Sir, can I order?
Yeah, Gaurav, you are.
Hello. Yeah. So thank you for taking my question. So my first question with regards to the store expansion that we have seen in Pizza Hut, it's been a strong expansion that we have seen here. And I think the same is the case in the other business segment also, wherein the network expansion has been strong. So if you can highlight your guidance for the expansion in both of these formats going ahead.
Hi, Gaurav. So Gaurav, if you look at on a nine-month basis, we've added 93 KFC stores and 77 Pizza Hut stores, while we continue to add Costa and Vaango as well. The quarter three on Pizza Hut was high because we were delaying the store openings given the brand performance. But there were some DA commitments that we had, and therefore we've kind of made sure that we fulfill our commitments. Going forward, obviously, as we've spoken in the past, we will be moderating Pizza Hut expansion, and you will see lower numbers, even further lower numbers versus what we've done so far. So we continue to remain bullish on KFC, on the other brands. We've added new brands. We are monitoring Pizza Hut performance very closely, and therefore, depending on the brand performance, we will take a final call on the numbers.
For the other brands, the higher expansion is also due to the Devyani store expansion that you mentioned, the food court. Is that also a reason why the expansion is higher than the other brands?
So we have upped the game on our food court penetration, as we've been speaking about food court expansions in the last two quarters. But the JV has opened only one food court in Kota, and that is not part of the consolidated numbers because we are not consolidating this JV fully, given the auditor's opinion and so on and so forth. So if I were to take, let's say, the JV that we've opened in Kota, it will further add four new stores, one each in KFC, Pizza Hut, Costa, and Vaango.
Okay. And so my last question is with regards to the margin performance. I mean, the margin recovery is not that better in KFC business. However, we have seen Pizza Hut margins even declining sequentially, despite the ADS remaining flat Q1 Q2. So to estimate on why the margins in the Pizza Hut are weaker, and also you can give a sense on how margins are adjusted for KFC benefit in the future. Thank you, and that's all from me.
Thanks, Gaurav. So Gaurav, on margin expansion, I agree with you that Pizza Hut has seen little lower margins, but we will see margin improvement coming from next quarter because we are going to be optimizing the marketing cost in Pizza Hut versus what we've done in the last six to nine months. At the same time, we've taken some fresh cost optimization measures also in Pizza Hut, as well as KFC, which will start to yield the results from January onward. So we are confident that as far as KFC is concerned, we will be able to come back to the margin levels that we've indicated in the past. And let's see how the Pizza Hut goes, and the expansion on Pizza Hut is dependent on the overall brand performance.
Sure. Thank you. Thank you, David.
Thank you. Next question is from Aditya from J.P. Morgan. Please go ahead.
Hi. Hello. Can you hear me?
Hi, Aditya. Yeah, you are.
Yeah. Hi, sir. Thanks for the opportunity. My first question is on the KFC performance. So if I look at your ADS and margin numbers and compare that with your sister franchise, there seems to be some divergence. I just wanted to understand if it's because of any region split or are you seeing any material difference in demand trend between different tiers of cities, which could be driving this?
So, KFC, as you know, our sister company or the sister franchise partner is predominantly present in the large metros because if you look at the country, I mean, they have a higher share of metro cities. And we've seen a better recovery in metros versus smaller ones. You would know that they have Mumbai City, they have Delhi City, they have Chennai, which are strong markets for KFC. We've also seen similar trends. We've not seen any big divergence. It's mainly we've seen primarily the KFC numbers getting impacted in Kerala, Assam, and West Bengal, which are very highly concentrated because of this geopolitical situation. And there also, we've seen an improvement and a turnaround happening.
So therefore, we have seen the green shoots because of the geopolitical situation also turning around, and therefore, that gives us the confidence that next quarter, hopefully, should be a better quarter from that perspective.
That's very clear. My second question is on the transaction growth of KFC, so is it right to assume that the transaction change for transaction decline would be lower than the SSSG?
See, the APC, which is the value piece, is holding very well. If at all, we've seen a small uptick in all of our brands as far as the APC is concerned. The decline, which is currently there, is primarily on account of transactions. And that's where this whole initiative on the low-cost meals and the value meals and the new promotions that Mr. Jaipuria talked about will help drive the foothold and will help improve the situation on the transactions.
Okay. If I can please, one last question. Can you also give a little bit more color on Vaango because we've been talking double-digit change since the last couple of quarters? Although ADS has declined a bit sequentially in this quarter, can you explain what kind of trends you're seeing here and give more color on the format?
So, Aditya, if you see Vaango is doing well on SSSG because of the older locations, because that is how the SSSG gets calculated. The formula is one-year-old stores, right? Whereas in Vaango, also, we've expanded the footprint from a number of stores' perspective. And in the nine months that we've ended, we've opened almost 31 new stores in Vaango. And you would know that new stores typically start the journey at a lower rate, and then they mature over a period of time. And that is what is driving the overall ADS numbers down.
Okay. Thanks. That's it from my side. Thank you.
Okay.
Thank you. The next question is from Percy Panthaki from IIFL Securities. Please go ahead.
Hi, Manish. How do you look at margins going ahead, especially for KFC? I mean, we are in negative territory right now, but supposing we go into a minor positive territory, a low single-digit kind of SSSG for the next few quarters, in that kind of scenario, do we see KFC margins at around 17.5%-18%, or can it be better than that?
Percy, as I mentioned in the last call, we are targeting KFC to get to 19%-20% margin at about 100,000 ADS. And we are tracking on that. It'll take us a few quarters to be able to get there. But on an overall basis, we are confident that the kind of measures we've taken, and once they start to kick in and we are able to see the full result, at about 100,000 KFC ADS, we will be able to get to 19%-20% Brand Contribution margins.
Understood. And these measures are more in terms of improving the ADS, or are there any measures in terms of cost efficiencies also? And if you could just a little bit elaborate on them.
Both sides. It's ADS as well as the cost side. So on the cost side, we've relooked at how we deploy the labor, how do we consume the electricity. So basically, you are aware of all the store-level expenses. So we've taken a relook at everything on a de novo basis, and we've taken some measures as a result of that.
Understood. Understood. Also, on international as a whole, what is the kind of growth that you are targeting for that piece, both in terms of revenue growth as well as in terms of number of stores for FY26?
See, Thailand, roughly, as far as the store growth is, I'm talking about Thailand because that's the largest piece there. Nepal is a small opportunity, as we've discussed in the past. So Thailand, we are going to be targeting about 20%-25% store count addition, which is roughly about 8%-9% of the stores that we have. And then on top, we are targeting an SSSG of about 3%-4% in Thailand. So therefore, that should give about 11%-12% revenue growth in Thailand. Nigeria seems to be kind of stabilizing as far as the currency is concerned. But right now, again, Nigeria, our objective is to stabilize the operations, bring the profit levels back because there have been huge losses as a result of currency devaluation.
So therefore, Nigeria, we are evaluating the expansion, but there'll be very small numbers in Nigeria if that were to happen.
Right. And is there any visibility on Nigeria breakeven by when we can hope for that? And what are the losses on Nigeria on an annualized basis currently?
So Nigeria, okay. So let's say, for example, as I said, Nigeria, this quarter, we've seen currency stabilizing. So the brand contribution has come back very strongly as far as Nigerian business is concerned. So currently, in Nigeria, our brand contribution sits at 20% plus.
Okay. Okay. No, I'm just trying to understand for my modeling purposes for FY26 full year versus a full year of FY25. Supposing if the losses go away, then how much of a swing in INR crore could I be sort of factoring in for the FY26 numbers? I just wanted to understand that part.
I can work that number out for you, Percy, and then we can discuss it offline basis. But again, I would like to kind of talk about Nigeria. We would like to see one more quarter of currency getting stabilized and then kind of talk about those numbers.
When you say brand contribution is 20%, would I be right in assuming that generally corporate overhead for a QSR format is about 5%-7%, and therefore your EBITDA margin also would be like in low to at least a low teens kind of a number for this quarter in Nigeria?
Yeah, because Nigeria is a small business, so therefore the corporate G&A is a little higher. But otherwise, directionally, you are absolutely in sync.
Understood. Understood. That's all from me. Thanks a lot.
Yep. Thanks, Percy.
Thank you. Next question is from Dikanshu Gaur from Bernstein. Please go ahead.
Hi, Manish. Congratulations on an improving performance trajectory. I wanted to double down on one question on Pizza Hut. You said that any further growth in terms of store network or investments in marketing will be dependent on performance. So can you guide us what performance markers are you looking for to get convinced of a turnaround?
So it's typically gigantic, as you know. I mean, it's ADS and SSSG numbers. And even on SSSG, we've seen improvement happening in the current quarter. What used to be double-digit negative a couple of quarters back, we are almost at a breakeven level. The industry has also seen a strong comeback on Pizza. So that's how we are monitoring it. So therefore, that is what I meant.
Okay. Is there any specific ADS number that you have in your mind or a brand contribution margin number?
We will not be able to give you guidance on that.
Sure. No worries. If I can just follow up one more, this is regarding Vaango. I think we had aggressive store expansion last quarter, which has slowed down this quarter. But if you do a broad backward math, it seems the 40 stores that you saw added in the last 12 months are operating at far lesser capacity than the remaining 54. So is it something about the structure and nature of the format which is giving you pause in expansion, or do you still remain very bullish about it? So just wanted to get a handle on that.
Sure. So, Dikanshu, if you look at when you're comparing, let's say, the base numbers to the new additions, the base has very, very strong operations on the airport also. And as you know, Vaango at airport does extremely well. And that is what kind of pushes up the base. Whereas all of the new additions are typically in the food courts and high streets and so on and so forth, which operate at a lower level. Otherwise, for example, if I were to compare, let's say, like-to-like basis, it's only the difference is only about the maturity profile of a store.
Okay, and then is the SSG, let's say, 9.6% this quarter, is it different for, let's say, airport stores versus non-airport stores? Is that something you would feel comfortable speaking about?
It'll be similar.
It'll be similar. Okay. And lastly, sorry, just so in ADS terms, then you would expect it to sort of stabilize at a lower level than it was earlier as the mix of stores moves towards more high street?
Correct.
Okay. All right. Thank you. I'll circle back in a bit. Thank you so much.
Sure. Thanks, Jigantu.
Yeah.
Thank you. Next question is from Devanshu Bansal from Emkay Global. Please go ahead.
Yes, sir. I thank for the opportunity. Congratulations on the new store milestones. Manish, last quarter, we talked about experimenting with some marketing and pricing promotions in select markets, right? So how has been the response to such initiatives, and what is the margin impact of this in the current quarter?
Devanshu, it's been a mixed bag. For example, we've seen a good response on the KFC side to these promotions. We've not seen such a good response on the Pizza Hut side, so therefore, it's been a mixed bag. But on an overall basis, I think things are moving in the positive direction, and therefore, we are going to be recalibrating the marketing spends from January onwards.
Understood. Sir, just a follow-up on this. So Q3, it's usually a stronger quarter, but the ADS is flat sequentially. And we have taken these initiatives where we are indicating that the response has been good. So I wanted to check the reason for a lower pickup on a sequential basis in KFC. Just your thoughts on that.
As I said, in response to the earlier question, one is this whole location thing. We've also seen a very strong store addition in quarter three. That also, therefore, let's say, typically, let's say, when you have this kind of store addition, it impacts the ADS performance because any new stores would start at a lower level.
Understood. Last question, sir. You indicated Kerala, Assam, and West Bengal now being red for us. So can you either talk about the performance on the regions outside of these states, impacted states, or if you could also suggest otherwise the figures of these impacted states and what is the kind of improvement that we are seeing in these states?
Devyani, we've seen a better improvement as far as SSSG performance is concerned for the states outside of these three states. These three states also have improved, and I think we have probably, let's see how the number goes as we go along. We do expect that these states also probably have bottomed out, and that is the only difference, but they are not in line with the rest of the states. Now, I think with the geopolitical situation stabilizing, we should see a better kind of picture in these states.
And qualitatively, can you sort of indicate as in what is the difference of SSG in these regions outside of these regions? Just to get a sense as in how things may turn up when sort of these states also recover.
See, I'll not be able to give you the exact numbers, but let's say, for example, if you look at the range of states that we operate in. I mean, on the highest side, probably the SSSG improvement sits at plus 10%-15% also. And there are states. So therefore, I mean, those are low-weight stores may not be adding so much weight, but I mean, the range is wide. So it's not just a narrow range that I can tell you, and you'll be able to apply in the model.
Thanks, Manish. Thanks for taking my question.
Sure. Thanks, Devanshu.
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Tejas Shah from Ambit Capital. Please go ahead.
Hi. Thanks for the opportunity. Manish, my question refers to your comment that the commitment was also one of the triggers. I'm sorry, it was not solely to expand or go aggressive on Pizza Hut to expand in this quarter, so given the subdued demand environment, which you also called out and Uncertain also called out as opening them up, I just wanted to understand how much flexibility do we enjoy on the expansion commitment? Was there an option to delay considering that demand is still not in great shape?
So if you look at Tejas, our openings in this year on Pizza Hut are lower versus the previous year. And therefore, there is a flexibility available. But again, at the same time, we are very cautious that we should not be defaulting on our agreements. And that's how because, as you know, the DA works from January to December period. So therefore, we will be now kind of recalibrating Pizza Hut as we go along.
Sure. And Manish, given the team's experience with past cycles, we are seeing first time in the listed phase. So just wanted to understand, this aggressive expansion typically pursued during downturns, does it benefit us in full recovery cycle, or do you want to wait for demand turnaround before acceleration on full expansion? Just wanted to understand from past experience what has been more remunerative among these two strategies.
Tejas, see, it is a chicken-and-egg story, right? I mean, if you were to look at our experience, the way we expanded during COVID time when nobody else expanded, and post-COVID, we've seen great results. Again, as you know, this business is not about putting up a large factory that you create a capacity and then you can utilize. For I mean, this is about it's a brick-and-mortar business. So you have to create store by store by store by store. Therefore, if you miss on the real estate opportunity, it's gone forever. If you are not able to create that whole bandwidth, it's not that, for example, if I were to say that there's a downturn of three years and I'll be able to open 400 stores together in the fourth year, it's physically not possible. So it's a very different nature of business.
And that's the reason we are kind of at it because eventually, if we all believe in the India story and we all believe that India will grow, the economy will grow, and the consumer sentiment will improve and the consumption will come back, then with the new budget and whatever steps the government has taken and will be taking, we should stand to kind of gain the most. And we've already experienced this. As I said, we've already experienced that during COVID time.
Right here. And the last one, if I may, in the history of the company, both for Pizza Hut and KFC, what has been the most prolonged downturn cycle that we have seen? Is this the current one, the most difficult one, or there is a history of such cycles in the past also?
See, in the past, Tejas, we've never had this kind of scale, right, so it's a combination of a slowdown in the consumer demand and consumer sentiment, and at the same time, we've been doing aggressive expansion also, so it's a combination of those two. Now, expansion is a very conscious strategy that we've undertaken, and we are confident about expansion because all of the expansion is happening on smaller formats where the payback periods are strong, so therefore, as we see the consumer sentiment coming back, it should greatly benefit us, but at this scale, obviously, we've not experienced things in the past because it was a smaller operation in the past.
Thank you. Thanks and all the best for coming forward.
Sure. Thanks, Tejas.
Thank you. Next question is from Marut Chaudhari, who's an individual investor. Please go ahead.
Hello. Yes, I'm on audio.
Hi, you're on audio, Marut.
Sir, [Foriegn language] मेरा पहला question है कि जो अभी इस quarter rupee depreciation हुआ है, तो उससे impact क्या होगा हमारे इस quarter में? [Translation] Sir, my first question is regarding the rupee depreciation that has occurred in this quarter. What impact will this have on our performance/results in this quarter?
So, Marut, हम लोगों की ज्यादा imports नहीं हैं, except for, let's say, key equipment on the CapEx side. So उसका हमारे को थोड़ा सा impact पड़ता है. But as far as operations are concerned, और उसका impact eventually depreciation में आता है. But otherwise, on raw material side, packing material side, हम लोगों का जो import structure है, वो बहुत छोटा है. So therefore, उसका कोई इतना impact नहीं है. Obviously, because of the currency, the international operations also get consolidated, उससे impact आता है. But that's only a translation effect rather than a transaction effect.
Aksha, okay and next is जो health techs, ultra-processed foods, जो अभी मतलब बात चल रही है, तो हम कोई healthier brand introduce कर सकते हैं अपने portfolio में? ऐसा ही हम look कर रहे हैं बाहर?
So if you see, Vaango is a healthier brand in our portfolio. South Indian brand is supposed to be the most healthy food in the country. So therefore, we already have that portfolio. Within KFC also, we have a range on the whole our dominant range is fried chicken, but we also have grilled chicken available. Similarly, so therefore, we have a good balance. Even the newer brand, for example, Sanook Kitchen, जो हमने sign किया है, it is a healthier brand versus the other brands that we deal in. So therefore, Sanook, again, we are going to be positioning on that basis. So we are conscious of what you are saying, and that is part of the strategy.
Okay. एक और question अगर मैं पूछ सकूं तो, जैसे cost optimization के बदले जो gross margin expansion हमारा KFC में होना चाहिए, मतलब कोई introduction के through, जैसे Yum China ने KFC coffee निकाला, उनका gross margin बड़ा। वैसे ही इंडिया में BK Cafe ने, Burger King ने अपना BK Cafe निकाला, उनका। तो हम क्या KFC में भी देख सकते हैं? जैसे Yum China ने KFC coffee निकाला, हम भी यहां ये introduce करके देख सकते हैं? क्या आपका क्या?
So, Marut, we have introduced and we have experimented with KFC coffee in some of the outlets. Now, obviously, this is a different strategy versus, let's say, what McDonald's is doing by way of McCafe or what Burger King is doing by way of BK Café because they operate large stores. And therefore, those stores where they are a bidder, हमारी strategy है to bring the formats down, to focus on the core, to make it more efficient on the paybacks and the margins. And that is how we are operating. Because if you see over a period of time, the trend in the QSR industry has been more and more home consumption.
That you would have seen with all the brands, if you were to look at last, whatever, three to four years, even post-COVID also, the home consumption is going up for the entire industry, is going up for all the brands. Therefore, in that scenario, we are highly focused on the format of the store rather than large formats.
Okay. That's it for me, sir. Thank you.
Sure. Thank you so much.
Thank you. Participants who wish to ask questions, please press star and one. Next question is from Lathika Chopra from J.P. Morgan. Please go ahead.
Yeah, Manish. I wanted to check with you on your thoughts around this quicker 10-minute delivery platform which were announced by the leading food aggregators. How do you view this? Is this something which is feasible for formats that you run? Do you see this as an opportunity or a threat from a snacking perspective?
See, typically, what they are talking about, Lathika, is all around the snacking platform, right, and those snacks are typically ready-to-eat snacks, which have always existed. So let's say, for example, typically, in any Indian household, any quick-eating snacks are always part of pantry. So therefore, the way we look at it, as far as fresh food is concerned, there is a cooking time and there is a delivery time. Although we've kind of, we are also in discussions with one or two players in terms of how can we participate and experiment. So for example, let's say, just to give you as to how the dynamics work, take the example of Pizza Hut. Now, Pizza Hut, the pizza is prepared after you get the order, and the preparation time itself is about seven to eight minutes, or depending on the pizza, it could be nine minutes also.
And then you have the delivery time. Whereas if you look at a brand like KFC, KFC operates on a ready-to-eat basis, and therefore, KFC can easily participate in that journey. So we are in discussions. We will be experimenting with this. Let's see how it goes. There could be some menu items which can always participate in that whole 10-year journey, but let's see how it kind of shapes up.
Understood. The second bit was just trying to check if there's been any change in your agreements or any kind of inflation you've seen with any of the aggregators?
No, not yet. So the discussions are on because, obviously, there has been a pressure from the aggregators, but so far, we've managed to hold, and it's fine.
All right. And the last bit I just wanted to check was on the three QSR brands that you're planning to bring and launch in India. The timelines remain from April this year onwards?
Yeah. We are on track from quarter one of the next financial year.
Great. Thank you so much.
Thanks, Lathika.
Thank you. The next question is from Aliasgar Shakir from Motilal Oswal Mutual Fund. Please go ahead.
Yeah. Thanks for the opportunity, sir. Just a question a little bit on the outlook. So as even Tejas was asking, this has been a little longer cycle of weak environment for us, and we've seen maybe about close to eight to 10 quarters of weak outlook. Now that you are hinting that there is some recovery, just if you could give a little more pointed clarity in terms of how is the situation on the ground, Ali, after two years of negative days, thinking of flatter SSSG, or do you think that things can improve from where we are talking about the possible SSSG in the next couple of quarters? And what kind of margin do you think?
Will it take time for you to come back to the 19%-20% margin that you have mentioned, or if we do the 5%-10% kind of SSSG bracket, then we should be able to reach that kind of margin? Thank you.
Sure. So Ali, as you, I mean, you're seeing the numbers of the QSR industry, and we've seen that kind of turnaround happening with almost all the brands. We've seen that in our numbers as well. And that gives us the confidence that maybe things are turning around. As we've said, that we've seen, let's say, for example, quarter three is a festival quarter. We've seen bigger throughputs happening on those festival days, which again is an indicator that the consumers are opening up their wallets. So therefore, the SSSG turning around is one of the paramount factors to be able to make sure that we kind of come back to our original margins. Irrespective of that, we kind of took the steps in the previous quarter. We've seen the impact of or the results of those steps coming in the current quarter.
We are confident that, as I said to Percy's question, that about 100,000 KFC ADS, we should be able to come back to our original margins of 19%-20%.
And the current quarter, are we seeing signs? Because I'm just asking from the point of view that there's two years of negative days. So on this year, are we seeing signs of SSSG bottoming out in this current quarter?
It's been a mixed bag because we operate in multiple states, and there are multiple kind of factors impacting various states. But now, with the budget coming in, with the geopolitical situation stabilizing, I think we are hopeful that things should kind of turn around.
Understood, sir. Very clear. Thank you so much.
Okay. Thanks so much.
Thank you. Participants who wish to ask questions may press star and one. Now, if there are no further questions, I'd now like to hand the conference back to the management team for any closing comments.
Thank you very much. We hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our investor relations team. Thank you once again for your interest and support and for taking the time out to join us on this call. Thank you very much. Bye.
Thank you very much. On behalf of Devyani International Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.