Ladies and gentlemen, good day and welcome to the Devyani International's 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 10 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anup Poojari from CDR India. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you for joining us for Devyani International 's Q1 FY2026 Earnings Conference Call. We have with us Mr. Ravi Jaipuria, Non-Executive Chairman of the company, Mr. Raj Gandhi, Non-Executive Director, Mr. Virag Joshi, CEO and Whole-Time Director, and Mr. Manish Dawar, CFO and Whole-Time Director of the company. We'll initiate the call with opening remarks from the Management Forum Chairman, followed by key financial highlights from the CFO. Thereafter, 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 will now request Mr. Ravi Jaipuria to make his opening remarks.
Good afternoon, everyone, and thank you for joining us today. I'm pleased to welcome you all to Devyani International 's Post-Results Earnings Conference Call to discuss our performance for the first quarter of the financial year 2025-2026. India's QSR industry is on a structural growth trajectory, underpinned by rising urbanization, growing income levels, increasing digital adoption, increasing female work participation rates, and growing appetite for convenience among younger consumers. While near-term macro factors have led to a phase of soft consumer demand, we see a better outlook for the industry in the coming times. We are learning from the evolving consumer trends, and we need to reset our business to have a differentiated and compelling proposition for our consumers, whether they are online or offline. We strongly believe that our industry will remain a prime beneficiary of evolving consumer behavior.
It's important that job creation continues in the economy with rising per capita income, which will lead to higher consumption. Considering the significant market potential, we continue to execute on our long-term growth agenda. I'm pleased to announce that we have concluded the acquisition of Sky Gate Hospitality, which runs Biryani By Kilo and Goila Butter Chicken brands, and increased our stake to 86.13% subsequently. This gives us access to market-leading brands to expand our presence in the biryani and the Indian cuisine segment, one of the largest food categories in the country. Sky Gate Hospitality has 105 outlets at present, and we are confident that these brands will be one of our key contributors to our expansion plans going forward. Across the portfolio, we are expanding our footprint in a focused manner.
To this end, we have added new stores in KFC, Pizza Hut, and other brands in our geographies. We are also in the process of launching our three new international brands: New York Fries, G-Life, and Sanook Kitchen in the next quarter. Seaworth offer, providing a 9 for INR 299 combo, this offer has been enthusiastically received by the consumer. We are already seeing significant contribution from this combo, despite it being a dine-in-only offer. Pizza Hut saw the launch of Juicy Wishes range of pizzas with three unique flavors of marinated toppings and Indian sauces. We have seen a good response and adoption for the products to provide more value to our customers. We also piloted unlimited pizza fried in a select store. Results are encouraging, as the participating stores showed healthy growth in transactions and ADS. Our financial performance has been healthy on a consolidated basis.
Quarter one revenue reached INR 1,357 crore, a 11.1% year-on-year growth. This growth was driven by healthy growth from KFC, Costa Coffee, and the food court business in India, and supported by 11.2% year-on-year growth in the international business. Reported EBITDA came in at INR 205 crore, with EBITDA margins at 15.1%. The slight dip in margins was due to deleverage from lower ADS year-on-year and investments in marketing and promotion in the quarter. As one of the leading QSR players, we are well-positioned to benefit from the rebound in consumer spending. Our multi-cuisine, multi-format strategy caters to a broad spectrum of consumer tastes, occasions, and price points, while diversifying away from any category or geography-specific risks. It also enhances our ability to capture opportunities across varied markets and evolving consumer trends.
With the strength of our brands and our execution capabilities, we are confident of our ability to deliver consistent growth. Our focus will remain on scaling profitability, strengthening both our core and emerging markets, and creating long-term value for our stakeholders. With this, I would like to conclude my address, and now I hand over to Manish for the financial highlights.
Thank you, Mr. Jaipuria. Good evening, everyone. A very warm welcome and thank you for your valuable time for attending Devyani 's Quarter One FY2026 Earnings Conference Call, our 16th touch-point, 10th since our listing in August 2021. We ended June 2025 with a total store count of 2,145 stores, comprising 1,067 KFC stores, 627 Pizza Hut stores, and 221 Costa Coffee stores. As you all know, we have signed up new brands and completed the acquisition of Sky Gate Hospitality recently. In view of this, please note that we've made an update to how we report our India operation mixes.
From this quarter, we are presenting our data across three key operating segments, which are Yum Brands, consisting of KFC and Pizza Hut, other franchise brands such as Costa Coffee, New York Fries, G-Life, and Sanook Kitchen, and our own brands, including The Bhojan and the recently acquired Sky Gate Hospitality portfolio. This will give better clarity and alignment with how we manage our business and how we look at our business internally as well. From the current quarter onwards, we are consolidating Sky Gate Hospitality financials. The transaction was consummated on June 10, hence the results have been consolidated from June 11, and a 20-day impact is there in the consolidated numbers of Devyani . Onto the financial mixes, consolidated operating revenue for Quarter One FY2026, including Thailand, was INR 1,357 crores, up 11.1% on a year-on-year basis.
Consolidated Q1 FY2026 gross profits came in at INR 925 crores, which was up 9.5% year-on-year, with margins at 68.2%. Brand contribution margin was at 13.1% versus 15.3% last year. This dip is mainly on account of a decline in margins in the Indian operations. Consolidated operating EBITDA on a pre-Ind AS basis was INR 110 crores, with margins at 8.1% versus 8.9% in the previous quarter. Lower brand contribution margin led to decline. Reported EBITDA was INR 205 crores, with a margin at 15.1%. The Indian operations grew 11% year-on-year to reach INR 932 crores in revenues. Gross margin came in at 69.6%, a decline of 2.3% versus previous year. This has been primarily on account of investment to support transaction growth in our brands. There was also a small impact from the increase in raw material prices of cheese, flour, and edible oils.
A change in GST applicability on rent has also led to an increase in rental cost. As a reminder, our industry does not get input credit on GST. Further, high saliency of off-premises sales across the two key brands, which are KFC and Pizza Hut, led to higher aggregator and delivery expenses. These costs have increased on a structural basis across the industry, and the impact will continue for the year. We also took initiatives to mitigate this increase by way of tight control on utility costs and other operational expenses. However, they could not fully offset the impact. Onto the brands, KFC in India added eight net new stores in Quarter One FY2026. With this, the total store count for KFC in India stands at 704 stores as of June 30, and we are on track to open approximately 100- 110 net new stores of KFC.
Average sales at INR 98,000 for KFC is high sequentially, but lower on a year-on-year basis. We are seeing good progress with KFC, SSSG after multiple quarters, with SSSG stabilizing at -0.7%. Revenues came in at INR 613 crore, up 20.5% year-on-year. Gross margin was lower at 67.1%, primarily due to investments in growing transactions and a small increase in the edible oil prices. The brand contribution margin came in at 15.5% for Quarter One FY2026 due to lower gross profit margin, higher delivery costs and aggregator costs, and deleverage on lower ADS. With the aim of improving the performance of the brand, we continue rationalizing our footprint at Pizza Hut. Due to closures of non-performing stores, we ended Quarter One FY2026 with 618 Pizza Hut stores in India, a net decline of 12 from the previous quarter.
In the current financial year, we are planning to slow down our organic expansion of Pizza Hut stores' openings. Pizza Hut India revenue for the quarter was INR 187 crore, up 3% year-on-year. The ADS recovered slightly to INR 33,000 on a sequential basis. SSSG came in at -4.2%, and efforts are underway to stem the decline. Gross margin at 74.8% was lower due to inflation in flour and edible oil prices, coupled with investments made to support the brand. The brand had a slight negative brand contribution in the current quarter. Franchise brands, which include Costa Coffee and the newer brands in India, had a stable quarter. We opened the maiden New York Fries stores at Mumbai International Airport. We are enthused by the performance and will continue to grow New York Fries and other brands.
The division's revenue came in at INR 62 crore, with a stable gross margin at 75.2% and brand contribution of INR 6.7 crore. Brand contribution for the division includes the startup costs associated with the new brand. Own brands, which include Biryani By Kilo and Goila Butter Chicken brands, reached INR 35 crore in revenues, with steady gross margin at 70.1%. Please note that acquisition of Sky Gate Hospitality was effective on June 11, hence only 20 days of financials of Sky Gate Hospitality are included in the brand contribution. Margin from own brands declined to 6.7% owing to this consolidation and dilution from Sky Gate portfolio of brands. We are working towards achieving positive brand contribution and turnaround of Sky Gate over the next 12 months. Our international business continues to grow steadily. Revenues reached INR 433 crore in Q1 FY2026, with gross margins of 65.6%.
Brand contribution improved to INR 74 crore, representing 16.7% margins on the back of better gross margin performance in the Thailand business. In conclusion, we are navigating a phase of soft consumer demand with a disciplined and measured approach. Our marketing strategy strikes a balance between broad-based brand campaigns and targeted tactical interventions. Driving profitable and sustainable brand growth remains our unwavering north star. On that note, I would like to request the moderator to open the forum for any questions or suggestions that you may have. Thank you very much.
Thank you, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Aditya Soman from CLSA. Please proceed.
Hi, good afternoon. Two questions from me. Firstly, on KFC, we've seen sort of flat-ish like-for-like growth on a base that is already quite negative. From here on, to see an improvement in trajectory at KFC, what in your view are the two or three key things that need to happen to start seeing a meaningful improvement? Within this sort of flat-ish trajectory, is there any meaningful trend difference that we saw maybe in the first half of the quarter versus the second half or in the more recent period in July? My second question is on these new brands that we are adding, whether it's Biryani By Kilo or New York Fries, over what period does the management intend to make these significant from an overall company perspective? Thank you.
Okay, thanks, Aditya. Let me first talk about KFC SSSG. While I agree with you that KFC has been negative SSSG for a few quarters, in fact, to give the ties, almost eight to nine quarters, there has been this whole quarter-on-quarter kind of impact, which comes in. Despite that, we've managed to stem the degrowth in KFC SSSG, which was there, and we are working fast this time. This time there was also a season shift from a calendar perspective where the consumption is typically low, because last year the period was a little different. It was spilling over into a second quarter a little bit, whereas in the current one, we've seen a better impact. Given that impact, we would have been probably versus that or a small positive on KFC SSSG.
Having said that, we've seen a good growth momentum in the online category, because we took initiatives on online specifically, and therefore the SSSG on online digital matter and signing is positive. We are trying to address the dine-in piece, which we are hoping that we will be able to do that over the next one or two quarters. Therefore, with that, you will see the numbers improving. What we did on online from a triple A key perspective is very heartening. Coming to the new brands, from a number, I guess, coming to the new brands, from Biryani By Kilo or let's say New York Fries and all. Right now, as far as the new brands that we've signed up, we want to test those brands, see how the consumer response is, and then scale up. We've opened New York Fries, one store at Mumbai Airport.
We'll be shortly opening some of the G-Life stores on Sanook Kitchen also. We will start with a couple of stores to see how the consumer response is. Therefore, this will take some time to scale up and become an overall meaningful contributor within the DIL portfolio. As far as the Sky Gate Hospitality portfolio is concerned, which is Biryani By Kilo and Goila Butter Chicken, it's almost about 105 stores. The objective there is to first set the model. As you all know, it's a loss-making portfolio as of now. Our first priority is to turn around the brand. We are hoping in the next 12 months, we will have a positive brand contribution and brand EBITDA. Post that, start to ramp up the brand into our own channels and so on and so forth.
Simultaneous to the overall turnaround, we've also started experimenting with the new formats or the new distribution channel for Biryani By Kilo, which is airports and food courts, again to test how the consumer responses from a dine-in perspective. We are also starting to work on some bit of recipe optimization from the kitchen preparation time and so on and so forth. There's a lot of groundwork, which has already started to happen along with the turnaround clarity. Once this is all achieved, that is where we will talk about a significant ramp-up in the new portfolio. Hope that answers your questions.
Yeah. Thanks, Anup. Very clear. Maybe just on Biryani By Kilo, just as a follow-up, the current model is largely delivery only, is it?
They do have some dine-in stores, but even from those dine-in stores also, predominantly it's delivery. If I were to look at the overall portfolio, 90%+ is delivery, whether you talk about the dine-in stores or the crowd store.
Perfect. Thank you so much, Ravi. All the best.
Thank you. Next question was from the line of Gaurav Jogani from JM Financial. Please go ahead.
Thank you for taking my question. My first question is with regards to the gross margin impact that you are seeing because of the promotional space. How long do you expect these to sustain? Additionally, given that they will also help to drive the transaction growth, at an EBITDA level, when do you expect it to start contributing positively?
Gaurav, we did multiple experiments online to see how the consumer is reacting so that we are able to kind of, and as you know, I mean, online you are able to kind of measure such things much more closely and in a much faster manner compared to the offline channel. That's the reason you see a significant impact in the gross margin as well as the brand contribution. Having kind of done that for a couple of months, our plan is to continue with the same model for another one or two months, get our learnings, and then start to optimize in terms of what is working and what is not working.
Therefore, within the next quarter—when I say next quarter, it means not the current quarter that we are talking about—we will start to see the gross margins improving as well as the same flowing into the brand contribution margin. Right now we are in the process of testing multiple things to see what is, and then the objective is to basically fine-tune after that.
Sure, that's thankful. I'm assuming that this will be across both the brands, KFC and Pizza Hut, both?
See, the nature and the extent, and therefore the impact is different. As an initiative, it is both brands.
Sure. The next question is with regards to this drag from the Sky Gate Hospitality brand on the own brands franchise. If you can quantify how much that has contributed negatively towards the margin this quarter for the own brands.
Maybe I can quantify it on a one-time basis, but we will not be able to kind of do it on a repeated one because we are going to be presenting the original results as own brands. Because otherwise, let's say given the multiple brands we have, it will become very, very complicated for everyone. Just to kind of quantify it, the negative brand contribution for the first 20 days that we've consolidated is about INR 1.2 crore from the portfolio. Therefore, if you were to look at the own brand portfolio, excluding the Biryani By Kilo portfolio, then the numbers are actually flat.
Okay. Okay. Manish, the last question is with regards to the impact that you called out for the GST bit of the rent and some impact of that increase in the aggregator expenses. If you can elaborate that a bit.
If you remember, last year, October, there was a GST ruling change whereby earlier, for example, there was this whole exemption, which was available for renters lower than a threshold level, which government kind of brought in as a reverse charge mechanism. Therefore, as far as the context is concerned, they are supposed to pay GST on 100% of the rents, wherein earlier, given the lower income levels of the landlords, you would save some bit of GST. That impact has carried out. Therefore, since in QSR, as you know, the GST is not allowed to be set off, in our case, it kind of tips the bottom line. That's the impact that I talked about.
Okay. You had said something about the aggregator bit as well. The aggregator cost also increased.
If you see in the current quarter, KFC online sales are higher than earlier quarters. With the online sales becoming higher because we ran these multiple things as an initiative on the online basis, obviously, your aggregator cost also goes up because the aggregator proportion is going up in the overall sales.
Okay. Thank you, Manish, for this.
Thank you.
Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the question queue, please restrict your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Next question is from the line of Sujit Jain from BALIC. Please go ahead.
Yeah, thank you. This is for Mr. Jaipuria, and these are not quarter-related questions. Let me note them down. Two points. Our categories are carbon-centric, so that brings cyclicity. When carbon is in a slowdown, we also slow down. We don't have an answer to the entire industry for fuel billions to 20-minute delivery. It does work for them. For us to even think about something like that, maybe we need to get our store economics right before we start thinking of adding an additional, you know, expenditure line. The third thing is that if I look at nine quarters, nine to ten quarters, the SSSG has been negative to flat, whereas the like-to-like for something like fuel billions has been positive. There is at least one player that has done better in the industry.
The fourth thing is some of the categories that we've entered, which are more, you know, there's regional variation such as in a biryani. For example, when I've purchased in a vangu because of the batter that will change locally from place to place, there's a limited standardization you can do. How do you address that? Thank you.
Okay, let me address a few questions for you, and then Mr. Jaipuria would also come in. Let me start from, you talked about biryani in terms of regional piece. You're right. There are multiple types of biryanis available in the country. If I remember my number right, there are almost 300 types of biryanis which are available in this country. If you were to subsegment the entire market and you were to analyze in terms of what works in the overall category, Hyderabad biryani is the biggest piece, followed by Lucknowi biryani, and followed by Calcutta. If you were to look at almost 70% of the market, it would be top four to five types of biryanis. Within that, if you look at Biryani By Kilo portfolio, we have Hyderabad, Lucknowi, and Calcutta, which is already there, and that is working well for us.
Hyderabad biryani works on an all-India basis. Lucknowi biryani works virtually on an all-India basis. Calcutta biryani is predominantly niche. They've already kind of fine-tuned the portfolio on the basis of three biryanis. If need be, maybe if we need to add one or two more, we can do that. Otherwise, we are largely covering what is important from an overall market perspective. Coming to your point on the brands being urban-centric and therefore what is happening there. If you look at the overall QSR market, Jubilant is there in 400 + cities. We are also in about 280 and 290 cities. Similarly, if you look at the penetration of the food aggregators, they are currently in more than 800 cities. Therefore, this whole thing is traveling much beyond what are historically understood as urban centers. We are also kind of there.
The opportunity lies in the tier-two segments because the awareness is there. The aspiration is there. The income levels are a little bit of an issue. Otherwise, we started to present ourselves beyond the urban-centricity, beyond the urban presence. That's how we managed to cover almost about close to 280 - 290 cities. When you go there, it is not just about opening a store. You need to have the portfolio. You need to have the right product mix, the right price points, what works in a smaller town from a promotion point of view. All of that also needs to be worked, which is what we've optimized a few things. We are working on a few things. Therefore, we are geared up beyond the urban India. Obviously, we are far, far away from rural as of now. Urban itself is still a very, very big opportunity. Your another question was about delivery. Am I right?
Yeah, trying to manage delivery.
Yeah. We've experimented, as I said, a few things in the delivery platform, and that's given us good results from a triple AC perspective, both for KFC and Pizza Hut. Obviously, you're right that Jubilant is doing a far, far better job versus what we are doing because their model kind of fits very well with the overall delivery portfolio because it's a delivery-first brand, right? We have kind of, over a period of time, moved from a dine-in-centric brand to a delivery brand. Therefore, we are also moving in that direction. We are also internally strategizing in terms of how we kind of capture that market quicker. Maybe we'll be able to come back to you in the next few quarters so that we are able to cater to the current consumer preferences. Therefore, with that, we will see that our SSS Ds also will start to pair better.
At the same time, on the online basis, we have to work on the dine-in basis. We have to work on our menu options and what we offer to the consumers on a unique basis versus what is there in delivery. That is, again, something that we are already working on.
How to improve the store economics so that you can accommodate more branding expenditure, including more expenditure on this delivery initiative?
See, we need to continue to optimize the formats for the dine-in channels. As you know, over the last few years, we've reduced the store format sizes. KFC, since everybody knows, but let me, for the sake of repeating it, KFC, the format used to be 3,000 sq ft . We are down to about 1,400 sq ft to kind of catch up with the delivery trends and the lower dine-in. Similarly, on Pizza Hut also, we've moved away from a dine-in-first brand to a delivery kind of focused format. Therefore, this needs to be continuously optimized. At the same time, we also need to be cognizant of the fact that there is a category of consumers who prefer, and they prefer a good dine-in experience, which kind of has started to work on a very segmented basis.
Therefore, more than the format optimization, we also need to combine formats along with the channels that will give us good results. That also is a plan that we are currently working on.
I wanted to hear Mr. Jaipuria how he wants to take this question.
I'm sorry. Please request you to rejoin the queue.
Yeah, this is not a question. I wanted to hear Mr. Jaipuria, how he wants to take this company at the pole position. Thank you.
I think it's better Manish is on the ground level with this. That's why I want Manish to say it. I am not totally at the ground level, so I didn't want to answer your question. That's why I've kept quiet. I will understand a bit more from him and then get back to you. I don't want to give you an answer which I'm not fully prepared for.
Thank you, sir. Ladies and gentlemen, please restrict your questions to two participants. Should you have a follow-up question, please rejoin the queue. Next question is from the line of Niharika Kumari from CapGrow Capital. Please proceed.
Hello. Yeah, hi. I have a couple of questions. The first question is more towards the QSR sector. Do you think the QSR sector has kind of bottomed out, or is it also facing threats from the likes of, say, Cloud Kitchen or consumers ordering more from the likes of Swiggy, Zomato? Is this more of a structural change, or is it related to QSR slowdown? When do we see SSSG getting ramped up? Is it a matter of a couple of more quarters, or will the turnaround take some more time?
Hi, Niharika. Niharika, see, to your first question in terms of what is happening with the QSR sector and where is it headed, in our view, there is nothing wrong with the QSR sector if at all. We still believe that this is one of the highest opportunity industries which are available. Now, when you talk about, let's say, just the listed QSR space, obviously, it is different. I'm talking about QSR as an industry, which means that will include aggregators, that will include local competition, that will include all the new players who are coming in. All of that constitutes, and they are predominantly playing in the QSR space. There are multiple startups which have experimented with traditional foods. They've converted that into QSR, and therefore, they are kind of jumping in. That is all about the QSR industry.
Coming to the listed players, if you look at where the recent issues are, and I will combine your question along with the SSSG, we've expanded very, very aggressively over the last four to five years. If you look at, let's say, Devyani numbers, what they were around the time we listed to where we are now, we are multifold in terms of the top line. Similarly, if you look at, let's say, the competition also, everybody has grown. Now that densification has come at the cost of SSSG. If the overall industry has to grow, we have to make sure that we are densified. If you look at, say, global, take the U.S. as a market.
In the U.S., the QSR industry is bigger than the FMCG industry because of the food habits, because of the multiple choices available, because of the densification, and so on and so forth. In our view, there's a significant opportunity in the QSR space. The densification is required. Once the consumption starts to pick up, we will see the SSSG is also coming back. It is also a combination of how aggressively we are opening and adding new stores. I've said in my comments that you will see a very limited Pizza Hut organic expansion. We are hopeful that with that little bit of slowdown, we should see positive SSSGs. On KFC, if you look at the current quarter performance, we have virtually, we've neutralized the losses, which were there for the last many quarters because we've laid out some online strategies. We are working on these things, and you will start to see a positive SSSG over the next few quarters.
Okay, Dawar, just one follow-up here. What are your views on cloud kitchen? Will it be a threat, or is it just complementary to Lifted Plus?
It is complementary because today, for example, if you look at the consumer convenience, they prefer to consume food at home, given organization, traffic jams, and so on and so forth. We have to ensure that we become a very meaningful player as far as the cloud kitchen or, let's say, online food strategy is concerned because it's important that we are able to satisfy the consumer demand. As Sujit mentioned, for example, Domino's has kind of worked very beautifully on this whole 20-minute delivery time, and they are seeing good results. We are also working on a similar strategy because if, let's say, 50% of the industry is getting consumed at home, then obviously, you need to make sure that you have a proper location strategy. You have to have a cloud strategy so that you are able to serve the consumer demand through the aggregators. Sort of those pieces are work in progress, and we are already working on those.
100%. Thank you.
Thank you. Next question is from the line of Jignanshu Gor from Bernstein. Please go ahead.
Hi. Thank you for the opportunity. Manish, am I on an order?
Yeah, you are, Jignanshu.
Okay, great. Manish, just one question. I think a lot of it has been discussed already. On KFC and Pizza Hut, I hear the argument and the logic behind the marketing investment for the promotional investment to bring transaction growth. Would you be, so two parts to this question. A, for the current quarter, in the YOY or sequential improvement in SSSG that you've seen, would you be able to share what kind of transaction growth have you seen in both these brands? The extension is, do you have a particular ABS number in mind at which you will sort of start to taper these specific investments in growing transactions upstart?
Okay. Obviously, we don't disclose the transaction numbers, but we've seen almost 10%+ improvement on the transactions overall with the initiatives that we've taken. If you look at only the online strategy, which is where this whole initiative was focused on, we've seen a much higher transaction growth. Therefore, this was one, as I said, to test. Second is to kind of spur the consumer momentum a little bit. Within this, now we will select in terms of what to do and how aggressively to do that. On the ABS side, our normalized KFC target is about INR 100,000 of ABS on a consistent basis for the full year. That is what we want to kind of aim at on an immediate basis. Once that is there, obviously, we will start to rationalize. They both kind of work together from that point of view.
Okay, great. Just a clarification. These promotions or campaigns were done across all stores or cities, or was it selected clusters for KFC and Pizza Hut?
Jignanshu, there was a differentiated strategy for online and offline. Where we've seen a huge momentum is the online strategy. Obviously, the stores, those promotions and schemes were not run at the dining store. Dining had different sets of promotions. That's how it has been.
Understood.
As you know, the dining servicing is from the stores only.
Correct. It was across geographies, right? It wasn't like focused only on metros or on tier two and so on.
No, across geographies. You're right.
Okay, great. Thank you.
Thank you.
Okay.
Thank you. Next question was from the line of Saurabh Kundan from Goldman Sachs. Please go ahead.
Thank you very much for the opportunity. My question is also regarding these promotions. Just wanted to understand them a little better, Manish. What is the nature of these spends that you're doing, especially on online? Is it something paid to aggregators for better visibility, or are these some menu-level strategic pricing or combos that you've done based on insights that are leading to better revenue growth?
Saurabh, if you look at it, there are multiple ways to kind of handle the entire online piece. One is this whole banner advertising and so on and so forth, which in any case we've been doing in the past. We've continued with that because that comes out of the overall advertising revenue. When we talk about online, it predominantly goes into the aggregators apart from the other targeted digital media. In terms of the large spend, that has been mainly consumer-focused in the shape of participating in some flat sales. It could be a new combo. It could be a little bit of different structure and therefore a higher discount and so on and so forth. There have been multiple combinations which we've tried.
Right. Some of those spends are for visibility. My only question was that.
Visibility has been more or less in line with whatever we've done in the past.
Okay. Okay. Okay.
It has been targeted at consumers directly.
All right. The second and last question is, at this point, do you have any color on, because you said multiple types of initiatives are going in, any color on what type of initiatives are working and which ones will you pull back, which ones will you continue? That's it.
Obviously, I will not be able to share these promotions in detail on a call like this. Obviously, we've seen what the result has been. As I said, I cannot give you an entire rundown of all the promotions.
I understood. I just meant that is it something like value that's working, or is it, I don't know, some combos? Any pattern to the initiatives that are working?
See, the value always works for the end consumer, right?
Okay.
That's normal. If you pick up any category, any industry, you give value to the consumers, they'll be queues. Therefore.
Right. Right. Thank you.
Okay. Thanks.
Thank you. Next question is from the line of Percy Panthaki from IIFL Securities. Please proceed.
Hi, Manish. I was just looking at the dine-in numbers for KFC. You are given the total sales and you are given the dine-in percentage. You can calculate that. I see that the dine-in sales in INR crore terms has declined 14% YOY. This is in spite of whatever store additions we have. On a per-store basis, it's probably declined in the high teens. I just wanted to understand this, like why we are seeing a growth in the online format. Is it just the customer shifting the channel from online to offline? If so, it's really not very good, right? We have had negative SSSG for the last two, three years, which means that the capacity utilization in the store is anyways low. If we get higher capacity utilization in-store, the flow-through from gross margin to EBITDA is going to be huge. We should focus on that rather than diverting the customer away from the dine-in towards delivery by launching these schemes and all that.
Percy, what you're saying is right because if you see quarter one of FY2025, the ABS was INR 104,000. Now it is INR 98,000 with a much higher share of ESV. What you're saying is right because, as I said, we've taken some specific initiatives for online. Obviously, when we've focused more on online, there are some consumers who've got shifted because they were able to get the value proposition sitting at home. We wanted to, if you see the last few quarters, we've been kind of protecting our margins, not participating, whereas the competing businesses have been doing that and the margins were eroding. We also wanted to kind of test. We've seen better transaction growth. We've seen better SSSG and so on and so forth. As Mr.
Jaipuria also said in his address, and I also mentioned that we need to have a very, very differentiated strategy now for online and for dine-in, which is what we are working on so that we are able to differentiate the consumers. With our learnings, obviously, we will now be balancing out in terms of what is happening in the online and dine-in to ensure that the consumers are not getting shifted.
This Epic Savers nine-piece for INR 299, which is for dine-in, was that run only towards the end of the quarter, or was it running for the entire quarter?
It was somewhere in the middle of the quarter, and it was only a dine-in. This offer was not available on an online basis.
Which is why my question is that if it is available only for dine-in, and despite that, the dine-in salience has fallen and the absolute sales per store has fallen, does it mean that this offer is not really having the kind of impact that we hoped for, or is it that it was just for a very small part of the quarter and therefore the impact is not visible?
See, on this one, for example, let's say whenever we experiment with new offers, we set some kind of target for ourselves that this should be the menu mix. Therefore, from that perspective, Epic has kind of exceeded that menu mix. At the same time, the offers which were available online were much more compelling than this value proposition from a consumer point of view. Therefore, we've seen the online momentum much more than the offline. That's the reason I said that once we now try and balance out things, you will see a better one coming in.
Understood. For bringing the dine-in growth back, do you think the Epic Savers, just continuing the Epic Savers, is going to be enough, or some more intervention will be required?
This will obviously continue. We are also planning on some more promotions with our only dine-in focus. We are also looking at some more value offers there. Therefore, that's the overall strategy that I talked about.
Understood. Just one more question from me. Again, possibly on KFC only. We have seen almost two to three years of a bad top line and demand scenario. Generally, there is one school of thought which says that when we are having this kind of a backdrop, the recovery can be equally sort of steep. It can, rather than just go into a low single or mid-single digit, we can have a year, year and a half of double-digit kind of SSG just because we've had a poor performance in the past. Do you think that the averaging just works out on its own, or there is something very specific which would be needed for the double-digit growth to happen, or just a normal consumer recovery will help that double-digit SSG happen?
See, we've seen these kind of consumer behaviors in multiple cycles in the past, right? Whenever this is weak and then suddenly it kind of spikes up, we've seen that in the other industries also. Now, overall, it's a play of whether the consumption is strong or not. If the consumption is kind of strong, obviously, it comes back even more strongly. Given this phenomenon also probably is bottoming out, it could be some good times. Let's hope so. We can discuss this more on an offline basis. We are also equally hopeful as you are.
Sure. Thanks a lot, Manish. That's all for me. All the best.
Thanks so much.
Thank you. Ladies and gentlemen, we will take this as the last question for the day. I would now like to hand the conference over to the management for the 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 our company, please feel free to contact our investor relations team. Thank you once again for your interest and thoughts and for taking the time out to join us on this call. Thank you very much.
Thank you, sir. Ladies and gentlemen, that concludes this conference. Thank you all for joining us, and we will now disconnect your lines.