Ladies and gentlemen, good day and welcome to the Q4 and full year FY 2022 Earnings Conference Call Of The Sapphire Foods India Limited, organized by Orient Capital. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Kapoor, Head, Investor Relations. Thank you and over to you, Mr. Rahul.
Hi. Good evening, everyone, and a warm welcome to Sapphire Foods fourth quarter FY 2022 earnings conference call. I'm Rahul Kapoor from Sapphire Foods investor relations team. I hope everyone on the call is doing well and staying safe. Today on the call, I'm joined by Mr. Sanjay Purohit, who is our Group CEO and Whole Time Director, our CFO, Mr. Vijay Jain, and Orient Capital, which are our investor relations advisors. We have uploaded our investor presentation and earnings press release on stock exchanges and our company website. I hope everybody on the call got a chance to go through these documents. We'll begin the call with the comments from the management, which will be followed by a Q&A session. This call may contain some of the forward-looking statements, which are purely based upon our beliefs, opinion, and expectations of the company as of today.
These statements are not at all a guarantee of our future performance and involves risk and uncertainty which cannot be predicted at this point in time. With this, I'll hand over the call to Sanjay. Here you go, Sanjay.
Good afternoon, ladies and gentlemen. Thank you everybody for attending our investor conference call. We're going to be announcing our quarter four FY 2022 and our full year FY 2022 financial data. Like Rahul said, the presentation that I'm making is already on the SEBI website as well as our own website. Quarter four saw operational disruptions because of the third wave of the COVID pandemic, and January and February were impacted, and things started to get somewhat to normal in March. Despite these operational disruptions, we've delivered a really strong performance in quarter four FY 2022. We added 29 new restaurants. Revenue grew by 46% year-on-year, EBITDA by 66%, up 260 basis points, and PAT of 5.4% as against a loss of 4.1% in quarter four FY 2021.
Our adjusted EBITDA pre-Ind AS 116 rose to 12.9%, which was up 470 basis points year-on-year. From a financial year perspective, this has undoubtedly been by far the best year in Sapphire Foods' short operating history. You would have known me to say that we started operations in 2015-2016. In this five, six years, this has been our best ever year. We added 142 new restaurants during the year. Revenue grew by 69% over 2021. EBITDA by 82%, up by 130 basis points. For the full year also we delivered a PAT of 2.7%. This last year in FY 2021 was a loss of 9.8%.
Our adjusted EBITDA, pre-Ind AS 116, has risen to 10.5%, up 670 basis points. We delivered INR 180 crores roughly of adjusted EBITDA. You know, when I look back two years to March 2020, when the COVID pandemic struck us, we really expected this pandemic to have a very detrimental impact on our, you know, fledgling business. However, in reality, the last two years have actually helped us transform our business and significantly improve the financial performance. In many ways, this positive outcome, I think, is a consequence of the perhaps rare values and resilience that has been shown by each and every Sapphire employee in just responding to the trials of this pandemic.
Internally, we call this as a step-up year for us, and actually all three businesses have delivered a step change in performance in FY 2022. KFC became a INR 1,000 crore+ brand for Sapphire with its highest ever restaurant EBITDA of 19.5%. We have talked a lot about the omni channel strategy on Pizza Hut, and we are seeing it play out with the brand delivering double-digit restaurant EBITDA of 13.4% and with a more compact omni channel store that we have opened, say from April 2018 onwards, that are delivering mid-teens restaurant EBITDA. The Sri Lanka business also is doing exceedingly well. We continue to be the biggest and the best QSR chain in the country despite the macroeconomic conditions being difficult. FY 2022, it's delivered the best ever performance. 25 new restaurant additions. SSSG of 42%.
Revenue growth of 60%. Restaurant EBITDA of 23.2%, up 360 basis points. Over the last few months, we are seeing inflationary pressures, all of you all will know that, on all our inputs. Therefore, this has required us to do a very fine balancing act between increasing prices, ensuring that there is minimum impact on consumer wallets, how do we sustain revenues and profitability growth. As operating conditions have normalized in April and May to pre-COVID levels, we are actually seeing very strong consumer demand for our brands. We have taken price increases on both the brands and in Sri Lanka. Right now we are continuing to see transactions improve. In fact, we are growing strongly. New restaurant additions are on track.
As we indicated, we've indicated that we should be able to double our restaurant count over the next three, four years. That seems to be on track. I think finally, we've been able to develop organizational muscle to be able to cope with volatile situations. Therefore we'll find ways to get better. We'll find ways to manage the inflationary pressure. We are quite confident about our future growth goals. Before I take you through the results, I just want you to. I always like to reiterate the Sapphire story because we are such a young organization. We operate restaurants of two of the largest global brands, KFC and Pizza Hut, and in our short operating history, we've been able to build substantial scale and operations, thereby leading to high profitability and scale among the top three QSR operators.
As a restaurant operator, we pride ourselves on our execution mindset. We want to deliver great customer experience, great food, great experience, great value, and our back-end operational capabilities aid this customer experience. We have worked hard to develop our capital allocation model to be optimized and therefore have worked on the new restaurant expansion model. Again, you would have heard us speak about this, our focus on smaller sized omni-channel restaurants. This has started to play out, improve accessibility and profitability. We built ourselves to be a platform player. We have the capability and capital to drive both organic and inorganic growth. I think underlying this is a values-based work culture, very high on governance, enabled by a professional management, professional board and professional promoters. Let me now take you through the quarter four results.
Restaurant sales were at INR 494 crores, up 46%. EBITDA was INR 104 crores, up 66%. EBITDA margin was 21%, up 260 basis points. We delivered a PAT of 5.4%. We added 29 restaurants, 13 KFCs, 10 Pizza Huts in India, 6 in Sri Lanka, and nothing in Taco Bell for the quarter. It's also our best ever year performance, as I talked about. We delivered INR 1,715 crores restaurant sales, up 69%, INR 325 crores EBITDA, up 82%, 13.9% EBITDA margin, PAT of 2.7%, and totally opened 142 stores, 60 KFCs, 57 Pizza Huts, 22 Pizza Huts in Sri Lanka, and three Taco Bell restaurants.
Our total restaurant count at the end of March was 579. We have a very strong balance sheet and cash. Net of debt is about INR 400 crores. You know, we operate with negative working capital. This is the next slide. This is slide number eight. It shows you the restaurant count across years. If you look at how our additions have gone during the year, we added 13 stores in quarter one, 32 in quarter two, 68 in quarter three and 29 in quarter four. We said in December our restaurant count was 550 and our guidance was we expect that to double in three to four years. I think this year we are on target to be able to meet you know, that broad objective. I'll now hand it over to Vijay.
Vijay Jain is our CFO, to take you through the specific financial details.
Thank you, Sanjay. Good evening, everyone. I'll cover from slide number , consolidated financial highlights. This is at an overall consolidated level. Restaurant sales, we took INR 494 crore, up by 46% over corresponding quarter. Gross margin of 69.1%, a drop of 100 basis points on account of inflationary pressure. We will deep dive into each of these, at a business level at KFC, Pizza Hut and Sri Lanka level, to understand this in a bit more detail. Restaurant EBITDA, we clocked 18.3%, up by 30 basis points. In spite of gross margin under pressure through our cost efficiencies, we were able to deliver expansion on restaurant EBITDA. Mind you, this was a quarter where January and February was impacted by COVID.
Inflationary pressure plus COVID, still we were able to drive restaurant margin expansion. Company adjusted EBITDA, which is pre-Ind AS 116, at 12.9%, up by 470 basis points. Overall company EBITDA post Ind AS 116 at 21%, up by 260 basis points and PAT at 5.4% for the quarter, up by 950 basis points, vis-a-vis loss of 4.1% in the corresponding quarter. If you look at the annual number of PAT 2.7%, this was the first ever year for Sapphire to deliver PAT profitability, so quite an important milestone from Sapphire point of view. Moving on to the next two slides. I'll not get into details of P&L and balance sheet. Moving on to cash flow, slide number 14.
Again, the cash flow is based on the post Ind AS 116 representation, so may not give a completely correct picture the way one wants to look at it. However, if I give you a couple of important data points over here. Cash generated from operations, if I bring it up pre Ind AS 116, it would be close to INR 240 crores - INR 250 crores cash from operations. When you look at the CapEx which we incurred for the year, so while the investing activity shows INR 691 crores, it also includes the funds which we would have invested into FDs and mutual funds. If I exclude that, the CapEx investment for the year would be INR 285 crores rupees for the year. The closing balance of cash shows INR 58 crore rupees.
However, if you include the investments which we carry, the overall cash balance net of debt is close to INR 400 crore at a consolidated level.
Let me talk now about the KFC performance. KFC, despite the operational disruption, had a strong quarter. We grew SSSG by 15%. If you look at slide number 16, we talk of the recovery versus FY 2020. Delivery is tracking at an ADS level double of FY 2020. Dine-in has come back and is slowly coming back, but it's still at 67% of FY 2020 level. As in April and May, this is starting to further improve. There are several branding and promotional initiatives that we had during the quarter. I think the launch of the Biryani Bucket was a very important innovation, and that's really doing well.
From the operational perspective, the seven minutes express pickup or get a free piece of chicken is really quite successful, helping our operational people to really hustle in the kitchen and drive you know customer satisfaction. That's worked well. There's a lot of work happened on digital activation. We won the Brand Disruption Award for the Value Burger campaign with Mr. Anil Kapoor. There are some of the pictures of our new restaurant launches. As you can see, they look really beautiful. When you see the Attur, Salem store, for example, it's a 1,500 sq ft store, but looks really imposing and beautiful. Then we've got some pictures of a Mumbai store and a Pathankot drive-through and then an indoor store.
Moving on to KFC financials, slide number 21. The SSSG for the quarter was 15%. ADS was at INR 132,000, growth of 12% over corresponding quarter. In spite of the first 45 days impacted by COVID, quite a healthy SSSG and ADS growth. Overall revenue for the brand at INR 296 crores, up by 43%, and we added 13 restaurants during the quarter. Moving on to the next slide. Gross margins were dropped by 70 basis points on account of inflationary pressure. The last price increase, which we took was in September. Since then, towards last week of March, first week of April, we have taken another price increase of close to 9% in KFC. The quarter had no price increase.
Despite the drop in gross margins, we were able to improve our restaurant EBITDA by 90 basis points at 19% for the quarter. Overall, KFC again had a very strong year, the best year. It has become a INR 1,000 crore brand for Sapphire and a restaurant EBITDA of 19.5%.
From a Pizza Hut perspective, our Pizza Hut was slightly more impacted by the third wave of COVID, and this is largely because of our strong mall presence. Malls in quarter three and quarter four were still not operating at 100%. The third wave of COVID had also impacted, you know, our business. The fact that we are in South and West, and South and West has had the most operational disruptions. The Pizza Hut business was a little more impacted than KFC in the quarter. Having said that, we had a SSSG of 3%, year-on-year. We launched the San Francisco Style Crust . You know, I'd encourage any of you all to have this.
This is absolutely fantastic product, and it expands the crust options that we are offering to consumers. You all know the pan pizza. Deep dish pan pizza is the signature KFC or signature Pizza Hut crust. This one, the San Francisco Style crust, which is a global innovation, also is starting to do quite well. It's just a lighter, little airier, and little crispier product. It's at the same price point as the deep dish pizza and this innovation offers little better, you know, little better margins than the deep dish pizza. Again, from a promotion perspective, we've shown a couple of pictures. There's a lot of activity around the San Francisco Style Pizza on digital. On slide 28, there are new restaurants that have some pictures.
Each of them is roughly in the region of about 1,200 sq ft or so. The Magadi Road store in Bangalore or the Bandra store in Mumbai, having about 50 seats. We've got a beautiful store in Fort Mumbai next to Sterling Talkies. You can see the Waluj, Aurangabad store also.
Moving on to slide number 29. We start with Pizza Hut financials. SSSG of 3% for the quarter. As Sanjay said, Pizza Hut was probably a bit more impacted compared to KFC for the simple reason, which is the territories which we operate in South, largely South and West and the mall portfolio. Still a 3% SSSG, ADS growth of 2%, overall ADS at INR 55,000. Restaurant revenue of INR 103 crore, up by 33%. Restaurant additions of 10 during the quarter. While gross margins dropped by 180 basis points, the restaurant EBITDA, we were largely able to hold in spite of both COVID impact and inflationary impact, with restaurant margin at 11.5%.
Within this entire cohort of stores which were opened from first April 2018 onwards, so stores opened over last four years, they have delivered profitability in the range of mid-teens. This is the compact omnichannel format stores which we have, which as a company, as a strategy, we will be rolling out as we move forward as well. Overall, for Pizza Hut also this was the best year. We have moved from single-digit EBITDA to a double-digit restaurant EBITDA. Within that double-digit restaurant EBITDA, the entire cohort, as I said, which is the recently opened since April 2018 onwards, compact omnichannel format stores delivering mid-teens level of profitability. This is in spite of the fact that the dining has been a bit constrained over the last one or two years.
We are quite confident about this particular format and the model as we move forward.
Let me then now talk about the Sri Lanka business. The Sri Lanka Pizza Hut business is the biggest QSR chain in the country, in that country, and is also perhaps the best QSR chain. In terms of our number of stores that we operate, the average daily sales, our customer experience is absolutely top-notch. During this period, from a local currency perspective, we've continued to go from strength to strength. In fact, if you look at the business, it delivered a 29% SSSG in Indian rupees. From a Lankan rupee perspective, which is really what local consumers are paying, there was a 47% SSSG in this quarter. This business continues to do well. We also opened six stores.
Like I said again, Vijay Jain will talk about the financials, it's doing really well. If you look at the channel sales contribution, which is the slide number 32, our recovery even on dine-in now has come to almost 100% of pre-COVID levels, and delivery and takeaway continue to do exceedingly well. We've had a slew of new product launches. We did a meal for one, which is the My Box launch. That's doing very well. We have quite an innovative product, which is pizza and biryani combined, which is limited, you know, just to our dine-in, you know, just to the dine-in occasion, during lunch. It's a very, very nice, very nice innovation. A lot of work on digital. The new store launches you can see.
All these are, I would say, smaller towns outside Colombo and outside the main cities. Our recent expansion of the brand continues. You know, it continues to occur at a reasonably fast pace. If you see during the year itself, we would have opened 22-
25.
22 Pizza Hut stores on a base of close to about 67 or so. Really strong number of additions and that we are quite confident will continue.
Moving on to slide number 36, Sri Lanka business financials. SSSG of 29% in INR has suggested very handsome growth in LKR, 47% SSSG. This is not just led by. Sometimes you feel that it's led by inflation, but that's not the case. We are seeing a very handsome transaction growth also over there in Sri Lanka business. 30% plus transaction growth. That's the real test of the business and we are seeing a very good transaction growth over there. Overall ADS, 30% growth in LKR terms. Restaurant sales at INR 92 crore, up 82% in Indian rupee terms and up 105%. We have almost doubled the business over last year. Mind you, last year Q4 in Sri Lanka we were not trending below pre-COVID levels.
Last year itself was also largely at a pre-COVID level. On that number, we've been able to double the business in Sri Lanka this quarter. Gross margin drop of 530 basis points. I'll just try and bifurcate this into two parts. Last year quarter four FY 2021 when we showed 70.2 as a gross margin. It has a 200 basis points annual benefit which was accrued in quarter four. The drop is more like around 330 basis points. Yes, because of inflationary pressure, but in spite of that we have delivered a very high restaurant EBIT of 24.4% for the quarter.
Even if you look at the year, restaurant EBIT of 23.2, this has been the best ever year for even Sri Lanka business, both in terms of revenue as well as profitability. If I convert this into a group at absolute value, the restaurant EBIT for the quarter has grown by 63% and the restaurant EBIT for the year has grown by 79%. A lot of times when you see that Sri Lanka is a very small contributor, the answer is no. It continues to grow very fast and it continues to contribute very handsomely to the overall business.
Let me take a minute or two to talk about our other initiatives. Last time I spoke of our ESG initiatives and there's a lot of work that is actually happening on the ground. What we thought we would benefit from was to onboard a professional firm and therefore we are starting to work with PwC and so fine-tune our charter and review our progress on ESG. I'm not going to be talking about this every quarter, so to make meaningful progress here we'll start to talk about it every half. Every six months we'll talk about some of our ESG initiatives. If you look at just one of the you know small shoots that we are now starting to take on a larger scale, we implemented solar panels in a couple of stores.
They have, you know, the solar panels are giving us benefits and providing us a payback of in the region of three years and therefore now we are expanding it to more number of stores. We will see that happening over the next couple of, you know, months. We launched a very beautiful store in T. Nagar. We refurbished a very beautiful store in T. Nagar, Chennai, which is a sustainable store. A lot of local cement texture, handmade tiles used, laminates from vendors that follow sustainable manufacturing systems and so on and so forth. This is, you know, initiatives that we are doing ESG front. From a people perspective we wanna equity and inclusion across the Pizza Hut global summit in 2021.
We were awarded best workplace for millennials in Sri Lanka. I think this agenda will just get stronger and more focused as we go forward. That's it from me. I'm gonna stop here and now hand over back to Diksha.
Diksha. [At this time we are ready] For Q&A.
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 the touchtone 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 a question. The participants are requested to restrict their questions to two per participant. If you have any follow-up questions, please stay back in the queue. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
We take the first question from the line of Percy Panthaki from IIFL. Please go ahead.
Hi, sir. Congrats on a very good set of numbers. I just wanted to understand your plans for next year in terms of what is the total CapEx that is planned for the year on a consolidated basis. If possible, if you would also give an idea on how many stores you would be opening across formats.
Percy, Vijay here. Again, we do not like to give a year specific guidance. As Sanjay mentioned, 550 restaurants we had as of 31 December. We plan to double that over three to four years. If you average it out, it could be 30-60 stores, right? In terms of CapEx, currently we've incurred INR 285 crore CapEx for the store where we actually had four stores. That will give you a broad indication on where our CapEx credits go. We would refrain from giving a very specific number. We are on track on this particular projections of doubling it over three to four years.
The CapEx of ours, which is INR 285 crore, includes refurbishment of our stores, and this is one of the big things which we do to ensure that customer satisfaction levels are always high. This CapEx of current year, which is FY 2022, of INR 285 crore, includes new stores, refurbs, plus IT CapEx as well.
As we are going forward, Percy, many of the stores that we have opened now are five, six years, so they come into the refurb cycle. We've always found that when we do a refurb and an overall facelift of the store, it has a very positive impact on, you know, on the customer experience. Refurbs also will start to increase in numbers going forward.
If I look at your business CapEx of INR 285 crore and a store addition of about 152, on average, it works out to be about INR 2 crore per store, including the refurbishment, IT, et cetera. Given that, your metal prices, commodity prices are also up, do you think this INR 2 crore per store will cover inflation in FY 2023, and if so, by how much?
Percy, again, the way you did the math, INR 2 crore per store, is not the right way to look at things because you have included the total CapEx and divided by just the NSOs over here, the new stores over here. Not really the right way. Just to answer on your inflation part, we are seeing an inflation in the range of 3%-5% on the CapEx front, at overall CapEx front. Again, there is always an end to that. How do you create more efficiencies internally so that not everything eventually hits us, but 3%-5% inflation is what you're seeing.
Okay. Given that your refurbs will continue, it would be fair to say that on a per store basis, whatever number of stores you open in FY 2023 multiplied by about INR 2 crore-INR 2.1 crore would be the total CapEx that you would sort of require. Is that understanding correct?
I would still say that INR 285 crore plus the adjustment for the stores increase or inflation is the right way to look at, because when you label it INR 2 crore per store, it gets labeled somehow that it's a per store cost, so I don't want to label it that way, Percy.
Okay, understood.
Yeah.
Secondly, on Sri Lanka, I just wanted to understand, while the Q4 figures, obviously, you're given in the presentation and they are very good, but on the ground, what is happening currently, are you seeing any kind of disruption in terms of demand, given the heavy inflation that the economy is going through and therefore, the pressure on the consumer wallet, leading to a demand compression? Or secondly, any sort of demand issues because of the disruption of daily life, and on account of that, if there is any sort of decline in the constant currency sales per store, could that have a negative operating leverage on the EBITDA margins also?
Percy, I think the advantage which we are getting in Sri Lanka right now is somewhat similar to what happened in India when COVID strike. When COVID strike, as Sanjay said, initially everybody thought that probably this would put us back by two years, but eventually it gave us an advantage when we came out of COVID. Something similar is happening in Sri Lanka, and a lot of times we are looking at just one month back, but the problem started even nine months back. But over nine months, whether it is inflationary pressures, whether it is other things which are happening on a macroeconomic front, the quarter four performance is in spite of those macroeconomic pressures. Yes, the things have got worsened on the macroeconomic front over last 30-45 days.
Even when we look at our April trajectory, we continue to see very high double-digit SSSG. Our quarter four was in the range of 30 odd percent . At present we are seeing similar numbers. The real benefit here is the SSSG. We continue to see very high SSSG in that. While the macro situation is tough, business-wise we are very strong. The advantage over there is that 90% of our deliveries, we own the fleet, we deliver ourselves. That's another advantage over there. We being the biggest brand and the largest brand over there gives a, like, unique advantage to us. As long as the stores are operational, which have been the case throughout, we are very confident that we should be able to generate very high throughput from those our stores.
Yes, there were a couple of occasions of disruptions on account of curfew or emergency. Barring those, as long as our stores are operational, we are confident of the revenue being generated.
Okay, sir. That's all from me. Thanks and all the best.
Thank you. We take the next question from the line of Richard from JM Financial. Please go ahead.
Hi. Thank you. Can I request you to give some perspective on, you know, on the movement in the non-restaurant costs. I'm really talking about the difference between restaurant EBITDA and company-adjusted EBITDA. You know, that cost used to be around INR 95 crore in each of FY 2021, which has gone up significantly to about INR 140 crore in FY 2022. Can you help us understand, you know, the reason for this quantum jump from INR 94 crore to INR 140 crore?
The difference also includes the ESOP cost. If you actually strip off the ESOP cost, ESOP cost for the year was in the range of INR 35 crore. That's the reason you will be looking at a big jump when you're looking from a restaurant EBITDA to adjusted EBITDA, because adjusted EBITDA is post ESOP cost.
Okay. That INR 140 minus INR 35, which is INR 105, that is the real cost.
Yes. Yes.
Okay. Vijay, Sanjay, can you you know obviously the margin picture at the restaurant level has turned out to be much better than what one would have anticipated maybe about 1.5 years back. Can you give us some you know some guidepost in terms of how are you looking at this? I mean. You know, is given that it turned out better than what it is you know are you looking at further expanding to this or you think that this is really the optimal level that you would like to operate at?
I think when we look at restaurant EBITDA, we would like to see it at a business level rather than at an overall level. A lot of time the overall level actually gets skewed because of the mix each business would play out. If you take business by business, KFC right now at 19.5%, I think we are quite happy where it is closer to 20 odd percent . We always maintain that we'll continue to see some efficiencies as we keep building more stores and we keep generating operating leverage. We're quite happy where the range is right now close to 20 odd percent for KFC.
Pizza Hut, while the overall brand is at around 11.5% for the year, I'm now stripping off the additional incentive which we have received during the year, so it's 11.5% for the year. Within that, the new stores opened from April 2018 onwards at mid-teens. This set we believe will start moving towards high teens as the dining comes back strongly for us. As we keep adding more and more the smaller and the tighter omni-channel format stores, the overall brand profitability, which is currently around 11.5%, we see this moving towards mid-teens, entering teens and eventually moving towards mid-teens. Sri Lanka currently at 20%+.
I think we are quite happy if it remains in the range of 20 odd percent , as long as the kind of growth we are getting over there of 40-50% SSSG. Because the idea is to manage inflation and we don't take price increases which is equal to inflation. We normally try and take it below inflation so that we become more attractive to the customers, we remain competitive, and we continue to offer more values. As long as we are able to deliver 20%+ restaurant EBITDA on Sri Lanka, we are quite happy.
Sure. Just to confirm again, you know, with regards to the store ambition, if I heard you correctly, you basically said doubling versus the 550 stores of December 2021 over a five-year period.
Over a three to four year period.
Over a three to four year period. Okay. Got it. Thanks a lot, wish you all the best.
Thank you.
Thank you.
Participants who wish to ask a question may press star and one now. Anyone who wishes to ask a question may press star and one on the touchtone phone. We take the next question from the line of Jaykumar Doshi from Kotak. Please go ahead.
Hi. Thanks for the opportunity. I have a question on Sri Lanka. If you can let us know how are you managing the operations, you know, what are the risks you are facing at this point of time, purely from supply chain perspective? You know, what's the base case and worst case scenario for Sri Lanka? That's number one. Another is, you know, usually when countries go through such difficult macro situation and default, you know, how does a QSR business perform over a two to three year period? What are your learnings if you have looked at similar situations in other countries where, you know, how has Yum! franchises performed in those countries?
Yeah. From an operational perspective, we have a really strong team there in Sri Lanka, Jay. You know, I've done extensive visits in Sri Lanka. I will say that this is perhaps the best QSR team there. So.
I meant availability, right? The other day there was a headline article saying that they don't have more than petrol supplies of one day or power cuts of 15 hours and such situations.
Right. What are the issues there? The issues are, for example, getting fuel and getting electricity to be able to run our stores. There, operationally, we've been able to still manage to run our generators and operate our stores. Yes, there have been disruptions, but where it might be for a few hours and we need to close down the stores, those. We normally do that during the, you know, the lean period. Apart from that, we have been able to manage the operational disruption. From a supply chain perspective, from an import standpoint, both, cheese is our biggest import. Again, there, we've been able to. We have stocks in hand. We have been able to manage imports, plus we are helping through India also.
Typically we used to get cheese from Fonterra in New Zealand. Now we are getting it, some cheese from India also. Apart from that, most of the other products are local. Capital equipment also we've been able to manage. On ground, this transaction growth that you are seeing is a result of us being able to manage that situation really, really well there. I know we read a lot in the newspapers about violence, et cetera. In general, it's a peace-loving country. Citizens are, you know, peace-loving, and I think very disciplined. Even if you go to a fuel station there, you won't find the kind of.
You'll find a disciplined line, and therefore, we'll have one person almost stationed at the fuel station to ensure that we get the right amount of say, diesel for us to run our generators there. I think overall all our operational parameters of the business continue to do well. We see an actual opportunity here, and again, we have talked informally to other people in the Yum!, you know, in the Yum! system. We have also talked to some other people who have been perhaps exposed to higher inflationary environments. Contrary to what you know, people say, we think that this is a great opportunity to strengthen our business, improve our accessibility further. When I look at, say, even close by, say, the Pakistan business of Yum!
seems to again be doing, you know, fairly well. I think we've got a team that is very capable. We've got certain operational strengths that are unique to us really in that market. We believe that from a macro perspective also, things will start to stabilize over the next six months, or whatever. Whenever they start to stabilize. We remain confident about this business and what it can do from a constant currency perspective. Sri Lankans are paying in Sri Lankan rupees. They are opening their wallets and spending on Pizza Hut, and I think that's what we have to focus on. If the currency depreciates versus the Indian rupee, and therefore, from our consolidation of accounts, what that does, it doesn't impact the Sri Lankan consumer.
You know, overall we continue to be bullish on that business.
Understood. If I may ask, as of today, have you managed to pass on all the inflationary pressure that you are facing on the, you know, raw material input side in terms of price increases? Are your gross margins and EBITDA margins as we speak today comparable to what it was, you know, before depreciation of Sri Lankan currency started?
Yeah. Our strategy will be to pass on the entire inflation as is to the customer. We would always want to pass on something which is lower than the inflation, which makes you more attractive to the customer. If it's not value, it's attractive to the customer, it makes you more competitive in the market. That's a general strategy which we always follow. For example, last year the inflation in Sri Lanka business was probably 20% +, 25% maybe. I'm giving you very approximate numbers over here just to make a point. We would have taken a price increase of around 15% last year. We dropped our gross margins last year. If you look at the annual number, we have dropped our gross margins last year, but we've been able to improve our EBITDA.
The way to improve or hold or improve our EBITDA is not just the gross margin line. How you can make sure that you deliver other cost efficiencies, thereby you don't pass on everything to the customer and still continue to hold and improve our restaurant EBITDA margins. This would be again the way forward. Again, we will not be passing on the entire inflation to the customer. Again, very confident of trying to hold the restaurant margin. As I said, 20% odd restaurant EBITDA we are quite comfortable and confident of.
Understood. You know, a couple of different questions. One is when I look at your India performance, KFC as well as Pizza Hut. On a sequential basis, there is about, you know, hardly any difference in gross margin for KFC. Marginal decline in gross margin for Pizza Hut. I'm talking about sequential December to March. There is definitely a seasonal drop in ADS for both the brands. When I look at your EBITDA margin drop on a sequential basis, it's slightly higher than what we usually see in, you know, sequential performance of other QSR players. I was just wondering, is this, you know, natural or seasonal decline, you know, in the margins?
Should one look at this quarter's EBITDA margin of brand level margin of 19% of KFC and 11.5% of Pizza Hut is more representative of your you know full year potential or is there any scope for especially you know Pizza Hut we were sort of after last quarter's performance my expectations were it probably will inch closer to 15% as you know the mix of new stores improve but it's gone closer to 10%.
There's twofold impact, right? It's not just the seasonal impact. You rightly said the seasonal impact would be there in quarter four versus quarter three. For the benefit of everyone, we had called out that quarter three typically is anywhere between 100-200 basis points higher than the annual average. This would have been dependent upon where the Navratri falls, where the Diwali falls, where the Shravan and Shadis is. Sometimes it's towards the end of Q2, sometimes it falls in quarter three. The industry level trend is that quarter three margins are 100-200 basis points higher than the annual average. This is the one impact which you see.
The other impact which probably you're discounting is on the COVID impact, the 45 days impact of COVID, which has impacted Pizza Hut more than even KFC over here. As I said, because of the territories which we operate, and that's reflective in the margin of Pizza Hut as well. On your other point that how much drop we have seen. If you look at KFC, if I recollect the number correctly, 21 was approximately the number in quarter three. We have delivered 19 odd percent for KFC. It's a 200 basis points drop. Yes, if the COVID impact wouldn't have been there, I think we would have been more closer to 20 odd percent for KFC. Pizza Hut, we have delivered 11.5% versus quarter three, 14.9%.
While you expected 15%, quarter three itself was 14.9% if I strip off the additional incentives which we called out in quarter three. 11.5% probably should have been around 12%-13% if we wouldn't have had impact of COVID in quarter four.
That's very helpful. I have a follow-up question, but I'll go back in the queue and come back later. Thank you.
Thank you.
Thank you. We take the next question from the line of Akshen Thakkar from Fidelity International. Please go ahead.
Congratulations to the team on a good set of numbers. Thanks for clarifying on the Sri Lanka business operations as it were in this quarter. Just had a question around how do you now treat the translation impact of currency? The currency is weakened, right? Could you just talk through how does it impact P&L and also balance sheet right now? Thanks. That's on question one.
On quarter four, the P&L impact is not too big because what we saw the depreciation started happening from second week of March onwards and till April, you would say. The Sri Lankan currency was anywhere around INR 0.37 Indian rupees to a Sri Lankan rupee. This was somewhere around end of February. By now we are at INR 0.21 , so almost a 40% depreciation has happened on the currency front. However, the impact in the Q4 P&L is less than 10% I would say in terms of currency translation for the P&L. Going forward, quarter one if you see, we would have a 40% impact in terms of translation.
Sri Lanka business delivered roughly 50-odd crore rupees for the current financial year in terms of revenue, in terms of overall EBITDA, I would say. And again, I am giving you a very approximate number. If you try and apply a depreciation of 40%, but we are growing there very handsomely by almost 40% or 50% SSSG. The overall quantum could be in the range of INR 10 crore for the year FY 2023. As long as the stores are operational, I think we don't see a big impact. Yes, if the stores shut down, of course the impact would be higher, but as long as the stores are operational, this is the impact we are seeing on Sri Lanka business for FY 2023.
On the balance sheet, assets that you have net translation.
On the balance sheet, yes. On the balance sheet front, the closing rate has to be used on the balance sheet side. When you translate your net assets on the balance sheet, we have taken an INR 20 crore impact on conversion of assets. And this is reflected under OCI, which is other comprehensive income. A major impact has already been taken because this was done when the currency was at INR 0.24 . Right now it's trending at INR 0.21-INR 0.22 . A big impact has already been taken into account under the OCI.
Yeah. Thanks for the time, and you know.
Sorry was I clear?
Sorry to interrupt. Your voice is not clear, Mr. Thakkar.
Like that?
Sir, the audio is not clear. We cannot hear you clearly.
Okay.
A bit more better, Akshen? Give it a shot.
[audio distortion].
No, not audible.
Sir, we are unable to hear you. We'll move on to the next question from the line of Mr. Prateek Poddar from Nippon India Mutual Fund. Please go ahead.
Yeah. Hi. Congrats on a great set of numbers. Just wanted to check in Sri Lanka, how much of the benefit you have got from competitive pressures? To the extent, because of such high inflation, have you seen competition shut down and given up share? Has that played to our advantage, which explains the high FMC?
Competition from a QSR perspective, no one has shut down stores. The unorganized market in Sri Lanka definitely has got impacted because they're not able to operate in the same manner that we are able to, and therefore, for certain there'll be some benefit that we have got from there.
There has been a shift from unorganized to organized, which helps the QSR industry in general, and we have been a beneficiary of it, scaling our scale up.
Yeah. I think our benefit is also on the delivery side, Prateek, here. In Sri Lanka, there isn't an ecosystem of aggregators and so on, and therefore it is important to own the delivery channel yourself, and our delivery capabilities in that market are by far the best.
This very thing.
Therefore, even with respect to other QSR brands, you would have gained a little bit.
Can you quantify this impact from unorganized to organized? Is it possible to break down or [equal what]?
I mean, just look at the SSSGs, so that just gives an idea. Other than, I mean, it is impossible to quantify how much is coming from unorganized or organized. There's no numbers to track the sector as such, isn't it?
Yeah. I hear you. Thank you.
Thank you. We take the next question from the line of Devanshu Bansal from Emkay Global Financial Services. Please go ahead.
Yes, sir. Hi. Thanks for the opportunity. You indicated that you have expanded addressable market by launching a thinner crust, which is San Francisco Style. I wanted to check if you can share the division of industry pizza sales in terms of thicker and thinner crust in the pizza category to understand better.
I think you misunderstood. It's not a thin crust. It's a similar crust the way it is, but it's different in taste. It's more crispier, it's more lighter, but it's not thin crust pizza.
Okay. I guess Sanjay mentioned that you have sort of increased the addressable market with this launch.
Yes, we have, but it's not a thin crust pizza. It's not a thin crust pizza.
Okay.
It's a hand-tossed pizza, but it's not a thin crust pizza.
Devanshu, you must have it. I mean, very difficult for, you know, and all of us are trying to find,
The right words.
If you, I think texturally it's quite different from our pan pizza, and it is hand-tossed. Therefore, I think I just encourage you to perhaps try one out. I'm sure you'll love it.
Sure, sir. Sure. I'll definitely try.
It's not thin crust.
Okay. Sanjay Purohit, I wanted to understand, dine-in recovery has been about 60%-70% of the entire Q4. If you could share the trends post opening up in late Q4 and Q1 across dine-in and delivery channels, it would be really helpful.
67% is again average for quarter four. If you look at our quarter three numbers, we said it's already hitting 80%, close to 80% for all the three businesses, Sri Lanka, Pizza Hut India, KFC India. Towards the end of quarter four, we are again seeing similar numbers in reaching 80% plus for both the brands in India. In fact, Sri Lanka already in quarter four we are seeing it hitting close to 100%.
Sure. Lastly, I wanted to understand that you were in the process of implementing a new POS system across your restaurant chain. Wanted your thoughts on the benefits that you expect to accrue from this in terms of growth or operational efficiencies.
First of all, the POS system that we used to operate, Micros, was an end-of-life product. Oracle had bought over this company and then they had sunsetted it. Hence it was imperative for us to look at a new POS. We implemented LS Retail. There are several back-end benefits of it, but the biggest front-end benefit is the processing time for billing. We are seeing that billing time has reduced anywhere between 12%- 15% on average, the time it takes to punch in a bill and serve a customer.
It has been rolled out in August of last year.
Yeah. We had rolled it out in June. Oh, yeah. By August we had finished the implementation across India, you know, restaurant base.
Sure, sir. Sure. That's helpful. Thank you for that.
Thank you. We take the next question from the line of Shivam Agarwal from Mirae Asset Capital Markets. Please go ahead.
Hello. My question is.
Yes, Shivam.
Yes. My question is, what is the store expansion strategy that you are chasing for the Sri Lankan business for the current year? Do you stick to your overall target despite slowdown in the economy?
Last year we opened 25 restaurants, and even in the last quarter we opened 6 restaurants. I probably this is a great opportunity for us to strengthen our base in Sri Lanka. We would continue to expand. This year we are looking at anywhere between 10-15 odd stores this year. Again, we will monitor this quarter-over-quarter that how things pan out over there. This was the plan for this particular year, 10-15 restaurants.
Again, at a broader level, Shivam, we have said that we expect to again double our restaurant base in Sri Lanka over the three to four years. I think we continue to hold that.
My second question is, are you planning to take any price hikes in the Pizza Hut or KFC for the current year?
KFC, we just effectuated a hike in last week of March, right first week of April of 9 odd %. Last week of March, you also saw a price hike of roughly 2.5% to 3% in Pizza Hut as well. Nothing immediate on cards for KFC at least. On Pizza Hut, we have been very conservative in terms of our price increase over last two, three months because we wanted to drive this value. Yes, if the inflationary pressures continue to remain, you may see another small hike in case of Pizza Hut in the upcoming quarter.
Okay. Thank you.
Thank you. We take the next question from the line of Akshen Thakkar from Fidelity International. Please go ahead.
Sorry, am I audible, sir?
Yes. Loud and clear, Akshen.
All right. Thanks. Sorry for the disturbance earlier. Just, you know, on the price hike point that you were mentioning in recent price hikes in KFC and Pizza Hut in March and April, how should we be thinking about, you know, gross margins in each of the businesses, in India at least, you know, versus exits in the year. Should, you know, given the price hikes do margins improve a little bit or, you think this is just a defense to the inflation that we saw?
I think the point which Sanjay made that the way we look at price hike is to make sure that we balance out the impact on customer wallet, how do we remain competitive in the market and still drive transaction growth and drive value. Our price hike typically will always be lower than the inflation. However, having said that, one eye is on restaurant EBITDA margins. We would certainly drive other cost efficiencies to hold and slightly improve on our current restaurant EBITDA margins for both the brands. While you may see a small drop maybe on the gross margin side, we are confident of holding and improving our restaurant EBITDA margins going forward.
I think if I add, so one eye is on consumer transactions. The transactions needs to continue to improve. At the moment, at least we are finding in April, May on transactions on both the brands have continued to improve. This is important. In an inflationary environment, it is not about taking price hikes to cover all the inflation, but to take it in such a way that transactions are not compromised. Right now, at least we are seeing that happen. And then, as Vijay said, restaurant margins are protected.
Got it. Just last question from my side. If I see pricing behavior in the pizza market by the market leader, they have been little more upfront in taking, you know, larger price hikes, and we've taken smaller price hikes. I guess the gap between the two would have reduced now. Is that playing a role in driving transactions for you or do you think it's more to do with some kind of product offering that you have out there and the kind of communication that you've been able to talk about Pizza Hut?
To be honest, I don't think we have looked at what you know, the competition has done. Even from a pricing standpoint, over the last two years we have taken a slightly different pricing outlook. We've got. If you look at comparable à la carte pricing, pizza to pizza, we might be more expensive than our principal competitor. However, what we have pushed is our meals. Pizza Hut is known for you know, meal occasion. If you look at our meal deals that are on offer, those are very competitive. In some cases might be even better value than the principal competitor. I think we're not chasing someone. This is our way to go.
Once we see dine-in come back, consumers are rewarding us for the value that they see it in our meal deals. Plus, if you look at all the work that is happening on innovation, the San Francisco Style Pizza is doing well. I think there's Momo Mia did really well. If I just look at the last 12, 15 months on the brand, actually there's a lot of noise, lot of positive noise that we are seeing even on a new product and inflation that perhaps over the last five years we have not seen.
Was that clear?
Yes. Yes. Very clear, sir. Thank you and all the best.
Thank you.
Thank you. We take the next question from the line of Utkarsh Maheshwari from Reliance General Insurance. Please go ahead.
Hello.
Yes, Utkarsh.
Hello, sir.
Yes. Yeah.
Yeah. Actually, I just want to understand what was the quantum of incentive which we received for this quarter, and I mean, for the full year, and I think this is only for this period, right? I mean, next year it will not be there, right?
Good, in fact, you brought up this point. For the quarter four, we have not booked anything which is additional incentives. The normal incentives which are going to be there for the next five years, it continues to remain this is what it is booked for quarter four. The additional incentives was booked for the period April to December, which we have called out. If you look at our annual numbers, the number in the bracket brings that out, clearly. 1.1% to be precise, it was the additional incentive booked from the period April to December, which has been called out.
Okay. Basically, I mean, one more thing which I want to understand. I mean, sir, we have been able to so far survive the storm in your Sri Lanka. What could be the new things which you should be keeping in mind just to keep this boat sailing? I mean, what could be the new areas or what could be the areas where we could have some pressures which may come to us?
Again, the focus continues to remain to make our business stronger, and this is what has enabled us to survive the thing. As long as the store remain operational, we are confident of handling the situation and confident of driving the revenue and transaction growth. If there's something else which happens on a broader macro level which would relate to shutting down of our stores, then one can't help. As long as stores are operational, I think we are very confident of driving revenue and profitability growth in that particular market.
If I want to understand, if you can quantify what could be the percentage increase cost of operation for us in the current scenario, which is hyperinflationary over there compared to the similar time last year, say, comparatively?
Increase cost of operations you're saying or you're talking about just general inflation?
No, increase cost of operation for us. Because, I mean, when things are in short supply, we would have. We might be paying something extra to keep them coming our way.
We have been able to actually still drive margin expansion even in quarter four, even in the entire FY 2023, not in quarter four, but still a very healthy margin of 24% in quarter four.
That is why we are in hyperinflationary environment because I mean you have said that the growth has been like in terms of SSG. I mean, probably if I want to just rephrase the question, what could be the quantum of increased cost of operation for us? Though it has been passed on so far, but what is the quantum as a percentage, if I want to understand?
Again, we have not passed on to customers. Even the current SSGs we are talking about is led by transactions. 30%+ transaction growth we have seen in that particular business for Sri Lanka. The costs are growing anywhere between 10%-15%. The inflation on raw material was 25%. We took a price increase of only 15%, so we have not passed on. We've been able to drive cost efficiencies because of the higher throughput, probably at a similar cost levels. As a result, we've been able to expand margin.
I mean, what could be our secret recipe to get things going? Because, I mean, as we are reading that there is a shortage of everything, and I think, and as you have rightly pointed out, that cheese is in short supply and fuel is already a problem. I mean, what are the steps you have taken to just ensure that it is sailing through in the right direction?
Again, some, a lot of things when you read in the newspapers probably are not giving the correct picture. When you say read a 15-hour power cut, actually our stores are not experiencing a 15-hour power cut. As Sanjay said, there is a challenge for two or three hours. Second, again, we are making sure that we have enough reserves in terms of backup for fuel, which will enable us to operate through via DG. Bigger thing on the brand side, as Sanjay said, probably we experienced movement from unorganized sector to organized sector. Again, within organized sector we are the largest player by far. That helps us drive transaction and the growth over there.
The strength of the business by being there over the last so many years, the team which Sanjay spoke about, the delivery capabilities which Sanjay spoke about, I think it's all adding up together. It's very difficult to put finger on a one particular aspect over here, to be fair. I think all these things put together is what's driving the business. As long as the stores remain open, we are confident of the growth over there, both in revenue and profits as well.
Yeah, because I mean, there was one particular thing which is called as your dine-in delivery, which is like 56% of your total sales. Is this what, I mean, the fuel cost is on us or fuel cost is on the rider part?
It's on us. These are our fleet, our riders.
Yeah. I mean, when we see that what kind of inflationary impact we may have felt because of this. I mean, it's a proportion, it is almost like 56% of the revenue is coming from your delivery only. There's gonna be this kind of a rise in fuel cost is going to be certainly an impact for us.
When fuel costs are rising, all other costs which are there as a part of the store operating costs are largely fixed in nature, right? When you see a top line growth of 40% and 50%, you get a huge operating leverage out of this particular business which enables you to drive expansion. Yes, there are few lines in the P&L which would grow or disproportionately. Rest of the lines you are able to generate operating leverage. As a result, we can still deliver a healthy margins, and that's what we have seen in Sri Lanka business.
Okay. Basically, is it fair to assume that till the time we have a good win and gateway of growth coming in from Lanka, then I think we should be in a place, better position to manage the show, right? Is that a fair assumption?
Yes.
Okay. Fair point. Thanks.
Thank you. We take the next question from the line of Gopal from SBI Life Insurance. Please go ahead.
Hi. Am I audible?
Yes. Please go ahead.
Yeah, yeah. Thanks a lot for the opportunity, sir. I have a few questions on what would have been the, you know, impact of this wave three on ADS, or you can give some sense in terms of how it was in January, February, and now how it is in April.
It's very difficult to exactly quantify because a lot of factors are at play. Mall impact, the territorial impact, different each state getting impacted differently, different restrictions across different cities. Again, if I try and make an attempt, probably around 5 odd percent maybe for KFC, 5%-7% maybe for KFC. Pizza Hut would be probably around 10%. Again, I'm trying to give you a very high level perspective or very approximate number over here.
Okay. Sure, sir. This proportion of quick delivery, pick up, and dine-in for last you know two years it has been more towards delivery. Do you see this changing going ahead?
Again, we have not pushed one channel over the other. As far I has been always saying that we are a omni-channel player, omni-channel player, omni-channel player. The push is across all the three channels. Why we have seen simply the dining being lower than pre-COVID levels is for simple reason that the operating hours are constrained or operating capacity has been constrained. There is no impact on consumer demand side as the restrictions are coming off. As the norms are coming back with movies coming back in multiplexes, we are seeing customers coming back to the restaurants and we are seeing dining coming back. It's not one channel over the other. Yes, because we had a channel on delivery and takeaway as well, and with digital capabilities we were able to take advantage.
We were in advantageous position to probably take some market share and drive that channel as well, but it was not one channel favoring the other.
Okay. Sure. Sir, lastly, can you give some sense in terms of what is the kind of SSG one should expect for financial year 2023 for Pizza Hut and KFC?
Again, we would not be giving a specific year guidance. Over next three years we have kept saying that as long as we are able to drive revenue at in the range of 25% CAGR, including our new stores, I think we should be quite comfortable and happy. We would continue to maintain that. I think we are on track for that.
Okay, sir. Thanks.
Thank you. We take the last question from the line of Jaykumar Doshi from Kotak. Please go ahead.
Hi. Thanks for the follow-up. You know, there were a number of occasions when you indicated you usually take lower price increase than the inflation, both in Sri Lanka and India businesses. Just trying to, you know, just need a clarification. You know, for a 70% gross margin business, you know, 30% COGS as a percentage of sales, if there is 20% inflation, you just need high single digit price increase to offset the absolute increase in RM. But in percentage terms, obviously the price increase will be much lower. Like you mentioned in Sri Lanka, you've taken 15% price increase versus 25% inflation. Is that right?
Am I thinking that you, on a percentage basis you take lower price increase than in, you know, inflation, yet you see it's RM basket level, but on a absolute basis you would try and cover the absolute increase in RM costs at all point of time?
Again, very difficult to say it in a formulaic sense because you would do the math each time different for different brands. For example, with KFC currently 9.5% we would have tried to cover a lot of it. With Pizza Hut for two years we have to try to drive. So at what point in time is. But yes, most certainly we always try and at least cover the increase, yes, at least that's bare minimum. But at the same time, we make sure that whether what are the other levers in the P&L, so that restaurant EBITDA margins we don't drop and we continue to hold and improve the restaurant EBITDA margins.
Is price increase, you know, entirely your decision or do you need Yum!'s approval or, you know, how does it work in India? Because, you know, there are two franchises. Does it sort of, you know, is it something that is uniform across the country or you have a choice not to take a price increase even if the other franchises do?
It's uniform across the country. There's a joint committee between us, the franchise, and Yum!, so there's a joint decision-making on all pricing decisions. At the end of the day, I think the overall objectives of both the franchisees and Yum! as a partner is all same objective. As long as the objective is common, I don't think it is a concern in terms of taking and not taking a price increase. We are quite comfortable, we come up with a unanimous decision on price increase across both the brands.
Thank you so much. That was very helpful and good luck with the coming year.
Thank you.
Thank you so much.
Thank you very much, ladies and gentlemen.
Thank you. Due to time constraint, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Thank you very much all of you all for joining. We've had record number of participants today, so I'm very grateful to all of you for your questions also. I just want to repeat the story. Despite the COVID disruptions in quarter four, we've had a very strong quarter four. Yes, there are inflationary pressures, but we have taken price increases on both the brands. When I look at April and May from a transaction perspective, we continue to see good consumer demand. From a store expansion perspective, we've called out that we should be able to double our store base over three and four years. This year we should be able to again hit our numbers that we want.
From an overall business perspective, we remain quietly confident about our prospects going forward.