Ladies and gentlemen, good day and welcome to the Barbeque Nation's Q1 FY26 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Vijay Sharma. Thank you, and over to you, sir.
Thank you, Anushka. Welcome everyone to Barbeque Nation Hospitality Limited Q1 FY26 earnings conference call. For today's call, I have with me Mr. Kayum Dhanani, Managing Director; Mr. Rahul Agrawal, CEO and Whole Time Director; and Mr. Amit Betala, CFO. Before we begin the call, before we begin the presentation, I would like to remind that some of the statements mentioned in today's conference call may be forward-looking in nature and may involve risk and uncertainties. Kindly refer to earnings presentation for the detailed disclaimer. We'll start the call with Mr. Kayum Dhanani sharing his perspective and overall demand scenario and key highlights for the quarter. This will be followed by a detailed discussion on business and performance by Mr. Rahul Agrawal, post that we'll open the forum for a Q&A session. I will now hand over the conference to Mr. Kayum Dhanani. Thank you, and over to you, sir.
Good evening, and thank you for joining us. This past quarter, we operated through a soft dine-out cycle. Yet, our resilient business model allowed us to maintain satisfactory performance. We added seven new restaurants during the quarter and remain firmly on track to achieve our FY27 network target of 325 restaurants. We expect the pace of new ongoing opening to accelerate to moving from four to five per quarter last year to seven to 10 per quarter. Our portfolio is strategically diversified across three business segments: Barbeque Nation India, international, and premium CDR. In India, while negative SSSG continues to weigh on revenue, we have safeguarded profitability through tighter cost controls and continued investments in guest experience. We are right-sizing our new restaurant prototype to be 20%-25% smaller, which will reduce capital expenditure and protect unit economics.
International remains a strong profit engine with 23% plus restaurant operating margins. We plan to open four to six restaurants this year across the Middle East and Southeast Asia. Premium CDR is growing rapidly with 19% year-on-year revenue growth, regular restaurant margins of 20%, and expanding presence in Delhi, Mumbai, and Hyderabad. Dining remains the core of our business, accounting for 85% of revenues. We continue to refresh the experience through culinary innovation, design upgrades, and value-driven promotions. Delivery, which contributes 15% of our revenues, is seeing positive SSSG in Barbeque delivery and Dum Safar Biryani, while UBQ is in the process of recovering from an impact due to brand repositioning across platforms. Across all three segments, we are prioritizing operational rigor and consistent guest engagement to keep in-store sales growth as the cycle normalizes.
In short, our focus is clear: deliver best-in-class guest experience, grow network, scale where unit economics are proven, build scalable brands, and maintain industry-leading margins with strong cash flow generation. With discipline, cost control, a sharper new restaurant playbook, and a robust pipeline, we are confident in our ability to deliver sustainable growth and margin resilience on the path to 300-325 restaurants in FY27. Thank you, and I would like to hand over to Rahul to walk you through the operating performance in detail.
Thank you, Kaiyum. Good evening, everyone. As highlighted earlier, we have resumed our focus on network expansion, opening seven new restaurants during the quarter, and remained committed to our target of 300 to 325 restaurants by FY27. Our current portfolio comprises 236 restaurants, which includes 193 Barbeque Nation India restaurants, 11 international restaurants, and 32 premium CDR restaurants. During the quarter, we reported consolidated revenues of INR 296 crore, lowered by 2.8%, primarily due to negative SSSG of 3.4%. Gross margin for the quarter was 67.7%, which was lowered by 40 basis points versus quarter one of FY25. We expect the gross margin to remain at around 68% on an annual basis. Pre-Ind AS restaurant operating margins were 11.5%, temporarily impacted by higher marketing spend, operating day leverage, and ramp-up of new restaurants. Mature restaurants reported pre-Ind AS restaurant operating margins of 13.3%.
Consolidated reported EBITDA margins for the quarter were 46 crore, with reported margins of 15.5%. Our adjusted operating EBITDA was 13.6 crore, with a margin of 4.6%. Barbeque Nation India recorded revenues of 229 crore, a year-on-year decline of 7%, primarily due to negative SSSG of 5.2%. This business segment is currently facing short-term SSSG challenges due to a shorter dine-out cycle. While revenues were impacted, we maintained our focus on profitability through tighter cost controls in existing units, while we continued to invest in for future growth. We have redefined our new restaurant prototype, enabling us to reduce capital expenditure and improve unit economics. We remain focused on opening 20 to 25 Barbeque Nation restaurants annually to meet overall network targets. In our existing network of 133 restaurants, we continue to drive operational rigor to enhance guest experience, to culinary offerings, and guest engagement activities.
During the quarter, we launched the Kukdookoo Carnival Festival, which is 16 new chicken dishes, and expanded our menu variety by introducing 10 vegetarian and 10 non-vegetarian starters across all restaurants. We also continued group focus value promotions like Sizzling 7 at 737, which was very well received. These initiatives helped deliver value to our guests through engaging offerings and adding pocket-friendly prices. We also increased marketing spend by almost 1% of sales during the quarter, with a focus in driving volume growth. While this has a short-term impact on margins, we are confident that these investments will deliver results in the coming quarters, with operating leverage helping to restore margins. Barbeque Nation International recorded revenues of INR 36.3 crore and an increase of 10% year-on-year, supported by strong SSSG of 8.5%.
Gross margin for the segment was 73%, and pre-IndAS restaurant operating margin was strong at 23%, with mature restaurants delivering restaurant operating margins of over 27%. Built on strong foundations, this business has been consistently profitable over the last four years. During the quarter, we launched our second restaurant in Kuala Lumpur and entered Sharjah. With this experience, we are well positioned to further penetrate the Middle East and Southeast Asia. We plan to open around five to six new restaurants this year, maintaining a network expansion growth rate of 30% plus, while focusing on same-store sales growth and operating discipline. Premium CDR recorded revenues of INR 43.1 crore, up 19% year-on-year. Gross margin for the segment was 74%, while pre-IndAS restaurant operating margin was 14.5%.
Margins were impacted due to yet-to-mature restaurants, while the mature network continued to deliver 20% restaurant operating margins. This business continues to expand rapidly, with two new restaurants added in Mumbai and Bangalore during the quarter. Again, we plan to drive 30% network expansion growth by scaling Toscano in Delhi, Mumbai, and Hyderabad, while also expanding Salt into additional network markets. As we grow, we will sustain guest experience through continuous culinary and service innovations and preserve operating margins. We also completed the acquisition of a 51% stake in Om Nom Nom, which now has presence across six locations in Bangalore and one more under fit-out. Our operating basis remains unchanged. We will defend and refresh the core experience through culinary innovations, design upgrades, and service discipline to recover SSSG. We'll grow the high-margin international business with a reputable playbook and attractive paybacks, ensuring expansion remains margin-attractive.
We'll thoughtfully scale up the premium CDR business, leveraging mature restaurant performance of 20% plus and our success in new methods to build deeper penetrations. Thank you. With this, we can now open the session 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 their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Viraj from Equirus. Please proceed.
Yeah, hi, Rahul. My first question is, we basically recorded a 5.2 negative SSSG on Barbeque Nation after recording an 8.8% negative SSSG in the same quarter last year. If I have to basically combine these two numbers, we are looking at almost 13-14% negative SSSG over a 24-month period. That is alarming. No real outlet can survive that kind of negative SSSG. And this is our major business. We can focus on other businesses, but this is doing very badly. What are we doing to address this growth?
Hi, Viraj. So you're right about this. Last year was 8.8, and this time it's 5.2. Like I mentioned in our opening remark, we are continuing to focus on our guest experience. We are coming up with new food festivals and giving the guest offering a variety in the stores, and also coming up with value offers, like I mentioned, Sizzling 7 at 7:37. So these initiatives are being undertaken across all restaurants in our portfolio.
Okay. Because, Rahul, my understanding was whatever were the restaurants which were not doing well, which were recording negative SSSG, our majority of them were closed last year, so even after closing them over the last 17, 16 months, we are still recording negative SSSG, presumably in the restaurants which are doing well, so I'm not able to understand this.
So the portfolio that we closed was largely loss-making restaurants. We don't close restaurants if they are negative SSSG. We close restaurants if they are bleeding, and we believe that the bleed will not sort of come to a profitable number. I think that portfolio level, even though the restaurants that we have in Barbeque Nation are at 5.2% negative SSSG, the overall restaurant operating margin is close to around 10%, right? So the closed restaurants were the ones which were not doing well and which were bleeding money. So that we have closed.
Okay, and my last question is, when we look at the numbers of other, I would say, dining restaurants or basically quick QSR, they basically suffered negative SSSG far later than us, and they are revising far before us, so this quarter also, almost everybody reported positive SSSG, and it's out there in the public domain, but we are recording negative record SSSG, even though we started diving in negative SSSG before then, and we are not recovering even after they are recovering, so is this a business model problem, or is this a Barbeque problem?
I think both businesses are different. We only have mixed-type restaurant QSRs. The business model in terms of mix of dining delivery is different. So very difficult to comment on how they have fared and how we have fared. In our business, if you look at this scale, the dining business definitely has some stress, which we have reported and which we are trying to recover through our guest experience and through our offers. Other than that, it was very difficult to make a like-to-like comparison between QSRs and us, right? The mix of two segments is different. The price points are different. One is largely planned purchase, other is impulse purchase. So very difficult to just make a like-to-like comparison between the two.
Right, sir. You understand? Just the last thing, sir, is if the negative SSSG continues at this rate, you are seeing tremendous impact on our restaurant operating margins also, where they have dropped for Barbeque Nation . If this continues at restaurant level, it will be really problematic. That's my only concern as a shareholder.
Absolutely. Thank you so much. Yeah. You're right about that. But if you look at the discipline that the team has shown on the cost side, even though we have a long period of SSSG negative period, we have been able to at least sustain a good amount of restaurant operating margins and try to minimize the impact of operating delivery. I agree with you that in the future, the margin expansion will largely be driven by cost of SSSG.
Is there any improvement in July you have seen, or nothing?
No, it's similar to quarter one right now.
Okay. Thank you.
But July is likely not also comparable because last year in July, the impact of travel started towards the end of July, but this year it started much earlier. So quarter two always is a lot of restrained days, which impacts the performance across months.
Sure. Thank you, Rahul.
Thank you, Viraj.
Thank you. Before we proceed with the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Dhaval Dama from Equirus . Please proceed.
Hi, Rahul. So just continuing the same on the question, specifically on Barbeque India. Now, if you look at it, our average restaurant revenue has dropped down to roughly INR 5 crore per annum, what we have reported in our quarterly presentation also. And obviously, we have seen a tremendous decline over the last three to four years over here in terms of the average revenue per restaurant. So basically, I first wanted to understand what's your take on this. And second, like you mentioned that you are taking initiatives in terms of giving value offers to consumers, trying to enhance guest experience and everything. I guess that we have been trying that since the last 12 to 15 months. But do you feel that, honestly, we have seen any traction over there, or are we getting any benefits out of it?
The numbers were -9% earlier, which is now around -5%.
Yeah, but that is minus on a larger scale.
No, I agree with you, absolutely. There is absolutely no joy in reporting this. But on the ground, the effort that you can put is only on increasing your operational rigor. And that is what we are driving. I think, like you also said in the previous call, out of this 193 restaurants, there are approximately 60-70 restaurants which are in positive territory. There are under 50 restaurants which will be in a territory of minus 1 to minus 2, and there are some which are driving in double digits, right? And largely, the south market is driving overall. We are also seeing some stress in outlets which are high dependency on IT businesses. We are also seeing some stress on outlets where the competition is very high.
There has been a response, and it's not that in the category there is a clear winner, and people are absolutely making it. We are seeing some drop in prices by competition at a number which doesn't sustain at a margin level. So we're seeing some of these, and we are navigating through these challenges by just maintaining our operational rigor, our value offering, and just increasing the overall guest experience elements, right? To some extent, we're also impacted by the service charge rule. Earlier, we used to charge 5% service charge, which is now banned, and we don't charge that anymore. We have taken price hikes. Normally, we used to take almost 1.5%-2% price hike on an annual basis. This quarter versus previous year, first quarter, there is a negative impact of 0.5% because of service charge.
That has also impacted our marginal gross margin and also came through in our overall sales number, right? So these are some of the factors that are there that we are grappling with right now. But as I said, we have also taken some efforts to increase the offerings and offers and also increase our efforts on marketing. In terms of team, we have further strengthened the operating team. We have recently hired a chief operating officer just for Barbeque Nation India business. So the focus across all the points that I'm mentioning is just only doubling down on this business. Obviously, we realize that the other two businesses are doing good, and we'll continue to grow those businesses, but a lot of effort needs to go further on ensuring that the Barbeque India business comes back on track.
Today, I think the big challenge is same store, which will also further drive our margins. So, Rahul, again, continuing on what you mentioned, so basically, you mentioned that there would be quite a few stores, at least in South India, which would be seeing a double-digit drag currently on our SSSG. So basically, would it be fair to assume that those restaurants would be basically at somewhere close to breakeven today at an EBITDA level?
No, in our entire south territory, we would be around mid-single-digit EBITDA margin at restaurant level. So we are not losing money there, no. So I think in the entire portfolio, restaurants which lose, I think, a lot of money will hardly be three, four. And like I said earlier, at the entire annual basis, we'll keep rebalancing the portfolio by closing maybe one restaurant every quarter. But we don't have a clear problem of, in Barbeque India business, some stores losing a lot of money.
So just one last thing from my end. So basically, we wanted to understand what do you think? So say, over the last five, six quarters, looking at the efforts that the team has been trying to make at least and trying to enhance the guest experience, obviously, which hasn't resulted in the kind of footfalls that the team would have been anticipating. So do you think that a menu revamp or something like that sort would be much better as compared to just focusing on guest experience enhancement? There's one last thing that I would want to understand about what's the thought process on that?
Menu innovations are happening. Like I mentioned about the Kukdookoo Carnival Festival, I think our guest scores in that period were very high. If I look at our NPS score between the start of the quarter versus end of the quarter, we have seen good improvements there. Some of these festivals that we are running, some of the other 10% startup things that we're running, is translating into good guest satisfaction scores in our NPS scores. Just that it has not led to the volume growth that we would have expected in the business.
Sure. Thanks a lot, Rahul.
Thank you, Dhaval.
Thank you. Before we proceed with the next participant, I would like to remind participants that you may press star and one in order to ask a question. The next question is from the line of Nitik Mukta from NV Alpha Fund. Please proceed.
Hi, sir. Thanks for taking my question. So I just wanted to understand what exactly is leading to such high negative SSSG in the south portfolio? I mean, what exactly is going wrong in the south portfolio which is leading to such pressure on the SSSG? And if you could also give the number of stores that the portfolio has because it is weighing down our company level SSSG so heavily, so that would also be very helpful.
So in the South, we have around 50 restaurants. And in the South, if I look at the three large metro markets, which is the two large metro markets in Bangalore and Chennai, the competition players in the all-you-can-eat Barbeque category are also among the highest. I would also like to mention that the competition intensity has not increased as such, right, in terms of the number of restaurants that competition had or we had. I'm seeing that number to be at least stable. But overall, in these markets, there is some larger stress than we are seeing in some of the other markets. There is also a pressure on pricing in these markets, which is taking away some business.
Especially in Bangalore, for example, the number of trade area, newer à la carte options that we are seeing is slightly higher than what we are anecdotally noticing in some of the other trade areas that we are trading in, like Delhi or Bombay.
Right, right. So it is a combination of pricing pressure and competition.
Yeah, and there's some reduction in corporate business in South. South also depends a lot on the corporate business. We have seen some of our weekday numbers being lower in South, which was earlier driven by that IT demand being lower, at least in this quarter.
Thank you. So is there a competition also facing sort of similar problem in terms of corporate demand being weak, etc., or is it an issue?
Look, our informal channel checks believe that they too are facing that. But obviously, the numbers are not out in the public, so very difficult to comment for me.
Right. But this south portfolio issue we have been facing since a couple of quarters, right? This is not a one, two, or three-quarter phenomenon. So I mean, how do we plan to change this again?
So the effort taken in this market is pretty much similar to what we have done for Pan India, just that some of the, at least on the pricing side, these markets will see more aggressive offers than you will see in other parts of India. Apart from that, our focus on guest experience is one of the highest across all markets.
Right. All right. So that's it from my side. Thank you.
Thank you.
Thank you. The next question is from the line of Madhu Rathi from Countercyclical Investments. Please proceed.
Thank you for the opportunity. So I wanted to understand on the other expense part of our P&L. So if I look at a standalone, it is flat on a quarter-on-quarter basis. But if I look at on a consolidated basis, it has increased. And so is this because of a new restaurant opening? This has increased because I understand that the 75-76 per hour was that we had done our cost reduction, and it was going to be stable going forward.
This is all come because of new store expansion.
Got it. And sir, is there any additional possibility of reducing our cost on our businesses over the next three, four quarters?
No, not really. Whatever cost reduction exercise that needs to be done, we have largely sort of done that. But we obviously keep looking at our existing cost structures and keep evaluating that. But I think the focus today is largely revenues per restaurant, and that is why you will see we have increased our marketing spend by 1% of sales in the current quarter. But on the structural side, I think we are fairly optimized in terms of operating this. Despite two years of sequential SSSG decline, we're still at double-digit restaurant operating margin in our core Barbeque India business. So just that, I think with SSSG recovery, the margins will now be driven by that.
Got it. And sir, is there the confidence that so I'm trying to understand this -13%-14% SSSG that we have experienced over 24 months, and our prices have been fluctuated mostly volume growth has declined. So is there an issue with our product market fit or something else? And what gives us the confidence that whenever spending resumes, we will be one of the beneficiaries of this uptrend?
I don't think there's a product market fit problem. We stand for a group dining. We stand for celebrations. Our guest scores there are very good, and some of the internal studies that we have done visitors brand performance versus competition, our numbers there are also very good. I don't think this is a product sort of problem. I understand that on NPS basis, we are down from, say, 100 to 87, 86, but I think this is something that we understand well, and this is something that we'll keep investing on and keep getting better at. I don't think there is something that needs to drastically change at the core offering. We will not change our experience offering, which is live grill. We obviously keep innovating on our product. We have added almost seven, eight new starters of kebabs in the menu when we launched 10% as offering.
We have continuously been doing food festivals in the past. We are also seeing that in our guest scores, but just that is not reflected back in our cover numbers.
Got it. So do we have any on-ground? So whom are we losing these volumes to? Is it other restaurants? Is it other buffet kind of store formats? Or is it something else other than this?
So overall, as a segment, the other players, they may have been in some trade areas, but we have not seen any trade area wherein we are struggling and competition is thriving. Similar format competition is thriving. In fact, we have seen certain trade areas where we are doing well, and we have seen competition declining at market. So I don't think it's a competition problem at all, at least in the same trade areas that we're working at.
Okay. So it's basically some alternate form of eating out kind of where we are losing share. Is that understanding correct?
Yeah, I would just say, yeah.
Okay, so thank you so much and all the best.
Thank you, Madhu.
Thank you. The next question is from the line of Harish from Avenir Capital. Please proceed.
Yeah. Hi, team. Thanks for the opportunity. What would be the blended price hikes at the Barbeque India level on a YY basis?
The average realization in the company is lower by 0.5% versus last year.
Okay, and my second question is.
Like I mentioned in the previous comment, there is a discontinuation of service charge now. We used to charge 5% service charge. We have passed that on in our overall blended pricing. But with the impact of various offers that keep running, we are lower by 0.5%.
Okay. But we mentioned that we have taken some price increases. So what would be that number, if you could share?
We've taken around 4.5% price hikes after we removed service charge. But the net realization on an average basis versus last year is still lower by around 0.5%.
Okay. Got it. Thanks for that. And what would be our current debt levels? And what debt levels do we project by the end of this year?
We are around INR 50 crores net debt today, and by end of the year, we will be in the range of around INR 80-INR 90 crores.
Okay. Those are my two questions. Thank you.
Thank you.
Thank you. The next question is from the line of Ashish from AK Investments. Please proceed.
Yeah. Thank you for taking my question. So I just wanted to compare our Barbeque Nation India with Premium CDL. So I understand that Premium CDL is a relatively small business with just 32 sort of restaurants. But still, we see positive SSSG in Premium CDL. However, Barbeque Nation is having a negative SSSG. So can you please explain that?
Both formats are different. One is all-you-can-eat buffet concept. The other one is the à la carte dining concept. In one concept, you can choose how much you want to order in one concept. As you enter, there is a minimum pricing that you are charged. There is a difference in gross margin. There is a difference in the location. Since this is a Premium CDR business, we are located in high-profile sites, which also drive a lot of impulse purchase. Barbeque Nation is largely located in also destination sites. The rental structures in both the places are different. So I don't think it's at least fair to just compare both the businesses like this is. Barbeque Nation is present in close to 80 cities. The Premium CDR business, we would be present in four, five cities right now.
Okay. Understood. So just to extend it further, so even if I see the gross margin, it has a good gross margin of 74%. So I'm just wondering, why can't we focus on premium CDR rather than focusing on Barbeque Nation India? I mean, I'm not sure if that business model is sustainable. I mean, so can you please maybe throw some colors there?
So all three businesses are at different stages. When I say we are focusing on all three, and we have separate teams driving all three businesses, in Barbeque India business, I would say the focus is among the highest, while unfortunately, the numbers are not reflecting the way it is. But we also realize that the impact on our overall numbers and our overall margins that we'll get from a higher SSSG and Barbeque India business will be far higher at a consolidated level than the other two businesses. Again, I'm no way saying that the focus in one or the other is divided. There is, I think, a good competent team to run all the three businesses. In Premium CDR business, we have accelerated the growth. This is the first year, I think, when we will look at opening between 12-15 restaurants.
We have a decent sort of pipeline. We have five restaurants under construction in this particular segment. So overall, on a base of 30 restaurants, adding 14-15 restaurants will add to almost 40% network expansion for that base. And I think that's a good size, which will help us to also expand in a manner that doesn't compromise on any of the experiences of the guests that we want to do, right? So I think that business is good. And over the period of next two to three years with the expansion that we're doing, I believe that this will grow at upwards of 20% there. Similarly, also for international business, international business performance is at 10% year-on-year growth. This is after the fact that one of the sites was temporarily closed due to one incident in Abu Dhabi. That will start operating from early next month.
So that business, also when we add around 5-6 restaurants on a base of 11 restaurants, it will give us around 40% incremental store counts. And we'll continue to grow over the period of 3-4 years at 20% plus. The largest one I'm working is Barbeque Nation , which is undergoing challenges in terms of SSSG. And that is where the focus is highest because as we shift from SSSG negative to positive, the impact that we see will be far higher. I understand the last two years has been lower. We are also going to that. There are multiple efforts being taken across some at larger level, some at local market level. Some efforts have worked for us. Some efforts have not worked for us. And sorry, this is at the cost of repeating.
While I'm seeing guest scores being looking better, we are still not seeing the volume numbers coming up.
Okay. Okay. Understood. Thank you. And last one. So I think in last quarter we call, you mentioned our corporate cost is around 6.5%. So I mean, so just wondering, is it shared across different formats or it is different? We have different corporate structure, different employees, and all of that.
So the leadership level sits in Barbeque India business. And the number two is our department, sub-department heads sits in other businesses also. So for example, in Premium CDL business, there is a separate lady as an HR head for that business, but she would end up reporting into the CHRO of the group. So those costs sit in Barbeque India business.
Okay. Okay. And given that we are targeting 30-odd stores this year, so I mean, what is your target in terms of corporate cost by end of this year?
I think overall increase on corporate cost. I don't see beyond single digits. I think the percentage number will also be how we do our revenues. But over a longer term, I think this number should not go beyond 5%-6%. Historically, pre-COVID, these numbers had always been around 5%-6%.
Okay. Okay. Thank you. Thank you very much.
Thank you, Ashish.
Thank you. The next question is from the line of Harshit Bohra, individual investor. Please proceed.
What is the marketing expense as a % of revenue for Barbeque Nation ?
Just for our core dining business, it is around 3% right now.
Okay. I was also wondering if there are any spending cash flows from Barbeque Nation brand to expand into Toscano and other businesses. What is the rationale of this strategy?
Sorry, Mr. Sandhu, so you're saying expanding the.
So basically, I mean, I'm just wondering if the Barbeque brand is being starved of marketing and visibility. If in fact we are using the cash flows from the core Barbeque brand to expand into Toscano and Salt, right? We'll be using the cash flows from the existing 195 restaurants in Barbeque Nation to expand into these other restaurants.
So I'm not looking at it this way. So as a company, we are generating operating cash flow, and then we are allocating that operating cash flow to grow our network wherever we believe that the payback and the unit promise is better. If you look at our international business, that business is anyway generating operating cash of approximately 20-23 crore, which is good enough to open around four to five restaurants, right? And based on the new expansion sites that we're getting, and if required, the gap between operating cash flow and expansion is higher, we may sort of resort to a very small amount of debt, right? So that number is very low. And similarly, in Premium CDR, I think whatever operating cash flow they are generating, they are investing back into the business.
This year around, since the network expansion growth is almost 40% existing base, there may be some shortfall, which will be either funded through debt or partly from Barbeque Nation . But I don't think we are starved of cash because of which we are not investing in Barbeque Nation business. I think we are taking all the prudent calls in terms of investment return on every penny that we're investing, be it CAPEX or be it OPEX. Last year, we have seen, despite negative SSSG, we have maintained our margins, which is very difficult in a high-opening level business like ours. And we have done a lot of cost control sort of measures.
I think the point that I'm trying to make now is that the focus is largely on reviving the business growth in the core India business, wherein we are not shying away in making investments where we're required, be it in the internal operating team, be it in marketing spend. So that is stepping up right now. But we are not in a position wherein we are starved of cash because of which we are not investing either in operating side or on the CAPEX side.
So to be prudent, I mean, wouldn't it be wiser to basically stop expanding until we solve the problems in our core business and stabilize, and then look at expanding?
I think it's not that we are not able to. We are just going short in terms of our effort because of which we just need because of lack of time, we are not able to get the SSSG back, and because of which we should focus more on existing business versus growing. I think there are large setups. There are different teams for different sort of work profiles. If you're entering into markets or trade areas where our customers are not served, I think it's right to penetrate further and grow your brand in those areas. I don't think we are also obviously prudent in terms of not opening up stores just for the sake of store counts and cannibalizing our existing business, right? I think we have gone through that journey in the past, and we are prudent about that.
That's why in Barbeque India business, you see expansions of around 20 stores in a year, which I think on a base of 200, we can do. The balance 20 for the overall network target is coming from the two divisions that we have, I think, grown and built very efficiently.
Thank you, sir.
Thank you.
Thank you. The next question is from the line of Dhaval Dama from Enigma Small Opportunities Fund. Please proceed.
Dhaval, just a follow-up.
Sorry to interrupt, Mr. Dhaval. The voice is not clear.
Yeah. Is it audible now? Is it better?
Much better.
Hello. Yes. Yeah, hello. Sorry, Dhaval, you slow again.
Yeah. Is it better now?
Yes.
Am I audible?
Basically, in all the business, all the three businesses during the current quarter, we see basically average store viability, even on the international side and on delivery.
So is it just due to basically those two things?
To that.
Sorry, Dhaval, I couldn't understand. You said all three businesses sort of what declined? So all three businesses during the current quarter on a YoY basis have seen a decline of the average revenue per store during the quarter, per restaurant during the quarter, if you look at it. Now, whether it be your international business or your Premium CDR also, where the average revenue on an annualized basis has declined during the current quarter as compared to last year. So basically, I was just asking, is it just because of dilution that is happening because of new store openings on at least Premium CDR or the international business, or is there something more to that?
It does a function of new store opening and how they ramp up. For example, in our international business, you would remember we started Sri Lanka last quarter, and that has been ramping up really. In our existing portfolio, as you know, we didn't grow much in our international business for almost three years post-COVID. That's why all of these individual restaurants have reached to a particular scale. As we're opening up new restaurants, in terms of the new restaurants also, we are right-sizing ourselves. I think average revenue in this portfolio on a larger base of maybe 40-45 restaurants, in my prediction, will settle down at around 8-9 crores. Again, that depends entirely on what sizes we do, what markets we do, what types we do. Very difficult to predict. Otherwise, on the existing base, obviously, SSSG is 8.5%.
So the existing numbers are looking very good in that market.
Okay. Sure. One last thing from my side. So just wanted to understand in terms of basically, like you have mentioned that we have been trying to promote a lot to our customers in terms of guest experiences. So just wanted to know, like I say, what percentage of spend should be going towards the digital forms and what would be traditional or something on that sort? If you could give us some color on that, would be helpful.
Sorry, Dhaval, I didn't understand the last part of your question.
Basically, we just wanted to understand what percentage of our media spend would be on digital platforms, and how are we trying to optimize the media spend to promote our restaurants also, to advertise them?
Almost 80% would be on digital, and the balance 20% would be on mediums like radios and holdings. We have not done mass market TV or something right now, but these are the two channels that we spend money on.
Sure. Sure. Thanks a lot.
Thank you.
Thank you. Are there no further questions from the participants? Thank you, members of the management. Thank you, everyone, for joining the conference call. On behalf of Barbeque Natio n Conference Call, that concludes this conference. Thank you for joining us, and you may now disconnect your line.