Ladies and gentlemen, good day and welcome to the Barbeque Nation Q1 FY 2024 Earnings Conference Call, hosted by Ambit Capital. As a reminder, all participant lines will be in 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, an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. Mr. Aman , thank you and over to you, sir.
Thanks, Aman. Good evening, everyone, welcome to the Q1 FY 2024 earnings con call of Barbeque Nation Hospitality Limited. From the management, we have with us Mr. Kayum Dhanani, Managing Director; Mr. Rahul Agrawal, CEO and Whole Time Director; Mr. Amit Betala, CFO; and Mr. Bijay Sharma, Head of Investor Relations. Before we begin the presentation, I would like to remind you that some of the statements made into this conference call by the company may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to the earnings presentation for detailed disclaimer. I now hand the conference over to Mr. Kayum Dhanani. Thank you, over to you, sir.
Thank you, Aman. Very good evening, ladies and gentlemen. I take the pleasure in welcoming you to Q1 FY 2024 conference call of Barbeque Nation. During the quarter, we recorded a revenue of INR 324 crore, which is an increase of 15.6% on quarter-on-quarter basis and 2.9% on year-on-year basis. This is an encouraging performance considering the prevailing subdued demand scenario and higher base impact in the Q1 last year. Both our dining and delivery business recorded very strong sequential growth, primarily driven by volume growth of over 20% across both segments. This growth was offset to some extent due to lower average realization in the dining business because of various offers and promotions across select markets. Our key focus during the quarter was to drive volume growth, which we have been able to achieve successfully.
We undertook various initiatives during the quarter to enhance guest experience through upgraded restaurant designs, elevating culinary experience, and further strengthening service culture. We remain committed to drive cover growth and will continue to invest with the objective to enhance our guest satisfaction. During the quarter, we opened four new restaurants, which included two restaurants in Barbeque Nation, India, one in Toscano, and one in international markets. We closed eight restaurants during this period, resulting into net network of 212 restaurants. Our medium to long-term growth remains intact, and we are pursuing a clearly defined strategy. Our focus will be on driving SSSD and profitability for the India dining business, scaling emerging verticals such as Toscano and international, and drive penetration of UBQ and Dum Safar. We will also look at expanding our brand portfolio, including inorganic growth.
With this, now I hand over to Rahul to take you through the performance during the quarter, and thank you very much. Over to you, Rahul.
Thank you, Kayum. Good evening, everyone. Our revenues for the quarter were INR 324 crore, an increase of 15.6% sequentially and 2.9% on year-on-year basis. Our dine-in revenues for the quarter increased 14.5% sequentially and 1.3% on year-on-year basis to INR 276 crore. Our delivery revenues recorded a strong sequential and year-on-year growth of 21% and 12.6% respectively to reach INR 47.3 crore. Both dine-in and delivery growth were primarily led by 20% volume growth on sequential basis. Delivery sales accounted for 14.6% of the total revenue during the quarter, which is the highest level over last seven quarters. Same-store sales growth for the quarter was -7.7% compared to last year.
Compared to Q4 FY 2023, we recorded a same-store sales growth of over 13%, which is primarily led by around 20% volume growth and offset to the tune of around 5% on account of lower dine-in price realization during the previous, during the current quarter. Consolidated gross margin for the quarter declined by around 180 basis points sequentially and 280 basis points on year-on-year basis. While the cost inflation remained under control, this decline was primarily attributed to lower dine-in price realization of around 5% compared to Q4 on account of various offers and promotions undertaken during this period. The gross margin trend is improving on month-on-month basis and have recovered to historical levels in July 2023.
Consolidated reported EBITDA for the period was ₹47.6 crores, which is an increase of 13% compared to Q4 FY 2023, and a decline of 35% compared to same period last year. Our Pre-Ind AS adjusted EBITDA for the period was ₹18.8 crores with a margin of 5.8%. Pre-Ind AS EBITDA margin only marginally improved on sequential basis, as the benefits of operating leverage were from sequential sales growth were offset by lower gross margin. Our restaurant network stood at around 212 restaurants. This included 190 Barbeque Nation restaurants, seven international Barbeque Nation restaurants, and 15 restaurants of Toscano. During the period, we added four new restaurants, which included one Toscano and one Barbeque Nation international.
We also closed eight restaurants during the period, which we believe had poor future economics. We also delivered strong quarter-on-quarter performance on revenue per outlet. Matured restaurant portfolio delivered an annualized revenue per outlet of INR 6.5 crore during the quarter, thereby growing 14% sequentially, and declined by around 7% on year-on-year basis. The matured portfolio delivered a restaurant operating margin of 14.3%, which was relatively flat on a sequential basis, despite the decline in gross margin. New restaurant portfolio is doing well. New restaurant portfolio reported an annualized revenue per outlet of INR 5.2 crores, which is an increase of 33% sequentially, and 27% on year-on-year basis.
The restaurant operating margins was 4.3% on this, compared to loss of 1.2% in Q4 FY 2023, and profit of 6.2% in Q1 FY 2023. Our primary focus during the quarter was to drive volume growth, and all our efforts have yielded very encouraging results. We are positive about continuing this trend and gradual improvement in our margins going forward. We are focused to maintain our market leadership position in CDR segment in India. Our focus area for medium term would be focused on strategy across Barbeque Nation in-dine business, scaling emerging verticals, growing delivery, and portfolio diversification. In our Barbeque Nation in-dine business, our focus will be to drive same-store sales growth and profitability, coupled with cost optimization. We'll continue to invest in enhancing guest experience through culinary innovations as well as upgrading our restaurants.
In our emerging business portfolio, our focus will be expansion-led, led growth for Toscano, coupled with maintaining our current eccentricity and profitability. Similarly, for Barbeque Nation International business, we'll focus on calibrated expansion and maintain eccentricity and profitability for the existing assets. Growth for delivery vertical will be focused on driving volume growth for UBQ, coupled with increased penetration of our biryani brand, Dum Safar. We also continue to evaluate opportunities of brand portfolio expansion, both under organic and inorganic space, such that we further capitalize on our existing organizational strength and understanding of our, of our guests. With this, we can open the session for Q&A. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Anyone who wishes to ask a question may please press star and 1 at this time. The first question is from the line of Kapil Jagasia from Nuvama Wealth Research. Please go ahead.
Thank you for taking my question, sir. My first question is, all food operators, including you, are very optimistic on the demand revival around Q3. Since the festival season is just two months away, have you seen a demand revival in smaller towns or, inflation moderating to a larger extent for your business? Just wanted to get a sense on how confident you are about business performance in the second half of the year.
Thanks, Kapil. No, it looks very encouraging. If you look at our past five-month data also, I think we've reached our lowest point in the month of February this calendar year. Post that, February till around June, we have seen sequential month-on-month improvement, both in terms of top line and also, you know, margins. Going forward, at least in our business, Q2 generally is a lower quarter, given a lot of vegetarian days. Seven months have already started, and this time around, this period is longer, around one and a half months. With that extent, you know, we saw some dip in July.
Otherwise, you know, on a like-to-like basis, even for seven days last year and seven days this year, the growth continues. With this momentum, I think, I'm also on the same bucket, which, which we believe that COVID, second half of the year should be, should be really strong. Given the fact that, the base impact we also take in, because last year second half has not performed that well.
Okay. Okay, that helps. My second question is, you know, dine-in volumes grew 20% sequentially. What has been the trend of volume growth earlier between Q1 and Q4? Since, you know, we have limited history, the pre-COVID times were really healthier.
You mean historical growth between Q4 and Q1 in the historical period?
Yes.
Yeah. Pre-COVID, I think typically the business growth is around 8%. Out of that, around 5% is typically, volume growth, and 3% is, is price hike. Historically, we normally took price hike in, in two periods. One is beginning of the year, and one is around the beginning of the second half. Total revenue growth was around 8%, which this time around is around 16% on sequential basis.
Okay. Okay. Around my final question would be on Dum Safar. No mention about this in your presentation. Just looking at the smart recovery in the delivery volumes, how much revenue has Dum Safar reached? What would have been the ADSU?
Dum Safar is now, it crossed 80% of our outlet. We are, I think we've done approximately ₹6.5 to 7 crore in the previous, ₹6.5 crore in the previous quarter on that. And on an, there's a month-on-month increase on ADS in Dum Safar. On a average, it would be around ₹5,000 ADS per day.
I guess earlier we were at ₹7,000, right? Has it gone down or
No, no. That INR 7,000 was only for stores that we started in the first phase.
Okay.
The first phase, ₹7,000, is approximately ₹11,000 right now.
Oh, okay. Thank you. Thank you.
This is expanded, this reached to 80% of our outlets over a period of four quarters, right? The first phase includes restaurants that were opened up in August last year, August and September last year.
Right. Right, right. Thank you. Thank you so much. Thank you.
Thank you, Kapil.
Thank you. Anyone who wish to ask a question at this time, they may please press star and one. The next question is on the line of Harit Kapoor from Investec. Please go ahead.
Yeah, hi, good evening. My first question was on the margins in the mature stores. You know, while you've gone from, you know, 19%, to about 14 point %, if you look at Q2 to Q1, 2 to 2023 to Q1 2024, sales revenue per outlet is broadly in a similar trajectory, INR 6.7 crores and INR 6.5 crores. Would you attribute this 500 bits only to the, you know, to the promo- you know, promo- increased promotions which you've done, you know, quarter-on-quarter?
Largely that, around, around 2.5% of that will also come from gross margin, which is largely the impact of that lower price realization. The balance 2% would be
The revenues are lower by around 3%, so maybe 1.5% will come from that. Overall, this portfolio is also recovering well now. If you look at versus Q4 versus now, ideally, with the increase in revenues, some bit of this should flow to your, to your margins, but we lost because of only lower price realization.
You know, by when do you think you'll be comfortable with the fall number, and you can kind of phase out the promotional promotions?
Look, this is already phased out. We, we did this aggressively in April. We also spoke about this in our last call.
Yeah.
Then from July onwards, this has been phased out.
In fact, if you look at our gross margin numbers in July, it has reverted back to around 60% to 65% that we used to do historically.
Got it. Got it. Second question was on, on the closures. So you've done eight closures. Could you give us a sense of what that number could look like in the near term, you know, given what visibility you have? Also, the benefit of these closures, you know, on the margins, do you start to see it from Q2, especially on these eight closures? I, I, I'm assuming it's been done through the quarter.
Yeah. So it's been done through the quarter, but typically there is, there's some notice, say, some also additional expenditures if- Yeah. -if you close.
I think Q3 onwards, it will definitely start flowing. Did you ask in terms of other closures going forward or?
Yes, also that. That's, that's the other question.
As of now, I think maybe five odd restaurants would be under very close watch. I think out of this, two or three will definitely close in this quarter. On the other two, we'll take a call in Q3 , if required. Other than this, this five portfolio, I think largely, I don't see that this needs to be reevaluated. I think we'll be done with our portfolio, I think, reconfiguration.
Got it. Those were my two questions. I'll come back for more. Thank you.
Thank you, Harit.
Thank you. The next question is from the line of Manish Poddar from Motilal Oswal. Please go ahead.
Yeah, hi, so, just, just a continuation to the other one. Can you call up, let's say, these eight restaurants which you have closed, now, what was generally the vintage of that, and how much has we actually EBITDA lost there? Why did you close it, actually? Why, why take the decision now? Because I thought during COVID, you've done a lot of, you know, downscaling already. What is really, you know, changing? Three parts. One is, you know, absolute EBITDA loss, you know, why, why close now? Vintage, is the third one.
Right. Let me first give you data point numbers. Absolute EBITDA loss for the quarter on this would be approximately ₹1.0 to 1.2 crore. These are the store level. And, you know, vintage-wise, these are all part of mature buckets. This is not new bucket, barring one, which is a new bucket. And in terms of tiers, four of them are in Tier Two, Tier Three markets, and four of them are in Metro Tier One markets. In some there is also, they have lived through their entire life of 12 years, and rents have gone up to a particular level, which has not been supported, and our discussions on rental renegotiation being going well.
In this, out of this, two of them we will revisit and go back to the same trade area, because we're talking to a site which is close by, but didn't want to take losses in the current scenario. Why now? You know, look, all of these are and also, so just to clarify, during COVID times, on the entire portfolio of close to our 160-odd restaurants, we have only closed three restaurants, right? Out of those three, two were in Bombay and one in Delhi. Those were profit-making restaurants, but we closed them because our rental discussions on them, they sort of go out well.
In the current one, I think with the expansion that we have done, you know, some of, some of the demands were also shifted to the other place. When we reevaluated all of these factors, we thought, at least in the metro market or metro tier market, these stores were not making any sense.
If I could just look at this mature restaurants basket, excluding this, let's say, eight, what is the margin there? I don't have the revenue, I'm just trying to.
0.5, maybe 0.5%, you know, improvement there, overall basis. 14.3 will go to, say, say, 15.
Okay. Okay. So if I look at this, you know, the scheme on the promotions page on the deck, do you think, you know, because effectively, I'm not sure if this is pan-India. You know, there are schemes on for every day from Monday to Thursday in terms of lunch. You know, there is schemes or there is discounted price. Is this, you know, in the regular course of business, this was the case earlier also, or, you know, the scheme intensities, because, you know, once you roll it out, to roll it back with corporate customers, let's say, if they are on, you know, for this, lunch meals, it'll be a difficult task, right? I'm just trying to think, think through it.
Is this a regular course of business, or when was a similar thing, witnessed by Yaar earlier?
One, to clarify, this is not just lunch, this is both lunch and dinner. Typically, this is not corporate customer, because corporate customer largely, you know, come on second half of the week, which is Wednesday and normally Friday. This is more of Monday, Tuesday, which are the leanest day in our business, and we try to drive some, you know, value-seeking customer who can't afford, say, our product on a weekend pricing, right? We always had the differential pricing, but on these days, and it's selective, right? In some, in some days, it's ₹599, in some days it's ₹699, also in few markets, metro markets.
It's by outlet, based on what is the term which is of the outlet, outlet does. This is limited time offer, which has given us very positive results. If you look at our current pricing basket, this price has gone up by approximately INR 150 across all markets now.
This is Monday to Thursday, right? This is on Monday, Tuesday, because I see two offers, Monday to Tuesday and Tuesday to Thursday.
Look, this is not Pan-India, this is. There are different offers in different markets. In some markets, it's only Happy Monday, Tuesday, in some markets, only Perfect Thursday, in some markets, it's mid-week offer, which is Monday to Thursday. Sorry, Tuesday to Thursday.
Okay, mid-week to Thursday. Okay.
It is, it is not one, one offer for, for pan-India. It's based on what is the table term, what is the capacity utilization, which day part is not working for us, and that's the way we've done it. The promotions are largely, largely digitally targeted, promotions.
Sorry, just, just this part, when was this last done by Yaar? You know, do, I mean, this sort of a promotion intensity, when was it last done? Does it, you know, do the customers retrace back to the full pricing? Is that a difficult task? Just to touch on that.
So, so, look, last quarter, obviously, we are, we are looking at low demand scenario, right? If you look at other businesses also, people are down trading lower, you know, average utilizations. Unfortunately, in our business, we only have one segment, which is all you can eat, right? If the price point is X, I don't have option for customers to go and say that, "Now you only take these four items and pay less than that," right? The purpose of this campaign was to ensure that how do you, how do you capture some of the value-conscious market, customers and somebody who's been hit by the current demand scenario. We only did it with that perspective. This was not done on weekends.
Weekends were pretty, pretty good. If you look at the growth numbers, versus Q4, the 20% volume sequential growth I'm talking about, if you look at our weekday sales, which is Monday to Thursday, the growth numbers are around 28%. Our weekend volume growth is around around 12% to 15%. What also happens is that, this gets a talking point. It's also, you know, it's something that leads to recall, and we've also get the rubber effect on this in other day parts also.
Thank you. Mr. Poddar, I request you to join the queue for any follow-ups. Also, before we take the next question, I'd like to remind the participant to limit their questions to two to three questions per participant. Thank you. The next question is from the line of Shubh from Emerge Capital. Please go ahead.
Hi, sir. Thank you for the opportunity. Can you please give the split of number of mature stores versus new stores and the operating margins with Ind AS?
Number of outlets, so Q1 would have around 152 or so, and the balance would be new store. Operating margins with Ind AS, I don't have it. Bijay, can you give the exact numbers? Bijay? Okay, so I'll get it sent to you, but typically, I think there is additional 8% which sort of comes through from that.
Okay, thank you.
Thank you.
Thank you. The next question is from the line of Sakshi Chhabra from Swan Investments. Please go ahead.
Hi, sir. I had two questions. My first question was that, what is, has, what is the driving factor behind this increase in the, delivery volumes and sales and
No doubt we've been talking about it, a lot of things about our product, our menu engineering, our packaging engineering, and those things have been starting to play out sequentially since February. We've also kept our mix same, which is a la carte and box sales. Whatever deterioration that we have seen in the previous quarters in our delivery revenue numbers was on account of decline in average order value. Average value has been now pretty stable for now five, six quarters, and what the increase that we're seeing is on the volume front.
Okay. What, what was the average order value being on delivery side?
Approximately ₹500.
Okay.
This is next to us. This is, this is after GST, after discount.
Okay, okay. How do you see this panning out going forward? If you will see this sort of growth sustainable on a delivery side?
Yes, we hope so. At least, over the last seven quarters, this is, this is one of the best. I think this growth number is also continuing in, in the existing, the current quarter also. It should do well.
Okay. Sir, I wanted to understand, I think on your matured stores, if we even see the ADS, which is in Q1 versus Q2 of last year, which is like Q2 is usually, you know, the weakest quarter for you. Even compared to that, the ADS has been lower in this quarter. What is gonna be our strategy going forward to improve this?
Yeah, look, over the last five quarters, what has happened is, we have added more capacity, generally there is, there's some demand pressures on, on, you know, on discretionary spends, right? With the mix of that, if you look at the trend of quarter-on-quarter was in terms of last year, we have come down from almost INR 7 crore to 5.7 crore in Q4, right?
Right.
The task was, how do you get more people inside?
Mm-hmm.
I think we called this out last quarter also, that our focus is volume growth. We have achieved that as compared to what we did in Q4. We have done better than what normally the trend between Q4 and Q1. Our focus first was to see what changes you can make on your existing, you know, operations, be it in terms of culinary innovations, be it in terms of asset upgradations. While that is continuous work, but by and large, a lot of work has gone into that in, in Q3 and Q4 last year. The second step was: How do you get your volumes and revenues back?
I think, we've got our volumes, on a upward trend, and revenues also are reflecting accordingly. The third step is our, our, our margins, which is what, we are working on, both as a factor of, of improvement in terms of our gross margin, and also some cost optimization, right? This, this will, this will obviously take maybe one or two more quarters. We've taken a hard look at our portfolio. But what I can say now is that, you know, have we reached the bottom in the previous quarter? I believe so, right? Based on, what other industries are also talking about some improvement and also sequential growth, I think that should also start reflecting in our, in our numbers.
Okay. What, so what is the kind of revenue growth that you would be targeting in the coming three years?
you know, long term, we target 5% to 7%, right? if I look at last 10-year history, we've delivered that. Q1 obviously started with a negative number.
Mm-hmm.
A lot of catching up has to be done. In today's, sort of, you know, seeing today, it's very difficult to give you a number, but I think it should be, it should be better than what we have done in Q1, based on what we are seeing in our business. Give me one more quarter, and then it is easier for me to give you an estimate.
Sure. Okay, okay. With the current sentiment and, you know, Q2 being weak, you will have to keep giving further promotions and offers, right? Your volume growth you will still get, but on the pricing side, for another sometime you'll keep doing this sort of promotional offers so that you can drive footfalls?
No, look, it's very tactical, right?
Mm-hmm.
Like I said, the pricing is back, the gross margins are back in the month of July itself, right? You keep running some, some of these tactical offers, you know, promotional offers to get a customer back. When they convert into repeat customer and when they, they see the amount of work that has happened, be it on the asset build in terms of food, I think, I think the repeat numbers will come in. You know, the, the better reflection also is our internal guest satisfaction scores, right? We, you know, we, we track it very closely. In the current year, while last year also was very good, in the current year, we are even higher than last year, right?
If you look at the sub-part of our of our feedback score, our food feedback score is, is even higher. Our service feedback score is flattish, and our, you know, asset look and feel and then feedback score is also higher. So, you know, those things give me comfort that. We have also seen the improvement in Q1 versus, versus last quarter, right? So, so hopefully it should continue, based on the, on the daily feedback that that's getting from our, from our guests.
Okay. Thank you so much for all your views.
Thank you. Thank you, Sakshi.
Thank you. The next question is from the line of Faisal Zubair Hawa from HE Hawa and Company. Please go ahead. Faisal, your line is unmuted. Please unmute yourself and proceed. It seems there's no response from the current participant, and so we'll move to our next question that is from the line of Sanjeev Goswami from Fractal Capital Investment. Please go ahead.
Hi. Thanks for the opportunity. I have couple of questions around the store expansion. What I understand is you're going to add 4 new stores.
Excuse me, your voice is breaking. May I request you to please repeat your question using a headset?
Yeah. Is it better now?
Yes. Hello?
Yeah. I had a couple of questions around the store expansion. You added gross four new stores and net of -4, because you closed four stores. If I look at last three years, most of the additions that you have done, they have been happening in metro and tier one cities. 59 restaurants in metro and tier one cities, versus only four in Tier Two and Tier Three cities. I have two questions. One, when you talk about your addition of 20 new stores in this year, in this financial year, is it on a gross level or net level? Second, what kind of cities it will happen?
Oh, this number is on gross level, not on net level right now. In terms of our city expansion, I think let's look at three parts. One is Barbeque Nation brand, both India and internationally, separately and Toscano. Our international business and Toscano business are on a different trajectory, both in terms of profitability and SSG, so there we'll expand. Toscano, we have already opened one more already in this quarter, and we have under the present pipeline of around four, five restaurants, right? So maybe two or three more will come from that. So overall, five will come from that. International again, we have one more which will come up in this quarter, and then maybe one more in Q4. So we'll have three coming from that.
12 will come from Barbeque Nation in India on gross basis.
Okay. now, if you look at the prospective future of 90 stores which opened before the COVID basically, and what the new format that you have, what is the CapEx per store? What has been change in terms of CapEx per store and also staffing per, per store or per restaurant?
Sorry, CapEx and what is the second part you said?
Staffing, staffing per restaurant.
Staffing, as in revenue?
Staffing, staffing. Number of staff.
Oh, staff. Oh, number of staff. Okay. In terms of CapEx, it has slightly gone up. You know, we are currently around INR 3 to 3.1 crore per outlet. And staffing depends on size of the restaurant. Typically, around 4,000 sq ft area would have around 40 odd staff in the restaurants. This includes both front of the house, back of the house, housekeeping, everything.
Okay. How does it compare with pre-COVID numbers?
It's pretty similar. I think, between pre-COVID and now, we have kept same, but the only efficiency has come from the fact that we have also not added incremental staff, despite the fact that we have added, delivery business, which is around 15% of our revenues.
Okay. If I can have just one more question, actually, on the commissary part. I understand that we have two commissaries, right?
Yeah.
Okay. One is in Delhi and one is in Mumbai.
Mumbai.
Yeah. Okay, Mumbai. How many minimum outlets do you need to start a commissary in a region? What are the CapEx for one commissary?
So, so, commissary is not the model that we are pursuing anymore. These were, these were historical commissaries and, when they were built, some of the restaurants that were built were not designed to have large kitchen areas, right? We're continuing with those commissaries. As you know, we currently operate in over 80 cities, and most of our operations have moved towards, towards very standardized products, wherein we rely on the, on ready-to-cook products, and a lot of, you know, vendor-driven, standardized, you know, items that we procure from them. Commissary is no longer an integral part of our strategy. For example, Bangalore, we have around, around 18 outlets of Barbeque Nation, and we don't operate a commissary there.
Okay. So probably in the future, you can look at closing down the commissary in.
We can look at optimizing. I think closure would be difficult. As I said, some of the outlets they support don't have that large kitchen right now.
Okay.
This is a design background. Yeah.
Okay. Thank you.
Okay.
Thank you, Sanjeev.
Thank you. Any participants who wish to ask a question at this time, then may please press star and one. The next question is from the line of Weber from BNB Investments. Please go ahead.
Yeah, have you mentioned in the last quarter that, this, this, this quarter, your focus will be on improving SSG? Considering that, still this quarter is negative, and so the reason for this is, Indian consumption market or anything else? Is it demand problem or anything else?
Clearly, demand is the was the problem. Like I said, last quarter, we focused on SSG. If you compare it versus Q1, on a high base, it looks, i t, it is low. If you compare it against a trend, versus last quarter, it has started to trend, trend up. We believe that as demand recovery also happens, which, at least, we are optimistic that it should happen in second half of the year, it should move towards positive territory also.
Okay. You feel that the, you told that the CapEx will be INR 3.1 crores. Considering that, what will be the depreciation per year from now onward, per outlet? Depreciation per outlet.
Typically, on an overall number, we have around ₹37 crores. This also includes entries related to Ind AS 116. Without that, the number is around ₹18 odd crores, which would be. This is for the quarter. This would be around ₹3 lakh, ₹3 to 4 lakh rupees per.
Per outlet.
Yeah, per outlet per month.
Yeah.
Around INR 0.40 crore per outlet per year.
Okay, thank you.
Thank you. The next question is from the line of Khush Gosrani from Increda Asset Management. Please go ahead.
Yeah. Hi, sir. Sir, could you help us to understand the store mix between north, south, east, and west?
It's pretty similar across all. If you look at 192 Barbeque Nation restaurants, it is evenly divided across all territories. When you look at east, we also look at APDF in that, but without that, if you look at core east, which is Bihar, Jharkhand, and Northeast States, and West Bengal, this would have around around 25 outlets.
Sure. sir, if I just look at the, I think so the per store revenue outlets that you are going mature and new stores, I think so the revenue part is improving very constantly. It is where the EBITDA margins, where the profitability that we are, we are where we need to focus. What are the steps that you are taking as of now to recover to the profitability that we have done?
So, a couple of percentage points will straightaway. Sorry.
Yeah, sure, sure. Please.
A couple of percentage points will straightaway come from gross margin expansion, which we are seeing already, and the balance will come from increase in revenues in these and operating leverage. While some cost optimization work is also being undertaken, that should give us another 50 basis points expansion there.
Sure. Lastly, since you are curtailing down these promotional expenses, you are still seeing the volume remaining at the levels, or it is declining as well as the August month is rolling in?
Volumes are better. If you look at Q2 last year and Q2 this year, there are difference in dates in respect to, you know, Shravan impacts. Shravan last year started earlier. This year started earlier than last year. Barring those impacts, the volumes are holding up. Shravan did, does impact us in, strongly in markets like North, UP, and also, West.
Sure. Okay. Sure, sir. For the overall, when can you, when are you, you know, internally planning to reach the EBITDA margins that we were doing pre-COVID, or at least, at the peak that we have done?
It's improving on, on quarter- on- quarter basis. It's very difficult for me to call out. It also depends on a lot of factors, but I think my estimate is, from quarter three onwards, we should start seeing a very good positive impact on the numbers.
The last question.
Yeah.
Yeah, sorry. Please go ahead. Sorry.
It's also subject to a general, you know, improvement in demand scenario that we are all expecting in Q2 , second half of the year.
Yeah. One last question, sir. You have written in the deck you want to add, target is to add 20 new restaurants. This is on the net basis, right?
No, gross basis. I should have clarified that.
Okay, on gross basis. Okay, so then, so then what on net basis you would be only adding, 12 stores, 13 stores? Sorry.
No, we are on 10, 10 odds, because in this quarter also, we might have couple of closures. Look, on the store front, let me clarify.
Yeah.
We, we are long-term believers in obviously our, our, our model, right, both Barbeque Nation, Toscano, international opportunities. I think today the time is not to expand, and, you know, opening stores are relatively easier. We have a history of opening up 10, 11 restaurants every quarter or three to four restaurants every month. All right? All we are saying is that today, given the capacity that we have created, it's time to utilize that capacity and increase the revenue from the existing capacity that is created rather than opening up new capacity. As I showed, the moment we see that happening, and the signs are very encouraging based on our month-on-month performance over last six months, we'll speed up on expansion also very quickly.
Sure. Okay. Thank you, sir. That's it from us.
Thank you.
The next question is from the line of Mythili Balakrishnan from Alchemy Capital Management. Please go ahead.
Hi, Rahul. good set of numbers-
Hi.
given the demand environment. just a couple of questions. First, If you could help us with the CF, the cash from operations, CapEx and FCF in the pre-Ind AS world for the quarter?
Yes. Cash was around INR 60 odd crores. This is cash profit I'm talking about. Out of INR 80.5 crores of Pre-Ind AS EBITDA, we have INR 16 crores of cash coming. CapEx was around INR 30 odd crores. Now, this includes four new restaurants, so one of them is international, so it's slightly high CapEx. Also two renovations that we have done during the quarter, and money that we'll spend on maintenance and general upgrade of our few of our assets. Yeah, that's it.
And in
Sorry, is there something else, Mythili? Yeah.
In terms of the demand trends, I also wanted to get a sense, is there any difference which you are seeing in terms of tier one, tier two, in terms of metros, in terms of malls, high streets, et cetera? If you could sort of just help with that.
No. If you look at last quarter versus this quarter, given that we are around 20% growth, we are seeing growth pretty much across all verticals. Just that weekdays have done better than weekends. Weekends also have joined, grown in double digits. In terms of geographical, geographical spread, barring one or two cities in south, we have seen very broad-based, you know, growth. In fact, Tier One, Tier Two also has reacted extremely well to some of the promotions that we have done. And the numbers I'm talking about is more on, on volume base rather than just overall revenue base, but revenue base also will be pretty similar. Tier One, Tier Two also is has responded very well to the to the price based offers.
Got it. Rahul, given, and just to get a sense, like, how much of your revenues would be from repeat customers, given that you do track them with some, you know, form of the cell phone numbers, et cetera?
It's around 50/50. If I look at on a daily basis, whatever customers who dine with us, 50% customers are our existing customers, which means that we have their mobile numbers on system before, 50% are new customers. As I always said, you know, you should look at this data with the fact that our average group size is around 4.5, right? Every time, say, four or five people come to us, you only get 1 mobile number. At least 50% repeat is also very good, if I apply a factor of, say, two also or 1.5 also, it's around 75% business pretty typically comes from repeat.
Got it. In terms of a loyalty program or something like that, what, what would be your sense of, you know? Have you, have you tried experimenting on that front as well to drive volumes?
Our, our loyalty program is app-based, and, and we get, almost 30% of our revenues coming from, from our own app. That's doing, doing very well, growing month-on-month. You'll see that number lower this quarter because we have the other property called Happiness Card, which became unattractive in few days because the pricing in the outlet itself was lower during those days. That's why the numbers come down, but otherwise structurally, you know, our total Happiness Card conversion on weekends are still very good.
Coming back to loyalty, around 30% business comes from loyalty, and almost sorry, from app, and almost 12% to 14% of our customers who dine with us have the loyalty points added to that in their transactions.
Got it. Also, lastly, right, in terms of this seasonality, as we move into
Sorry, Mythili, your audio is not audible at all.
Okay. Is this better?
Yes.
Yes.
Yeah. Sorry, just wanted to get a sense of the seasonality as you head into Q2 from Q1, while Q2 tends to be weak. Just wanted to get a sense of how much has it normally been down by as compared to the previous quarter, and any indications of how it has been so far?
Around low single digits, 4% to 5% between Q2 and Q1.
Okay.
Currently, as I said, it's stable. The only gap is
You are not including the fact that on a normal Q2, you would have had more stores than what you have had in a Q1, right?
No, it is including that. Last time also, when I said, it's 8% growth normally versus, now 15% growth in this quarter, this includes overall business.
Okay. It, it is normally a 4% to 5% decline between Q2 and Q1?
Yeah.
Got it. And this time, are we trending similar or worse because of a longer Shravan?
Till now, pretty similar, but also, you know, realized that the longer Shravan days have covered, I think that's first, the 37, 38 days. I think going forward, if you look at like to like Shravan days, we are, we are actually better than last year.
Got it. Got it. Thanks a lot, Rahul. Thanks a lot for this. Thank you.
Thank you, Mythili.
Thank you. Ladies and gentlemen, that would be our last question for today. On behalf of Ambit Capital, that concludes today's conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.
Thank you.