Good morning, everyone. On behalf of Żabka Group, I'm delighted to welcome you to our Investor Day 2025. Whether you're joining us here in the room or tuning in online, my name is Filip Paszke. I am Group IR Director. It's a pleasure to have you here with us, where we can share the Żabka story with you and give you an update on our strategy, which we have published just yesterday, highlight our progress, and present our vision for the future. Today's agenda is pretty packed. It features a focused block of presentations from our senior leadership team. In a true Żabka spirit, where convenience and time are our currency, we've designed the sessions to be concise, insightful, and hopefully impactful. While we can't promise you the same two-minute experience that our customers have when they visit our stores, we'll do our best to keep things efficient and engaging.
A couple of housekeeping information. Following the presentations, we will open the floor to questions, Q&A session. Here's how it works. Those of you in the room, if you wish to ask a question, please raise your hand and there'll be someone with a microphone coming to you. Online participants, you can use and submit your questions using the Ask a Question button on the top right corner of your screen. You can ask the questions in writing throughout the duration of the session. We will read these questions once we address all the questions from the audience. After the Q&A, we will break for lunch for about 45 minutes. After the lunch, there will be buses outside of the hotel waiting for those of you who are joining us for the store visits and the distribution center visits.
Adam Manikowski, CEO of Żabka Polska, will join us for this trip alongside our Chief Commercial Officer and Chief Operating Officer from Żabka Polska. Thank you again for being here with us. We look forward to an inspiring and productive session. Let me now welcome Mr. Tomasz Suchański, CEO of Żabka Group. Thank you.
Good morning and a warm welcome at our Investor's Day presentation, which is one year, exactly one year after our IPO. My name is Tomasz Suchański. I'm CEO of Żabka Group, and I'm joined today with the members of my management team that will present themselves during the presentation. Ladies and gentlemen, I'm very proud to tell you that we have delivered everything that we promised and we guided before and during IPO. We have progressed in all financial, operational, and ESG KPIs that we have planned. Our Like-for-Like was 6.1% for the first half of the year. We improved our EBITDA margin by 0.4% to the upper limit of the range between 12% and 13%. We have opened 1,256 stores during the last 12 months. We have today 12,000 stores in Poland, and we have more than 120 stores in Romania.
We successfully introduced street food in all our stores, and we launched a new application, which is now responsible for 37% of Żabka sales. As you can see, we are speeding up our growth. Our business model is supported by structural, economic, and social tailwinds. Less time, increasing wealth causes lifestyle shifts and urbanization that increase demand for convenience and digital solutions. Our convenience ecosystem is the best positioned in the market to benefit from these changes. Growth has always been a part of our DNA. Everything started over 27 years ago when we opened the first store in Poznań, Poland. During the very first 18 years, we were focusing ourselves on building a chain of traditional corner stores. Everything changed in 2016 when we decided to go into the direction of modern convenience.
We decided to change everything in our stores, starting with the logo through assortment, equipment of the store, to the communication. That move increased the number of Poles visiting our stores every day, especially young people that we know are digitally native. This fact led us to the second transformation of our business, digital transformation based on data and AI. Żabka today is combining physical presence with expanded QMS with digital offerings and services in Poland and Romania. Today, Żabka Group is a tech-powered convenience ecosystem that is serving customers in two different worlds, the big ones, physical and digital. On the physical side, we have, as I said, 12,000 stores. We have 18 million Poles that have less than 500 meters to the nearest Żabka store. On a daily basis, we serve 4.2 million customers.
On the digital side, we have our application, which is somehow the gateway to this digital business where we operate such companies like Maczfit, Dietly, also in e-commerce, Jush!, and delio. All these businesses have more than 10 million users. Of course, to run this business, to run this touchpoint with customers, we have an AI-powered tech backbone that we use on a daily basis. We do not forget our ESG commitments. We have improved in all pillars of our responsibility: sustainable lifestyle, employers' engagement, mindful business impact, and especially transparency and validation, for which we have been rated AAA by MSCI. As you know, this is the highest rank possible. Ladies and gentlemen, growth and innovation are in everything that we do. Today, we will tell you how we want to grow, but also how we want to share the profits from that growth.
Thank you, and Tomasz, the floor is yours.
Warm welcome, everyone, here in Warsaw, but also people in front of their screens in their offices and homes. My name is Tomasz Blicharski, and I'm Chief Strategy and Development Officer of Żabka Group. A year ago, when we were having discussions before the IPO or just after IPO, we told you about our growth strategy. We told you that within five years, we will double our business. We will do that because we are going to be opening more than 1,000 stores per annum. We are going to be growing our Like-for-Like sales from mid to high single digits, and we are going to grow the digital businesses by five times during that period. I am pleased to say today that we upgraded this growth forecast. We upgraded in the aspect of store openings.
We now plan to increase our chain, both in Poland and in Romania, by 1,300 stores plus in every single year until 2028. This is a significant change. What it means is that by the end of this forecast period, we will have 16,000 stores operating in those two countries, which is 1,500 higher than what we have told you a year ago. What is also important is that our growth story in those two countries does not end there. In the long term, we plan to have 27,000 stores in Poland and in Romania, which is also an increase by 4,000 compared to the previous estimations. This is on the back of our revised long-term outlook for Romanian business. What it means is that in this 2028 that I just mentioned about, having 16,000 stores, we will still have 11,000 stores to open in just those two countries.
Why do we upgrade the growth prospects in particular now? Firstly, because we feel very confident in our growth trajectory in Poland. The newly opened stores in Poland perform very well. The sales of newly opened stores are higher and closer to our mature stores than they've ever been. We shared a lot of the information about that in prior quarters, but now we have longer data that confirms this trend. Secondly, we have the highest number of new locations for stores to be opened secured, with more than 1,700 locations to be opened. We now actually even signed the locations in some of the new builds to be opened in 2028. That gives us very long visibility on the pipeline of new stores to be opened. Thirdly, the cannibalization between the chain remains at a very low level. The second pillar is Romania.
We started the Romanian adventure a year ago. Now we have more than 120 stores, and we see the performance of these stores is very good. We see that sales of the stores, or here the number of store visits, approach on average the average for Polish stores, which is a great example of the customer attraction that these stores bring to the market, given that they're relative youth. In terms of Romanian stores, what we like about them is the attraction of our QMS offering. More than 30% of visits in the stores are for the QMS, which is at the benchmark of top Asian convenience players. All in all, that gives us a lot of confidence in the rollout, both in Poland and in Romania, at a very attractive payback period for years to come.
The second and third pillar of our growth, we have not, and we do not revise the forecast. I'll just remind you what we have told you a year ago. Starting with the Like-for-Likes, we continue to plan to grow our Like-for-Likes from mid to high single digits. That will be based on four pillars. Firstly, we'll continue to grow the sales on the back of successful and improving street food offering. Here, even though we have finalized the remodeling of the entire chain to effectively include equipment that enables us to serve all the assortment, the job is not done. As you'll see later on in Adam's presentation, there is a long tailwind coming from this change as the habits and the perception of the offering by the customers evolve. Secondly, we'll continue to invest in the services, so non-food-related services in our stores.
We have more than 20 services in our stores. This serves as a differentiation for our stores between us and any other player on the market. It brings the people in, and those people not only use the services, but also they co-buy on the food and the grocery items. It is an important attraction of our format. Thirdly, we'll continue to do what we do very well, which means innovate and excite the customers with our assortment on the convenience side and grocery side. Last year, we changed more than 600 products, introduced 600 new ones, and we continue to be well known on the market for this, for attracting especially the younger part of the population with the innovation and excitement in our assortment.
What is important is all of these three pillars that I just mentioned will be exacerbated and magnified by the fourth one, which is our consumer app. We'll talk more about it in the later part of the presentation, but the recently relaunched consumer app attracts more people into the store, who buy more stuff, and we'll continue to invest in this aspect of the business and include also the new features that will continue to build on this trend. The third pillar of our growth that I mentioned before, the digital businesses, we plan to grow it at 5x between 2023 and 2028. Here, it's worthwhile to mention that our short-term focus in the last few quarters was predominantly on getting those businesses above the break-even. We achieved that at the end of last year, and we continue to build on this this year.
Having said that, we obviously remember the growth aspect of this business, and these businesses are on track to grow by 5x by 2028. That includes the existing businesses, Maczfit, Lite, Nano, and a few others, as well as we incrementally boost that growth by adding new services into our ecosystem, including Żappka Pay, including EasyDrop, including In-Pulse, and a few others. Wojciech will talk more about that. We are confident that all of this together will result in the growth as we expected, or maybe even higher in the future. What this brings us, all of this, is a company that on one hand grows in terms of the revenue and EBITDA, and secondly, and Marta will talk more about it in a moment, with financial and prudent financial management with respect to the capital expenditure, the company that significantly increases its free cash flow.
We are at this stage where a year ago we told you that when we are at 1x, we'll tell you what to do with the capital allocation. We're at this stage where we now can share with you that we want to go from good to great. We want to be a business that grows sustainably over years, and at the same time, share the profits of that growth with all the investors through dividend. On the details of that, please, Marta, join the scene. We have small technical problems, so Marta will join in a moment the scene, and we'll talk much more about it in a moment. Thank you very much.
Thank you. Good morning, everyone. It's good to see you. My name is Marta Wrochna-Łastowska. I'm Chief Financial Officer of the Group. Let me start saying that we are really proud of the outstanding financial performance which we delivered. We delivered robust and profitable growth, growing our business, as you see, from PLN 6 billion of sales in 2015 up to almost PLN 30 billion now. When you look on the EBITDA growth, it has been even higher. Moreover, we see still a very significant growth potential going forward, and we are on track to deliver on our IPO promise to double our sales by 2028. Since IPO, we have also significantly improved our balance sheet. We deleveraged our balance sheet, improving the leverage from 2.3, as you see on this page, in 2023, to 1.5 at the end of 2024. This is excluding leases.
Now we are approaching the leverage of 1x, which we believe is right for us in the future. Given that, we will generate the cash beyond what we need to invest in our growth. Therefore, I'm very pleased today to share with you the information about the dividend payment. We believe that this creates a truly unique shareholder return proposition with a combination of best-in-class growth, which you have seen already, and meaningful capital return. When we met last year at IPO, we outlined the key building blocks of our value creation, including growth, profitability, and cash flows. I'm very pleased to say today that we have delivered on all the promises. As you see on this page, in some areas, we have even outperformed our guidance. We have proven that we have a well-thought-out long-term strategy, and we know how to execute it.
Referring to the key parameters, we said that we will accelerate, we said this year that we will accelerate our expansion, and we are on track to deliver 1,300 stores this year in Poland and in Romania. We continue to deliver Like-for-Like, which is above the market. For the first half, we had Like-for-Like of 6%. Despite poor weather, we are expecting to see mid-single-digit Like-for-Like in the third quarter, consistent with our guidance. We had EBITDA improvement and EBITDA margin improvement in the first half of this year, and we are in the upper end of our 12%-13% guided range. You have seen also meaningful improvement in our net profit margin, benefiting from the leveraging, better terms of our financing, and improved effective tax rate. Finally, we deliver faster than initially planned.
In line with the discussion which we had with most of you, as we approach the target leverage, we are ready to share with the shareholders the surplus of capital. We will introduce the new capital allocation policy, which I will describe in detail further in my presentation. What you are going to see on the following slides are the key outputs of our value creation plan, long-term value creation plan, which is the roadmap for us for the following years. You will see how Żabka's financial model translates in very strong value creation through growth in operating cash flow, stable CapEx, and declining debt service. Let me start with our increasing operating cash flow. As you know, the growth in our operating cash flows is driven by robust and profitable growth in our top line.
In ultimate convenience, the growth comes from the healthy combination of new stores opening, as well as growth of our existing stores. We have a huge and highly compelling business in Poland, delivering high and, what is important, still expanding margins. We have a smaller business in Romania, which is still in early stages, but performing well. Tomacz said that we see the traffic in our stores in Romania approaching the level which we have in Poland. We have a very good product mix with a high share of QMS. Importantly, the stores we opened last year deliver positive and increasing contribution. This provides a great foundation, and I'm confident we can deliver attractive margin in Romania when we continue to scale. Digital convenience offering business is significantly smaller, but growing really fast. Last year, we achieved profitability.
We shared that with you, a milestone moment for us, and we expect to see its benefit reflected in our margins in the years ahead. The combination of those two, so ultimate convenience and digital convenience offering, creates a very compelling operating cash flow profile, which is visible here of our group, which provides both long-term growth as well as attractive margin. The second very important factor which contributes to our value creation is our smart and disciplined CapEx. We have a very strict and payback-driven approach to our capital investments. Therefore, we are able to invest in our expansion, in store upgrades, in franchisee solution, in logistics, in technology, while at the same time keeping our CapEx constant in absolute terms or declining as a percentage of sales in the coming years.
As a result, what you will see, we will see the free cash flows growing at a faster pace than both sales and EBITDA. This is the beauty of our business. We can improve returns while at the same time continuing to invest in our future. The last very important point which contributes to our value creation is our financing and the leveraging profile. Since IPO for the last 12 months, you have seen that we have diversified our source of financing, and we meaningfully improved our funding terms. As you may recall, in May this year, we issued PLN 1 billion of bonds with an attractive margin of 150 basis points. A few weeks ago, we have completed the process of refinancing of our main facility agreement, PLN 3.5 billion, extending its tenor to 2031 and improving the margins.
As I already mentioned, we have nearly reached our mid-term leverage target of 1x, which we believe is the right one for our future. Given that, what you will see, we will see the cash required for debt service, which is going to decline, creating surplus capital, which we will be able to share with our shareholders. Let me assure you that from my perspective, nothing has changed in our business. We have always had, and we are going to have the business which is highly cash-generative. The only difference is that we increased scale, we improved leverage, and we improved our funding terms. Given that, we are going to build the surplus of cash, which we will share with our shareholders. Why we believe that 1x is the right leverage?
Taking into account our expected cash flow profile, our planned investment, and also expected cost of our funding, we believe that 1x is a sweet spot when we can still keep appropriate liquidity to have the operational flexibility, and at the same time, ensure efficient balance sheet. When you look on this chart, it is clear that any further leveraging will not bring additional incremental benefits for our business. Therefore, we believe we have now headroom to start sharing capital with our shareholders through dividends. Before I will share with you the details of our new capital allocation policy, let me spend a few minutes on our CapEx, because this is the topic we discuss frequently with the management team, as well as we also answer some questions on CapEx from the investor. As mentioned during the IPO, the majority of our CapEx is growth-related, approximately 80%.
The biggest portion of the growth CapEx relates to new store openings. Given that we are planning to open 1,300 stores in the coming years, it will remain the most important part of our spending. The second very important and significant part of our growth CapEx is investment in the existing stores. These investments position us to serve our customers better and to build their competitive advantages. They are to drive our Like-for-Like, so the traffic in our stores, or drive efficiency of our operations. Approximately 20% of our CapEx is maintenance CapEx, and mostly store upkeep, as you see. This is extremely important for us to keep our network in excellent conditions. We need to have our stores attractive and welcoming to our customers so that they want to visit us.
We also make sure that we invest in our operation and technology to make sure that we keep the long-term strength of our business. As I said, we are planning to keep the constant CapEx in absolute terms in the following years and declining as a percentage of sales. Bringing all that together, we are extremely proud to share with you our new capital allocation policy. The policy was designed to deliver the long-term shareholder value through growth. You know that growth is and always will be the most important for us. We will also keep the target leverage of 1x, and I can assure you that all long-term and mid-term plans are designed while keeping the leverage of 1x. On top of that, keeping the appropriate liquidity to have the flexibility in our operation. We will also have the optionality to allocate surplus capital for bolt-on acquisition.
The primary focus for us is organic growth, but we will continue to evaluate the selective value accretive M&As, which can expand our capabilities. Finally, the surplus of capital will be shared with our shareholders through dividends. We are planning to start with a 50% payout ratio from the profit of 2025, which will be payable as annual dividend in mid-2026. In the following years, you will see the payout ratio between 50% and 70%, depending on our investment needs. We will always keep the flexibility to do what is right for our business. Therefore, if we see we have incremental profits, we may decide to increase the dividend payout ratio. Alternatively, when we see interesting investment opportunity or M&A, we may temporarily decrease our dividend payout ratio. If you want to look from the more longer-term perspective, we may consider also the share buyback.
Tomasz started the meeting today saying that we delivered on our promises. I'm really pleased to share with you right now our upgraded mid-term guidance. This guidance reflects the accelerated expansion, as well as our new dividend policy. We will continue to grow our business through a combination of new store opening and Like-for-Like growth. We are planning to open 1,300 stores per annum to reach the target of 16,000 stores in Poland and in Romania by 2028. You've seen we have great results of new stores. We have exceptional payback in Poland. We have great potential in Romania, and our white space is 27,000 stores for us to capture on those two markets. We are planning to deliver the Like-for-Like in the mid to high single-digit range. Tomacz shared the key initiatives which will drive Like-for-Like, and you will hear more about that from Adam and Wojciech.
We are planning to keep our EBITDA margin in the upper end of our 12%-13% range. What you will see, you will see the slightly increasing profitability in Poland and disciplined and mindful investments in Romania. It is extremely important for us to keep the proper balance between profitability and growth. We want to make sure that we will deliver the EBITDA margin in the guided range, while also continuing to invest and continuing rollout in Romania. Our profitability, our EBITDA margin will be benefiting from continued improvement in our product mix, depending on relationships with our suppliers and improving terms of trade based on higher volumes. We will benefit from the investments we've done in digital and tech. We will continue to automate and digitalize our business.
We will see also benefits coming from the development of our digital convenience offering, as well as new digital services, which will be presented by Wojciech. We are committed to keeping our target leverage rate. I skipped the net profit. In line with the guidance which we shared with you at IPO, we are planning to increase also net profit towards 4.5% in the medium term. Finally, we are committed to keeping the leverage ratio at 1x. Given our cash flow profile, we will share the excess cash flow with our shareholders, creating a truly unique and compelling shareholder value proposition, combining best-in-class growth and meaningful capital return.
Looking at our group, we have evolved our business from the traditional corner store into a value proposition that extends far beyond that, into modern convenience that resonates really well with a wide range of customers in Poland and recently also in Romania. We have shown that we can learn, we can adapt, we can change, we can innovate, and importantly, we know how to execute. We've delivered on our promises, which we gave you at IPO, and we will continue to do so. Now I would like to invite you to the second part of our meeting, of our presentation. Adam, Anna, Wojciech, and Jola will walk you through the key pillars of our strategy. I hope this perspective will help you to understand even better our ambitions, as well as the wide range of opportunities which are ahead of us.
I invite Adam to tell you more about how we are going to drive our business in Poland.
Hello everyone, and welcome. Thank you for being with us today. In my part of the presentation, I would like to focus on the two important strategic pillars, which are helping us to deliver, to double the sales to the end customers from 2023 to 2028. The first one, very important, as the growth is in our DNA, is the expansion. We've been opening more than 1,000 stores in Poland for the last few years, maintaining the high quality of expansion. We are accelerating our growth, accelerating our number of new stores, and this year we will open almost 1,300 stores, and we will continue accelerating. We know exactly where to open the stores, thanks to our exceptional modus operandi, know-how, and technology.
We invested a few years a lot in AI, machine learning, and analytics to know exactly where we should open the stores and with what kind of economics. We scrapped almost 10 million addresses in Poland, using 700 million different elements, impacting the attractiveness of the locations. We created the heat maps, and we exactly know where our expansion teams should look for the location. We also know that we have the models, which, once finding the location, can help us with 99% of the confidence, set and predict the economics of each store. We also approve every single location centrally during our investment committees, making sure that the approved location is meeting all the financial and operational requirements. This is the proof that what we've been doing for the last many years keeps the high quality.
It's not only about opening the new stores itself, but it's about opening and growing with a high level of the quality of the new openings. We have on average 12 months paybacks from invested capital, which is one of the best in class. As you can see, it's almost similar among different store clusters. As to our growth, there are many questions where we are taking the location from. One of the big stores are, of course, the Greenfield locations, the heat map, which I described. For example, you can see on a slide that we have in Poland still 5x more mom-and-pop stores than existing Żabka stores. This is also a very important channel for us to grow and to open the new stores. The other example are the bank outlets. As you know, everything is going to digital, and the banks were in the premium locations.
It's also a very good source for us for the new stores. Having the technology, knowing where to look for location, having the access to prime locations, and having the model allowing us to maintain the high quality of the expansions, we made this decision to accelerate and to continue. We are also successfully recruiting the new franchisees who are successfully operating our existing and our new stores. It's also thanks to the investment in the franchisee remuneration system. If you look at our white space, it's almost 20,000 stores. We know it because we scraped 10 million addresses in Poland with sophisticated technology. We are very confident that this is the right space. Historically, our expansion quality is showing that we are right. We have 7,500 stores to open.
If you look at where we are, where is the white space, what's the breakout of the white space, you can see that it is still in Warsaw. It is in small cities, medium, and the big cities. You can be surprised that still we have so much white space in Warsaw. When you go out of this hotel, you will see many Żabkas. That's true because after the detailed analysis of all the addresses in Warsaw, we see that saturation level in Warsaw is, for example, 58% only. Still a big headroom to grow. It's not only about Warsaw. It's not only about the small cities or big, but it's also about medium cities. All over Poland, we can grow because all over Poland, the level of saturation with Żabka stores is on the level of 60%.
This is the additional proof, besides our historical performance, that we can successfully be opening the new stores for the next years. If you look at the breakdown of existing store network, our existing store network, we are 9% in Warsaw, but we are almost evenly shared between large, medium, and small cities. This is also the proof that we are not planning to change our structural way where we open the stores. We are planning to open the stores across all Poland because we see the white space potential. We are confident that the data and analytics we use show that those new stores will be maintaining and achieving the economics of the stores which we opened so far. The next important level of how we are driving Like-for-Like are all our Like-for-Like initiatives.
Being the growth-driven company, we have many different projects and initiatives which we are focusing on in order to grow sales, but also to grow our Like-for-Like. There are two aspects of these activities. There are aspects which we cannot control and the ones which we can control. One aspect which we cannot control, and it's very important for every convenience business in the world, is the weather. As you can see, this summer, for those of you who live in Poland, was one of the coldest ones. I don't know if you know what we tracked exactly. The temperature drop versus last year was the same as in 2017, which shows that this summer was a clear anomaly. All the industries connected to weather were negatively impacted by this.
In our convenience business, the better the weather is, the more traffic there is, and the more sales of categories like beverages or ice cream. If the weather is bad, there is less traffic, and there might be negative impacts. We estimate that the negative impact of this anomaly, which is the cold summer on our Like-for-Like, is on a level between 1%- 2%. However, it does not change our guidance to deliver for Q3 the single mid-digit Like-for-Like. It does not also change our guidance for the full year, where we want to deliver the lower end of the mid to high single-digit Like-for-Like. Let's focus right now on what we can control. We are a growth-driven company. We have many initiatives, as I said. I have chosen only three of them, which are the key pillars of the current and future growth.
The first one is our gastronomic offer. From June, we introduced the oven to all our existing stores. Those are the special oven and special assortment with special visualization, where we can sell the street food to our customers. Via this, we made a revolution on the street food offer in Poland. We are the largest street food chain in Europe, with almost 12,000 stores having this offer for the customers. However, it's a long journey. Already, this offering is the key driver of Like-for-Like for our QMS. We see the great traction with our customers. We see that we are growing with awareness. We are introducing new products. I encourage you to try during the break our offering. We have the stand with our street food offering. We are investing in price and promo activities to convert the non-customers to customers of this offering.
We see that it is a journey. Already starting well and creating a very strong driver for our sales growth, we see that, like in an example of coffee, it takes time. That's why we see the huge potential with this offering. We started with coffee many years ago. Right now, we are selling 40 million cups of coffee per year. We are the biggest coffee seller in Poland. We are selling 80 million hot dogs per year with the awareness of 90%. I don't know if you know that with the awareness of pizza, which we sell only 30%, we sell 1 million pizzas per month. We are the biggest pizza seller on the market, and only awareness 30%. It shows how huge potential we have to drive sales, to drive Like- for- Like, and to convert non-customers to customers of this offering.
We have coffee and hot dogs on the stage of advocacy. We have very good products like French fries, paninis, tortillas, and zapiekanki, who are going to the stage of retention. We have many novelties, which we know that in order to grow the awareness of them and moving the stage to advocacy, we need time. I'm mentioning this to show you the huge potential which we see and the great tractions which we see with the customers, because you don't find any other retailer who has this kind of gastronomic offering. This gastronomic offering has a quality comparable to the biggest QSR players at the much, much lower price, which makes the value proposition for the customers very attractive. When I say about the uniqueness of our stores, we always say that Żabka is not only the store, it's the convenience hub because of the services.
This is an important platform, not only from the perspective of building our competitive advantage, but also being truly convenient for our customers. Right now, we have almost more than 20 services in our stores. We recently started cooperation with Allegro Delivery. We are the biggest parcel operator in Poland, biggest coffee place in Poland, banking services, ATM services. Recently, we introduced gaming services and also the prepaid vouchers, which is interesting. Our prepaid vouchers, you can customize them and pay, for example, only for coffee or certain given categories. We have more than 20 services. Why it's very important for us? Not only because it's the essence of every convenience business model, but also 50% of the customers having the halo effect are co-buying, are co-buying our products, increasing our sales, and increasing Like- for- Like.
This is the platform, a very important platform, which helps us to grow, which helps us to grow our sales. The third very important pillar are the products. The story is about the products. I can proudly say that we have one of the best new product development teams on the market. We are constantly innovating with our assortment, using many different feedbacks. We are taking feedbacks from our franchisees, working closely with the franchisee council. Our franchisee is the ambassador of the Żabka brand, very close to customers. Thanks to the technology, we are also using monthly 500,000 feedbacks from customers via our app. We are able to detect the new trends, and we are also able to see what customers are thinking about our assortment, what they are thinking about our new products.
We are also taking the inspiration from around the world to predict the trends and to introduce new products which no one has on the market. That's why, having this know-how, we are able to introduce between 30- 40 monthly new QMS products, which are unique by itself and are available only in Żabka. We are constantly innovating also with the packaging and with the design. Besides the private brand, besides growing the large QMS offer, differentiating us from the others, we are yearly introducing 1,500 new branded products to our stores, out of which 500 branded products are exclusivity for Żabkas. That's why almost 40% of our customers are the innovator seekers and ambassadors for the novelties. This is also another example of the uniqueness and another example of how we can competitively grow our sales through incrementally introducing the new assortment.
The big enabler for this is the digitalization. We introduced a few years ago our app. Right now, we have more than 10 million customers, and more than 30% of the sales is going through the app. This tool helps us to not only loyalize our customers, but to increase the size of the basket, increase the frequency of their visit via personalized offers, via coupons, via meal deals, and other trading mechanics. This app also helps us to spend all the marketing and promotional money very effectively in a very targeted way. Wojciech will tell more. I just want to mention that we are constantly innovative in the digitalization.
We are right now the biggest chain with almost 5,000 stores with digital screens, where we can display the content for the customers, which we can monetize, and where we can, as the biggest of this kind of player on the Polish retail market, in a real-time influence customer shopping habit during their shopping trip. This will be elaborated more by Wojciech. Before this, I would like to invite on the stage Anna, who will tell us more about our international business. Thank you very much.
Good morning and very welcome you here in the room, but also people online. My name is Anna Grabowska. I'm the Managing Director of Żabka International. You've just heard from Adam how we are developing in Poland. Now let's focus on international expansion. I will talk you through how we are doing in Romania. When we selected the first market for international expansion, we looked at two things: how customers are ready for a convenience value proposition, but also what is the market growth potential. Romania scores very high on both criteria. It is supported by tailwinds of the same market trends, like growing GDP, very stable GDP, growing disposable income that is being transferred into consumption, low unemployment, and great eagerness for convenience. Why? Because the lifestyles also shift, like in Poland. People are working long hours. Women are educated, and they are working also professionally.
People don't want to cook as much as they used to, and they are in a rush. We have a great momentum for our expansion. We entered Romania only last year. We opened the first store in June last year, and today we have 122 stores. We started our expansion from the capital city, from Bucharest, but we also expanded to other two regions. We are present in Constanța. This is the biggest port harbor at the Black Sea, in fact, the biggest in Europe, given the war in Ukraine, and also a very popular summer destination. Romania has lovely beaches, so a lot of people are moving to the seaside during summer. We are also in Pitești region. This is an important industrial center, well known for Dacia Car Maker. We obviously started from Bucharest. This is a very densely populated city.
This is a population of Warsaw, but squeezed in the Poznań space. Twice as much people on the square meter, very big traffic, but also a lot of residential living in the small vicinity. We have a good presence in Bucharest already, so we started to expand to the outskirts of the city, to small, medium towns, and cities outside of Bucharest to test our format. How are we doing? Yes, we opened to over 100 stores within a year, which I think is the number one, I think, effort compared to other retailers. We're testing different locations. The vast majority of our stores are residential, given the dense population, but we're also testing stores next to the railway station, in the offices, next to university campuses. We know that the school locations are very good for us. How are we doing?
I think you've heard from Marta and Tomasz, but I think I will repeat that the QMS performs ahead of our expectations. It already reached 30% of daily traffic in stores, and it is the biggest attraction of customers as we launch something new, totally new to markets. Customers in Romania are very open to trying QMS. They have a longstanding tradition of eating out. Now, weather is good, but this is also a Latin culture of just eating small things on the go, drinking coffee, eating croissants, etc. They also have a habit of going out for lunch. This is supported by the state and employer-supported lunch vouchers that have been present on the market for years. They have money, and they go for lunches. We launched our QMS, 100% private brand, so it's a great competitive advantage.
We have all the great products that Adam explained, but tailored to Romania. Sandwiches, smoothies, juices, salads, ready meals, but also great bistro. This is the equivalent of Żabka Cafe. We've already sold nearly 2 million hot dogs in Romania, and also burgers and pizza. This is a competitive edge for sure. We also launched some innovation. Adam imports a lot of products to Poland to attract customers, and I proudly exported some products from Poland to Romania. We have in our stores fruit stores: Wedel, Oshi, Tarczyński, Śliwka Nałęczowska, Krówka z Milanówka, and many others. Polish products are very well received. These are perceived as premium products of great quality and great price. The store's look and feel is similar to Żabka, even though they are called froo for some good reasons, not to call them Żabka, as the Żabka name does not translate well into Romanian.
They have something different meaning. Froo is a nice word, they're easy to pronounce. The store's look and feel, although resembling Żabka, is great. It's modern, contemporary, lit, and clean, and it is standing out on the market. We started to communicate using traditional form, but we very quickly moved to the digital communication, using a bit of a disruptive tone, as we are a newcomer to the market, so we have to stand out. The brand awareness in a short period of time raised to like 44%. This is still half of the way to Poland, but giving the youth of the company, I think is a great achievement. The B2B model is rooted in our franchisee system that you know from Poland. Although we have to tailor it to the market, in fact, we operate our store using an agency model. We cooperate with over 100 agents.
We provide them with range, promo, and price strategy. We deliver goods, so we are responsible as fru for marketing, logistics, etc. We equip the stores, but they employ the personnel. They train them. They also look after customer service and provide great store standards. You remember that we acquired a majority stake of Dream Distributor, the FMCG distributor. That was the way for us to enter Romania. Since the acquisition, we managed to upgrade the distributor, and now Dream performs as our logistics platform. With the exception of tobacco, which is still being delivered directly to stores, everything else is being delivered through our distribution center in four temperature zones. Fruit and veg, chilled, fresh, frozen, and ambient are being delivered from D.C. to our stores. We are very proud that we have very good traction with customers. This is the most important. Customer is the king.
They judge, and they decide with the money where to go. Customers really like us. Yes, the NPS is high, and also the feedback that we got is standing out from other retailers. We are original. We are a surprising brand. We are modern, contemporary. This is something that they missed, as you know, when we were not there. What is important, they say that if they had a froo store nearby, they would spend more. I think it is something that we provide them incrementally. We concentrate our efforts to invite customers for the trial, meaning that if they try out our stores, they stay with us. 80% of our customers are returning customers. They repeat purchase. They like the store and you know how we perform. They also say that we are a destination for a quick snack on the go.
30% is not only a share of transaction, but also an absolute number of coffee per store, hot dogs, or sandwiches per store that we sell in big quantities. We see that we're leapfrogging the traffic. Each quarter, we're growing the average traffic in our stores by 13%. Tomacz mentioned that we are catching up with the Polish operation very fast. In September, we've already matched the daily traffic in our stores in Romania compared to Polish stores. Remember, we have a year-plus history in Romania, so it's a lot ahead of us. We also see that the stores in the second year of operation are still maturing. We have a decent double-digit Like-for-Like growth, predominantly driven by new customers that are coming to our stores. We also see that the stores opened last year are already profitable, and they grow profitability.
Increased sales, better margin, but also better discipline costs. I think ahead of us, there is also another movement or growth in traffic. We have not yet touched a lot of avenues. We have not yet launched services. We only trialed with a couple of services. We know that convenience is not only about products, but also additional incremental services that give additional reason to come, but also help us for cross-buying. The brand awareness, yes, it is half of what we have in Poland. We will bring more customers in years to come. Finally, work on range and price. Yes, and when we launch to Romania, we launch the same range all stores. Obviously, one fit does not fit all. Does not size does not fit all. We started to differentiate the ranges from traffic to residential type of stores and also to more affluent and less affluent customers.
We have not touched yet the price differentiation, which is kind of obvious to optimize profit, but also to optimize sales. This is, I think, ahead of us. We are very encouraged by performance so far. That's why we increased the white space potential forecast for Romania. When we started at IPO last year, we said, okay, there is 4,000, which was very conservative. Yesterday, one of the investors told me, divide Polish white space by half, and you will get the right number, which also could be an exercise. We did a bit of sophisticated exercise looking at demand and supply of location. You know what we know? From our experience, we have a very good performance not only in the capital city, but also in second and third-tier cities. Second, we have a very good tailwind of all the new avenues opening for new locations.
What we see, what's going on in the market? Banks, consolidation, and digitalization of financial services. Banks used to be on a very good prime location. It's a good idea for us. Traditional trade is still big in Romania. It is still 40,000,
You know, outlets that we can convert, and we see the willingness of mom-and-pop stores to convert into fru. We see the new legislation coming into the betting system. Just to say that in Romania, you would see betting straight on because there is exactly the same number of bettings as pharmacies. Yes, they are very visible. The day services also are being digitalized, so we will have a lot of locations. The third one, we have a very strong and very positive response from customers and in various locations. This is important that we tested small and medium and bigger stores, and in all of them, our value proposition, including QMS, is a differentiating point, and customers respond very well to it. That's why we increased the forecast, and now we see that Romania can accommodate like 7,600 froo stores.
We also are mindful when it comes to the investment, and we are being very disciplined when it comes to cost. We do everything possible to get the synergies with the group and leverage the know-how and the technology that we have in the group. Our approach is local. Whatever we can take from a well-proven concept, we take to Romania. Whatever needs to be tailored, we tailor to local customers' needs. A couple of examples, so obviously the store look and feel, the branding, naming is different, but the branding, the brand position is exactly the same. International sourcing, we've already set up the structure that helps us to get all the innovation from Poland, but in Romanian packaging, in right, secured recipes.
We do some tailor-made changes, like coffee in Romania is a bit stronger and more robust than in Poland, but we have exactly the same source and the same trade of terms. Data and technology, we're developing Greenfield, straight in art, a POS system and ERP system for Romania. We're doing it in a way that if we decide to scale up outside and beyond Romania, we can do it in an easy way. B2B I discussed, and processes. Processes, we try to outsource to Shared Service Center, which is in Poland, and those like routine AP processes or buying CapEx, everything is now outsourced to Shared Service Center. Finally, process standards and know-how.
We lay the foundation at the moment that you know, if we decide to go internationally, we can have a good playbook that we will take out and we'll say, okay, this is the way how we want to enter the next market. I know that some of you have been to Romania already. I had the pleasure to walk you through the stores, but also I got to know yesterday that some of you have never been to Romania as a country, not even say to our fru stores. I think that I will show you the film, like a sneak peek of you know, how we're doing in Romania, and after the video, I will invite Wojciech Krok to the stage. Thank you very much.
Żabka went on a real adventure of launching the most loved store format to a new destination. Welcome froo! With Romania in its core, we opened our first store, and then another one, and another one, and a residential one, as well as traffic ones, and many, many more. In total, we already have more than 100 stores in Southeast Romania, fully customized to our customers' needs, no matter the time or place. Every store includes our competitive advantage. Froo Bistro with the best hot dogs, other amazing hot snacks like pizza and French fries, and many more, together with aromatic coffee, our own delicacies that you can find only at froo and will help when hunger comes, no matter the time of day.
Like a good soul salad and Tomcio Paluch sandwiches, the yummy ready-to-eat food, smoothies and juices out of bare fruit and Foodini, Fill and Chill, our iconic ice cup, chilled beer, and froo-exclusive drinks and snacks. Let's not forget about local brands Romanians already love and trust. Bring a smile with every visit. We painted the city green. From traditional channels, we smoothly jumped into outstanding and unconventional communication campaign in collaboration with one of the funniest stand-up comedians, which significantly increased brand awareness and visibility. The result? Froo is a hit, a hit that we will replicate throughout the country, a hit that Romania loves. Anything you want in every froo.
Good morning, everyone. My name is Wojciech Krok, and I'm the Managing Director of Żabka Future. As Tomasz mentioned in his intro, Żabka is a company extremely well positioned to take advantage of various trends, various shopper trends, and societal trends that are happening in Poland. One of the trends that we see is very profound, very important, is the trend towards digitization. Poles are among the most digital nations in Europe, and we can see that increasing every year. You can see many numbers, we have multiple statistics that prove that point. That is why, in our growth story, we put digital growth as one of the key pillars of our strategy, one of the key three pillars of our strategy. Now, at Żabka Future, what we do is we support this growth, we fuel this growth through a combination of three things.
Number one, as was mentioned a couple of times by my colleagues, we develop our app. We have revamped it in the fall of last year. We invest and develop new digital businesses that fuel our growth. Finally, we provide effective technology, data, and automation to underpin the growth of the entire group. Starting with our app, our app is becoming an increasingly critical component of our whole ecosystem. Firstly, supporting the stores, but more and more supporting the different digital businesses that we have. As mentioned, last fall, we have revamped our app, essentially building a new technology stack underneath, and we had three objectives in mind. Number one was to change the user experience and introduce features, very specific features that help with our Like-for-Like, help with our store growth.
These are features like activated coupons, which you can see in some QSR restaurant apps, meal deals, or things like personalized offers that allow us to stimulate customers and make them come to the stores more often. Number two was to integrate all of the businesses that we have in our group into a single, we call it a super app, but basically a single user interface that makes it more convenient to access these businesses, but also add new digital services, making people's lives easier. Finally, what we wanted to do is to get all of the data from that ecosystem into a single customer data platform that allows us to take better commercial decisions all across our group. These were the three things. Of course, the key question is, how are we doing?
I'm quite pleased to report that we meet the majority of the KPIs that we have put in front of ourselves. Number one was increasing engagement. We can see that only this year, the engagement of people, as measured by sessions, went up by 24%, by time spent in the app, by 19%. We also have an additional KPI that looks at what service people used. In the past, it was mainly focused around the store. Now, more and more people use adjacent services that are available in our app. Of course, it's not only about engagement. It's also about monetization. We can see that this parameter is going up even more. We see that 27% of all sales done with the group, sorry, we see 27% growth in all sales done in the group, done using a digital engagement, so primarily with our app.
That number is also growing quite heavily. Finally, we put a goal in front of ourselves, which was around using the app to stimulate sales in our group businesses. As an example, the recent launch of Jush!, which is our e-commerce proposition in Wrocław, we were able to divert as much as 20% of traffic through the app to that new launch, which we believe is a good result. The app is the first thing. We also invest and develop new digital businesses in the group. All these businesses have a very clear strategy and are also aligned with the mission of Żabka, which is freeing up our customers' free time. These are essentially all digital convenience businesses, so putting what we do in our convenience business into the digital world.
They're highly synergistic with our core between each other and allow us to monetize the 10 million plus digital customers that we have in our ecosystem. Again, in the spirit of delivering on promises, the question might be, how are we doing with the digital businesses? Number one, and this was mentioned, we promised to break even in 2024, and we have. We're keeping our commitment to increase our revenue from the digital businesses by 5x in four years, so between 2023 and 2028. We have a strong trajectory in 2025 and plan to accelerate that growth in 2026, exceeding PLN 1 billion in revenue from the digital businesses. We will do that for a combination of two things. Number one, we see a strong growth trajectory from our existing businesses, but as was mentioned, we are also introducing a couple of new businesses.
I'll share that in a moment, what they are and what they do. Starting with the existing businesses, of course, each of them is a business of its own. Many, many things are there, many details, many detailed initiatives, but I'll only focus on the ones that are strategically important. For Maczfit, what some of you might see in our stores, we already are starting with vertical integration with our core business. Already this year, we have sold 1 million products produced by Maczfit in our stores. We like this large-scale pilot. We like the results. Next year, we will 10x that, so we will sell around 10 million products produced by Maczfit in Żabka stores. We think that is only the beginning. We see vertical integration between Maczfit as a producer and Żabka as a key strategic pillar. Number two, Lite, which is our e-commerce business. It operates Jush!
and delio, which are our, again, e-grocery propositions. We see that business is growing extremely well, faster than 60% each year. We see that each order placed is contributing positively to EBITDA on a full operating cost perspective, so after all applicable operating costs. There the strategic move is, of course, scaling. We have done the first step recently by entering a new city, Wrocław, which we believe will take that business closer and closer to full EBITDA profitability. Finally, Nano, as we have shifted our strategy, we're now opening these autonomous stores. It still remains the largest chain of autonomous stores in Europe, in so-called specialist locations, which are factories, which are university campuses with captive audiences. We see that strategy working extremely well with Nano, able to save costs, increase tickets, and basically be a very valid proposition in these areas. These were the existing businesses.
Now looking at what we have in store, what are we looking at to innovate? Number one, Żabka Ads. This is our digital out-of-home advertising business. Already today, we have approximately, yesterday was 4,998. I think today is 5,000 digital screens across our Żabka footprint, making us one of the largest digital advertising providers in the country. We use these screens for two reasons. Number one, we boost Like-for-Like sales from our existing stores. As mentioned by Adam, they're a very efficient way to drive our customers to buy more. The second part is we're using to monetize them outside. Today we're working with more than 90 FMCG brands, and our campaigns are seen by more than 25 million individual touchpoints, so views each month, already today. This is, of course, a business where the screens have very strong returns on investment.
We expect to grow further with our ads business. The second business is EasyDrop. It's a new business. It's something that we're in the process of launching. Essentially, think of it as Żabka having one of the largest pickup drop-off points for parcels in the country. Combine that with our very efficient logistics backbone. We're able to provide a logistics product, whereas consumers are able to give a package in the store when they return an e-commerce product, and that gets shipped back to the merchant. We can offer potentially the cheapest product in e-commerce returns in Poland and scale it very rapidly. That's what EasyDrop will be about. Of course, low CapEx, very high synergies with our core business. The next initiative we're taking, and this was always a big thing for us, is looking at financial services.
Żabka Pay, and what I can say today is not all the details, but we're working with a leading financial institution in Poland to create a suite of digital financial products. This includes payments and other financial services that we will then put through our app to our 10 million plus digital customers. We're very excited about that one, but more details will come in the next sessions. Finally, we have launched In-Pulse, which is a joint venture between Żabka Group and Stagwell, which is a leading American digital marketing agency. This business allows us to monetize our data. I was talking a lot about how much data we have. Stagwell is a leader in marketing technology that basically has products that our data can fuel.
Already today, we're working with leading B2B customers and using these products to do market surveys and give them actionable customer insights based on real data, something that nobody else can do in Poland. These are some of the new businesses. The last piece of how we support the growth of Żabka Group is efficient technology, data, and automation. I think a lot has been said, both by Adam when he was explaining how we look for new stores and use AI, by Anya when technology develops the new tech stack for Romania. What is relevant here is to say, as we're doing all that, we're managing to do it very efficiently. Our total cost of ownership of technology in Żabka Group as a percentage of revenue is going down, and we expect it to be more efficient over time.
In the spirit of efficiency, we're also launching, I mean, already have launched a very large program on GenAI, together with the business, together with the operations, to look at each and every process in our group. As you have heard multiple times, Żabka is quite efficient in using AI. We're going to review all the processes, use GenAI to optimize costs in our core business. Already we're seeing first P&L results, and we expect that to be a relatively big driver of our group efficiency. To sum up this part of the presentation, I think we are very well positioned as a company to take advantage of the digitization trend. Number one, our new mobile app is improving on virtually all parameters and is a key driver of what we do as a group.
Number two, our digital businesses are growing, not only in terms of revenue, but increasing very rapidly in terms of profitability. Number three, we're quite efficient with the use of technology. We're innovating, we're supporting all the group businesses and elements in the growth. As a whole, we believe we can take advantage of the digitization trend efficiently. With that, thank you so much, and I'm giving the floor to Jola, who will talk about people.
Good morning, everybody. My name is Jola. I'm Chief People Officer, and I'm the last to speak on purpose. I'm the last to speak to demonstrate that we have the organization and people ready for the growth, ready to deliver all those initiatives that have been presented by my colleagues. Our strong leadership is proven by results and external recognition. Our organizational confidence is built on the operational framework, our focus and mindset, and our disciplined execution. Of course, at the core of our success are our people, a diverse team of experts whose expertise and diverse background fuel our innovation and also fuel our adaptability to a dynamic market. As you can see, we have brought people from various locations with different backgrounds, different expertise, and it all creates the spirit of collaboration. What we are highly proud of is that we are an employer of choice.
This year, we have received almost 120,000 applications, people who want to join us, to join our story and our adventure. We are also giving access to train our people by the best. This combination of expertise, different backgrounds, and continuous learning is giving us the confidence that we will grow. We are equally proud of our culture, our unique culture. We were sharing this across during our IPO that we are in the top 25 most engaging organizations globally. Last year, we confirmed that we are again third in a row, confirmed by the Gallup Institute, that we are in the top 25% of organizations with the most engaging culture globally. Our culture is built on values. It's all about responsibility. It's all about credibility, openness, and of course, ambition. Our employees, our organization, and yeah, our employees, they are 8x more engaged than the average Polish worker.
You can imagine how much fun we have at work, but also how far we can grow with our employees. This culture that we have created, this is not only the driver of our success, the driver of our performance. It also creates a great place for our people, so they are committed and they found a sense of purpose. They want to stay with us for long-term success. This stability, this commitment translates to stability of teams. We are observing longer years of service. We are observing strong age and gender diversity. Average Żabka employee is 36 years old. Still young, but with great experience. 12% of our workforce drives digital innovation. It all gives us a great balance between stability and innovation. Summarizing, we have the right organization. We have proven already that we are able to deliver great results.
We have a high ability to attract and to retain the best people globally. Thank you. With that, we have concluded both presentations, and now we will be moving to a Q&A session. Thank you.
Thank you all very much. This concludes the presentation part of our meeting. I hope you find these presentations insightful. Before we start the Q&A session, let me remind you of our agenda. After the Q&A, we will break for lunch for about 45 minutes. After lunch, there will be buses waiting for you outside of the hotel to take you to the distribution center and store visits. Now, important information, there will be four mini buses, 20 seaters, and one of them will be going to the airport after the site visits. If you want to go to the airport afterwards, just make sure you're on the right bus. In terms of Q&A, let me just remind you how it works. If you're here in person, please raise your hand and a person with a microphone will approach you.
If you're joining us online, please use the ask a question function on your screen, and we will read your question once we address the questions from the audience. At this time, I would like to invite the management team to the stage. Thank you.
It's got to be a first. Yeah, there's one person over there, right?
Good morning. Michal Potyra from UBS. Thank you for a very interesting presentation. I think it was very thorough, but I think one element was missing, and I want to challenge you a little bit. Maybe you could say something about your plan for your franchisees. I think that part was missing. Is your business plan assuming basically they will follow your success? Maybe you could provide a little bit of your plans about the reduction of the churn of your franchisees going forward. Thank you.
Yes, maybe I will take this. You're right. Franchisees are an important part of our business model. We say that in Żabka, we have two hearts. One is for customers, one is for franchisees. Żabka's success is the success of the franchisees. This accelerating expansion is also connected with accelerating recruitment of the franchisees. This year, we recruited 15% more franchisees than last year. We are able to do this, and we decreased churn. The churn is below the budgeted churn. We are able to do this through constantly investing in our franchisee offer. There was not much time today to discuss all franchisees' part, but we have a separate and a big team working constantly on improving our franchisee offers.
This is not only connected with improving franchisee payout because we are sharing the margin with them, but also with all other additional benefits like trainings or benefits which we are using for them because of our scale. It is connected with education, connected with cards, with healthcare, insurance, etc. We do not see any threats with the new candidates. We do not see any threats connected with possible increase of the churn because of our close relations with the franchisees and franchisee council. As I said, we are constantly, constantly improving the franchisee offer.
Thank you. Maybe just one another question. Maybe you could talk a little bit about the regulatory risks and challenges going forward. Particularly, I'm thinking about, you know, we've seen increased taxation efforts from the Ministry of Finance targeting the banking sector for now. You are not in the scope of the retail tax. Any thoughts on that? Any thoughts on the Sunday shopping restrictions? Any changes potentially? Maybe the last bit, maybe you could comment a little bit on this bottle deposit scheme, which I believe is launching just today. Do you expect any impact on your revenue and costs from this? Thank you.
Maybe I will start with the overall views. You touched upon a huge subject, right? We could have a chat for many, many hours about what might be happening in Poland about that. To go directly to the subjects you mentioned, Sunday ban, I don't see any possible changes with that law. Actually, there are some rumors, but we have to remember that our stores are open because the franchisees are owners of the businesses, and they can be open like other 50,000 or 60,000 traditional stores in Poland. I don't think anybody wants to close that, especially when you take into consideration the fact that society took that ban easily because there are small stores that they can go to and buy, you know, water during the summertime or ice cream for the kids. We have to take that into consideration, right?
The second one, which is the taxation on the retail taxation, you know, we were discussing that when the law was introduced, what, three, four years ago, that the problem is how to do it, not making in a whole supply chain, each of the players paying, you know, across the supply chain. We are wholesalers, right? If from the point of view of the, you know, law or accountancy, and I cannot imagine that the whole supply chain will pay this retail tax. It's always the final one. Again, the question is, do you want to tax the small operators? What was the reason for that tax? If it goes across the whole market, okay, we'll be paying that tax.
The thing is, what was behind that thinking about retail tax at that time was to equalize the possibility of the very big players, which are international, with the local small players like the traditional market or franchisees of Żabka. Again, it's a decision that has to be made. About the deposit, maybe Tomasz.
Yeah, the third question was around the deposit system. Indeed, it's a day today that the system kind of officially starts. It's been a law that was in preparation for the last several years. It is actually following EU law, and I think we're the 19th country in Europe that introduces this. We had ample time to prepare for this situation. Firstly, formally, a vast majority of our stores, which are below 100, I think 50 square meters, are not formally subject to the law. Having said that, we see an opportunity to do incremental business on the back of this change. That's why we prepared. We tested several different solutions over the last several years, and we are fully ready to start now. The customers will be able to return plastic packages in all of our stores.
In some of the stores, roughly half, there will be a machine standing there, which will facilitate the process. These are the stores which we, based on these few years of test, estimated to have the greatest return potential. In the remaining part of the chain, there will be a possibility, and the collection will be manual. We believe that we can differentiate against other small stores, and we can attract people into the stores and offer them a co-buying opportunity, which we always value, as you remember when I mentioned about the non-food services.
Good morning, Mihai Murischi from Pure Alpha. I would like to ask about market segmentation and competition in Romania, especially in convenience, but also how big is this mom-and-pop stores segment comparing to Poland?
Okay, thank you very much for the question. Yeah, Romania is still very fragmented when it comes to the retail market. There are, like, you know, 40,000, 50,000 small mom-and-pop stores across the country. Taking into account this half of Polish population, you'd extrapolate to what we had like seven, eight years ago in Poland. There are big international players when we talk about the modern trades, like Auchan, Carrefour, Kaufland, and Lidl. Lidl is the market leader. Although I think it's also fair to say that structurally, because the cities are very dense, structurally, the city centers are protected from kind of discounters entering the city centers. They are typically outskirts of the city, the same for hypermarkets. Recently, there's been a consolidation of the market in modern trades.
Ahoid took over Profi, Profi player, and now by value, they are number one, number two, depending on how many they had to sell. Stores, the transaction has been qualified by the watchdog in Romania, and the remaining part has been bought by Anabel. This is the local Romanian supermarkets. I think when it comes to convenience market itself, you would see a lot of fast food providers or quick meal providers. As I said, Romania traditionally is, you know, habitually ready for eating out. A lot of these outlets and a lot of, I wouldn't say modern convenience, like convenience players. They don't have Bistro, they don't have QMS. They are like small retail, good looking, but not modern convenience players like Shop & Go, like Profi Go. I think they try to a bit take some solutions from us and copy us.
I think we shake the market a bit. You know what is fair to say, that we are the, we've taken the niche of being on one side the street food and QMS provider, on the other side the retail store. You don't have such a solution to compare with us.
Good morning, Piotr Łopaciuk, PKO BP Securities. I have three questions. The first would be on potential alcohol sales ban on fuel stations. It seems there is a chance again for implementing this. Do you have like any analysis estimating the potential positive impact on your business? The second one would be on Romania. We heard a lot of warm words about the business development there, but so far no acceleration visible in terms of openings. When can we expect it and what could be the pace? Also on Romania, are there any regulative differences which might be material? I'm thinking about form of employment, Sunday ban, or maybe something else. The first question, as you mentioned, whether in free queue.
I started to wonder whether in free queue last year, was there any negative impact on your business related to floodings in Poland in September, or was it like immaterial? Thanks.
Yes, maybe I will take the first one because the first one, alcohol on fuel stations. I mean, what we can comment here. I think it's a legal issue that may appear, and we will act accordingly, right? Probably you ask about the impact, but I cannot judge the impact before something happens, right? I don't think we can prepare on this as it will be something that will happen or not, right? I don't think we will build our strategy on this. On Romania, maybe Tomacz, yeah, and then whether...
Yeah, on Romanian kind of long-term expansion plans. I think what we try to convey here is that we're optimistic in terms of the Romanian expansion. It is one of the reasons why we expand our growth plans from 1,000 to 1,300+ stores per annum. This number includes Romania as well. In the first year, we opened 100+ stores in Romania, and we intend to accelerate that figure. It is included in this revised number of stores. I think that was the first part of your question around Romania. The second was around the legal restrictions to the business in Romania. Romania is a country where there are no similar restrictions compared to Poland, including the Sunday trading bar and any other. I mean, there are some kind of legal differences, but you know, in the context of your question, they are not material.
The third one was the like.
Good question about the weather in September. Why? Because this quarter three was very specific. It was an anomaly in terms of the weather. We tracked the data very carefully, and the temperature drop to last year is comparable to the year 2017, which shows it's an anomaly. Everyone who lives in Poland knows that we had a very cold summer, impacting negatively all the industries connected where results are connected with weather. We estimate our impact between 1%- 2% of like for like. However, we do not change our guidance for Q3 to deliver a single mid-digit like- for- like. As to September specifically, you are right. There were floods in the second half of September last year, mainly in the south of Poland. At that time, we had around 11,000 stores. We had only, from what I remember, 15 stores closed.
It didn't have a huge material impact on our business. What had an impact is that this September, the rainfall was lower than last year. However, the temperatures were colder. Paradoxically, this September was around 2- 3 degrees on average colder than September last year. That is why it was, from a weather perspective, a difficult quarter in terms of the categories like beverages or ice cream. To your question, lower rainfall this year versus last year, however, colder September, and overall anomaly in Q3 in what concerns overall three months of weather and summer.
Okay, we can move to the questions that are submitted online. Do we have a question on the Carrefour strategy in Poland? According to press reports, Carrefour is planning to exit from Poland. With this format, there are, among others, over 500 convenience stores. Would Żabka be interested in some form of participation in the exit of Carrefour?
I mean, it's quite difficult always for a retailer to comment on decisions and actions of other players on the market. I can only say that, okay, Carrefour has 500 convenience stores. We open 1,200 convenience stores per year. Having that into consideration, you can try to answer your question. It would never be any big move or change for us. That's the only comment I can have on that.
Okay. Another question that we have concerns Romania. In Romania, is there a timeline or guidance for the business to become break-even? Which factors are the main drivers of the losses if it's scale? Any guidance on the number of stores required in Romania to break even?
Thank you for this question. We shared, I think, a lot today about Romania, about our performance of the stores, about our operations. I think it is too early for us to say what the number will be to break even. What we can say is that we have the stores which we opened last year, which have already positive contribution. We have some stores even we opened like last month or two months ago delivering a positive contribution, which is very positive for us. We see the performance of this business is really very, very, very good, in line or in some areas even above our expectation. It gives us confidence that from the long-term perspective, we will build a substantial value in this country.
We will share with you, of course, we will have more details to share, but at this stage, I think this is something what we can say.
Maybe to build on what Marta said is, unlike in Poland, as Anna Grabowska mentioned, there is competition of some sort in Romania, and that impacts our ability, combining the scale where Romania is now and the competition, of giving you some of the very detailed information around that business.
Moving on to the online questions. How do you assess the business potential arising from retail media in Żabka? What steps are planned within the next year or two in the context of monetizing Żabka's potential in this area?
Okay, thank you for that question. On the retail media business, we see it as an extremely promising business. Today, we have, as mentioned during the presentation, around 5,000 screens. The payback on these screens is very attractive. It's actually one of the, I would say, best payback periods that we see across our investments. We see very big interest from both FMCG companies. As mentioned already today, we're working with more than 90 different players who advertise on our platform. We also see additional benefits arising from increased Like-for-Like sales. Our plan with that is to obviously scale that business. We don't have an exact number of stores to which we will go. For now, we will continue expanding. We measure the ROI on each screen in each specific location so we know where to put the screens and where not.
What I can say at this point is it is fast growing, both in terms of our expansion and in terms of the interest of advertisers and in terms of supporting our Like-for-Like, very, very solid.
Thank you, Wojciech. I'll pause. We have a few questions left online, but I'll pause here. Maybe there's still some questions from the audience. Oh, there is one.
I have a question regarding the guidance, new term guidance for the net margin. This is 2.5%- 3% and was 3%. What are the main reasons behind lowering this?
The net profit margin, you mean?
Yeah, net profit margin.
I think that the near-term guidance is 3% and we have not changed that. The near-term guidance and the mid-term guidance is 4.5%. Maybe.
Yeah, in the presentation, it was stated 2.5%- 3%.
It is 3% in the near term. It is what we, I think in the IPO, we said 2.3% and 2.5%- 3%. Therefore, we presented that in the presentation as the IPO guidance. We shared, I think, during the last call that it will be 3% in the near term and 4.5% in the mid-term. This is the right guidance we should be looking at.
Okay, thank you.
Thank you for this question. It was good to clarify that.
Moving on to questions online. How is the share of QMS and transactions expected to evolve over the next three years? What actions are planned to further increase the share of QMS in the mid-term?
Yes, so if you look at the categories, QMS is our fastest growing category and the main incremental driver of our Like-for-Like. We see that it's creating differentiation and giving us the unique competitiveness, competitive advantage on the market. That's why we invest in QMS from different parts. We invest a lot for snacks, sandwiches to go. We invest in ready meals. At the same time, we invest in our gastronomic offer, which is street food. The fastest growing is the street food, which is the main accelerator of all QMS. We see, that's why we like to talk about all over QMS offer for customers, because as you know, our strategic objective is to be part of the daily rituals of our customers, which means that right now we have the offer for breakfast, for lunch, and for dinner. We recently introduced our breakfast offer.
You can buy toast, you can buy panini with scrambled eggs and bacons, coffee, etc. We will be investing. It's our strategic priority on QMS, sandwiches, snacks to go, ready meals, and gastronomic offer. It will remain for next year's our key driver of Like-for-Like. We are doing this via new product development, which I described, and via our strong joint business plans with the selector suppliers, which are exclusively together with us delivering and creating those unique products under the QMS umbrella.
To build on what Adam said, as we shared before, we're approaching 20% share in visits that include the QMS transactions, right? If you look at the benchmarks of most developed convenience operators in the world in that aspect, typically from different Asian countries, you would see that the share of QMS is exceeding 30%. This is our kind of North Star that we want to reach in the longer term. Every year, as Adam mentioned, this is the highest growing category. The share is increasing and we're slowly and gradually getting there. As you have seen from the data that we shared around the coffee, which was one of the first QMS products that we introduced, this is a long-term process.
It takes several years because we have to not only put the machinery and products in stores, but also install in the customer minds certain kind of automatisms that they understand by heart that such products are available at Żabka, are of good quality and good offer.
Another question coming from online viewers. Store openings projection for 2025, will you be reaching 1,300 stores opened in this year?
Yes, we will. As we shared with the presentation, we are on track to deliver the guidance of 1,300 stores to be opened this year in Poland and in Romania.
Last question that I have online at this point. In terms of the regulatory environment, particularly in the area of franchise agreements, are any new regulations planned by the regulator that would impose obligations or fees on franchisors?
Yes, yes, we are in the discussion on the retail boards, but we have to remember that we signed two years ago, I think, a code of conduct of the franchise companies providing franchise models. This was agreed between all the groups. Hopefully, the new regulatory bill or changes that might be introduced in the future will take that into consideration.
Thank you. The list of the online questions is there's no more questions. Are there any other questions from the audience? Yeah, there are some over there.
Yeah, one more question from my side. A question regarding churn. You mentioned that churn decreased than what you budgeted. Was it driven by voluntary churn or obligatory churn?
It's both voluntary and obligatory in our decision.
I've got a question regarding Romania's strategy. What needs to happen for you to accelerate the rollout? I mean to open the similar number of stores as we see now openings in Poland.
I think, and I'll make a little joke here, even though we have a very ambitious team opening more than 1,000 stores in Romania, half of the size of Poland would be an extremely kind of ambitious task. It would be very difficult because of the people and kind of real estate and geographical limits, Romania being more or less half of the size in terms of population, right, of Poland. We're not in our ambitious target. We're not as ambitious to get to the Polish levels. Having said that, I think our ambition in the mid-term is to get to Polish levels, but adjusted by the size, right?
If you think about our kind of thinking around Romania and expansion, once we get all the machines working on 100%, by machines meaning the expansion, you know, we get to the certain level of maturity. This is the run rate level that I think can be expected. It is a process, right? We kind of finalize the test phase. We move on to expanding at a higher pace, but it will take time for us to get to this kind of run rate, similar level to Poland, adjusted for the size type of levels.
I can build on that. First and foremost, the most important is to refine the format, yes, and to make sure that if we scale, we scale the right one. Second, to build enablers. Yes, remember that we are building the company from scratch when it comes to technology, people, and also the expansion pipeline, yes. We need to ensure that we have a backbone and all the enablers in place, up and running. Then, nobody will catch us up.
Yes, and just to give you the color, before the galaxy, so before this logo that you can see on the wall, we were opening 260, if I remember well, the year before. We introduced the new model. We were testing that model. We adapted that model to the needs of the Poles. We started to expand this model. There were 400 stores after two years, 600. It was a big jump to 1,000 stores. As Tomasz was mentioning, Poland is Poland with 38 million. Romania is a different country. We are on a different stage. Anna knows that. Adam knows that because they do it on a daily basis. Thank you.
It's time for one last question from the audience. Okay, if there are no more questions, thank you very much for joining us today. There will be lunch served outside, and buses taking you to the store visits and D.C. There are colors on your badge, color dots on your badges. That is groups that we will divide you by in our distribution center.
Thank you.
Thank you.