Barbeque Nation Hospitality Limited (NSE: BARBEQUE) Q1 2026 Earnings Call dated Jul. 31, 2025
Corporate Participants:
Unidentified Speaker
Vijay Sharma — Investor relations
Karim Dhanani — Director
Rahul Agrawal — CEO
Analysts:
Unidentified Participant
Viraj — Analyst
Dhaval Dharma — Analyst
Natic Mutha — Analyst
Madhurathi — Analyst
Harish — Analyst
Ashish — Analyst
Harishad Vohradi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to The Barbecue Nations QN FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Vijay Sharma. Thank you. And over to you, sir.
Vijay Sharma — Investor relations
Thank you, Anushka. Welcome everyone to Barbecue Nation Hospitality Limited’s Q1 FY26 earnings conference call. For today’s call, I have with me Mr. Kalim Dhanali, Managing Director. Mr. Rahul Agarwal, CEO and Whole Time Director and Mr. Amit Betala, CFO. Before we begin the call, before we begin the presentation, I would like to remind that some of the statements mentioned in today’s conference call may be forward looking in nature and may involve risk and uncertainty. Kindly refer to Amit’s presentation for the detailed disclaimer. We will start the call with Mr. Kalim Dharani sharing his perspective and overall demand scenario and key highlights for the quarter.
This will be followed by detailed discussion on business and performance by Mr. Rahul Agarwal. Who is that? We’ll open the forum for a Q and A session. I will now hand over the conference to Mr. Karim Dhanani. Thank you. And over to you, sir.
Karim Dhanani — Director
Good evening and thank you for joining us. This past quarter we operated through a softer dine out cycle. Yet our resilient business model allowed us to maintain satisfactory performance. We added seven new restaurants during the quarter and remain firmly on track to achieve our FY27 network target of 300 to 325 restaurants.
We expect the pace of new ongoing opening to accelerate in the second half. Moving from 4 to 5 per quarter last year to 7 to 10 per quarter. Our portfolio is strategically diversified across three business segments. Barbecue Nation, India International and Premium CDI in India. While negative SSF continues to weigh on revenue, we have safeguarded profitability through tighter cost control and continued investments in guest experience. We are rightsizing our new restaurants prototype to be 20 to 25% smaller which will reduce capital expenditure and protect unit. Economics International remains a strong profit engine with 23% plus restaurant operating margin.
We plan to open four to six restaurants this year across the Middle east and southeast Asia. Indian CDR is growing rapidly. 19% year on year. Revenue growth, mature restaurant margins of 20% and expanding presence in Delhi, Mumbai and Hyderabad Dine in remains the core of our business accounting for 85% of revenues and we continue to refresh the experience through culinary innovation, design upgrades and value driven promotion. Delivery which contributes 15% of our revenues is seeing positive SSSD in Dabik delivery at Dumb Supper Biryani while UBQ is in the process of recovering from an impact due to brand positioning across platforms.
Across all three segments we are prioritizing operational rigor and consistent guest engagement to ensure sales growth as the cycle normalizes. In short, our focus is clear deliver best in class guest experience, grow network scale where unit economics are proven, build scalable brands and maintain industry leading margin with strong cash flow generation. With the disciplined cost control, a sharper new restaurant playbook and a robust pipeline, we are confident in our ability to deliver sustainable growth and margin resilience on the path to 300 and 300 to 325 restaurants in FY27. Thank you. I would hand over to Rahul to walk you through the operating performance in detail.
Rahul Agrawal — CEO
Thank you Kalam Good evening everyone. As highlighted earlier, we have resumed our focus on network expansion, opening seven new restaurants during the quarter and remain committed to our target of 300 to 325 restaurants by FY27. Our current portfolio comprises of 236 Redstones which includes 193 body premature India restaurants, 11 international restaurants and 32 premium CBR restaurants. During the quarter we reported consolidated revenues of 297 crores, lower by 2.8% year on year primarily due to negative SSG of 3.4%. Gross margin for the quarter was 67.7% which was lower by 40 basis points versus quarter one of FY25.
We expect the gross margin to remain at around 68% on an annual basis. The India’s restaurant operating margins were 11.5%. Temporarily impacted by higher marketing spend, operating day leverage and ramp up of new restaurants. Matured restaurants reported pre India’s restaurant operating margins of 13.3%. Consolidated reported EBITDA margins for the quarter was 46 crores with reported margins of 15.5%. Our adjusted operating EBITDA was 17.6 crores with a margin of 4.6%. Nation India recorded revenues of 229 crores year on year decline of 7% primarily with a negative FSFG of 5.2%. This business segment is currently facing short term FSG challenges due to a softer buyout cycle.
While revenues were impacted, we maintain our focus on profitability through tighter cost control in existing units While we continue to invest in for future growth, we have redefined our new store new restaurant prototypes enabling us to reduce capital expenditure and improve unit economics. We remain focused on opening 20 to 25 Bari phones restaurants annually to meet overall network targets. In our existing network of 193 restaurants, we continue to drive operational rigor to enhance guest experience through culinary offerings and guest engagement activities. During the quarter we launched the Kukar carnival festival featuring 16 new chicken dishes and expanded our menu variety by introducing 10 vegetarian and 10 non vegetarian starters across all restaurants.
We also continued group focused value promotions like sizzling 7 at 737 which was very well received. These initiatives helped deliver value to our guests through engaging offerings and at a pocket friendly prices. We also increased marketing spend by almost 1% of sales during the quarter with a focus in driving volume growth. While this has a short term impact on margins, we are confident that these investments will deliver results in the coming quarters with operating leverage helping him to restore margins. Bhatiki Nation International recorded revenues of 36.3 crores, an increase of 10% year on year supported by storm efficiency of 8.5%.
Gross margin for the segment was 73% and pre India’s restaurant operating margin was strong at 23% with mature restaurants delivering restaurant operating margins of over 27%. Built on strong foundations, this business has been consistently profitable over the last four years. During the quarter we launched our second restaurant Karl Object and entered Sarja. With this experience we are well positioned to further title in Middle east and Southeast Asia. We plan to open around five to six new restaurants this year maintaining a network expansion growth rate of 30% plus while focusing on same store sales growth and operating discipline.
Female CBR recorded revenues of 42.1 crore up 19% year on year. Gross margin for the segment was 74% while pre Indian restaurant operating margin was 17.5%. Margins were impacted due to yet to mature restaurants while the mature network continued to deliver 20% restaurant operating margins. This business continues to expand rapidly with two new restaurants added in Mumbai and Bangalore during the quarter. Again we Plan to drive 30% network expansion growth by scaling Tescano in Delhi, Mumbai and Hyderabad while also expanding soil into additional metro markets. As we grow, we will sustain guest experience through continuous culinary and service innovations and preserve operating margins.
We also completed the acquisition of 51% stake in Omnomnom which now has business across six locations in Bangalore and one more under FIT out. Our operating business remains unchanged. We’ll defend and refresh the core experience to culinary innovations, design upgrades and service discipline. To recover ssg, we’ll build a high margin international business with a repeatable playbook and attractive paybacks, ensuring expansion remains margin accretive. And we’ll thoughtfully scale up the premium CDI business leveraging mature restaurant performance of 20% plus and our success in new metrics to build deeper penetrations. Thank you. With this we can now open the session for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Viraj from Enigma. Please proceed.
Viraj
Yeah, hi Ram. My first question is we basically recorded a 5.2 negative SSSG on Barbecue India after recording an 8.8% negative SSSG in the same quarter last year. If I have to basically combine these two numbers, we are looking at almost at 13, 14% negative SSSG over a 24 month period. That is alarming. No real outlet can survive that kind of negative smsg. And this is our major business. We can focus on other businesses but this is doing very badly. What are we doing to arrest this growth?
Rahul Agrawal
All right. Hi Dharaj. So you’re right about this.
Last year was 8.8 and this time is 5.2. Like I mentioned in our opening remark, we are continuing to focus on our guest experience. We are coming up with new food festivals including the guest offering variety in the stores and also coming up with value offers like I mentioned 167 at 2027. So these initiatives are being undertaken across all the stores in our portfolio.
Viraj
Okay. Because Rahul, my understanding was whatever were the restaurants which were not doing well which were recording negative SSSG were a majority of them were closed last year. So even after closing them over last 17, 16 months, we are still recording negative SSLG presumably in the in the restaurants which are doing well.
So I’m not able to understand this.
Rahul Agrawal
So the portfolio that we closed were largely loss making restaurants. We don’t close restaurants if they are negative association. We close restaurants if they are breeding and we believe that the greed will not sort of come to a profitable number. I think that portfolio level, even though the restaurant that we have in Barbecue India are at 5.2% negative SSLG, the overall restaurant operating margin is close to around 10%. So the closed restaurants Were the one which were, which were not doing well and which were bleeding money so that we have closed.
Viraj
Okay, and my last question is when we look at the numbers of other. I won’t say dining restaurants are basically quick qsr. They basically suffered negative SSSG far later than us and they are dividing far before us. So this quarter also almost everybody reported positive SSSG and, and it’s out there in the public domain. But we are recording negative record SSG even though we started diving in negative SSSG before then and we are not recovering even after they are recovering. So it is a business model problem or is this a barbecue problem?
Rahul Agrawal
I think both businesses are different.
We only have mixed distant QSRs. The business model in terms of mix of ban and delivery are different. So very difficult to comment on how they appear and how we have fared in our business. If you look at this scale, the diamond business definitely has some stress which we have reported and which we are trying to recover through our guest experience and through our offers. Other than that, it was very difficult to make a like to like comparison between tsrs and us. Right. The mix of two segments are different. The price points are different. One is largely planned purchase, a various price purchase.
So very difficult to just make a likelihood comparison between the two.
Viraj
Right. Sir, you understand like just the last thing sir is if the negative SSSG continues at this rate, you are seeing tremendous impact on your restaurant operating margins. Also where they have dropped for the barbecue India. Like if this continues that restaurant level it will be really problematic. That’s. That’s my only concern as a shareholder.
Rahul Agrawal
Absolutely. Thank you so much. Yeah, you’re right about that. But if you look at the discipline that the team has shown on the. On the cost side, even though we have a long period of, we have been able to at least sustain a good amount of restaurant operating margins and try to minimize the impact of operating day leverage.
But I agree with you that in future the margin expansion will largely be given by cost efficiency.
Viraj
Is there any improvement in July you have seen or nothing?
Rahul Agrawal
No, it’s similar to quarter one right now. Okay, thank you. July is likely not also comparable because last year in July the impact of Shravan started towards the end of July. But this year it started much earlier. So 42 always been a lot of proceduring days which impacts the performance across months. Sure.
Viraj
Thank you Ram.
Rahul Agrawal
Thank you.
operator
Thank you. Before we proceed with the next question, I would like to remind participants that you may press Star in one to ask a question. The next question is from the Line of Dhaval Dharma from Enigma Small Opportunities Fund. Please proceed.
Dhaval Dharma
Hi Rahul. So just continuing the same on the question, specifically on Barbecue India. Now if you look at it, average restaurant revenue has dropped down to roughly 5 crore per annum. What we have reported in our quarterly presentation also and obviously we have seen a tremendous decline over the last three to four years over here in terms of average revenue per restaurant. So basically first, wanted to understand what’s your take on this. And second, like say you mentioned that you are taking initiatives in terms of giving value offers to consumers, trying to enhance guest experience and everything.
I guess that we have been trying that since the last 10 to 15 months. But do you feel that honestly we have seen any traction over there or are we getting any, any benefits out of it?
Rahul Agrawal
So the numbers were -9 earlier, which is now around -5. I agree with you absolutely. There is, you know, there is absolutely no joy in putting this but, but on the, on the ground, you know, the effort that you can put is only on improving your operational rigor. And that is what we are driving. I think like you also said in the previous call, out of this 193 restaurants, there are approximately 60, 70 restaurants which are in territory.
There are 50 restaurants which will be in a territory of minus one to minus two and there are some which are driving in double digits. Right. And largely south market is. We also see some stress in outlets which are high dependency on IT businesses. We also see some stress on some outlets where the competition is very high. There has been a response and it’s not that in the category there is a clear winner and people are absolutely making it. We have seen some drop in prices by competition at a number which then sustain at a margin level.
So we’re seeing some of these and we are navigating through these challenges by just maintaining our operational reserve, our value offering and just increasing the overall guest experience elements to some extent. We’re also impacted by the service charge rule. Earlier we used to charge 5% service charge which is now bang and we don’t charge that anymore. We have taken price hikes normally used to take almost 1.5% to 2% price hike on annual basis this quarter versus previous year, first quarter there is a negative impact of 0.5% because of service charge. That also impacted our marginally gross margin and also came through in our overall sales number.
Right. So we are using the factors that are there that we are grappling with right now. But as I said, we have also taken some efforts in order to increase the offerings and offers and also increase our efforts on marketing. In terms of team, we have further strengthened the operating team. We have recently hired a chief operating officer just for Barbie Collection India business. So the focus across all the points that I’m mentioning is just only doubling down on this business. Obviously we realized that the other two businesses are doing good and we’ll continue to grow those businesses.
But a lot of effort needs to go further on ensuring that the public to India business comes back on track. And today I think the big challenge is same store which will also further drive our margins.
Dhaval Dharma
So Rahul, again continuing on what you mentioned. So basically you mentioned that there would be quite a few stores at least in South India which would be seeing a double digit drag currently on our sssg. So basically would it be fair to assume that those restaurants would be basically at somewhere close to breakeven today at an EBITDA level
Rahul Agrawal
in our entire south territory we would be around mid single digit EBITDA margin at the store level.
So we are not losing money there? No. So I think the entire portfolio revenue restaurants which lose a lot of money will hardly be 3, 4 and like I said earlier, at the entire annual basis we’ll keep rebalancing the portfolio by closing one restaurant every quarter. But we don’t have a problem of body pizza business, some stores losing a lot of money.
Dhaval Dharma
So just one last thing from my end, so basically we wanted to understand what do you think so like say over the last five, six quarters looking at the efforts that the team has been trying to make at Felix in trying to enhance the guest experience obviously which is which hasn’t resulted in the kind of footfalls that the team would have been anticipating.
So do you think that a mini revamp or something like that sort would be much better as compared to just focusing on guest experience enhancement is one last thing that I would understand would want to understand about what’s the thought process on that
Rahul Agrawal
the new innovations are happening. Like I mentioned about the Kukulkanu festival, I think our guest scores in that period was very high. If I look at our MTA score between the start of the quarter versus end of the quarter, we have seen good improvements there. So some of these festivals that we are running, some of the other things that were that they’re running is translating into good get transaction scores and our NPS scores just that it is not led to the volume growth that you would expect in the business.
Sure. Thanks.
Dhaval Dharma
Thank you Garuda.
operator
Thank you. Before we proceed with the next participant, I would like to remind participants that you may press Star in one in order to ask a question. The next question is from the line of Natic Mutha from NV NV Alpha Fund. Please proceed.
Natic Mutha
Hi. Hi sir. Thanks for taking a question. So I just wanted to, you know, understand, you know, what exactly is leading to such high, you know, negative SSG in in the south portfolio. I mean what exactly is going on in the south portfolio which is leading to, you know, such pressure on the ssg. And if you could also give you know, the number of stores that the portfolio has because it is weighing down our company or SSG so heavily. So that would also be very helpful.
Rahul Agrawal
So in south we have around 50 restaurants. And in south if you look at the three large metro markets which is Bangalore and Chennai, the competition players in the all you can eat barbecue category are also among the highest.
I would also like to mention that the competitive intensity has not increased as such. Right. In terms of the number of restaurants that competition had or we had, I’m seeing that number to be at least stable. But overall in these markets there is some larger stress than we are seeing in some of the other markets. There is also a pressure on pricing in these markets which is taking away some business. And especially in Bangalore for example, the number of trade area newer options that we’re seeing is slightly higher than that we are seeing in some of the other trade areas that we are trading in like Delhi or Bombay.
Natic Mutha
Right, right. So it is a combination of pricing pressure and there’s
Rahul Agrawal
some reduction in corporate business in South. South also depends a lot on the corporate business. We have seen some of our weekday numbers being lower in south which was earlier driven by it demand being lower at least in this quarter.
Natic Mutha
Is our competition also facing sort of similar problem in terms of corporate demand being weak etc or it is just us issue?
Rahul Agrawal
Look on informal channel checks, you know, believe that, that they too are facing that. But obviously the numbers are not out in the public so very difficult to comment.
Natic Mutha
Right. But this out portfolio issues we have been facing since a couple of quarters. Right. This is not, not a one, two or three quarter phenomena. So I mean we plan to change this. Again
Rahul Agrawal
the efforts taken in this market is pretty much similar to what we have done for Pan India. Just that some of the I think on the pricing side these markets will see more aggressive offers than we see in other parts of India. Apart from that, our focus on gift experiences is one of the highest across all markets. That’s it from us.
I thank you. Thank you.
operator
Thank you. The next question is from the line of Madhurathi from Countercyclical investments. Please proceed.
Madhurathi
Thank you for the opportunity. So I wanted to understand on the other expenses part of our if I look at a standalone it is flat on a quarter on quarter basis. But if I look at on a consolidated basis it has increases because of a new restaurant opening. This has increased or because I understand that the 7876 crore was a like we had done our cost reduction and it was going to be stable going forward.
Rahul Agrawal
This will all come because of new storage sanctions.
Madhurathi
Got it. Anshur, is there any additional possibility of reducing our cost on our businesses within 3 4/4?
Rahul Agrawal
No, not really. So I think whatever cost that needs to be done we have largely sort of done that. But we keep looking at our existing cost structures and keep evaluating that. But the focus today is largely revenues per restaurant and that is why you will see we have increased our marketing spend by 1% of our sales in the current quarter. But on the structure side I think we are fairly optimized in terms of operating this. Despite two years of sequential FDG decline we’re still at double digit stock trading margin in our core barbecue India business. So just that I think with FHG recovery the margins will now be driven by that.
Madhurathi
Got it. I’m sure. What gives us the confidence that I’m trying to understand this negative 13 14% of that we have experienced over 24 months and are prices have been flat. So it is mostly volume growth has declined. Is there an issue with our product market set or something else? And what gives us the confidence that whenever spending resumes we will be one of the beneficiaries of this uptrend?
Rahul Agrawal
I don’t think there’s a product market fit problem. We stand for group dining. We stand for celebrations. Our guest scores there are very good and some of the internal studies that we’ve done which is brand performance versus competition numbers there are also very good.
I don’t think this is this is a product sort of problem. I understand that on a 24 basis we are down from say 100 to 87 86. But I think this is something that we understand well and this is something that we keep investing on and keep getting better at. I don’t think there is something that needs to drastically change at the core offering. They will not change change our experience offering which is light grill. We also keep innovating on our product. We have added almost 7, 8 new starters kebabs in the menu when we launch 10+10 as offering.
We have consisted in doing food festivals in the past. And we are also seeing that in our guest course but is not reflected back in our for the members.
Madhurathi
Got it, sir. Do we have any idea on ground, sir, whom are we losing these volumes to? Is it other restaurants? It is it other buffet kind of store formats or is it like something else other than this?
Rahul Agrawal
So overall as a segment, the other players, they may have been in some trade areas, but we are not seeing any trade area wherein we are struggling and competition is thriving.
Similar format competition is thriving. In fact, we have seen certain trade areas where we are doing well and we have seen competition within that market. So I don’t think it’s a competition problem at all. At least in the same scale areas that you’re looking at.
Madhurathi
Okay, so it’s basically some alternate form of eating out kind of where we are. Is that understanding correct?
Rahul Agrawal
Yeah, I would get.
Madhurathi
So thank you so much and all the best. Thank you.
operator
Thank you. The next question is from the line of Harish from Avner Capital. Please proceed.
Harish
Yeah. Hi team. Thanks for the opportunity. What would be the blended price hikes at the barbecue India level on a yoy basis the average realization in the company is lower by 0.5% versus last year. Okay. And my second question is like I mentioned the previous continuation of service charge. Now we should charge 5% double charge. We have passed that on in our overall blended pricing. But with the impact of various offers that keep coming, we are lower by 0.5%.
Rahul Agrawal
Okay, so but we mentioned that we have taken some price increases. So what would be that number if you could share?
Harish
We’ve taken around 4 and a half 5% price hikes from after we remove service charge. But the net realization on an average basis versus last year is still lower by around 0.5%.
Rahul Agrawal
Okay, got it. Thanks for that. And what would be our current debt levels and what debt levels do we project by the end of this year?
Harish
We are down 50 crores net debt today. And by end of the year we will be in the range of around 80 to 90 crores. Okay, those are my two questions. Thank you. Thank you.
operator
Thank you. The next question is from the line of Ashish from AK Investments. Please proceed.
Ashish
Yeah, thank you for taking my question. So I just wanted to compare our Baltic initial India with the Prem CDR. So I understand that Pygmy CDR is a relatively small business which is 32 sort of restaurants. But still we see positive SSG in Pygm CDR. However, Balbiki mentioned is having a negative SSG so can you please explain that
Rahul Agrawal
both formats are different? One is polythamine basic concept. The other one is a la carte dining concepts. In one concept you can choose how much you want to order. In the concepts as you enter. There is a minimum pricing that you are charged.
There is difference in gross margin, there is difference in the locations. I think this is a premium TBR business located in high football sites which also drive a lot of infrastructures. Babi connection is largely located in destination sites. The internal structures in both the businesses are different. So I don’t think it’s at least fair to just compare what the businesses you know. Like this is present in close to 80 cities. The present CBI business, we would be present in four, five cities right now.
Ashish
Okay, understood. So just just to extend further. So even like if I see the gross margin, it has a good gross margin of 74%.
So I’m just wondering like why can’t we focus on premium CDR rather than focusing on Barbican nation India? I mean I’m not sure if that biggest model is sustainable. I mean so can you please maybe.
Rahul Agrawal
So all three businesses are at different stages. When I say we are focusing on all three and we have separate teams driving all three businesses in barbecue India business, I would say the focus is among the highest. While unfortunately the numbers are not reflecting the way it is. But we also realize that the impact on our overall numbers and our overall margins that we’ll get from a higher SSG and barbecue India business will be far higher at a consolidated level than the other two business.
Again, I’m no way saying that the focus in one or the other is divided. There is I think good competent team to run all the three businesses. In P1 CBI business, we have accelerated the growth. This is the first year I think when we will look at opening between 12 to 15 restaurants. We have a decent sort of pipeline. We have five restaurants under construction in this particular segment. So overall on a base of 30 restaurants, adding 14, 15 restaurants will add to almost 30% expansion for that base. And there’s a good size which will help us to also expand in a manner that doesn’t compromise on your experience of interest that you want to do right.
So that business is good. And over the period of next two, three years with the expansion that we’re doing, I believe that this will grow at upwards of 20% there. Similarly also for international business, international business performance, the 10% year on year growth, this is after the fact that one of the site was temporarily closed due to One incident in Abu Dhabi that will start operating from early next month. So that business also when we add around five to six restaurants on a base of 11 restaurants, it will give us around 40% incremental store counts and will continue to grow over the next three to four years at 20% plus the largest one obviously Bobby to India which is undergoing challenge in terms of SSG and that is where the focus is highest.
Because as we shift from SSG related to positive, the impact that we see will be far higher. I understand last two years has been. We are going to that there are multiple efforts being taken across some at larger levels, some at local market level. Some efforts are worth. Some efforts have not worked for us. Sorry. Because at the cost of repeating while I’m seeing just code being looking better, we are still not seeing the volume numbers coming up.
Ashish
Okay, thank you. And last one. So I think in last quarter we call you mentioned like our corporate cost is around 6.5%. So. So just wondering is it shared across different formats or it is like different. We have different corporate structure, different employees and all of that.
Rahul Agrawal
The leadership level sits in barbecue India business and the number two department, some department heads sits in other businesses also. So for example business, there is a separate media and HR head for that business but should end up reporting into the chro of the group. So those costs in barbecue India. Okay, okay. And given that we are targeting 30 odd stores this year. So I mean what is your target in terms of corporate cost by end of this year? I think overall increase on corporate costs I don’t see beyond single digits.
I think the percentage number will also be a function of how we grow our revenues. But over a longer term I think this number should not go beyond 5 to 6%. You know historically pre Covid these numbers have always been around 5 to 6%.
Ashish
Okay. Okay. Thank you. Thank you very much.
Rahul Agrawal
Thank you Ashish.
operator
Thank you. The next question is from the line of Harishad Vohradi and individual investor. Please proceed.
Harishad Vohradi
What is the marketing expense as a percentage of revenue for barbecue India?
Rahul Agrawal
Just for our core dinette business it is around 3% right now.
Harishad Vohradi
Okay. I was also wondering sir, are we spending cash flows from barbecue India brand to expand into Toscano and other businesses? What is the rationale of this strategy so you can expanding. So basically I mean I’m just wondering if the barbecue brand is being starved of marketing and visibility. If in fact we are using the cash flows from the core barbecue brand to expand into Toscano and assault. Right. We’ll Be using the cash flows from the existing 195 restaurants in barbecue Nation to expand into these other restaurants.
Rahul Agrawal
So I’m not looking at this thing. So as a company we are generating operating cash flow and then we are allocating that operating cash flow to grow our network wherever we believe that the payback and is better. If you look at our international business, that business is generating operating cash off 20, 23 crores which is good enough to open around four to five restaurants. Right. And based on the new expansion side that they’re getting and if required the gap between operating tax and expansion is higher, we may sort of resort to a very small amount of debt.
Right. So that number is very low. And similarly in premium cdr, I think whatever operating cash flow they’re generating they are investing back into the business this year around. Since the network expansion growth is almost 40% existing date, there may be some shortfall which will be either funded through debt or partly from barbecue India. But I don’t think we are starved of cash because of which we are not investing in barbecue India business. I think we are taking all the prudent calls in terms of investment return. Every penny that we’re investing be it Capex or be it opex last year we have seen despite miserable versus sg we have maintained our margins which is very difficult in the high operating business like ours.
And we have done a lot of cost control sort of measures. I think the point that I’m trying to make now is that the focus is largely on revising the business growth in the core India business wherein we are not shying away in making investments. They will require speed in the in the internal operating team, be it in marketing spends. So that is stepping up right now. But we are in a position wherein we are starved of cash because of which we are not investing in operating side or on the Capex side.
Harishad Vohradi
So to be prudent, I mean wouldn’t it be wiser to basically stop expanding until we solve the problems in our core business and stabilize and then look at expanding?
Rahul Agrawal
I think it’s not that we are not able to. We are so short in terms of our effort because of which we are, you know, we just need lack of time. We are not able to get the SOSB back and because of which we should focus more on existing business versus growing. I think there are large setup, there are different teams for different sort of work profile. If you’re entering into markets or trade areas where our customers are not served. I think it’s right to concate further and Grow your brand in those areas. I don’t think they’re obviously prudent in terms of not opening up stores just for the sake of store counts and cannibalizing our existing business.
I think we have gone through that journey in the past and we are prudent about that. And that’s why in barbecue India business, you see expansions of around 20 stores in a year, which I think on the base of 200 we can do. And the balance 20 for the overall network target is coming from the other two divisions that we have grown and built very efficiently.
Harishad Vohradi
Okay, thank you, sir. Thank you.
operator
Thank you. The next question is from the line of Dhaval Dharma from Enigma Small Opportunities Fund. Please proceed. Sorry to interrupt. Mr. Dhawal, your voice is not clear.
Dhaval Dharma
Yeah. Is it audible now? Is it better?
operator
Much better.
Dhaval Dharma
Yeah. Is it better now? Yes. Am I audible in all the business? All the quarter, we basically as it stole even on the international side. So is it just due to that? Sorry, I couldn’t understand. You said all three businesses on a 1 decline. So all three businesses during the current quarter on a yoy basis have seen a decline of the average revenue per store during the quarter during the quarter.
Rahul Agrawal
If you look at it now, why offices, be it your international business or your premium CDR also where the average revenue on an annualized basis has declined during the current quarter as compared to last year So basically I was just asking, is it just because of dilution that is happening because of new store openings on at least premium CDR or the international business? Or is that something. It’s just a function of new store opening and how they ramp up. So for example, in our international business, you would remember we started Sri Lanka last quarter and that has been ramping up slowly in our existing portfolio. As you know, we didn’t grow much in our international business for almost three years post Covid. And that’s why all of these individual restaurants have reached to a particular scale as we are opening up new restaurants.
In terms of new restaurants also, we are right sizing ourselves. I think average revenue in this portfolio on a larger base of maybe 40, 45 restaurants in my prediction will settle down at around 8 to 9 crores. But again, that depends entirely on what sizes they do, what markets you do, what sites you do. So very difficult to project. But otherwise on the existing base, obviously FSG, 8.5%. So the existing numbers are looking very good in that market. Okay, sure. One last thing from my side. So just wanted to understand in terms of basically like you have mentioned that we have been trying to promote a lot to our customers in terms of guest experiences.
So just wanted to know like say what first three pages of would be going towards the digital forms and what would be traditional or something on that sort. If you could give us some color on that would be helpful. Sorry, the last part of your question just wanted to understand, just wanted to understand what percentage of our media spend would be on digital platforms and how are we trying to optimize the media spends to promote our restaurants. Also advertising almost 80% would be on digital and balance 20% would be on mediums like radios and headings.
We have not done mass market TV or something right now, but these are two channels that we spend money on.
Dhaval Dharma
Sure, sure. Thanks a lot though.
Rahul Agrawal
Thank you.
operator
Thank you. As there are no further questions from the participants. Thank you members of the management. Thank you everyone for joining the conference call on behalf of Barbecue Nation. Conference call that concludes this conference. Thank you for joining us. And you may now disconnect your lines.