Barbeque Nation Hospitality Limited (NSE: BARBEQUE) Q4 2025 Earnings Call dated May. 22, 2025
Corporate Participants:
Bijay Sharma — Head, Investor Relations
Kayum Dhanani — Managing Director
Rahul Agrawal — CEO & Whole Time Director
Amit Betala — Chief Financial Officer
Analysts:
Viraj Mehta — Analyst
Harit Kapoor — Analyst
Vinod Krishna — Analyst
Sanjeev Raj — Analyst
Naitik Mutha — Analyst
Madhur Rathi — Analyst
Akilesh B — Individual Investor
Manjeet Buaria — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q4 and FY ’25 Conference Call of Barbeque-Nation Hospitality Limited. 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 touchdown phone.
I now hand the conference over to Mr Vijay Sharma, Head of Investor Relations. Thank you, and over to you, sir.
Bijay Sharma — Head, Investor Relations
Thank you, Steve. Welcome everyone to Barbecue National Hospitality Limited’s Q4 and Full-Year FY ’25 Earnings conference call. For today’s call, I have with me Mr Kajun Hanani, Managing Director; Mr Rahul Agarwal, CEO and Whole-Time Director; and Mr Amit, CFO. We will begin the call with Mr Kayum sharing his perspective on overall demand scenario and key highlights for the year. This will be followed by a detailed discussion on business performance and outlook by Mr Rahul. Post that, we will open the forum for a Q&A session.
Before we begin the presentation, I would like to remind you that some of the statements made in today’s conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to the earnings presentation for a the detailed disclosure.
I will now hand over the conference to Mr Thank you and over to you, sir.
Kayum Dhanani — Managing Director
Thank you. Very good evening, ladies and gentlemen. I take the pleasure in welcoming you to quarter-four and full-year FY ’25 conference call of Hospitality Limited. Leveraging the resilience of our business model and a strong focus on operational efficiency, we conclude the year with stable performance.
During the year, we reported a total revenue of INR1,233 crores. Our top-line was marginally lower by around 1.7% compared to last year, primarily led by negative SSSD. In-line with our strategy to focus on profitability, we were able to maintain our profitability despite the challenging business conditions. Our reported EBITDA for the year was relatively flat at INR211 crores with a margin of 17.1% and our adjusted EBITDA for the year stood at INR91 crores with a margin of 7.4%.
Our three business segments continued to perform in-line with our expectations. For our Barbecue Nation India business, we remain committed to establish it as preferred celebration destination. During the year, we introduced various value-based promotions to target families as well as corporate segments, broadly focused on large group celebrations. We also continued our culinary festivals to enhance guest experience. In addition, we also upgrade — upgraded some of our older restaurants to delight our guests with more vibrant.
Our India business recorded revenue of around INR981 crores in FY ’25, a decline of 6% compared to last year. However, the restaurant operating margin was INR118 crores, sorry, with a margin of 12%, an increase of 70 basis-points compared to last year. Our international business continued to robust performance with 8% year-on-year growth in revenues to INR97 crores in FY ’25. The growth is primarily led by positive SSSG and faster ramp-up of newly-launched restaurants. This business segment continued to report P&S margin of — sorry, margin of over 25% during the year.
We expected our footprint in Sri Lanka with launch of our restaurant in Colombo. Our premium CDR reported revenue of INR160 crores in FY ’25, a growth of over 30% compared to the same-period last year. This was primarily led by network expansion. Pre-NBS restaurant operating margin for the business was at around 18%.
Thank you. And I would now hand over to Rahul to walk you through the performance in detail.
Rahul Agrawal — CEO & Whole Time Director
Thank you, Kayum. Good evening, everyone. During the quarter, we added five new restaurants and closed one restaurant, resulting in a net count of 230 restaurants. Our year-end network of 230 restaurants included 191 restaurants in BBQ Nation India business, nine restaurants in BBQ Nation International Business and 30 restaurants in premium CDR business, that is Tuscano and Salt.
During the year, we added 80 new restaurants and closed five restaurants resulting in a net addition of 13 restaurants in financial year ’25. During the quarter, we reported a revenue of INR293 crores. The revenues were down by 1.8% compared to same-period last year. Our for the quarter was negative 2%, which was flat compared to last quarter and continued to be an improvement trend compared to previous year.
Our reported EBITDA for the quarter was INR53.3 crores with margin of 18.2% and our EBITDA for the quarter was INR19 crores with margin of 6.5%. We reported a revenue of INR1,233 crores in FY ’25, a decline of 1.7% compared to last year. Of the total revenues, dine-in revenue accounted for 85% and delivery business contributed to balance 15%. Our dime-in revenue for the year was INR1,040 crores, a decline of 2% compared to last year.
The delivery revenue for the year stood at INR190 crores, an increase of 2.5% versus last year. Gross margin for the year improved by 160 basis-points to 68.2%. Around 40 basis-point of this improvement was due to reclassification. The balance 120 basis-point was primarily driven by better realization and efficient management of input costs. Restaurant operating margin for the year was 13.9%. Despite the operating deleverage, the restaurant operating margins marginally improved compared to last year-by 30 basis-points, led by efficient cost management.
Our adjusted operating EBITDA for the year was INR90.6 crores and adjusted operating margin stood at 7.4%, which was flat compared to last year. Consolidated reported EBITDA margin for the year was INR211 crores and reported operating margin for the period was 17.1%. We also maintained robust EBITDA-to-cash conversion and delivered INR80 crores of cash profit. India business was negative, but is on an improvement. The business recorded a revenue of INR981 crores and maintained gross margin levels of around 67%. The pre-India’s restaurant operating margin for the business improved by 70 basis-point to 12% during the year.
Efficient cost management helped in increasing restaurant operating margin compared to last year despite operating deleverage. This is broadly in-line with our commitment to retaining our margins despite the prevailing demand conditions. We are hopeful that this will enable us to further enhance profitability as the demand scenario improves going-forward. International business recorded a revenue of INR97.3 crores during the year, an increase of 8% compared to same-period last year. The growth was supported by positive SSFG and faster ramp-up of new stores.
The business segment maintained its gross margin at 74%. Pre-India’s restaurant operating margin for the business was strong at 25% plus. In March 2025, we expanded our footprint into Sri Lanka with launch of our mobile outlet in Colombo. We plan to open four to six in a year and we’ll continue to evaluate new trade. Our premium business recorded a growth of 30% year-on-year to close to INR160 crores. The gross margin for the segment remained flat at around 75%. Pre-India’s restaurant operating margins were 17.6% compared to 28.8% last year.
The impact on margins were due to new and yet to mature stores opened during the year and mature network continued to deliver restaurant operating margin of 21% plus. We expanded the footprint for this business by entering into new cities such as Hyderabad, Delhi and Bombay this year. The biggest response from these three new cities have been very exciting and we plan to further increase our presence in these cities coming in the coming year.
Our strategic on making leadership in casual dining and scaling regional segments has positioned us to effectively navigate industry challenges and achieve sustainable network growth. We anticipate that our India business network will grow at a rate of 10% to 12% over the medium-term, while other segments are expected to grow at 12% 30%. This project will enable us to reach our target of operating 300 to 325 restaurants by FY ’27.
Thank you. With this, we can open the question for Q&A.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star N2. Participants are requested to use handset 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 Mehta from Enigma. Please go-ahead.
Viraj Mehta
Yeah, hi. My first question is regarding your store openings. You have reiterated that we will grow to 300 to 325 stores by FY ’27. So which will mean — and we are at 230 today, so which will mean we will need to open at least 30 restaurants this year. Can you please tell us by like May, how many stores have we opened?
Kayum Dhanani
So we have three stores already operational now in this quarter and we have around 12 restaurants under out. Is 12, I’m expecting another four to open up in this quarter. So this quarter, I’m expecting to be to open seven stores — seven new stores in-quarter one.
Viraj Mehta
And all of these would be domestic barbecue or they would be premium CDR or international?
Kayum Dhanani
So out of seven, we are expecting between two to three in international. Some of these international pipeline was supposed to open in-quarter four, but got slip to quarter one we have three in two in the premium CDR and balance in BBQ India.
Viraj Mehta
Okay. You also mentioned that we are seeing improvement in domestic barbecue as far as SSG is concerned. So are you seeing any signs of reversal of — I mean, negative SSG growth that we have consistently seen for the past several quarters.
Kayum Dhanani
So frankly, last year, when I look at when I say last year ’24, we were at close to 8% decline, which currently full-year basis around 3.5%, right? But have you moved to positive territory now this quarter itself, we are pretty much similar to what we were in-quarter four as of now, but half quarter has gone by, let’s wait for other ones. So the recovery is very slow and gradual there.
Viraj Mehta
Right, right. And as far as BBQ India is concerned, we are doing around INR5.3 crore and which is which is you would — would you say it is on the lower-end and once we see slightly positive improvement and when we go to, let’s say, INR5.7 to INR5.8 crore, INR5.9 crore sales per outlet per year, what’s the kind of ROM that you think we will see from currently 11% 12%.
Kayum Dhanani
So if I look at last three-year matured restaurants of BBQ India business, which is close to around 155 to 160 restaurants. Our last three year average is around 16%, right? And average sale-in this portfolio on average is around INR5.85.99 crores or so. So at that number, we will reach to around 16% restaurant operating margin. This is — this is what — what in the current scenario, which is FY ’23, ’24, ’25 average numbers are looking like.
Viraj Mehta
Okay. And would it be fair to assume that for 30 stores that you mentioned, our new capex for this year would be closer to INR90 crores.
Kayum Dhanani
So new-store capex, so I think we will do more than 30, I think that the plan is. And if you look at our current network portfolio, we have around 230 operating. We have around 12 under out and we have an active pipeline of another 18 where commercials are almost finalized with those sites and the process of diligence, project viability and all this stuff is going on. So I think there’s clear visibility of the 30 restaurants as of now. And apart from that, we have — we have another 15 sites which are in very early stage. So at least our plan would be to target to achieve around 35 to 40 this year so that we cross 300 by FY ’27.
And also if you look at our pace, last year H1, we were doing almost four per quarter. We moved to five per quarter. You know, frankly, a couple of sites have slipped to quarter one, they should not have been. And I think we very quickly move to an average quarter opening of 7 to 10, right? And that’s how we plan to meet our target of 300 to 325.
Viraj Mehta
Sure. And I mean, if I look at by the fantastic performance on international piece, on our nine restaurants, now we are doing almost INR13 crore-plus kind of revenue and our in this quarter is almost 29.6% on pre MDAs. I mean, are we at 29% 30%, are these kind of sustainable number or you see them mean reverting back to 25% 26%?
Kayum Dhanani
No, I think these are not. So this quarter we also delivered 10% FSSG and FSSG to positive FSG to margin expansion is a clear story in our business, which you saw that this quarter. But I think — and for the full-year normalized basis, 30 will not remain. I think if we can maintain anywhere between 25% 26%, it’s a good number to have. And as we also expand new restaurants this year, there may be marginal dip also. But on a long-term basis, I think, this business should deliver us anywhere between 23% to 25% restaurant margin, which on a payback period store basis should look like close to 2.5 years, right?
Viraj Mehta
Sure. And my last question is regarding your premium CDR. And when we talk about a premium CDR, we are at almost INR5.5 crore sales in our premium CDR with 30 restaurants. Provided that these are premier — premium CDRs, like when we go from 30 to 60 restaurants over next couple of years, in your mind, what are your aspirational revenue per outlet?
Kayum Dhanani
It will remain at around 5.5 to 6% and I’m giving you a range because in some of the new ones, we may open up slightly smaller restaurants. Our previous ones, we are at an average size of around 3,000 square feet. We are now doing some at 200 square feet also. So adjusted for that, I think INR5.5 crore INR6 crore is a decent number to assume for this.
Also, I’m not so worried about 30 going to 60 and sort of impacting our revenue per restaurant because if you look at the current profile of this portfolio out of 30 restaurants of 15 are based out of only Bangalore, right? And the balance 15 are based out of Hyderabad, Chennai, Pune, now recently opened up one in Bombay and one in Delhi, right? So a lot of metro markets are really open to us and some of these metro markets have potential of high-throughput.
So I would not — I will not worry about this average number going down. I think the focus would be to ensure that in some of these newer trade areas that we are entering and going with the brand for the first time, we sort of make a mark like we have done in South with these brands and continue to deliver that. I think once we do that and we open up the first three, four successfully, ramping-up from 3, 4 to maybe 10 or 12 in every city is not a challenge and we know that. And by the time the teams will be set, the entire operating process will be set-in these markets. And that’s the hard work that has been going on. And when I say that we opened up three new markets, I think we’re extremely happy with our performance in Hyderabad, Bombay, Delhi that we launched and took one of it.
Viraj Mehta
Sure. And last question on premium CDR. Obviously, you mentioned that we are — margins have fallen to less than 15% because of newer store opening. But should as investors, this is more like one-off and our longer-term margins in your view are still like around 20% plus or minus percent here and there.
Kayum Dhanani
So we’ve also given you a matured portfolio margin too, right?
Viraj Mehta
Yeah. But to understand what is matured, what is not so — which is why I’m asking for a slightly longer-term understanding when you open a store, do you think 20% is what you look at when you open a store?
Kayum Dhanani
Yes. So matured is very, very simple. It is anything more than two years in mature portfolio for us and we don’t do any other classification. So we take everything which is more than two years of matured portfolio, right? So it’s that simple. And every restaurant which are more than two years-old in our premium CDR concept has done an operating margin of 21.3% despite the fact that SSG has been slightly subdued in this business also, right?
So I think on long-term basis, this should deliver around 21% margins. The business has very strong gross margins at around 75% and I think we know-how to manage our operating costs, be it be it rental cost or on manpower cost. So I think one reasonably a confident of delivering 21% restaurant operating margin on this portfolio.
Viraj Mehta
Thank you. Thank you. Best of luck.
Kayum Dhanani
Thank you very much.
Operator
The next question is from the line of Kapoor from Investec. Please go-ahead.
Harit Kapoor
Hey, hi, good evening. So I just wanted to check this 30 stores you mentioned 30 to 35 stores. How much of that would be Barbecue India this year? I mean, what’s your estimate?
Rahul Agrawal
So overall, we want to do around 20 of BBQ India we will do around four to five of international and between 12 to 15 of premium CVR..
Harit Kapoor
And there was a point of time where you know the SSSGs are okay and you — your pace of expansion increased in India and then you kind of had a year of consolidation because the market was not conducive. So how you — what drives the fact that you can open up another 20%, which is like a 10%, 11% increase in the India — in BBQ India, especially because the format probably has not come out-of-the woods yet completely. So I just wanted to know what are you seeing or what changes are you making to ensure that you’re still okay in-spite of this fairly pace of expansion expected this year.
Rahul Agrawal
So, I’m glad that you raised this. So you’re right and FY ’23 was the year when we added almost 37 restaurants of BBQ India, but also like that, that is the period when we came out of second-half of FY ’22 and FY ’23 performance, which was pretty much post COVID and one of the best periods that we’ve seen, right? And on back of that, we have — we have taken some calls which eventually been sort of work-out and we have to go-ahead and do some corrections in our overall portfolio.
I think — and that part is done now. And on — separately, what we have done also is we have also strengthened the two of our other verticals, which is both international and premium CDR and sort of build an organization where we feel very comfortable that we can sort of do 30% sort of network addition on this portfolio on their basis, right?
And similarly on BBQ India now, I think we have done corrections in our — in our store formats, our store sizes, I think we don’t need the 4,200 square feet areas anymore. We can do this at around 30 to 100 square feet areas. So the whole economics have been on. And some of the latest restaurants that we opened up has all been in this sort of range. It also gives us flexibility to go to prime places, space slightly higher, but the throughput is good. So the whole change is being done accordingly. And to that extent, I feel very comfortable that 20 is something that the business can very easily absorb.
Harit Kapoor
Thanks all. And is there a risk in your mind of this 12% pre-Ind ASR restaurant operating margin for F ’26 for India because of this expansion or is that not the right way to look at it? We should just still look at like what mature is doing versus new is doing? Just wanted to understand how should we think about it?
Rahul Agrawal
No. So frankly, I don’t think 12% rest operating margin is what we would target to do in our India portfolio, right? I think added at a smaller 50%, 60 rest of portfolio is to do around 21% margin. Last year average, it has come down to around, 16 17 and the current year it is looking like 12 on the overall basis, including some of the new one-side. These also as market change, as market evolves, we obviously need to do some corrections but over a longer-term period for matured portfolio, I think if I look at — look at the business model and unit economics, this will be — this will be a INR5 crore to INR6 crore outlet depending on the size, depending on-location.
And on that portfolio, at the unit-level, we’ll try and achieve sort of 18% restaurant-level margin as we as we scale this portfolio. On a blended basis, I think we’ll definitely target 16% restaur level margins in this. Right now, these numbers are — these numbers are not at the best and these numbers are also after two years of negative SASG, right. So that revival has to happen. And despite that negative, we are at 12% operating margin for the full-year.
So I think once we — obviously we are doing changes on-the-ground in terms of this experience, culinary festivals, a how to also increase our service, new-store design. So we’re working on these guest expenses level and as we further improve, not that the entire portfolio is negative, right? We still have 50% plus portfolio which are — which are positive territory. So as we continue doing these works, I think once NSSG improves, this will flow down to margins. At least that’s what my experience says in this company over the last few years.
Harit Kapoor
Yeah, I don’t deny the operating leverage benefit, no doubt about it. I also wanted to check about your prognosis of why last year also was — I mean we understand that dine-in has been weak across even QSR businesses, you know what in your opinion would take for you know this apart from your bottom-up initiatives, what would it take-in your opinion to kind of get back to a positive SSSG trajectory, specifically in the India with Nation India business or — and what are you seeing in the market right now to say that ’26 could possibly be a year where you get back-in the plus trajectory on the SSLG for BBQ India.
Rahul Agrawal
So very difficult question and we keep sort of at it every time. Maybe different for different markets. In some markets, there is new competition in some markets. We need to upgrade our — our assets, our service, our product. In some markets consumers feel that the price point is slightly expensive. So the answer is not sort of one for the entire thing. But — but in general, I think consumers are also looking for at least in the CDR space in newer experiences, right?
So whenever in any particular trade area, we see a new sort of format restaurant coming in, you know, the fad remains for some time and it just do impact us. There is no doubt about it, right? And what happens in our business also is we are a very long-term comfort sort of level that in-place, right? We see that both in India business also in terms. So that demand keeps repeating. But now I think in my view, if we continue to do what we are doing and we obviously keep improving at that, the guest demand will come back. It’s not that some of the other players in barbecue all-you-can-eat categories are doing good. We also got some studies done. Our NPA scores are also better than the other industry players that we call this done on. So I think it’s just about holding on to it, trying to ensure that guest expense is good and protecting your margin at the same time. And when the site turns, I think I think this — this is — this slows down very well to your bottom-line.
Harit Kapoor
Got it. Wish you all the best. Thank you. Thank you.
Rahul Agrawal
Thank you,.
Operator
Thank you. The next question is from the line of Krishna from Avendus Wealth. Please go-ahead.
Vinod Krishna
Sir, am I audible, sir?
Operator
Yes, sir, you are.
Vinod Krishna
Sir, one question on the barbecue value proposition. Because you want to position barbecue celebration. Are we seeing customers finding some other alternatives going for some other alternatives as a celebration destination. Is that why we are seeing how you — how to — are you — is there any way that you are keeping track because we can’t do it from outside, but you know who are — is it competition or is it people are moving to different formats for celebrations? So any idea?
Rahul Agrawal
Look, our brand sort of stands for sport celebration. We stand for group dining out. If you do any barbecue nation, any slot, any session, you’ll always find three, four tables getting either their birthdays or or any group of group dining from corporate. So this is what we stand for, right? And there is one of the other celebration story in every table and we also engage with guests in terms of giving them a cake from our complementary cake from our side just to enhance their experience.
So this is the positioning of. We are not in pulse purchases, our price points are close to INR1,800 per pack and this huge large group because when they come in, they don’t bother about who is winning, how much, what the bill is going to be. So that level of comfort sort of is driven by — by the brand. And that is what we target. And if you look at our business, our average group size is around 4.5% and we get almost 50% of our business from group sizes of more than more than six, right.
So that is what we want to focus on. And our point is that in for any individual or guest, we can just celebrate one or two occasions at clinician out of maybe six occasions that he has every year. I think that city trade is very handsome for us.
Vinod Krishna
Exactly. That’s what I’m saying is, are you seeing any competitive industry in terms of people moving their way to other formats for celebration? That’s exactly what I’m asking. Are you — you’re pack like our own or own way that you have done because you’ve seen like there’s a continuous SSG negative growth. So is it maybe in some part of India, not in the whole of India, maybe. I’m not saying no direct part.
Rahul Agrawal
So obviously, the value proposition with some of the other barbecue if you can eat player gives is similar and in some cases, the price points to be different. But eventually, if you look at on the on the reported overall number basis, are some of the other players taking away market-share, absolutely no. I think I don’t think there’s only one large player and their numbers also a whatever we can track them seems to be to be better than what we’ve done.
So I don’t think based on our internal research that some of the other larger players are taking market-share in this celebration destination in a concept of us.
Vinod Krishna
So then what would be our progress like why there is a slower-growth in last two years, like especially and where there is no-growth, where there is still SSG growth, like is there any difference between those locations and other locations where there is negative growth. So is there anything that you have identified and working on?
Rahul Agrawal
So working on across the entire portfolio because the answers in every specific trade area may be different, right? In some cases, maybe there is a competition in some cases, maybe you know we need to upgrade our asset in some cases, the price points may not be favorable, right? So in some cases, there is a mall which has sort of gone down for whatever reason.
So I think answer is different and different and we are working across all with individual view across the entire portfolio. In general, I think eating out has been slower for last two years that the impact that we have seen across multiple players, unfortunately, we only had QSR numbers in public domains. But apart from that, I don’t think there is any other reason. But like I said earlier also, specifically South market for us has been — has been more challenging. East has been positive country, West is marginally lower and North again has been also flattish. So apart from these, there is no other separate thing. It’s not that metro Tier-1, Tier-2 is pretty much similar.
Vinod Krishna
So as restaurants mature, we can go to INR6 crores to INR7 crores per restaurant or it will depend because the sizes are different. So we can assume that average.
Rahul Agrawal
No, at a portfolio level — at a portfolio level, we can. Our matured portfolio obviously is higher. So as matured portfolio matures, we can.
Vinod Krishna
Okay. So okay. So I can understand that you’re not at least any alternatives where customers are moving to celebrate. Huge.
Rahul Agrawal
No.
Vinod Krishna
Thank you, sir. All the best, sir.
Rahul Agrawal
Thank you.
Operator
The next question is from the line of Sanjeev Raj from Anand Rathi. Please go ahead.
Sanjeev Raj
Hi, team, good evening and thank you for giving the opportunity. So my side is two questions. So just I want to understand that this quarter our SSG is minus 2%. So I understand 73% of our BBQ core stores are in Tier City. So does this mean that the lower SSG is mainly due to the underperformance in Tier-2 and Tier-3 city if yes.
Rahul Agrawal
No, that’s not the case. I think between the tiers I don’t see any change in Tier-1, Tier two has pretty much behaved by and large in similar fashion.
Sanjeev Raj
So you are saying that the performance is more or less, it’s common for all the cities, right?
Rahul Agrawal
Yes.
Sanjeev Raj
So thank you. And my second question is, sir, just if you look at the mature restaurants in the core business, it’s around roughly INR55 million to 50 million. So want to understand where the based on the revenue, so what would be the average dining table turnover per day or you can say average table utilization percentage in weekend and week days.
Rahul Agrawal
So we don’t share those numbers, but what I can share is our weekday business, which is Monday to Thursday is approximately 40% — sorry, 50% and the balance 50% is from, if I understand. But I wanted to the stable terms and other stuff.
Sanjeev Raj
Okay, sir. Sir, last question is that. So can you able to share some data on a repeat customer for our core business for Tier-1 and Tier-2 cities for so…
Rahul Agrawal
I think between Tier-1 and Tier-2, the average throughput may be different. But other than that, operating — operating parameters are pretty similar in terms of repeat rates, turns, numbers they all pretty similar as at a portfolio level.
Sanjeev Raj
Okay, okay. So thank you, sir.
Rahul Agrawal
Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to two or three questions. The next question is from the line of from NV Alpha Fund. Please go-ahead.
Naitik Mutha
Hi, sir. Thanks for taking my question. Sir, my first question is, hi. Sir, my first question is, you know, we’ve seen sort of muted necessary in both our premium CDR and international business on a full-year basis. So I just sort of wanted to understand that is — was the market condition tough or what exactly has panned out because the growth — the SSG growth rate has been sort of declining in both these markets.
Rahul Agrawal
So in the — in premium CDR specifically, this year it has been lower also specifically because large part of the portfolio, like I said, is in South India and South generally has — has struggled for the entire dine-in plays at least in our portfolio. In international business, you know, it’s positive and on a full-year basis, it’s around 1%. I mean, yes, lower than FY ’24, but as you also expand more, you might have some but there’s no specific reason why I can tell you it is only 1% positive and not or not higher.
Naitik Mutha
Right. Sir, I wanted to understand, I mean, is this expected to continue or we see sort of SSG growth coming back-in these two markets?
Rahul Agrawal
No, so I think we are consciously also adding a couple of percentage points on pricing, which has also helped to maintain SSG in these markets. Also, has been calculated on maybe six restaurants, of these are in UAE only right now. So they are beyond the ninth year of their — of their existence, we are not open. As you can see, no new restaurants have been opened for last four, five years at least on the FSG front. We had six in FY ’21, ’22, ’23 and then we started from ’24 onwards two and then one this year, right? So I think the 50-year SSG is a very good sort of trend. As we add more restores, I think at a portfolio level, we should deliver between 3% to 5%.
Naitik Mutha
Right.
Rahul Agrawal
I think more than — more than efficacy also,, I would — I would be very sort of conscious of predicting our margins at 25% at this operating margin, right? At a portfolio level, even if as we open up new-store, different sizes, different markets, even if we deliver INR10 crores of average revenue per store and deliver 25% operating margin, I think we have an extremely good business that we have. The real thing is that how can you replicate this from existing nine restaurants to say at least a size of 25 30 restaurants, right?
So my focus is largely on that. I would not worry about a couple of percentage points on here or there. I would try and sort of maintain a sound business with 25% restaurant operating margin and also build scale in that business further.
Naitik Mutha
Right. Got it. And sir, my second question is on India business. And are we largely done with, with the store closures or we expect some two, three stores to be closed in this year also?
Rahul Agrawal
So I think we don’t have any major store closures coming, but we will continue to relook at our portfolio and on a base of, say, 200, we may have three or four coming up every year and that’s because we — if the store is not turning out or not performing, then instead of wasting our time on that, we would go-ahead and sort of launch a new one somewhere else. So now whatever store closure that you’re seeing is largely from, you know, just having a hard look on one or two, which are not giving the desired results.
Naitik Mutha
Got it. Got it.
Rahul Agrawal
Sort of big one that is coming out here.
Naitik Mutha
Right. Got it. Just my last question is even in terms of depreciation for this quarter, we have seen a step-up jump-in depreciation, while the finance cost has not seen as much step-up. So is there any one-off or this is pertaining purely to the rental base.
Rahul Agrawal
Amit, can you take that?
Amit Betala
Come again.
Rahul Agrawal
Depreciation.
Amit Betala
There is no ramp-up on depreciations. Anything specifically mark.
Naitik Mutha
Sorry?
Amit Betala
Hello?
Naitik Mutha
Yeah. I was just mentioned that your depreciation is significantly higher for this quarter when I look at it from compared to last quarter or last year’s — last year same quarter. So just wanted to know any specific reason or any one-offs in there?
Amit Betala
No, there is no one-off in that case. So whenever there is a store closure ticket, there is a depreciation which happens at the store closure level as well. And because of that, there is an increase in the deposition. Otherwise it will be.
Naitik Mutha
So this is expected to remain the quarterly run-rate that we have for this quarter.
Amit Betala
Yes.
Naitik Mutha
Okay, thank you.
Operator
Thank you. The next question is from the line of Ankit Chaudhary from IIFL. Please go-ahead. MR. Ankit, your line has been unmuted. Please go-ahead with your question. MR. Ankit, can you hear us? As there is no response, we’ll move on to the next question. It’s from the line of Madhuj Rathi from CounterCyclical Investments. Please go-ahead.
Madhur Rathi
Sir, thank you for the opportunity. Sir, I wanted to understand regarding the store closure initiatives that we took a year back. Sir, sir so how many of the 200 stores currently we have reduced their sizes and what would be the average store size currently and where do we expect this to go over the next two to three years as we add-on more stores?
And a small sub portion would be, sir, we have seen a decline in our other expenses. So is this because of rightsizing the stores and some fixed-cost benefit moving to our margin going-forward? So if you could help me understand on that.
Rahul Agrawal
Yeah. So on the store sizes, on the existing portfolio, obviously, we can’t change much because of the long-term reasons. So in those, we have done some internal corrections to see whether we can use those spaces for storages for which we are paying outside rentals. So just trying to improve the on that because if you have already contracted 428 square feet, we can’t just give away 1,000 square feet because the real-estate will not work accordingly, right?
So the size in the pass portfolio remains same. In the new portfolio, the average has come down. So as we maybe add 100 stores of the new portfolio and the average size will reduce, right? But the operating process of store operations have changed now with the sizes that we have different channels that we have launched.
In terms of other expense is largely lower because of some of the other line items. This includes in some cases external storage spaces, in some cases, electricity initiatives in manpower also, we have taken some initiatives and further on average basis, whatever new stores that we opened up has also lower operating cost?
Madhur Rathi
So the new stores — sir, so if I consider the 200 stores that we currently have, how many would be the older legacy stores and what would be their average sizes and what would be the new stores and what would be their sizes currently?
Rahul Agrawal
So one legacy stores don’t have a problem, right? These legacy stores that we have are also delivering us a good 16% of restaurant operating margins the next year portfolio. So please don’t get that notion that we have problem in our existing portfolio and let me change it. Obviously, we have a problem of FSGs, but not because of any inherent problem in this and there’s no way looking at changing this portfolio. I think we’re very happy with this and we are continuing to grow this, right? Does that, what we’re saying is the new ones that we are now designing, we are designing which with the smaller areas, which we believe are slightly more efficient in terms of operations and can also deliver better margins at a smaller throughputs.
So that’s the whole concept. And the recent seven, eight restaurants are also in this new format design. So in the past, you also shared new-look and field designs of the restaurants that is what we are talking about here, right? And this also breaks back to the previous question which was asked in this call regarding the how can we do maybe 2025 based on India. I think we feel very comfortable with this new concept size operating cost that the economics will work on these new-store openings.
Madhur Rathi
Got it. Sir, sir, is it fair to assume on a broader level that our new stores would be 20% to 25% lower square feet than our earlier stores, but because of — of a better economics going-forward?
Rahul Agrawal
Yes, yes. Also, you know, what has happened is as we have increased our presence, I think it’s better for us to also go in prime locations, right, where the rentals are higher. So I can’t contract higher per square feet rentals at for larger areas, right? We have to really more efficient to in terms of designing some of these restaurants so that we try and get throughput, but also at an average — average rental cost on absolutely basis doesn’t change, even though first profit may be slightly higher.
Madhur Rathi
Yeah. Got it. So another question on our — so if I consider our restaurant operating margin that we have mentioned 16% for our India, 25% would be for the international and 20% for the premium. So how much would be additional cost that should flow and give us previously, so what would be the fixed-cost associated with other than these restaurant operating margins?
Rahul Agrawal
Yes. So this back-end cost, I mean the back-end cost is the entire regional office cost, every cost which is apart from the store cost, which is the regional office and the corporate office. So even the marketing costs are part of the restaurant operating cost.
Madhur Rathi
So look, would that be 4% to 5% of revenue?
Rahul Agrawal
No. So currently, given that our revenues have been flattish, this number has been slightly higher at 6.5%, but on long-term basis, this will be between 5% and 5.5%.
Madhur Rathi
Sir, another question, sir, how is our delivery business doing? And sir, the acquisitions that we made past quarter of below ice-cream. So how are the margins in that expected going-forward?
Rahul Agrawal
So the numbers of government one, they are very small and they are not part of this financial. We have not consolidated will start from next financial year. On delivery business, you know, the SSSG on our same-store delivery growth has been positive for us for the entire quarter. And specifically on delivery, as you know, we have three brands. One is Barbecu Nation, which is positioned as mostly Barbecue sale UBQ which is which is positioned as no means, and simple means and third is, which is a positioning.
So out of this, there is one major change that we did in our UBQ business, which is we changed its position from Nation to for meals and, right? So we lost out on some of the organic demand. And that’s why that particular business was negative SSG of almost 30%, but the other two brands, which is Barbecue Nation and are at positive SSSG of approximately late single-digit. So very happy with the two brands, which is Barbecue and. We obviously need to do that course correction in UbiQ because there was a lot of commonalization of menu between and and that was not the desired result.
So if you have to grow UBIQ as a brand, we’ll have to also reposition it separately. So now there is distinct position between Barbecue, and and going to grow that. We obviously lost out some bit on UBQ, but I’m sure as we again rebuild it, we’ll get this back. And I’m very happy to see it positive SSG and good positive SSG on the two other delivery brand, which is BBQ India and BBQ.
Operator
And just sorry to interrupt, sir. I would request you to please come back-in the.
Madhur Rathi
I’ll do that. Thank you, sir.
Operator
Thank you very much. The next question is from the line of Akilesh B, an Individual Investor. Please go-ahead.
Akilesh B
Hi, thanks for the opportunity. Am I audible?
Rahul Agrawal
Yes.
Akilesh B
Sir, I wanted to understand the capex outlay a little better. So if we have to open 35 40 restaurants in each of FY ’26 and ’27, what would be the estimated capex for this and how do we plan to fund it? And connected to that, every year out of our base of 230 restaurants that we have, how many come up for, say, major refurbishment or some kind of major maintenance capex? And what would be that amount and how do we plan to fund that?
Rahul Agrawal
So overall, for these 35 crores to 40 restaurants, we would have INR100 crores to INR110 crores of capex. We would have another 30 crores for maintenance or this will also include some part of refurbishment and depending on whether we need to really relocate or redo the entire restaurants, maybe another INR5 crores for a couple of new restaurant sites. And then there is another INR5 crores to INR10 crores of corporate capex which comes up towards tech ability, IT work and these stuff.
So overall, for the next two years, I’m expecting a capex outlay of anywhere between INR125 crores or INR134 crores to INR140 crores. In the past, we have funded largely from our internal equivalents, but this year if the intern it will fall short, I think we may have to raise external debt of another INR35 crores 30 crore INR35 crores.
Akilesh B
So currently what is the net-debt or net cash position as of the last.
Rahul Agrawal
Our net-debt — our net-debt is around INR50 crores right now on a net-worth of around INR400 crores.
Akilesh B
Okay. And sir, second question is for Barbecue India to hit 15% or 16% restaurant operating margins for the full-year, what kind of SSSG do you think this portfolio will require if we have to hit that in this year or even FY ’27.
Rahul Agrawal
So on average we are at currently 12%, so I think 5% to 6% will also take us to 15% in additional level operating margins. So also one is and like we have done over last two years, you know, we are also very quick to manage our costs in an efficient manner, right? Last two years we have seen impacting us negatively, but we have taken pretty much every step to ensure that in a disciplined manner, we manage our costs and try and variable as much as possible, right.
So I think my focus at least for the next couple of years is to expansion, try and build good restaurants for our consumers. And on a larger base sort of work on your margins. I’m not saying that I’ll take my eye off the margins, but my focus is to, you know, increase the pace of store expansion. And that’s why when I said about the pipelines and all, I think I feel happy that these could be delivered.
Akilesh B
So can you comment a little on what levers are left on this cost efficiencies and also on this Villow Bourmet acquisition, which you had done. So what is your expectation from that in FY ’26 and is it a drag on the profitability cost for the company.
Rahul Agrawal
Is easier, no, there is not a drag on the profitability. It is mostly on the profitability. This is not consolidated right now. We have acquired 42% or so. We will finish our last tranche of 8%, so that we become 51% and then we’ll start consolidating the results. When we acquired it around April, they had three in cloud kitchens.
We have already opened three more. We have six cloud kitchens now and on that base, it’s growing pretty well. And profitability is maintained. I think the focus there is twofold. On one-side, we want to expand and increase our production facility. So we ramp-up our production to ability so that we can service more-and-more in our kitchens. And on the second side, we’ll go and some more cloud kitchens. Like we mentioned also earlier, this is a small-business and we will take some time to build it, but we’ll build it in a profitable manner. We will not — these cloud kitchens will not lose money. In fact, they were very profitable when we filed it, right?
Your first part also was on — sorry, I missed the first part.
Akilesh B
On the levers which we have for more cost efficiencies there.
Rahul Agrawal
Yeah so look, we keep looking at everything. There is a very large organization, we are — we have multiple sort of areas in which we can make improvements. But I can’t tell you specific points right now, but what I’ll tell you is, we are constantly looking at numer ways of doing things so that we can say something. Even at INR10,000 sort of saved in one outlet is approximately INR20 lakh rupees per month and close to INR2 crores per year, right?
So we keep a very strong eye on every expense that is incurred at a store-level and then try and multiply pan-India. So you know some are — some are in pipeline, some have not worked also in some cases, we realize that cost was important and we should not cut it and we get back. So it’s a constant work.
Akilesh B
Okay. Thank you, sir. All the best.
Rahul Agrawal
Thank you,.
Operator
Thank you. And the next question is from the line of Manjit from Solidatory Investment Managers. Please go-ahead.
Manjeet Buaria
Thanks for your question is just answered on below. Thank you.
Rahul Agrawal
Okay. Thank you.
Operator
As there are no further questions from the participant, we will conclude this conference call. On behalf of BBQ Nation Hospitality Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.