Devyani International Ltd (NSE: DEVYANI) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
Ravi Jaipuria — Non-Executive Chairman
Manish Dawar — Wholetime Director and Chief Financial Officer
Analysts:
Anoop Pujari — Analyst
Gaurav Jogani — Analyst
Aditya — Analyst
Percy Panthaki — Analyst
Jigyanshu Gaud — Analyst
Devanshu Bansal — Analyst
Tejas Shah — Analyst
Marut Chaudhary — Analyst
Latika Chopra — Analyst
Aliasgar Shakir — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Diviani International’s 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 call, please signal an operator by pressing star than 0 on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Anu Pujari from CDR India. Thank you, and over to you, sir. Thank you.
Anoop Pujari — Analyst
Thank you. Good afternoon, everyone, and thank you for joining us on Devyani International’s Q3 FY ’25 earnings conference call. We have with us Mr Ravi Jaipuria, Non-Executive Chairman of the company; Mr Raj Gandhi, Non-Executive Director; Mr Virag Joshi, CEO and Whole-Time Director; and Mr Manish Dawar, CFO and Whole-Time Director of the company. We’ll initiate the call with opening remarks from the Chairman, followed by key financial highlights from the CFO. Post that, we will have the forum open for a question-and-answer session.
Thank you before we begin, I would like to point out that some statements made in today’s call may be forward-looking in nature and a disclaimer to this effect has been included in the results presentation shared with you earlier.
I will now request Mr Ravi Jaipuria to make his opening remarks
Ravi Jaipuria — Non-Executive Chairman
Good afternoon, everyone. I warmly welcome you to our earnings conference call to discuss the business performance of DIL for quarter three 2025. We are optimistic that the recently presented Union Budget 2025, particularly the new personal tax regime will bring much-needed share for the middle-class in the country. In our view, the budget should enhance purchasing power leading to improved consumer spending. This is great news for the consumption sector, including the QSR industry as it could drive stronger consumer sentiment leading to further expansion of the industry.
I’m delighted to say that DIL has successfully met its store expansion guidance, crossing an impressive milestone of 2,000 stores in the recent quarter across all brands and geographies ahead of the original target. This achievement further enhances our market presence and reinforces our strategic position in the QSR industry. It also offers our customers greater access to our brands. Reflecting on quarter three, our store expansion strategy has been a key driver of the company’s growth. We remain committed to this approach, ensuring a balance between expansion and store-level performance, in-quarter three, we added 111 net-new stores, bringing our total store count to 2032 as of December 31 December 2024.
Our core brands, KFC, Pizza Hut and Costa added 107 stores in-quarter three, thereby further strengthening our brand performance. DIL consolidated revenue for the quarter stood at INR1,294 crores, reflecting a 53.5% year-on-year growth. We have also seen slightly better margin performance because of better SSSG and certain fresh cost optimization measures. I’m glad to share that our brand continued to demonstrate consistency and excellence. In recognition of this, KFC was awarded the most admired retailer of the Year for market expansion at the Pepsi Images Foodservice Awards 2024.
While the overall consumer sentiment remained a little subdued during the festive season, our QSR in general and DIL witnessed some green shoots of recovery in metro and large cities. For the budget conscious consumers, value menu, items such as KFC roll variants and snackers were major attractions during the festive season. KFC Epic savers and Pizza Hut discounts offered help in driving volumes with both brands experiencing recovery in-demand by clocking highest-ever stay sales of big festival days. Our food coats business is gaining momentum with new nutritions being added during the quarter.
As we expand our footprint, we remain focused on tapping into strategic opportunities. A key development during the quarter was the opening of the first food court in established under the JV arrangement with PVR INOX. Our international team also contributed to the overall growth of the company. In Thailand, we successfully added nine net-new stores totaling to 305 stores quarter three. To conclude, I’m glad that despite the relatively quiet festival season, DIL has remained focused on-store expansion while continuing to explore new and innovative ways to connect with consumers. As a leading player in the Indian QSR space, we are uniquely positioned to capitalize on the sector’s recovery with market conditions expected to turn positive. In the coming quarters, we are confident that our efforts having doubled our store count to 2,000 in just over 2.5 years will yield strong and further strengthen our position in the industry.
With this, I would like to conclude my address and now hand over to Manish for the financial highlights. Thank you.
Manish Dawar — Wholetime Director and Chief Financial Officer
Thank you, Mr Jaipuria. Good evening, everyone. A very warm welcome and thank you for your valuable time for attending DIL’s Q3 and nine months FY ’25 earnings conference call. Our 14th such calls since our listing in August 21. DIL has achieved a significant milestone of 2,000 stores in-quarter three FY ’25, ahead of the guidance given in the past. The total store count at the end-of-the quarter stands at 2,032 stores. Our core store footprint has now exceeded 1900 stores comprising of 1,052 KFC stores, 651 Pizza Hut stores and 209 Costa Coffee stores. The operating revenue for Q3 FY ’25 was INR1,294 crores, representing a growth of 54% versus quarter three FY ’24. The current year numbers include the Thailand business, which was acquired in January ’24.
The Indian business witnessed a growth of 9.6% year-on-year, mainly due to store expansion. Revenue was INR873 crores with growth of 4.4% versus the previous quarter. The gross margin for the consolidated business was 68.7%, a drop of 60 basis-points versus the previous quarter. The impact on gross margins was primarily due to food inflation that we’ve seen in core brands, driven by rising oil, chicken, cheese and coffee bean pricing. The brand contribution for Q3 FY ’25 stood at 14.3%, higher by 70 basis-points versus the previous quarter. Improvement in brand contribution was mainly on account of sales leverage and fresh measures on cost optimization in the Indian and Nigerian operations.
Consolidated operating EBITDA on a pre-IndAS basis was INR131 crores versus INR114 crores in the previous quarter. The pre-IndAS margins for the quarter for the consolidated business were 10.1%, an improvement of 70 basis-points versus the previous quarter. The consolidated reported EBITDA on a post-IndAS basis was 16.9% versus 16.3% in-quarter two of FY ’25. The Nigerian currency is showing signs of stabilization and broke its continuous weakening trend in-quarter three. The PBT for quarter three FY ’25 on a consolidated basis was INR9 crores versus a loss of INR4 crores for the previous quarter. The improvement in PBT is primarily on account of better EBITDA.
Moving the discussion to our core brands, KFC in India added 44 new stores in-quarter three FY ’25. With this, the total store count for KFC in India stands at 689 stores at the end-of-quarter three FY ’25. Average daily sales for quarter three FY ’25 was flat at 96,000 versus the previous quarter. Revenue at INR570 crores increased by 4.8% on a quarter-on-quarter basis. Gross margin for KFC during the quarter was 68.6%. The brand contribution margin at 17.2% for the current quarter saw an improvement of 60 basis-points because of better sales leverage and cost optimization measures.
During the quarter, Pizza Hut added 51 new stores, reaching a total count of 644 stores in India. Revenue for quarter three FY ’21 was — FY ’25 was INR190 crores versus INR185 crores in the previous quarter. ADS for the brand was INR35,000. Gross margin for the quarter was 76.2% and brand contribution for the quarter was INR4 crores with a margin at 2.1%. Cost per coffee added two new stores during the quarter, reaching a cumulative store count of 209 stores. Q3 FY ’25 revenue was INR52 crores, which grew by 5.4% over the previous quarter and 30.2% on a year-on-year basis, mainly due to expansion of new stores.
The gross margin for the quarter was 75.5%, an improvement of 50 basis-points over the previous quarter. Brand contribution in Q3 saw an improvement and stood at 16.9%. We opened our first food coat under the strategic tie-up with at Kota. DL has an economic interest of 51% on the new company. Please note that this entity shall be consolidated in accordance with accounting standards 28. Total number of international stores was 374 with the addition of nine new KFC stores in Thailand and one Pizza Hut store in Nepal in-quarter three. The international revenue for the quarter was INR430 crores with growth of 9% versus quarter two FY ’25.
Gross margin was 64.1%, a drop of 100 basis-points versus the previous quarter because of Thailand currency impact on closing inventory valuation. Brand contribution margin of 16.6% saw an improvement of 60 basis-points versus quarter two FY ’25. The reported EBITDA was 14.9% during the quarter versus 13.4% in-quarter two FY ’25. To conclude, we have been executing our expansion strategy in a very calibrated manner, while ensuring healthy paybacks in our core brands. A key driver of this has been our focus on small format stores over the past few years, which are highly capital-efficient and offer stronger payback potential.
While SSG performance has impacted returns in the short-term due to subdued external environment, such trends are also typical during phases of accelerated expansion. Nevertheless, we remain confident that our strategy will drive sustained growth and profitability in the medium-to-long — in the medium-to-long term.
On that note, I would also like to request to — I would also like to request the moderator to open the forum for any questions or suggestions that you may have. Thank you very much.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on your touchstone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Gaurav Jagani from JM Financial. Please go-ahead.
Gaurav Jogani
Hi, sir, am I audible?
Manish Dawar
Yeah, what are you?
Gaurav Jogani
Hello. Yeah. Sir, thank you for taking my question. Sir, my first question is with regards to the store expansion that we have seen in Pizza Har. You know, it’s been really strong expansion that we have seen here. And I think the same is the case with the other business segment also wherein the network expansion has been strong. So if you can highlight, you know, your guidance on the expansion in both of these formats going ahead.
Manish Dawar
Hi, Gaurav. So Gaurav, if you look at on a nine-month basis, we’ve added 93 KFC stores and 77 Pizza Hut stores. While we continue to add and Wango as well. The quarter three on Pizza Hut was high because we were delaying the store openings given the brand performance. But there were some DA commitments that we had and therefore, we’ve kind of made sure that we fulfill our commitments. Going-forward, obviously, as we’ve spoken in the past, we will be moderating Pizza Hut expansion and you will see lower numbers, even further lower numbers versus what we’ve done so-far. So we continue to remain bullish on KFC on the other brands. We’ve added new brands. We are monitoring Pizza Hut performance very closely. And therefore, depending on the brand performance, we will take a final call on the numbers.
Gaurav Jogani
And so on the other brands, the higher expansion is also due to the JV store expansion that you’ve mentioned the food coat. Is that also a reason why the expansion is higher than other brands?
Manish Dawar
So we have upped the game on our food coat penetration, as we’ve — as we’ve been speaking about food coat expansions in the last two quarters, but the JV has opened only one food coat in quota and that is not part of the consolidated numbers because we are not consolidating this JV fully given the auditor’s opinion and so on so forth. So if I were to take, let’s say, the JV that we’ve opened in Kota, it will further add four new stores, one each in KFC, Pizza Hut, Costa and Wango.
Gaurav Jogani
Okay. And sir, my last question is with regards to the margin performance. I mean, the margin recovery is tad better in the PFC business. However, we have seen margins even declining sequentially despite the ADS remaining flat Q-on-Q. So anything on why the margins in the Pizza Hut are weaker? And if also you can give a sense on how margin trajectory for can up in the future. Thank you. That’s all from.
Manish Dawar
Thanks, Gaurav. So Gaurav, on margin expansion, I agree with you that Pizza Hut has seen little lower margins, but we will see margin improvement coming from next quarter because we are going to be optimizing the marketing cost in Pizza Hut versus what we’ve done in the last six to nine months. At the same time, we’ve taken some fresh cost optimization measures also in Pizza Hut as well as KFC, which will start to yield the number — which will start to yield the results from January onwards. So we are confident that as far as KFC is concerned, we will be able to come back to the margin levels that we’ve indicated in the past. And let’s see how the Pizza Hut goes and the expansion on Pizza Hut is dependent on the overall brand performance.
Gaurav Jogani
Sure, sir. Thank you. Thank you very much.
Operator
Thank you. Next question is from Aditya from JPMorgan. Please go-ahead.
Aditya
Hi, hello. Am I audible?
Manish Dawar
Yeah, you are.
Aditya
Yeah. Hi, sir. Thanks for the opportunity. My first question is on the KFC performance. So if I look at your ADS and margin numbers and compare that with your sister franchise, there seems to be some divergence. I just wanted to understand, is this because of any region split or are you seeing any material difference in-demand trend between different tires of cities, which could be driving this.
Manish Dawar
So KFC, Aditya, as you know, our sister-company or the sister franchise partner is predominantly present in the large metros because if you look at the country, I mean they have a higher share of metro cities and we’ve seen a better recovery in metros versus smaller ones. You would know that they have Mumbai City, they have Delhi City, they have Chennai, which are strong markets for KFC. We’ve also seen similar trends. We’ve not seen any big divergence. It’s mainly we’ve seen a primarily the KFC numbers getting impacted in Kerala, and West Bengal, which are very highly concentrated because of this geopolitical situation and there also we’ve seen an improvement and a turnaround happening. So therefore, we have seen the green shoots because of the geopolitical situation also turning around and therefore that gives us the confidence that next quarter hopefully should be a better quarter from that perspective.
Aditya
That’s very clear. My second question is on the transaction growth of KFC. So is it right to assume that the transaction — same-store transaction decline would be lower than the SHG?
Manish Dawar
See, the APC, which is the value piece is holding very well. If at all, we’ve seen a small uptick in all of our brands as far as the APC is concerned. The decline which is currently there is primarily on account of transactions. And that’s where this whole initiative on the low-cost meals and the value meals and the new promotions that Mr Jaipuria talked about will help drive the footfalls and will help improve the situation on the transactions.
Aditya
Okay. If I can squeeze one last question. Can you also give a little bit more color on Bango because you’ve been clocking double-digit growth over the last couple of quarters, all the areas have declined a bit sequentially in this quarter. Can you see what — can you explain what kind of trends you are seeing here and give more color on the format?
Manish Dawar
So Aditya, if you see Vango is doing well on SE because of the older locations because that is how the SSE gets calculated. The formal is one year-old stores, right, whereas in Bango also, we’ve expanded the footprint from a number of stores perspective. And in the nine months that we ended, we’ve opened almost 31 new stores in Wango and you would know that new stores typically start the journey at a lower rate and then they mature over a period of time and that is what is driving the overall ADS numbers down.
Aditya
Okay. Thanks. That’s it from my side. Thank you.
Manish Dawar
Okay.
Operator
Thank you. The next question is from Percy Panthaki from IIFL Securities. Please go-ahead.
Percy Panthaki
Hi, Manish. How do you look at margins going ahead, especially for KFC, I mean, we are in negative territory right now, but supposing we go into a minor positive territory, a low single-digit kind of a SSG for the next few quarters, in that kind of scenario, do we see KFC margins at around 17.5% to 18% or can it be better than that?.
Manish Dawar
Percy, as I mentioned in the last call, we are targeting KFC to get to 19% to 20% margin at about 100,000 ADS and we are tracking on that. It will take us a few quarters to be able to get there. But on an overall basis, we are confident that the kind of measures we’ve taken and once they start to kick-in and we are able to see the full results at about 100,000 KFC ADS, we will be able to get to 19% to 20% brand contribution margins.
Percy Panthaki
Understood. And these measures are more in terms of improving the ADS or are there any measures in terms of cost efficiencies also? And if you could just little bit elaborate on them.
Manish Dawar
Both sides, it’s ADS as well as the cost side. So on the cost side, we’ve relooked at how we deploy the labor, how do we consume the electricity. So it’s basically you are aware of all the store-level expenses. So we’ve taken a relook at everything on a de novo basis and we’ve taken some measures as a result of that.
Percy Panthaki
Understood, understood. Also on international as a whole, what is the kind of a growth that you are targeting for that piece, both in terms of revenue growth as well as in terms of number of stores for FY ’26?
Manish Dawar
See Thailand roughly as far as the store growth is because I’m talking about Thailand because that’s the largest piece there.
Percy Panthaki
Sure.
Manish Dawar
Nepal is a small opportunity as we’ve discussed in the past. So Thailand, we are going to be targeting about 20 to 25 store count addition, which is roughly about 8% to 9% of the stores that we have. And then on-top, we are targeting a SG of about 3% to 4% in Thailand. So therefore that should give about 11% to 12% revenue growth on Thailand. Nigeria seems to be kind of stabilizing as far as the currency is concerned. But right now, again, Nigeria, our objective is to stabilize the operations and bring the profit levels back because there have been huge losses as a result of currency devaluation. So therefore, Nigeria, we are evaluating the expansion, but there’ll be very small numbers in Nigeria if that were to happen.
Percy Panthaki
Right. And is there any visibility on Nigeria breakeven by when we can hope for that? And what are the losses on Nigeria on an annualized basis currently?
Manish Dawar
So Nigeria, okay. So let’s say, for example, as I said, Nigeria this quarter, we’ve seen currency stabilizing. So the brand contribution has come back very strongly as far as Nigerian business is concerned. So currently in Nigeria, our brand contribution sits at 20% plus.
Percy Panthaki
Okay. Okay. Okay. I’m just trying to understand for my modeling purposes for FY ’26 full-year versus the full-year of FY ’25, supposing if the losses go away, then how much of a swing in rupees crore, could I be sort of factoring in for the FY ’26 numbers? I just wanted to understand that part.
Manish Dawar
I can work that number out for you, Percy, and then we can discuss it offline basis.
Percy Panthaki
Sure.
Manish Dawar
But again, I would like to kind of talk about Nigeria, we would like to see one more quarter of currency getting stabilized and then kind of talk about those numbers.
Percy Panthaki
And when you say brand contribution is 20%, would I be right in assuming that generally corporate overheads for a QSR format is about 5% to 7% and therefore your EBITDA margin also would be like in low-to — at least a low-teens kind of a number for this quarter in Nigeria?
Manish Dawar
Yeah, because Nigeria is a small-business. So therefore the corporate G&A is little higher, but otherwise directionally you are absolutely in sync.
Percy Panthaki
Understood, understood. That’s all from me. Thanks a lot.
Manish Dawar
Yeah. Thanks, Percy.
Operator
Thank you. Next question is from Jigan from Bernstein. Please go-ahead.
Jigyanshu Gaud
Hi, Manish. Congratulations on an improving performance trajectory. I wanted to double down on one question on Pizza Hut. You said that any further growth in terms of store network or investments in marketing will be dependent on performance. So can you guide us what performance markers are you looking for to get convinced of a turnaround?
Manish Dawar
Yeah. So it’s typically, as you know, I mean, it’s ADS and SSSG numbers. And even ong, we’ve seen improvement happening in the current quarter. What used to be a double-digit negative a couple of quarters back, we are almost at a breakeven level. The industry has also seen a strong comeback on pizza. So that’s how we are monitoring it. So therefore, that is what I meant.
Jigyanshu Gaud
Okay. Is there any specific ADS number that you have in your mind or a brand contribution margin number? Or
Manish Dawar
We will not be able to give you guidance on that.
Jigyanshu Gaud
Sure. No way. If I can just follow-up one more. This is regarding Vango. I think we had aggressive store expansion last quarter, which has slowed down this quarter. But if you do a broad backward math, it seems the 40 stores that we have sort of added in the last 12 months are operating at a far lesser capacity than the — than the remaining 54. So is it something about the structural nature of the format, which is giving you pause in expansion or do you still remain very bullish about it? So just wanted to get a handle on that.
Manish Dawar
Sure. So Jaganshu, if you look at when you’re comparing, let’s say, the base numbers to the — to the new additions, the base has very, very strong operations on the airport also. And as you know, Vango at Airport does extremely well and that is what kind of pushes up the base, whereas all of the new additions are typically in the food courts and high streets and so on and so forth, which operate at a lower level. Otherwise, for example, if I were to compare, let’s say, like-to-like basis, it’s only all — the difference is only about the maturity profile of a store.
Jigyanshu Gaud
Okay. And hence, is the SSSG, let’s say 9.6% this quarter, is it different for, let’s say, airport stores versus non-airport stores, is that something you would seem comfortable calling? It will be similar.
Manish Dawar
It will be similar.
Jigyanshu Gaud
Okay. And lastly, sorry, just — so in ADS terms, then you would expect this to sort of stabilize at a lower level than it was earlier as the mix of stores moves towards more high-street.
Manish Dawar
Correct.
Jigyanshu Gaud
Okay. All right. Thank you. I’ll circle back-in the queue. Thank you so much.
Manish Dawar
All the best. Thanks,. Yeah.
Operator
Thank you. Next question is from Devanshu Bansal from Emkay Global. Please go-ahead.
Devanshu Bansal
Yes, sir, thanks for the opportunity. Congratulations on reaching the store milestones. Manish, last quarter we talked about experimenting with some marketing and pricing promotions in select markets, right? So how has been the response to such initiatives and what is the margin impact of this in the current quarter,
Manish Dawar
It’s been a mixed bag. For example, we’ve seen a good response on the KFC side to these promotions. We’ve not seen — we’ve not seen such a good response on the Pizza Hut side. So therefore, it’s been a mixed bag. But on an overall basis, I think things are moving in the positive direction. And therefore, we are going to be recalibrating the marketing spends from January onwards.
Devanshu Bansal
Understood. Sir. Just a follow-up on this. So Q3 is seasonally a stronger quarter, but the ABS is flat sequentially. So — and we have taken these initiatives where you are indicating that the response has been good. So wanted to check the reasons for a lower pickup on a sequential basis in KFC. So just your thoughts on that.
Manish Dawar
So as I said in response to the earlier question, one is this whole location thing. And then we’ve also seen a very strong store addition in-quarter three and that also therefore, let’s say, typically, let’s say, when you have this kind of store addition, it impacts the ADS performance because any new stores would — would start at a lower level.
Devanshu Bansal
Understand. Last question, sir, you alluded West Bengal not doing led for us. So can you either talk about the performance on the regions outside of these states impacted states? Or if you could also — if you could suggest otherwise the salience of these impacted states and what is the kind of improvement that we are seeing in these states.
Manish Dawar
Devanshu, we’ve seen a better improvement as far as G performance is concerned for the states outside of these three states. These three states also have improved and I think we have probably — let’s see how the number goes as we go along. We do expect that these states also probably have bottomed up and that is the only difference, but they are not in-line with the rest of the states. Now I think with the geopolitical situation stabilizing, we should — we should see a better kind of picture in these states.
Devanshu Bansal
Any qualitatively, can you sort of syndicate as in what is the difference of SSG in these regions outside of these regions. Just to get a sense as in how things may turn up and sort of these states also recover?
Manish Dawar
See, I’ll not be able to give you the exact numbers, but let’s say, for example, if you look at the range of states that we’ve — that we — that we operate in, I mean on the higher side, probably the SSG improvement sits at plus 10%, 15% also. Yeah. And there are states. So therefore, I mean those are low weight stores, may not be adding so much weight, but I mean it’s — the range is wide. So it’s not just a narrow range that I can tell you and we’ll be able to apply in the model.
Devanshu Bansal
So Manish. Thanks for taking my questions.
Manish Dawar
Sure. Thanks,.
Operator
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Tejas Shah from Avendus Spark. Please go-ahead.
Tejas Shah
Okay. Hi, thanks for the opportunity. Manish, my question refers to your comment that the commitment was also one of the triggers. I’m sure it was not the sole to expand or go aggressive on Pizar store expansion this quarter. So given the subdued demand environment, which you also called out and also called out in his opening remarks, I just wanted to understand how much flexibility do we enjoy on the expansion commitment, let’s say, was there an option to delay it considering that demand is still not in great shape?
Manish Dawar
Yeah. So if you look at Tejas, our openings in this year-on Pizza Hut are lower versus the previous year. And therefore, there is a flexibility available. But again, at the same time, we are very cautious that we should not be defaulting on our agreements. And that’s how because as you know, the DA works from January to December period. So therefore, we will be now kind of recalibrating Pizza Hut as we go along.
Tejas Shah
Sure. And Manish, given the team’s experience with past cycles, we are seeing first time in the listed phase. So just wanted to understand this aggressive expansion typically pursued during downturns. Does it benefit us in-full recovery cycle or do you want to wait for demand turnaround before acceleration on-store expansion? Just wanted to understand from past experience what has been more remunerative among these two strategies.
Manish Dawar
So just see it is a chicken and egg story, right? I mean, if you were to look at our experience, the way we expanded during COVID time when nobody else expanded and post-COVID, we’ve seen great results there. So — and again, as you know, this business is not about putting up a large factory that you create a capacity and then you can utilize for — I mean, this is about — it’s a brick-and-mortar business. So you have to create store-by-store by store-by-store. And therefore, if we miss on the real-estate opportunity, it’s gone forever. If you’re not able to create that whole bandwidth, it’s not that, for example, if I were to say that there is a downturn of three years and I’ll be able to open 400 stores together in the fourth year, it’s physically not possible. So it’s a very different nature of business and that’s the reason we are kind of at it because eventually, if we all believe in the India story and we all believe that India will grow, the economy will grow and the consumer sentiment will improve and the consumption will come back, then we — with the new budget and whatever steps the government has taken and will be taking, we should stand to kind of gain the most. Sure. And we’ve already experienced this. As I said, we’ve already experienced that during COVID time.
Tejas Shah
Very clear. And the last one, if I may, in the history of the company, both for Bizarat and KFC, what has been the most prolonged downturn cycle that we would have seen? Is this the current one, the most difficult one or there is a history of such cycles in past also.
Manish Dawar
See, in the past, Tejas, we’ve — we’ve never had this kind of scale, right? So it’s a combination of a slowdown in the consumer demand and consumer sentiment. And at the same time, we’ve been doing aggressive expansion also. So it’s a combination of those two. Now expansion is a very conscious strategy that we’ve undertaken. And we are confident about expansion because all of the expansion is happening on smaller formats where the payback periods are strong. So therefore, as we see the consumer sentiment coming back, it should greatly benefit us. But at this scale, obviously, we’ve not experienced things in the past because it was a smaller operation in the past.
Tejas Shah
Thank you. Thanks and all the best for coming quarters.
Manish Dawar
Sure. Thanks,.
Operator
Thank you. Next question is from Marut Chaudhary, who is an individual investor. Please go-ahead.
Marut Chaudhary
Hello. Yes, and am I audible?,
Manish Dawar
You are audible marked
Marut Chaudhary
[Foreign Speech]
Manish Dawar
[Foreign Speech] But as far as operations are concerned, [Foreign Speech] But otherwise on raw-material side, packing material side, [Foreign Speech], because of the currency, the international operations also get consolidated, [Foreign Speech], but that’s only a translation effect rather than a transaction effect.
Marut Chaudhary
Okay. [Foreign Speech]
Manish Dawar
So if you see Vango is a healthier brand in our portfolio. South Indian brand is supposed to be the most healthy food in the country. And so therefore, we already have that portfolio. Within KFC also, we have a range on the — while our dominant range is fried chicken, but we also have grilled chicken available. Similarly on the pizza, therefore, we have a good balance. Even the newer brands, for example, Sanu Kitchen, [Foreign Speech] it is a healthier brand versus the other brands that we deal in. So therefore Sanuk, again, we are going to be positioning on that basis. So we are conscious of what you’re saying and that is part of the strategy.
Marut Chaudhary
Okay. [Foreign Speech]
Manish Dawar
So, we have introduced and we have experimented with KFC Coffee in some of the outlets. Now obviously, this is a different strategy versus, let’s say, what McDonald’s is doing by way of McCafe or what Burger King is doing by way of BK Cafe because they operate large stores and therefore [Foreign Speech] to bring the formats down to focus on the core to make it more efficient on the paybacks and the margins and that is how we are operating. Because if you see over a period of time, the trend in the QSR industry has been more-and-more home consumption. And that you would have seen with all the brands, if you were to look at last whatever three to four years even post-COVID also, the home consumption is going up for the entire industry. It’s going up for all the brands. And therefore, in that scenario, we are highly focused on the format of the store rather than large formats.
Marut Chaudhary
Okay. That’s it from my side. Thank you.
Manish Dawar
Sure. Thank you so much.
Operator
Thank you. Participants who wish to ask questions, please press star and 1. Next question is from Latika Chopra from JPMorgan. Please go-ahead.
Latika Chopra
Yeah, hi. I wanted to check with you on your thoughts around this quicker 10-minute delivery of platforms, which are announced by the leading food aggregators. How do you view this? Is this something which is feasible for formats that you run? Do you see this as an opportunity or a threat from a snacking perspective?
Manish Dawar
Just see typically what they are talking about, Latika is all-around the snacking platform right and that snacks, those snacks are typically ready-to-eat snacks which have always existed. So let’s say for example typically in any Indian household any quick eating snacks are always part of pantry. So therefore the way we look at it as far as fresh food is concerned, there is a cooking time and there is a delivery time although we’ve kind of — we are also in discussions with with one or two players in terms of how can we participate and experiment. So for example, let’s say, just to give you as to how the dynamics work, take the example of Pizza Hut. Now Pizza Hut, the pizza is prepared after you get the order and the preparation time itself is about seven to eight minutes or depending on the pizza, it could be nine minutes also. And then you have the delivery time, whereas if you look at a brand like KFC, KFC operates on a ready-to-eat basis and therefore KFC can easily participate in that journey. So we are in discussions. We will be experimenting with this. Let’s see how it goes. There could be some menu items which can always participate in that whole 10-year journey, but let’s see how it kind of shapes up?
Latika Chopra
Understood. The second bit was just trying to check if is there been any change in you know your agreements or any kind of inflation you’ve seen with any of the aggregators?
Manish Dawar
Yes. No, not yet. So the discussions are on because obviously there has been a pressure from the — from the aggregators, but so-far we’ve managed to hold and it’s fine.
Latika Chopra
All right. And the last bit I just wanted to check was on the three QSR brands that you’re planning to bring and launch in India. The timelines remain from April this year onwards?
Manish Dawar
Yeah, we are on-track from quarter one of the next financial year.
Latika Chopra
Great. Thank you so much. Thank you.
Manish Dawar
Thanks, Latika.
Operator
Thank you. The next question is from Aliasgar Shakir from Motilal Oswal Mutual Fund. Please go-ahead.
Aliasgar Shakir
Yeah. Thanks for the opportunity, sir. Just a question on the — a little bit on the outlook. So as even Tejas was asking, this has been a little longer-cycle of weak environment for us and we’ve seen nearly about close to eight to 10 quarters of weak outlook. Now that you are hinting that there is some recovery, just if you could give a little more pointed clarity in terms of how is the situation on-the-ground, are we after two years of negative days thinking of flat SSSG or you think that the things can improve from here, we are talking about a positive SSG in the next couple of quarters? And what kind of margin do you think will it take time for you to come back to the 19% 20% margin that you have mentioned or if we do the 5%, 10% kind of SNG bracket, then we should be able to that kind of margin? Thank you.
Manish Dawar
Sure. So Ali, as you — I mean, you’re seeing the numbers of the QSR industry and we’ve seen that kind of turnaround happening with almost all the brands. We’ve seen that in our numbers as well and that gives us the confidence that maybe things are turning around. As we’ve said that we’ve seen, let’s say, for example, quarter three is a festival quarter. We’ve seen bigger throughputs happening on those festival days, which again is an indicator that the consumers are opening up their wallets. So therefore, the SSG turning around is one of the paramount factors to be able to make sure that we kind of come back to our original margins. Irrespective of that, we kind of took the steps in the previous quarter. We’ve seen the impact of — for the results of those steps coming in the current quarter. So we are confident that, as I said to Percy’s question that about 100,000 KFC ADS, we should be able to come back to our original margins of 19% 20%
Aliasgar Shakir
And the current quarter, are we seeing signs because I’m just asking from the point-of-view that there is two years of negative base. So on this base, are we seeing signs of SSG bottling out in this current quarter?
Manish Dawar
It’s been a mixed bag, because as we operate in multiple states and there are multiple kind of factors impacting various states. But now with the budget coming in, with the geopolitical situation stabilizing, I think we are hopeful that things should kind of turnaround.
Aliasgar Shakir
Understood, sir. Very clear. Thank you so much.
Manish Dawar
Okay. Thanks so much.
Operator
Thank you. Participants who wish to ask questions may press star and 1. As there are no further questions, I’d now like to hand the conference back to the management team for any closing comments.
Ravi Jaipuria
Thank you very much. We hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free-to contact our Investor Relations team. Thank you once again for your interest in support and for taking the time-out to join us on this call. Thank you very much. Bye.
Operator
Thank you very much. On behalf of International Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.
Manish Dawar
Thank you very much.