Jubilant FoodWorks Limited (JUBLFOOD) Q2 FY23 Earnings Concall Transcript

Jubilant FoodWorks Limited (NSE:JUBLFOOD) Q2 FY23 Earnings Concall dated Nov. 08, 2022

Corporate Participants:

Deepak Jajodia — Vice President, Finance

Hari S Bhartia — Co-Chairman

Sameer Khetarpal — Chief Executive Officer and Managing Director

Ashish Goenka — Chief Financial Officer

Analysts:

Nihal Jham — Edelweiss Financial Services — Analyst

Amit Sachdeva — HSBC Securities — Analyst

Kunal Vora — BNP Paribas — Analyst

Jaykumar Doshi — Kotak Securities — Analyst

Percy Panthaki — IIFL Research — Analyst

Vivek Maheshwari — Jefferies — Analyst

Arnab Mitra — Goldman Sachs — Analyst

Avi Mehta — Macquarie Group — Analyst

Tejas Shah — Spark Capital — Analyst

Vishal Punmiya — Nirmal Bang Securities — Analyst

Sheela Rathi — Morgan Stanley — Analyst

Robert Marshall-Lee — Cusana Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Jubilant FoodWorks Limited Q2 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Deepak Jajodia, Vice President, Finance, Jubilant FoodWorks Limited. Thank you and over to you, sir.

Deepak Jajodia — Vice President, Finance

Thanks. Good evening, everyone. Welcome to Jubilant FoodWorks Q2 FY ’23 earning call for investor and analyst. We are joined today by senior members of the management team, including our Chairman, Mr. Sharma S Bhartia; our Co-Chairman, Mr. Hari S Bhartia; our CEO, Mr. Sameer Khetarpal; our CFO, Mr. Ashish Goenka; and our Group CFO, Mr. Arvind Chokhany.

We will commence with key thoughts from Mr. Hari S Bhartia, we’ll then turn to our CEO to share his initial impressions. Our, CFO, Mr. Ashish Goenka will follow him with the operational and financial update for the quarter ended 30th September, 2022. After the opening remarks from the management, the forum will be open for the question-and-answer session. A cautionary note some of the statements made on today’s call could be forward-looking in nature and the actual results could vary from these statements. A detailed statement in this regard is available in Jubilant FoodWorks’ results release and earnings presentation, both of which are available on the Company’s website under the Investor Relations section.

I would now like to invite Mr. Hari S Bhartia to share his views with you. Thank you and over to you, sir.

Hari S Bhartia — Co-Chairman

Thank you, Deepak, and good evening, everyone. Welcome to our earnings call. Let me start by highlighting some observations around the sense we are deriving from the current environment. On the demand-side economic activity remains resilient. We are seeing a sustained revival in-demand for the foodservice industry after we have seen a big impact of COVID over many quarters in the last two years. The growth for us was equitable across all town classes. It has got further impetus with the onset of the festive season. The timing and takeaway sales has shown strong recovery and we continue to see further opportunity for growth in this channel. The delivery channel has continued to grow on a strong base of last year.

On the cost side, the inflationary wings continue to persist and is driven by food and energy inflation. Notably, the CPI inflation continues to be above RBI’s 6% tolerance level for three consecutive quarters. Within this, the food inflation continues to be ahead of the headline inflation. With dairy products the prices for cheese, which is one of our key ingredients were at a price level not seen in the last 10 years. Overall, I am pleased with how our company continued to focus intensely on executing our strategy. The strength of our omnichannel channel model and continuous focus on cost optimization has helped us deliver another quarter of strong all-round performance.

The focus of network expansion as outlined in the beginning of the fiscal year continues to be on Domino’s. We added 76 new stores and entered 22 new cities in India. With this we have opened 134 new Domino’s stores in the first half and are well on track to achieve the store guidance of opening 250 stores in financial year ’23. Our continued investment in building our digital and data strength is yielding very good results. I’m happy to share with you that app installs at 9.4 billion and own asset contribution to delivery sales were at its highest-ever level in this quarter. This has been possible through enhancements to our back-end technology, data analytics, menu personalization and enhanced CRM capabilities. We are positively surprised with the tremendous response received to our loyalty program, Domino’s Cheesy Rewards. The cumulative enrollment grew to over 7.2 million since its national launch only a few months back in May 2022.

During the quarter we became the first QSR company to launch menu innovation dedicated to East India, our team worked with a panel of renowned chefs to create an amalgamation of pizzas with authentic regional taste loved by the locals. This has been possible, thanks to our high store density across all regions and therefore we will continue with such menu innovation for different regions going forward. The Board in its meeting today also approved a restructuring exercise with regards to our international operations where international operations will now be held in a step-down subsidiary Jubilant FoodWorks International Luxembourg. The exercise will result in simplification of structure without any change in ultimate ownership over the subsidiaries.

I’m happy to share with you that Sameer has joined us in early-April. Let me now turn over to him to share his initial impressions as a CEO and Managing Director of our company.

Sameer Khetarpal — Chief Executive Officer and Managing Director

Thank you, Mr. Bhartia. Good evening, everyone on the call today and thank you for making it today on an auspicious day of Gurpurav. As you know that I joined Jubilant as a CEO on 5th of September, was here for the last three weeks in the quarter and total of eight weeks. I’m pleased to inform you that my learning and my transition is on track. I’m receiving tremendous support from my team and all of the stakeholders. In the last eight weeks, I have been traveling across India and visited almost 100 stores, spoken to — spoken with and read reviews of more than 1,000 customers and met more than 1,000 of our frontline teams serving customers inside the stores and delivering to customers.

I also visited our food tech factories and was very deeply involved in launching the West Bengal range and No Onion No Garlic range in Gujarat. My focus has been to learn fast, ensure execution and continuity in our strategy. My early impressions are following: specifically four of them I’d like to call-out — strength of JFL — JFL stems from a culture of customer-led hustle inside the store, deep domain expertise in data sciences and a very strong digital team. Unparalleled physical footprint, especially not only in Tier-1, Tier-2 cities, but also in Tier-3, Tier-4 cities. World-class food tech factories that managed very complex forward and reverse supply-chain which is multi temperature. And an awesome team that I’ve inherited.

On the back of these trends, the team at JFL delivered a very strong quarter, serving more than 3 crore customers in this quarter — customer orders. Despite the very tough challenging environment, we delivered strong like-for-like growth, very consistent and industry beating EBITDAs, digitally acquiring customers at a new pace and loyalty is a big hit. We also added the net-new stores — the higher even net-new stores in this quarter and internationally team — internationally two teams in Bangladesh and Sri Lanka have delivered a strong quarter despite severe headwinds.

On new and emerging brand fronts, I was there for many of the store openings in Bangalore and customers are loving Popeyes. They’re coming back and again we have launched our own app over there last quarter or two quarters ago and that is also seeing great traction. Hong’s Kitchen iterating the service and we are very pleased to inform a very steady growth in orders and also repeat — customer repeat rates. It is truly building up of our India’s first Chinese QSR brand.

I will continue to devote my time in deepening my understanding of the business and the portfolio. Embedding technology at a fast pace and furthering our digital agenda. Driving customer-centricity and accelerating execution in Q3 as you know that Q3 is our biggest quarter with multiple high touchable festivals and yeah that’s kind of my focus.

Let me now turn to Ashish to share financial and operational update for the quarter.

Ashish Goenka — Chief Financial Officer

Thank you, Sameer, and good evening, everyone. The revenue from operations of INR12,868 million, grew 16.9% versus the prior year. In Domino’s growth in revenue was driven by like-for-like growth of 8.4% along with a healthy contribution coming from our newly opened stores. Our fortressing strategy also continue to work well for us. We continue to face high inflation. This has significantly impacted our gross margin, which came in at 76.2% lower by 200 basis points year-on-year and 50 basis points quarter-on-quarter. However, despite that we have been working on all fronts to drive productivity across our cost line and therefore, delivered a healthy EBITDA, a growth of 9.2% versus the prior year. EBITDA came in at INR3,125 million. This was at 24.3%, lower by 170 basis points over last year and 30 basis points quarter-on-quarter.

Profit after tax came in at INR1,192 million, PAT margin being at 9.3%. We added 72 new stores on Domino’s this quarter, entering 22 new cities, and now we are serving our guests through 1,701 Domino’s stores across 371 cities in India. We have started with the journey of launching regional menu-based innovation dedicated to local taste preference of a particular region.

First in the series was a dedicated East India range. For the first time, we combined authentic local flavors like Kasundi, Kosha, and Malai on pizza. Similar regional menu innovation in the form of No Onion No Garlic range was launched in Gujarat in West India. We believe that such innovation will go a long way in expanding the market for pizza, which we have successfully done for over so many years.

We are continuing on our path to significantly improve preorder in-order and post-order experience, while advancing own app adoption. In this endeavor, we relooked at onboarding journey on our own app and made a resolve to make onboarding even more seamless, faster and intuitive. In the new journey, we reduced the number of steps from new users to read the homepage from 5 to 1. SIM number detection, OTP auto read and background location detection were our means to achieve one step onboarding.

On the new brands front, we added two new stores in Popeyes, taking the network strength to eight stores. We’re getting encouraging customer feedback and sensing the huge opportunity ahead, we are building pipeline and will step up store growth in H2. In Dunkin, we are pivoting the coffee first and have opened three new outlets with coffee queues across Delhi, Noida and Gurugram till date with one new store added during the quarter. The initial response has been very encouraging.

In Hong’s Kitchen, we are progressing well with planned reduction in number of processes from store kitchen to our central kitchen developed in our Greater Noida commissary. This is helping us make the model more QSR like and significantly improve consistency translating to higher customer satisfaction.

Turning to an update on international markets. In Sri Lanka, despite a very difficult macroeconomic backdrop, we delivered system sales growth of 37%. The growth was driven by dine-in and takeaway channels. The own app contribution to delivery sales was 71%, an increase of 7 basis points — 7 percentage points year-on-year. We opened four new stores, taking the network strength to 40.

In Bangladesh, system sales grew by 42%, and we opened one new store, taking our total store count to 11. The own app contribution to delivery sales was 75%, an increase of 11 percentage points year-on-year.

Turning to the update on sustainability front. I’m happy to share with you that the electric vehicle penetration in our delivery speed has reached 31% as against 19% by end of March 2022. We’ve also started a program driven on wheels, where we are facilitating driver training for women for marginalized section of the society with an intent to help them become paid winners for their family.

In closing, we are pleased with the delivery of a balanced quarterly performance in the backdrop of significant inflationary challenges. As we look forward, we remain confident in our strategy and execution and feel that we are well-positioned to lead this exciting phase of growth of food service industry.

With that, let me now turn over to the moderator to initiate the question-and-answer session.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Nihal Jham from Novama [Phonetic] Institutional Equities. Please go ahead.

Nihal Jham — Edelweiss Financial Services — Analyst

Yes, good evening, and congratulations on the performance. Three questions from my side. The first one was that a lot of raw materials, including a comaterial cheese is at an all-time high. So would we look at pricing action in case that sustains?

Ashish Goenka — Chief Financial Officer

So thanks, Nihal. As you know that we are facing multidecadal high inflation and cheese prices also went up in this quarter. We had instituted two rounds of price increases earlier this — one in earlier this year and one towards the end of last year. Currently, we are not looking at any further price increase and we would be looking at absorbing some of these cost increases in our margins. We are, of course, driving productivity initiatives across the organization to mitigate the impact. Also, we have also started seeing stabilization and softening of some of the other commodities, especially on the fuel side, and on the oil side. So if cheese prices were to not go up further, we should be able to maintain and manage at the current level. Of course, within that, we will continue to look at pockets of technical opportunities to enhance our value extraction, but we are not looking at any overall price increase.

Nihal Jham — Edelweiss Financial Services — Analyst

That is helpful. Moving on to the second question. We’ve added around 100 cities in the last three years, and the aggression has been stronger than in the last two quarters. What I wanted to understand is for these new cities, how does both productivity and profitability work because I would assume a lot of these would be single-store cities. So from a supply chain cost perspective also.

Ashish Goenka — Chief Financial Officer

Yes. So we have been making deeper inroads into Tier 3 and Tier 4 towns, Nihal, and that’s a part of our concerted strategy. We have added almost 66 new cities over the course of last 12 months. And I think the model works very well for us because not only we see robust demand in these new cities. But because of the lower operating cost, our profitability tends to be slightly higher and better than even Tier 1 and Tier 2. And therefore, the paybacks tend to be lower. So I think it kicks in a virtuous cycle of growth for us. And we are seeing — and we continue to believe that, that model will continue to work for us in future.

Nihal Jham — Edelweiss Financial Services — Analyst

Sure. Just last question on Domino’s. As I understand, three initiatives at this point in time are something that at least we are reading or highlighting is first is the delivery speed that we are targeting, second is obviously the menu launches, and third is on the loyalty program. Would it be possible to give a sense that of these three, which you think would be the most important in terms of getting new consumers or driving the engagement for the brand?

Ashish Goenka — Chief Financial Officer

So Nihal, our constant endeavor has been to continue to drive our LFL growth. And I think a combination of these initiatives is what we are targeting. And I think all of them will help us build the brand salience and not only bring in new consumers to the category and our brand, but also drive frequency of our existing customers.

So I think if I were to just talk about it, I think menu innovations are largely towards attracting new consumers to the category. And the delivery improvement, DCB [Phonetic] is a program, which is aimed towards giving a much higher level of customer satisfaction, which is equally true for both new and existing customers. Loyalty program, again, is directed towards driving frequency. But what we also believe is it also will bring in a lot of new consumers into the category. And whatever data we have seen or the experience we have looked at in the last four to five months of having launched the program, it is helping us actually recruit a lot of new customers on to the brand as well. So I think all these initiatives will act on bringing in new customers to the category as well as driving frequency and satisfaction of our existing customers.

Nihal Jham — Edelweiss Financial Services — Analyst

Sure. Thank you so much.

Operator

Thank you. The next question is from the line of Amit Sachdeva from HSBC Securities. Please go ahead.

Amit Sachdeva — HSBC Securities — Analyst

Hi. Good evening, everybody. Thank you so much for taking my question. Sir, my question is on the network rollout and the way — it has been very impressive. And in this demand environment, revenue growth of 17% is great and new vigor is to a rollout is indeed very impressive. My question comes from it, what is the cost you’re willing to take in doing so? For example, if I were to assume that gross margin didn’t decline, then PBT would have grown by 13%, all things remaining the same, which is about 4% drag to the overall sales growth. My sense is that it may come from small things ignoring, but coming from two impacts, store split impact and new stores still catching up to full throughput level, but investment is already been done in rentals, etc.

Now a question is that how much drag are you willing to take in aggressively in rolling out strategy? Is there a limit or guiding principle you have set in the network rollout that we will not let earning drag coming beyond this level? Or there is some sort of thought how to strategically think about this network expansion and how we should think about earnings growth lagging the revenue growth? That’s question number one, sir.

Ashish Goenka — Chief Financial Officer

So thanks, Amit, for your question. And I think as we’ve said in the past, our store expansion is actually not having any negative impact impact on our overall margin. What is causing an impact on margin and dilution in EBITDA is largely coming from commodity inflation. And we are seeing that inflation not just in commodities, but across lines. As you would know, we are seeing very high level of inflation in fuel even in manpower cost as overall inflation has gone up, minimum wages have gone up.

So I think the pressure is largely on account of the unprecedented inflationary environment that we are seeing in the economy and not really because of store expansion. Because I think on a store expansion, we have a playbook that we have been following. And as the margins of the existing stores improve, while the new store may come in at a slightly lower margin in the beginning. But at an overall level, it does not really impact and we are able to absorb that. So I think once the commodity cycles were to turn, we should be able to improve our profitability from here.

Amit Sachdeva — HSBC Securities — Analyst

But if I may say, look at the other costs, I think you’ve done an excellent job in managing other costs. if I look at some staff costs to other expenses, I think everything is sub below sales growth, in my view. I may be wrong a bit here and there. But on an average, I thought that every other cost item this quarter grew less than the sales growth. So you did actually manage other costs quite well. And I have already given the benefit of doubt that say margin did not decline 200 basis points, the PBT growth would have been 13% in that case. So what I’m trying to say — what I’m trying to understand is that when we grow 70 stores, 76 and 250 stores a year, would it, at any stage, be a case where PBT or earning growth would lag the revenue growth. Or it is like an earning dragging event for you or it is not. That is where I was coming from? How we should structurally think…

Ashish Goenka — Chief Financial Officer

You are right. Yeah, of course, we will see a higher impact on PBT than we will see on EBITDA because of higher level of depreciation. But I think that is the cost of growth that we are willing to take because I think what we are willing — looking at protecting is, of course, our EBITDA margin because that is a far better reflection of the operating health of the — of our brand.

Higher depreciation would also be because of the investments we are making in our commissary because as you know, we have a very well entrenched commissary-based model, and that has really worked well for us. And as we expand we’ll also be looking at expanding our commissary network. So in fact, this year, our Bangalore commissary is under progress, and we are making substantial investment there. So some of these investments in store network expansion, commissary network expansion and so the digital capabilities that we are building will, of course, lead to higher depreciation. And to that extent, there will be an impact on PBT. But at an operating level, what we are lading and monitoring very closely is to ensure that we continue to deliver the level of EBITDA margin.

Sameer Khetarpal — Chief Executive Officer and Managing Director

And also, Nihal, the leverage in the line item below gross margin comes from I mean, G&A, if you have more store — higher store footprint, you get leverage in G&A, commissary costs, logistics costs, and also marketing costs. So I think from that perspective, it works well for us, except for the fact that the inflation has been very high this quarter.

Amit Sachdeva — HSBC Securities — Analyst

Got it. Got it. I think that’s very helpful. And I want to just understand how you’re thinking about this because I believe some cash costs are also sitting below EBITDA line, which is allocated to depreciation and interest expense as you open stores because of the accounting. And hence, PBT also becomes a relevant we take to look at for us as such to see that impact. But that I understood the point, sir, thank you so much. Just very quickly on Papeyes, if you can share Sameer, your experience, you shared your experience, you said that you visited stores, can you share some real economics and what sort of numbers you’ve seen so far? And what impressions you have got and how fast the store network rollout will happen in Popeyes? Can you share some targets for this year and next year, please?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yeah. So I think from a — it’s still very early days for a brand which is launched in India. Our first imperative is to get the product market fit right. I think on that front, I would say the progress is ahead of our plans. Customers are loving the product and they’re coming back for more. The repeat rates are very healthy, more than 30%. We also launched Popeyes with our own app, which again shows the prowess of our digital and deep data heritage that we are building now. And again, that app is seeing great traction.

So we launched with the right product with the right set of assets and right stores placed in right areas. So we’re quite satisfied with it. I think still in year one, we would like to iterate the service get on to aggregators, build the salience and then go from there. The guidance we have given is, I think, 20 to 40 — 20 to 30 stores, we should meet that guidance and then reassess as we enter into the next year for rapid scale-up.

Amit Sachdeva — HSBC Securities — Analyst

Perfect. Thank you so much, Sameer. Thank you so much for taking my questions.

Operator

Thank you. The next question is from the line of Kunal Vora from BNP Paribas. Please go ahead.

Kunal Vora — BNP Paribas — Analyst

Yeah, thanks for the opportunity. My question is on the loyalty program. You mentioned that you had about 30 million orders this quarter and 7 million consumers are on the loyalty program. Just wanted to understand the gap, is it because of multiple orders from same consumer, smaller than qualifying orders? Can you help us understand how to look at the loyalty program enrollment? And also, if you can provide some initial feedback on what — like whether you’re seeing higher ordering frequency, higher order value from these loyalty programs annually?

Ashish Goenka — Chief Financial Officer

Yeah. So thanks, Kunal. So roughly — I think, first of all, I think the program is doing really well, and we have looked at all global benchmarks and we’ve also looked at other peers in the industry who have launched similar programs globally. I think our take rate in terms of the overall enrollment into the program and also the contribution of orders from enrolled customers seems to be tracking very, very well. So I think — first of all, I think we are very, very excited and happy with what we have seen as an outcome of the launch.

The full mix, just to give you a context, when live only in August, while we had launched the program in May, but it was an omnichannel program and therefore, the entire mix, and we were rolling it out in a phased manner, went live only in August. So this quarter, we have seen an overall enrollment of 7 million. Roughly one-third of our orders are coming from enrolled customers, which also reflects a very high level of engagement. Our focus going forward will be to continue to drive enrollment into the program and overall customer engagement.

Kunal Vora — BNP Paribas — Analyst

Okay. Understood. Okay. My next question is you’ve given the own app contribution to delivery sales in international markets, like I think you’ve given 71% for Sri Lanka, you have given Bangladesh number also, what’s the trend for India? And what’s the number if you can share that?

Ashish Goenka — Chief Financial Officer

So Kunal, for India, also, we report OLO contribution to delivery sales. We have been tracking upwards of 98% for many, many quarters now. In terms of our overall delivery contribution, it remains a dominant channel for us, and it continues to grow in a very handsome manner, which augers well for us because as we are seeing significant recovery in dine-in and takeaway, delivery continues to hold and grow.

Kunal Vora — BNP Paribas — Analyst

The number which I was looking for is the own app contribution, not the OLO contribution. Own app will be how much and what will be the third party?

Ashish Goenka — Chief Financial Officer

So Kunal, we don’t share that number, but I think I can tell you that we have been continuously driving our own app focus. And this quarter, we had the highest ever own app contribution from delivery sales. And quarter-on-quarter, we have seen movement from aggregator channels to our own app channel. A dominant share of our delivery and overall orders actually come on our own assets. And this is a significant dominant share is what I can tell you.

Kunal Vora — BNP Paribas — Analyst

Okay. That’s it from my side.

Operator

Thank you. The next question is from the line of Jaykumar Doshi from Kotak Institutional Equities. Please go ahead.

Jaykumar Doshi — Kotak Securities — Analyst

Yeah. Hi, thanks for the opportunity. My question is on the pace of store network expansion. Now if I look at your September 2019 quarter revenues, like about 1,265 stores it was about INR988 crores, and then there is a price increase of about 15%, including delivery fees. When I compare this quarter versus September quarter, adjusted for price increase, incremental quarterly revenue run rate is about INR125 crores to INR150 crores. It translates into an annual run rate of INR600 crores for 400 new stores that you’ve added. So is this trajectory in line with your expectations? And if not, would you consider slowing down the pace of network expansion a little bit?

Ashish Goenka — Chief Financial Officer

So Jay, if I’ve understood your question right, you’re trying to triangulate our store expansion along with price increase to see whether our revenue build up stack up. If that’s the question, let me just sort of give you a bit of a color on our revenue growth. So of course, our focus has been on driving revenue growth through store addition and as well as driving same-store growth. And our LFL has been very strong in this quarter at 8.4%.

Now in terms of the construct of the growth, a large part of our growth is coming from order increases, which, again, is good news from us and a significantly higher volume growth. So the growth is order-led and volume-led. Of course, a lot of this price increase has not really flown into a ticket price increase for us because in a highly inflation environment, consumers, of course, are making choices. And we are seeing these choices reflect in two aspects. One is marginal moderation in the items per order. And second is the product mix, which the consumer buys. And therefore, all of this price growth that we have taken over the last two years while has helped us protect margins, has not necessarily translated into an increase in our ATPs.

And therefore, when we look at our growth, what gives us a lot of joy and satisfaction is that our orders are increasing and our volume is going up, which means we are seeing far more consumers coming into our brand and are engaging more with us as they’re buying more products. Of course, they are making a share of wallet choice by moderating their item per order and also looking at the product mix that they buy. So I’m not sure if that helps you Jaykumar…

Jaykumar Doshi — Kotak Securities — Analyst

Essentially what you are suggesting is on your 1,250 store network that was pre-pandemic, now you have taken price increases, it has not translated into a proportionate revenue increase as the consumers are down-trading.

Ashish Goenka — Chief Financial Officer

So what we are seeing is order growth volume growth. But yes, you’re right consumers are down trading to some extent and also reducing items per order. So the right thing to look for us would be to look at — and also, I think it’s a combination of channel mix, where we are now seeing a lot more increase in dine-in as a channel. And dine-in, as you know, always comes with a slightly lower bill per order or average ticket price. And that also is leading to a bit of a channel impact on the overall revenue. So I think you have to look at the combination of channel and order versus BPO. So what we are seeing is, again, I’m repeating myself, but what we are seeing is order-;ed and volume-led and maybe not all the pricing is translating into growth.

Sameer Khetarpal — Chief Executive Officer and Managing Director

And Jaykumar, this is Sameer. Another way to look at this is the wallet share or the spend share per order may be lower, but the overall customers are coming back and shopping on our platform far more than before. I think that’s a function of loyalty and the value offering that we have. So that’s another lens to look at.

Jaykumar Doshi — Kotak Securities — Analyst

Sure. And just a follow-up question on loyalty. How do you think about the cost-benefit analysis in this case? And if you could give with some numbers, if you can explain the cohorts in terms of what percentage of your customers were ordering at a much lower frequency versus what percentage of your customers were already ordering at a frequency where maybe there won’t be a lot of benefit, but a cost associated with loyalty?

Ashish Goenka — Chief Financial Officer

So if you look at the economics of the loyalty program, I think it’s a very clear case of higher frequency paying back for the investment in the program. Also, since we are giving products free, the — overall the cost of the program tends to be much lower because the putdown cost is only the food cost of the product and not giving out the entire value. So the way we see it is that as we are getting — we are able to recruit more consumers because of the loyalty program, and that will help drive growth and therefore pays back to the program. And the more important benefit is frequency increase of existing customers, which again pays back for the program.

The other benefit that we are seeing of the program, Jaykumar is that also the churn that we were seeing in existing customer cohort also gets retained. So, for example, if there was a high user who would degrade to a medium user over a period of time. We believe that with the help of this loyalty program, we will be able to retain him at a high user level. So the inter-cohort movement also can help, will be able to drive positive mix through to the help of this loyalty program. So I think a three-fold benefit should more than payback for the cost of the program, and we believe that it would be margin accretive as we go along.

Jaykumar Doshi — Kotak Securities — Analyst

Thank you so much and congratulation and [Technical Issues] with your spend everybody.

Ashish Goenka — Chief Financial Officer

Thank you. Thank you, Jaykumar.

Operator

Thank you. The next question is from the line of Percy Panthaki from IIFL Securities. Please go ahead.

Percy Panthaki — IIFL Research — Analyst

Hi. Good evening, everyone. Am I audible?

Ashish Goenka — Chief Financial Officer

Yeah, Percy.

Percy Panthaki — IIFL Research — Analyst

Yeah. So my question is on store addition again, and I’m restricting myself to store addition in towns where you are sort of present since a very long time, large towns where you would sort of have a fairly good penetration of stores what is the logic of opening new stores in those towns, especially when you’re not fully utilized on your dine-in capacity because the delivery can anyways be supplied from any store? It doesn’t matter, in fact, the customer doesn’t even many times know which store is serving him his delivery order. If the only logic is to reduce the delivery time from 30 minutes to 20 minutes, I’m not really sure whether that’s really a huge enough advantage for us to invest in capex of a new store because we are already market leaders in terms of delivery time in Indian or rather Mumbai context, if I’m getting a Domino’s in 30 minutes, versus that any other option, if I order on Zomato, Swiggy, etc., it takes anywhere between 45 minutes to 1 hour. So moving that 30 minutes to 20 minutes by itself, yes, it’s an incremental positive. But do you think the amount of cost and the amount of investment you’re putting in, just to get this one single advantage, does it make economic sense here?

Ashish Goenka — Chief Financial Officer

So Percy, thanks for that question. First of all, let me clarify that we are not adding stores to reduce our drive time from 30 to 20. So let me upfront clarify that. That’s not the reason we’re adding stores. And we have been able to achieve the 20 to 30 by doing a lot of process engineering at our end in terms of reducing the time for making the pizza and also defining the polygons more sharply. So that’s on — are we adding stores to drive DCB, the answer is no.

The reason we are opening more stores in existing towns is because of the growth opportunity in the white spaces, which are already existing in these towns. So there are two levels of growth. One is, of course, as we have seen rapid urbanization in India, and that is a macro trend, which is likely to continue. And therefore, the city peripheries will continue to grow. And there are, therefore, enough and more white spaces still remaining in existing towns where we can open a Domino’s store, yes. So that’s one.

Second, we have also been following a strategy of fortification in these terms, and we have explained this in great detail in the past as well that whenever a store reaches a level of demand that it is not able to cater fully and the store KPIs start deteriorating in terms of the operational KPI. We look at splitting the stores and open another store in the same vicinity. In most cases, we have seen that when we split the store, the operating KPIs of the mother store becomes significantly better. We are able to reduce drive time, operating cost, customer experience improves and the virtuous cycle of growth kicks in where the mother store comes back to its original level in under three years.

And the child store, which already gets the head start from the mother also recovers its investment in — like any other new stores in under three years. So I think it’s the virtuous cycle of growth that we have seen and the model works very well for us. So the new store addition in Tier 1 and tier towns or existing towns is only driven for the growth opportunity that it drives or provides and not because we are chasing any operating KPIs.

Percy Panthaki — IIFL Research — Analyst

So this growth opportunity, can you not just sort of address by fortifying the existing stores by putting in, let’s say, two more kitchen staff, one more oven in the store, et cetera, why do you need to open a completely new store, which is going to be a much higher investment in capex as well as rentals.

Ashish Goenka — Chief Financial Officer

So Percy, I think our entire brand is positioned on providing a great experience. So I’m sure you’ll not be happy receiving a Domino’s pizza in 45 minutes. The whole brand has been built on the delivery promise of get your pizza in under 30 minutes. So I don’t think at any stage, we would want to compromise on the core proposition and the promise of the brand. So I think that is sacrosanct for us.

And as I said, that even from a financial perspective, if I were to keep aside consumer metrics for one second, even on purely financial metrics we are going to look at, this model really pays back for us and the paybacks are as good as what we get in Tier 3, Tier 4 or any other town. So there is no reason for us not to invest in this opportunity.

Sameer Khetarpal — Chief Executive Officer and Managing Director

And Percy, we do that, right, what you’re saying is debottleneck the store, do as much as we can during — in the kitchen. So all of that is there is a standard playbook over there. Only when we start breaching the — or nearing the laws of physics is when we split. So right, I think we put the — like Ashish said, we put the customer value proposition and the brand promise at the center after solving for all bottlenecks and constraints and then split the store.

Percy Panthaki — IIFL Research — Analyst

Okay. My second question is on margin. So how many more quarters would you think before this — I mean, how many more quarters do you think this phenomenon of Y-o-Y EBITDA margins being down as we have seen in this quarter will continue? Do you think it’s a very temporary thing? Or this Y-o-Y EBITDA margins being down can continue for a couple of more quarters?

Ashish Goenka — Chief Financial Officer

So Percy, as I was stating earlier, large contributor of almost all — the entire contribution of this margin dilution is because of commodity price inflation because the EBITDA margins have been actually reflecting our gross margin dilution, which has reduced by 200 basis points year-on-year. So even in last quarter, we were expecting commodity prices to have softened this quarter, which has not happened. So I think that could be anybody’s guess in terms of when do we see the commodity cycles coming back and prices moderating. So would be difficult to give you a time frame, but we’ve already started seeing signs of some level of moderation and some level of stabilization.

And if we do not get any commodity shocks from here on, we should be able to recover some of this in the quarters to come.

Percy Panthaki — IIFL Research — Analyst

So if today’s prices remain where they are, then — I mean, do you think that Q3 was mainly sort of the price at the beginning of the quarter being high, and that’s why it caused an impact and by the end of the quarter or where we sit today, the prices are already low enough to nullify that margin impact or not yet?

Amit Sachdeva — HSBC Securities — Analyst

No, if prices stay where they are today, we would — I think our margin performance will be where we are today. Of course, we can look at some productivity initiatives, some level of operating leverage as we grow. But by and large, we could be at similar levels as we are today.

Percy Panthaki — IIFL Research — Analyst

Okay, that’s all from me. Thanks and all the best.

Operator

Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead.

Vivek Maheshwari — Jefferies — Analyst

Hi, good evening. A few questions. So first, Sameer, you did articulate your learnings and where the strengths for Jubilant FoodWorks are. What are the areas that you think requires attention? What are the places where you think there can be a potential for improvement or reasonable improvement to significant?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yeah. I think you see — I see it, Percy — sorry, Vivek I see it more as opportunities for growth and margin expansion. I think getting the new brands to accelerate faster is definitely a priority. The making sure we double down on — continued double down on Domino’s. Like I said, I will continue to do that. And lastly, the digital assets that we have is actually unparalleled, and we have an app running in Sri Lanka, Bangladesh on iOS, Android and a progressive web application. So I think the opportunity to kind of take the physical store footprint plus digital is so immense. If you double down on that, I think that is to me is the real opportunity, plus the emerging brands is where I’m focusing on.

Vivek Maheshwari — Jefferies — Analyst

Got it. And in that context, look Domino’s any which ways you’re the guidance for addition and the last year addition numbers any which ways have been strong. So one of the another question that I have had was what is your sense on, let’s say, a Hong’s or an Ekdum! Biryani because that’s where, despite things opening up and being near normal for at least last six months, we haven’t seen any buzz. We have actually — we did see, I think, six stores closure last quarter. And this quarter, we haven’t seen any additions. So what is the sense that you have either on the product or on the brand specifically, Hong’s as well as Hong’s and Ekdum!?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yeah, I’ve spent a lot of time to meet customers, look at their reviews, also benchmark versus the competition. So firstly, it takes time to get the product market fit right. And if you do it right, not only from a consumer standpoint, but also from store economic standpoint. I think we are fast reaching that stage. By end of this financial year, we believe — at least I believe, across Dunkin, Hong’s and Popeyes, we will be ready to scale faster. Where we’ve been focusing on is making sure we have a great-tasting product. Customers are coming back, and we have a store economic model that is ready for scale-up. So from — on all these fronts, I’m happy to note very positively that things are going in the right direction.

Vivek Maheshwari — Jefferies — Analyst

So does that mean that we will see stores additional acceleration going ahead?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yes, I think that’s all what we want. There is still about five months in this quarter, we should [Technical Issues]

Operator

[Operator Instructions] This is the operator here, we have the line for management reconnect. Sir, please go ahead now.

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yes, I think we — I don’t know where we lost connection. What I was saying was we have about five months in this year and our actions are geared towards getting the coffee first proposition right in Dunkin, taste product and customer value proposition in Hong’s getting the store economics right, I think we should be ready to scale up as we enter the next year.

Vivek Maheshwari — Jefferies — Analyst

Got it. Two quick questions. One, sorry, a naive one, but what is the — how do you account for the loyalty program? So as customers order, where does that — the promise of free pizza sits in the P&L and balance sheet? And ultimately, how will it unwind?

Ashish Goenka — Chief Financial Officer

So we make — this is accounted as discount as per the accounting norms, and we accounted basis a certain ratio of redemption based on the past trend. So we account for that, and it unwinds as and when the customer redeems the pizza.

Vivek Maheshwari — Jefferies — Analyst

So if I order pizza today and I get the point, so it is accounted at the time of original order or it is at the time when I redeem it after, let’s say, sixth order?

Ashish Goenka — Chief Financial Officer

No. So we account it the time of the initial order itself, but not 100% prorated to the likely redemption that may happen. So for example, if only 20 out of 100 customers are redeeming we’ll account for 20% upfront.

Vivek Maheshwari — Jefferies — Analyst

Yeah. But I mean given that this is new, so you wouldn’t have data as yet in terms of what the redemption would be. So what will be the benchmark?

Ashish Goenka — Chief Financial Officer

So we, of course, do it based on an estimate. And we have also got the pilot results with us because we run an extensive pilot for the first six months before we rolled out naturally. So we have the pilot results with us with bases which we are accounting. And of course, we’ll keep doing it up as we get more data on actuals as the program matures.

Vivek Maheshwari — Jefferies — Analyst

Got it. Got it. And last observation, you have given own app contribution for really, really small markets like Sri Lanka and Bangladesh. Just curious that if you can present Sri Lanka and Bangladesh, what’s the issue if you’re gaining share, any which ways for your own property for India, which is like the largest one, what is the issue that you can’t share that number, but you can share Bangladesh and Sri Lanka?

Ashish Goenka — Chief Financial Officer

So Vivek feedback taken. We will certainly evaluate this internally and come back.

Vivek Maheshwari — Jefferies — Analyst

Thank you. All the best.

Ashish Goenka — Chief Financial Officer

So there are no aggregators in those markets and there aggregators are very, very small. We have large entrenched aggregators in India. And of course, they are very close channel partners. So there is a certain level of sensitivity involved with that, and that is what I was thinking. But I take your feedback, we will discuss internally and will come.

Vivek Maheshwari — Jefferies — Analyst

Right. I’m sure they wouldn’t mind if you share your data. I’m sure aggregators wouldn’t mind that. So I leave it that with you. Wish you all the best.

Operator

Thank you. The next question is from the line of Arnab Mitra from Goldman Sachs.

Arnab Mitra — Goldman Sachs — Analyst

Yeah, hi. Thanks for taking my question. My first question was on the store expansion, let’s say, if you’re going to add 250 plus stores this year, any approximate ratio of how much the store splits versus completely new stores? And is the gap between LFL and SSSG steady? Or is it increasing as store split proportion may be increasing? So I just wanted a sense on both of them.

Ashish Goenka — Chief Financial Officer

So Arnab as per your question, our split stores are broadly one-third of the total stores that we’ve been opening. So that ratio is by and large remain consistent. In fact, slightly lower this year than we had reported for the full year last year. And to that extent, I think the LFL and SSSG gap is also steady. There is no — I mean, deviation from what we have seen in the past. So roughly one-third of our stores are split stores this year.

Arnab Mitra — Goldman Sachs — Analyst

Okay, thanks so much. My second question was actually that this quarter, like what Amit I think earlier asked your EBITDA has grown by 8% or 9%, but your PBT is down 1%. So the depreciation increase that we’ve seen how much of that — is it evenly split between actual depreciation increase and rent increasing therefore will this gap kind of continue in this phase of high store addition unless your SSSG significantly starts improving.

Ashish Goenka — Chief Financial Officer

So Arnab, as I’ve explained earlier, I think the depreciation is moving in line with, A, I think new store addition, where we are investing in capex and also because of IFRS you would see lease accounting getting charged-off in depreciation and interest. So that’s directly proportionate to the number of stores we are adding and the investments that we’re making in our commissary and digital. But large part of the investment, of course, is going towards store expansion.

Arnab Mitra — Goldman Sachs — Analyst

And any inflation on the rent side that is there? I mean, how is the commercial rental market right now in terms of inflation as we look for the next one or two years?

Ashish Goenka — Chief Financial Officer

So Arnab, we have not seen any significant inflation on rental side. Anyways for all our existing properties we have long contracts in place and the increments are directly governed by the contracts. And even for the new stores that we’re opening we are able to get fairly competitive rate given our overall presence and the strength of our business development team. So we are not seeing any inflationary impact — a material inflationary impact on the rental side.

Arnab Mitra — Goldman Sachs — Analyst

Got it, got it. And one last question on Popeyes, in Hong’s and Ekdum! you have seen isolated process as you rightly said it takes time, it’s taken almost two years, do you see Popeyes having a faster pace of iteration or it will also go through this phase before you can really commit very large expansion and that worked on it?

Sameer Khetarpal — Chief Executive Officer and Managing Director

I think — good question. I think there are two different playbooks, I think on Hong’s we are building the playbook. On Popeyes there is an existing playbook that we are customizing to India. So therefore that should be faster than developing doing grounds up invention.

Arnab Mitra — Goldman Sachs — Analyst

Okay, understood. Thanks so much. That’s it from my side, all the best.

Sameer Khetarpal — Chief Executive Officer and Managing Director

Thanks.

Operator

Thank you. The next question is from the line of Avi Mehta from Macquarie Group. Please go ahead.

Avi Mehta — Macquarie Group — Analyst

Hi, team. Thanks for the opportunity. I just wanted to understand the capex number. So for the first half you’ve done almost about close to INR400 crores of capex is this — if you could help explain what has been the reason for sudden increase despite — I mean it implies that per store capex has risen sharply. So if you could give us a sense what has driven that? And in turn what would be the number that we should kind of assume for FY ’23? That would be first part. Thank you.

Ashish Goenka — Chief Financial Officer

Thanks, Avi. So I think overall capex has followed our store expansion. Our first store capex have seen marginal increase, which is in line with inflation. We have seen about 8% to 10% increase per store. Larger capex outflow has also been because of the opening liabilities, which has got paid out this year. Overall, I think I would say we would be close to INR650 crores to INR700 crores in terms of overall spend in capex because, A, we are — as I said earlier, we are — we’ll continue to invest in store expansion. We are also building commissary and large part of investment, about close to INR200 crores will go into our new commissary that we are building in Bangalore and some amount of investment in our usual maintenance and digital assets that we are building. So I think a combination of these three should take us to that number.

Avi Mehta — Macquarie Group — Analyst

Okay, perfect. And the second part is just following up on the earlier participant. If I look at the difference between the headline sales growth in the LFL that we give out, that number has moderated despite the store addition as a percentage actually going up. So you did highlight that the fit stores is not the reason that percentage has not risen, would it mean that the new stores are taking longer to kind of flow through or is there time — any guidance or understanding of that, please?

Ashish Goenka — Chief Financial Officer

So Avi, I think new — our new stores continue to do well. Sometimes it’s also a function of the timing of the opening of some of the new stores. Most of them have been skewed towards the end of the quarter. Also, with dine-in coming in, in a big way now and growing sequentially as well as year-on-year. As I explained earlier, there is also a slight bit of channel mix that has come in. And therefore, when you triangulate all of this together, you’ll be able to sense — I mean, you see a slightly higher division between LFL and revenue growth this quarter.

Avi Mehta — Macquarie Group — Analyst

Okay. Okay. And last, just a big keeping, if I heard you correctly, just if I could inform you would look to — you would expect margins to remain at current levels if inflation does not kind of expand, and it does seem that inflation has broadly kind of stabilized at this level. Was that — I’m not sure if I heard it correctly. So I just want to clarify.

Ashish Goenka — Chief Financial Officer

That’s right, Avi, your understanding is correct.

Avi Mehta — Macquarie Group — Analyst

Okay. Thank you very much, sir.

Ashish Goenka — Chief Financial Officer

Thank you, Avi.

Operator

The next question is from the line of Tejas Shah from Spark Capital. Please go ahead.

Tejas Shah — Spark Capital — Analyst

Hi, thanks for the opportunity. My first question is for Sameer, Sameer in your opening remarks you mentioned the digital agenda of the company. And then you spoke about very entrenched digital agenda on the customer side. So just wanted to understand, obviously, early days, but whatever insights you have, how do you see role of tech playing on the back end of supply chain customer acquisition, improving store efficiency side?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yeah, there are multiple pieces, Tejas, to this like your question. Firstly, there is an element of our digital applications to acquire new customers, engage them through our loyalty programs and make sure that they’re getting — they can track their orders. So this whole fulfillment — acquisition, fulfillment and engagement piece that is working extremely well, and we’ll roll that out to all international geographies, which have been done and to all brands. So that’s kind of the piece over there. There are, of course, next version of those apps and more modules that we’ll continue to add. For example, promotions could be another, personalization could be the next. So there is a clear road map over there.

Second, you are absolutely right, what goes inside the store or in the kitchen also needs to be digitized and automated, how we manage our stores, inventory, point of sales systems, how our manpower and the store manager is operating in the store. There is big room to kind of do that, digitize those processes and make life simpler in our store.

Third piece, you spoke about is the real back end, which I believe is our strength and I visited the Greater Noida food factory, and I was very impressed with the level of automation that I see not only in our production lines, but also in warehousing, where we are using advanced robotics for storing and taking out. So, of course, there is room to make sure our logistics forward the middle mine planning that can be more data-driven, but that is far for the course in my sense. Does that answer the three areas that you touched upon?

Tejas Shah — Spark Capital — Analyst

Yes. Very much, very much. Thanks for the detailed answer. Second, Popeyes, obviously, we all thought and based on your guidance as well, that the playbook was relatively simpler and it’s relatively simpler versus the other initiatives that we have. But last three quarters and in this quarter, in particular, store expansion has been muted. So it seems that we at best achieve lower end of our guidance on 20 stores and not 30 stores. So just wanted to understand, is it typically second half reexpansion that we’ll do or there is a revisit on that guidance as well?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yes. I think — again, I will not read too much into this at the moment, like for any new brand to come into India even with an existing playbook, you still need to customize the taste, flavors, product and build the brand salience, we are in that phase. I will — I don’t worry too much about it.

Ashish Goenka — Chief Financial Officer

And I think on your question on store guidance, Tejas, I think, as I said, we will accelerate — we are planning to accelerate in the second half, and therefore, we should be at the lower end of the guidance that we had given earlier, which is 20 to 30 stores addition this year. We’re also looking at opening two more cities in South. One of them should go live in this quarter and we are looking at opening one more toward the end of quarter four. So we have a robust plan in place. But as Sameer said, sometimes new brands take a little longer than you plan for. But I think we are currently on track to be at the lower end of our guidance.

Tejas Shah — Spark Capital — Analyst

Sure. And the last one, if I may, this is a follow-up from the previous quarter I had asked, the war has still continued and that is one more Russia-Ukraine I am referring to and there’s one more international chain, which has actually injected out of Russia. So just wanted to know where do you stand? Is there any pressure from global partner on rethinking on that investment or is it a continuous business as usual for us there?

Ashish Goenka — Chief Financial Officer

So Tejas, the line was not clear, but if I understood the question right, was it around DPU Asia’s presence in Russia?

Tejas Shah — Spark Capital — Analyst

Yes, yes.

Ashish Goenka — Chief Financial Officer

Okay. So I think DPU Asia is a listed entity, so we wouldn’t like to really make a lot of comments, but the management has recently announced that they would be limiting their investments in the Russian territory and that primary focus now and currently is on the safety and wellbeing of their employees and customers. So I wouldn’t want to comment any further on that.

Tejas Shah — Spark Capital — Analyst

Great. Thanks and all the best. That’s all from my side.

Operator

Thank you. The next question is from the line of Vishal Punmiya from Nirmal Bang Institutional Equities. Please go ahead.

Vishal Punmiya — Nirmal Bang Securities — Analyst

Yeah. Hi, team. Thank you for the opportunity. So my question is on innovations. So apart from the couple of regional launches that we have done this quarter, we couldn’t really see launches in other part of the country, especially in the current festive and the sporting season. So what are the plans going forward? Are there any big plans in terms of innovations and new launches?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yeah, I think it’s a constant endeavor, Vishal, I think we started with paratha-pizza, I want to remind all of us, right, that’s where our first innovation came, and we have taken — from there taken to East then to West. And I think this quarter itself, we have planned to launch more. I think you should hear about it very soon in November itself.

Vishal Punmiya — Nirmal Bang Securities — Analyst

Understood. Understood. And secondly, last quarter, you mentioned that the dine-in recovery was very close to the pre-COVID level. So what kind of growth have you seen for this particular quarter, if any?

Ashish Goenka — Chief Financial Officer

So Vishal, in terms of overall revenue, we are seeing full recovery and growth over even covered. Our dine-in recovery has been very, very robust. And both sequentially and year-on-year, we are seeing robust growth in dine-in and dine-in plus together as well.

Vishal Punmiya — Nirmal Bang Securities — Analyst

So it still hasn’t reached above the pre-COVID levels, right?

Ashish Goenka — Chief Financial Officer

So in terms of overall revenue, as I said, it has breached or crossed the pre-COVID level and in fact we are growing from there. But of course, there is significant headroom for growth in our dine-in because we have always focused on being an omnichannel player. The good thing is that our delivery being a dominant contributor continues to deliver very robust growth for us and continue to see the momentum. And we’re also seeing a significant uptick in our dine-in demand, and we also see a significant headroom for growth in dine-in. And therefore, we are taking a number of dine-in-specific interventions as well to continue to write the growth on dine-in.

Vishal Punmiya — Nirmal Bang Securities — Analyst

Understood. Thank you and best of luck.

Ashish Goenka — Chief Financial Officer

Thank you so much, Vishal.

Operator

Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead.

Sheela Rathi — Morgan Stanley — Analyst

Yeah, thank you very much for taking my questions. I just had one question and that is for, Sameer. Sameer, my question to you is that during your tenure at Amazon, you have been involved in the incubation and scaling of a lot of new businesses, Amazon Fresh Food and few others. So just wanted to understand any learnings from that experience that could help scaling of all the new businesses, which Jubilant has fored into such as Popeyes, Hong’s Kitchen and Ekdum!?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yes. Nothing — thanks for that, Sheela, and firstly, I have to build upon the foundation that I am inheriting, right? So I think I’m very cognizant of that versus purely applying one model on the other. Having said that, there are several learnings and especially three I would call out. Firstly, the customer obsession piece. And you would have seen in my narrative and my initial time that I spent reading about a lot of customer reviews, meeting them, in fact, reading their emails, answering to them. So that’s one culture I want to drive not only in the front end, but in our commissary and also in corporate office. So that will I think — that’s a really long-term value creation for us.

Second piece is the agenda of technology and data forward that piece like I have again touched upon it. We are already running five different apps in three different environments. And along with that, if you bolt on data and customer backward thinking, I think that we can grow at a faster clip. The third piece is on operational reference. Ultimately, we are in the business of serving the customer a hot pizza and he or she really be having a delightful meal experience. So that needs to come together with a fast pace of growing the stores, having the culture of hustle inside the kitchens and making sure the delivery is flawless and on time. So operations excellence, continuous process improvement is something which I’ve not really picked up in Amazon, but also in McKinsey, GE and Hindustan Lever so I’ll bring that to the floor. So these are big areas, Sheela.

Sheela Rathi — Morgan Stanley — Analyst

And if I may, just as a follow-up here, which among these three would be the easiest one to do and the toughest one?

Sameer Khetarpal — Chief Executive Officer and Managing Director

Yeah, I think the — for a hot pizza on your table, all have to come together. I wish there was one silver bullet. I think there is a great momentum of opening, right, and culture of hustle, which like I said, which I’m inheriting I need to build upon that. I think digital, definitely, we will move faster and forward with my experience and bringing the customer centricity, I think these two probably, if I add on to the strong foundation that we have, we will enter — or we will deliver better in this quarter and enter the next quarter far better.

Sheela Rathi — Morgan Stanley — Analyst

Thank you very much and best of luck.

Sameer Khetarpal — Chief Executive Officer and Managing Director

Thank you.

Operator

Thank you. We’ll take the next question is the last question from the line of Robert Marshall-Lee from Cusana Capital. Please go ahead.

Robert Marshall-Lee — Cusana Capital — Analyst

I was wondering if you can talk more broadly about the development of the competitive environment. So do you see increased pressure in particular places, have you seen receiving some of the other quick service restaurants, KFC, etc., consolidating. So I was wondering whether you see any kind of material impact of that and how you adapt the strategy with that in mind?

Ashish Goenka — Chief Financial Officer

So, Robert, I think if I got the question right, it was about the competitive environment and the competitors growing it up, was that question?

Robert Marshall-Lee — Cusana Capital — Analyst

Yeah. So whether you see any material increased intensity from the QSR sector?

Ashish Goenka — Chief Financial Officer

So I think, Robert, India is a market I think, of course, is a market which presents a huge growth opportunity and the kind of macro trend we are seeing is what everyone else is seeing. So we are not surprised with the increase in competitive intensity. And therefore, what we are focusing on is building on our strength as Sameer, alluded to and also setting up our store expansion, which we have basically stepped up quite well in the last few quarters. So we will continue to focus on the customer and continue to focus on build on our strength and continue the pace of store expansion that we’ve embarked upon.

Sameer Khetarpal — Chief Executive Officer and Managing Director

Also, some of this competition actually also help in growing the market. So — but we people double down on our sense. Number one, being deeply delicate store footprint. Second is digital and our own assets. And thirdly, world-class supply chain that we have.

Robert Marshall-Lee — Cusana Capital — Analyst

So I take from that there is an increase in the competiveness overall, but actually potentially helpful in growing the market as well, is that right?

Ashish Goenka — Chief Financial Officer

That’s right, that’s right, Robert.

Robert Marshall-Lee — Cusana Capital — Analyst

Thank you.

Operator

[Operator Closing Remarks]

Sameer Khetarpal — Chief Executive Officer and Managing Director

Thank you.

Ashish Goenka — Chief Financial Officer

Thank you.