Jubilant FoodWorks Ltd (JUBLFOOD) Q3 FY22 Earnings Concall Transcript

Jubilant FoodWorks Limited (NSE: JUBLFOOD) Q3 FY22 Earnings Concall dated Feb. 02, 2022

Corporate Participants:

Deepak Jajodia — Investor Relations

Hari S. Bhartia — Co-Chairman and Director

Pratik Pota — Chief Executive Officer and Wholetime Director

Ashish Goenka — Executive Vice President and Chief Financial Officer

Analysts:

Abneesh Roys — Edelweis — Analyst

Vivek Maheshwari — Jefferies — Analyst

Percy Panthaki — IIFL — Analyst

Manoj Menon — ICICI Securities — Analyst

Jaykumar Doshi — Kotak — Analyst

Arnab Mitra — Credit Suisse — Analyst

Avi Mehta — Macquarie Capital — Analyst

Gautam Rathi — CWC Advisors — Analyst

Vishal Punmiya — Nirmal Bang — Analyst

Chanchal Khandelwal — Aditya Birla Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q3 FY ’22 Earnings Conference Call of Jubilant FoodWorks Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Deepak Jajodia. Thank you, and over to you, Mr. Deepak.

Deepak Jajodia — Investor Relations

Welcome to Jubilee FoodWorks Q3 FY ’22 Earnings Call for Investor and Analyst. We are joined today by senior members of the management team, including our Chairman, Mr. Shyam S. Bhartia; our Co-Chairman, Mr. Hari S. Bhartia; our CEO, Mr. Pratik Pota; our CFO, Mr. Ashish Goenka; and our group CFO, Mr. Arvind Chokhany. We will commence with key thoughts from Mr. Hari Bhartia. Mr. Pratik Pota will follow him with his perspective on JFL’s progress on the quarter ended 31st December, 2021.

After the opening remarks from the management, the forum will be open for the question and answers. 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 the statements. A detailed statement in this regard is available in Jubilant FoodWorks’ Q3 FY ’22 results release and earnings presentation, both of which are available on the company’s website and 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 and Director

Thank you. Good evening, everyone, and welcome to our earnings call. During quarter three FY ’22, the on-ground COVID situation improved considerably compared to the previous period even though restrictions remained on dine-in, which was capped at 50% capacity. The annual celebratory season in the last fortnight of December was also impacted due to the COVID-led curbs in select markets. In spite of these restrictions, we delivered a strong system and like-for-like growth in this quarter. The dine-in segment showed good signs of recovery and contributed to the year-on-year growth. Delivery and takeaway channels also registered a healthy growth in comparison to the pre-pandemic levels of quarter three FY ’20. As you would be aware, we continue to witness inflation across categories with input costs increasing sequentially as well as on a year-on-year basis. Nevertheless, we delivered strong profitability with an increase in EBITDA margins, both sequentially and versus last year. This was driven by productivity and taking some pricing action in December. It is important to note that even after price increase, Domino’s remains the most affordable pizza by far and continues to deliver unmatched value for money to its customers. We opened a record 75 new Domino’s restaurants in quarter three in India. We also recently inaugurated the 1,500th Domino’s store in India, an important landmark in our exciting journey in India.

The company will continue to deliver on targets around new store openings and new town penetrations. We have developed the necessary business development competencies backed by data-driven approach around site selection and have the wherewithal to drive rapid on-ground execution. During the quarter, we concluded the acquisition of 35% stake in Thrive, the direct ordering platform. We will continue to make such strategic investment in relevant and early-stage startups, which, in turn, will help us acquire strong digital and other capabilities essential for driving growth and further our transformation into a food-tech play. Turning to our international business. In Sri Lanka, the company delivered its highest ever system sale in a quarter. Bangladesh too experienced a healthy growth. The company concluded the reverse book building process and increased its shareholding to 40.29% in DP Eurasia. Popeyes got off to an extremely promising start in Bangalore last month.

We were encouraged to see strong and enthusiastic response from consumers despite the prevailing restrictions at that point. Our early experience has reinforced our conviction that Popeyes will be a strong, long-term growth driver for JFL, and we look forward to building a large and a profitable network of Popeyes. Before I conclude, as you are aware, the Board also decided to split the shares 1:5. I hope this will give larger participation from all stakeholders, especially the retail ones. Going forward, we will continue to focus on delivering our long-term priorities and we’ll strive to achieve the goal of building a multi-brand and a multinational food business powered by technology and digital assets.

With this thought, I invite our CEO, Pratik Pota, to share his perspective and insights.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, Mr. Bhartia, and good evening, everyone. Thank you for joining the call today. We reported a very strong quarter today with double-digit revenue and EBITDA growth, record profits and a strong underlying operating performance. Revenue from operations was at INR11,935 million, up 12.9% versus the previous year. Like-for-like growth, which is the same-store growth of non-split stores, was at 7.5%. This is a much more relevant competitor for our company, as we continue to execute successfully on our fortressing strategy in existing cities and improving continually on our customer experience. Notably, the ratio of split stores to the overall new stores opened in the last seven quarters is as high as 46%. Hence, going forward, LFL will be the key metrics that we will be reporting to track same-store growth. We faced strong and broad-based inflationary pressures across commodities and personnel costs in this quarter. Despite this, we did well to drive efficiencies and deliver strong EBITDA margins. EBITDA stood at INR3,174 million, up 13.9% versus Q3 FY ’21. And EBITDA margin was at 26.6%, higher by 24 basis points versus the previous year and up 60 basis points versus the previous quarter. Profit after tax was at INR1,373 million, higher by 9.8%, with a PAT margin of 11.5%.

We further accelerated the pace of new store openings. In the first two quarters together, as you’re aware, we had opened 75 Domino’s stores. In the third quarter, we hedged the new benchmark by opening 75 stores within the quarter itself. This is the highest number of restaurants ever opened in a quarter by any Domino’s franchisee in any market across the world. We also spread our footprint wide entering 17 new towns in this period, split across 322 cities, our Domino’s store network stands at 1,495 stores at the end of the quarter. Rather, it stood at 1,495 stores. So as you are aware, more recently, we reached a magical milestone of 1,500 stores and are absolutely confident of continuing our relentless network growth in the periods ahead. Our fortressing strategy is also allowing us to shrink delivery areas and reduce drive times. As a result, a significant proportion of delivery orders now get delivered in under 20 minutes, thus leading to a vastly improved customer experience. This has directly translated into a significant increase in our customer satisfaction or NPS numbers. Our NPS is now by far the best in class in the QSR category.

Domino’s app in stores during the quarter were at a record 8.2 million. Our own app sales continued to grow faster than the aggregators and a dominant share of our revenues continues to come from our own assets. On our emerging brand portfolio, we opened two new stores, one each for Dunkin’ and Hong’s Kitchen. Our total store count for Dunkin’ is 29 and for Hong’s Kitchen stands at 14. Notably, Hong’s Kitchen has become one of the largest Chinese peers of QSR chains in the Delhi-NCR region. In Sri Lanka, the company delivered a standout performance and registered its highest-ever system sales in a quarter with a year-on-year growth of 95.9%. Bangladesh system sales grew also healthy at 39.5%. The company launched one new outlet each in Sri Lanka and Bangladesh. The Domino’s store count is 32% and 8% in Sri Lanka and Bangladesh, respectively. In January, our first ever Popeyes restaurant, the flagship restaurant in Koramangala, Bangalore got up to a strong start. Popeyes marks an entry in the fast-growing and large chicken category.

Our early experience has strengthened the confidence that consumers in India will love the strong kitchen flavor that has made Popeyes an iconic brands in the U.S. and across the world. I’m pleased to share with you that the entire India menu for Popeyes has no MSG and the chicken is antibiotics free. Popeyes has built its own in-house delivery fleet, with 100% of use of e-bikes enabling a zero-emission delivery experience. As we speak, we are living through and hopefully seeing off the short third COVID wave. A well-proven playbook, developed over the last two years, ensure that we focus on employee and customer safety, even as we continue to operate our business, serve our customers and even grow our network. We are really proud of the indomitable spirit and resilience of our food soldiers that have kept us going.

On that positive note, I would like to call upon the moderator to initiate the Q&A session. Thank you.

Questions and Answers:

Operator

Thank you, very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss. Please go ahead.

Abneesh Roys — Edelweis — Analyst

Thanks. My first question is on the store addition in Hong’s and Ekdum! So it’s at a four-quarter low with just one store addition. While I see Domino’s quarterly addition at an all-time high and breaking many records. So why this discrepancy? Why this different nature of trend is there? This is a new business. Domino’s is a very mature business. So why not accelerate in Hong’s and Ekdum! also?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, thank you, Abneesh. Thank you for the question. And I think your observation is spot-on in terms of the pace of store openings. I think on Hong’s Kitchen, let me share with you an update. I think we made a good progress in Hong’s on multiple fronts. Our quality of food, our menu overall has been accepted really well. Our pricing, it seemed to offer very strong value for money. Our in-store operations have been streamlined. There is much eater consistency. We also are now moving and working closely with a central manufacturing kitchen and using a lot of our stocks coming from there and products coming from that to ease operational complexity in the stores. In Hong’s, we feel that we are in a good place. And you will see us expand our network much more so in the coming periods. I think on Ekdum!, given the fact that we launched it well after Hong’s, there is a lot of work going on in refining the overall Ekdum! model. And you will see Ekdum! scale up with phase after Hong’s Kitchen.

Abneesh Roys — Edelweis — Analyst

One follow-up on Hong’s, you mentioned in the opening remarks that this is the largest QSR chain in Chinese in NCR. What metrics are you seeing here? Is it number of stores? Or is it any other metrics in terms of revenue or any other if you can share?

Pratik Pota — Chief Executive Officer and Wholetime Director

Abneesh, given the fact that credible and reliable estimates on revenue or other financial measures are hard to combine, my remark was to the number of stores and the size of the network.

Abneesh Roys — Edelweis — Analyst

Sure. My second question is…

Pratik Pota — Chief Executive Officer and Wholetime Director

Sorry, please go ahead.

Abneesh Roys — Edelweis — Analyst

Yes. My second question is on store closures. So I’m coming to Domino’s. 15 stores closed in Domino’s. So now what we are seeing is dine-in in not just Domino’s across retail format. As in the store, footfalls are seeing a spectacular recovery. So if you see multiplex numbers came out in Q3, they have reported much better than expectation, initial expectation. So now when you have been closing stores, so when recovery happens in dine-in, so would you be at some disadvantage because you have closed a lot of the stores from a dine-in perspective? Or your store openings are taking care of that, if you could elaborate on that?

Pratik Pota — Chief Executive Officer and Wholetime Director

Sure, Abneesh. I think the store closures that we had in the last quarter were very specific and very targeted. And a lot of the stores that we closed were in tech parks or in travel and transport locations, like metro stations or railway stations and some closures of regular high-speed stores for very specific reasons, local reasons, local issues. The number of closures in malls that we had were marginal. It’s two stores out of the 15 as we closed were in malls. I think given the mix that we have right now of stores, which are in the high street locations and which are in delivering carryout format and which are in the more traditional dine-in friendly formats or locations like malls, et cetera, we have a good portfolio, and we are absolutely confident of being able to participate in their full dining recovery when it happens.

Even in the last quarter, we saw a very encouraging dine-in recovery intra quarter, of course, which was interrupted by the restrictions which came in the second half of December. But we feel good about the fact that the assortment of stores that we have, the portfolio of stores that we have in the formats and the locations which they are in, we are well placed to participate in the strong delivery growth as also participate and drive the strong dine-in recovery. So I do not think there will be — there is any question of us missing any opportunity. These are very considered and very deliberate closures that we made. And as you can imagine, 15 closures over the last three quarters on a network of a size, that’s a very small number.

Abneesh Roys — Edelweis — Analyst

So last question and essentially a follow-up on Domino’s only. So when I see a customer clearly is requiring instant gratification, we have seen Swiggy scale-up, for example, 10-minute delivery, you also spoke regarding the 20-minute delivery, which is going well on NPS and all that. Also, you said, going forward, you will share the LFL data and not share the SSG data. So when I see the 75-store addition, which is a record breaker, how important the reason is a 20-minute delivery for this? And if it is important, will the record breaking spree or very high store addition, that is now a fact of life. So essentially, you will need to be much closer to the customer, so you will need to expand much faster?

Pratik Pota — Chief Executive Officer and Wholetime Director

So Abneesh, as we’ve said both in the earlier investor calls as also in the opening remarks now, driving faster delivery, making sure we reach our customers the lowest possible time, that is a very deliberate and a very important part of our overall strategy. We made a very good progress over the last two quarters. And as I mentioned earlier, more than 60% of our orders now — a majority of our orders in delivery now were delivered in another 20 minutes. So it’s a very encouraging and very robust progress that we made on 20 minutes. And that has led to, as I mentioned in my remarks, a significant improvement in customer satisfaction scores. One big driver, therefore, of our focus in strategy and our store-split strategy is the need to shrink the delivery areas and get to our customers faster. So you will see us maintaining this approach and this strategy as we go ahead. You will see us fortressing markets, but you also see us enter new towns. You also see us enter virgin areas in existing markets and grow the network in that manner as well.

Abneesh Roys — Edelweis — Analyst

Sure. That was from my side. Thanks a lot.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you.

Operator

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

Vivek Maheshwari — Jefferies — Analyst

Hi, good evening, everyone. My first question, again, is on SSG. Could you just — so while you mentioned, but what — I mean after reporting SSG number for so long, what drove this change. Why did you think about moving from SFS to LFL, if you can clarify that position?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, sure, Vivek. I think that’s a fair question. And let me attempt to answer it. And of course, happy to take any follow-up questions if you have any. I think the inherent logic for reporting LFL and believing very strongly that LFL is a more appropriate and relevant measure comes from the fact that as a very deliberate part of our strategy, we are fortressing on markets, we are splitting our stores. In other words, we are looking to carve out areas of existing other stores and open up new stores to allow us to serve our customers faster. So there will obviously be a pressure on mother store revenues and mother store growth in the short term as these new stores play out.

And these splits, as I mentioned earlier, are done to reduce the delivery times and ensure that we get closer to ambition of delivering 20 minutes across the country. LFL, therefore, is a much, much more appropriate and accurate measure of the real underlying growth in the business because it takes out the impact of the store split. That’s number one. Number two, I think just to reassure everyone, the base of stores on which we report LFL, like-for-like versus same-store growth, the base is not very different.

So for instance, in the last quarter, just to give you the numbers and to illustrate, our LFL number was reported on a base of as much as 1,052 stores. It’s not a small number. It’s a very large number. And had we reported SSG, it will be reported on a base, which was only about 100 stores higher. So it’s a very significant base of stores to report LFL. That’s my second point. And the third point is that dispersion and the difference between LFL and SSG is not large, it’s a small difference.

I think the reason, however, why we are reporting LFL and not SSG, it’s a more conceptual reason because we believe very strongly that it’s important to take out the split store impact, which is a very deliberate strategy that we are embarking on, to take out that impact and to be able to show what the real underlying growth of the business is and that gets captured best by the metric of like-for-like growth, removing the noise of the split stores.

Vivek Maheshwari — Jefferies — Analyst

I see. Okay. And just a follow-up, Pratik, because there have been a lot of investor worries about the change in this reporting. Could you not have given both the numbers as you have been doing in the past? And is there some sort of worry that SSS number will not look good in the foreseeable future, maybe for a few quarters, and that is the reason what — I mean the timing is something that a lot of investors are questioning to be honest. So any color again would be useful.

Pratik Pota — Chief Executive Officer and Wholetime Director

Yes, Vivek. No, no, I appreciate the question, and thank you for asking that question. Look, I think like I said earlier, the reason why we are reporting LFL, and we have stopped reporting SSG is a very conceptual reason that this is a much better indicator of our real underlying revenue growth, number one. That said, however, Vivek, I want to repeat what I said just a little while ago, which was the difference within the two numbers is not substantive. It’s a small minor difference. So if there’s a concern that is being done, so that does not show our SSG number, I think that concern is misplaced. I think our numbers remain strong. I think numbers remain robust, but the LFL number is a far better indicator, a far better measure of the real revenue growth and the real underlying growth, which is just showcasing that — this.

Vivek Maheshwari — Jefferies — Analyst

Got it. And last follow-up on this, and I’ll get back in the queue, which is basically do you also envisage as you are accelerating and, let’s say, adding more number of stores in the medium term? Do you anticipate a cannibalization, which is far higher than what it was in the history?

Pratik Pota — Chief Executive Officer and Wholetime Director

So that’s, again, a very good question, Vivek. So let me give you some comfort and some clarity on this. I think the really encouraging part of our fortressing strategy is the fact that our performance of both the mother stores that we split and the new stores that we opened in these areas remains very strong and very encouraging. So our new stores that we opened, actually, both in the split areas, in the fortressing markets and also in the new markets, virgin markets, our stores pay back in under three years. In some cases, in the split store situation, well under three years, number one.

Number two, the mother store that we split gets back to its old revenue, pre-split, again in well under three years. In some cases, in under two years. The mother store and the new store in its area, the split store together, and as we imagine, have a significantly higher revenue or significantly higher EBITDA and significantly improved customer experience, significantly improved delivery times.

And to make the whole model virtuous and a win-win-win model, our operating costs go down. Our network effect kicks in. Our delivery cost — cost for delivery goes down. Our logistics cost, supply chain costs go down. So think about the situation, where we have a stronger revenue growth, stronger EBITDA growth, a stronger customer experience and more efficiencies and lower cost. That’s a complete virtuous cycle that kicks in as a result of a fortressing strategy, and that’s what we are working on.

Vivek Maheshwari — Jefferies — Analyst

Got it, Pratik. Thank you all the very best.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, Vivek.

Operator

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

Percy Panthaki — IIFL — Analyst

Hi, team. Good evening. My first question is on the pace of the recovery. So if we see Q2 versus two years ago, I think the total sales growth was somewhere in the region of about 11% or so. Q3 versus two years ago, it’s about 13%. So there really hasn’t been any further sort of incremental recovery versus Q2 or a very, very minor recovery versus Q2. And in the past, we’ve had that as dine-in opens up, that will sort of add sales without taking away from delivery.

But what we have seen happening in Q2 versus Q3 is that while dine-in has recovered, not fully, but versus what we had seen in Q2, there is a recovery there, but it is not adding to the overall sort of picture because versus the recovery that we have seen in Q2 in the delivery, that number has come off. So it’s become sort of a zero-sum game between these two portions. So some thoughts on this topic, whatever you think.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, Percy. Let me first respond to your question about recovery in dine-in and overall recovery. I think the Q3 performance and the recovery needs to be seen in the context of operating constraints on the ground. The operational hours that our stores were allowed to operate for in the third quarter were as much as 5% lower than the previous periods because of various restrictions and I’ll talk about more of that in just a minute. So we had actually lower operating hours on the ground than in the past, number one.

Number two, dine-in capacity restrictions, dine-in being capped at 50% continued during the quarter. Number three, in the second half of December, there were far more restrictions that were reinforced. Again, to illustrate, there was a dine-in closure and a curfew in Maharashtra from nine p.m. onwards. There was a dine-in closure and curfew from 10 p.m. onwards in Delhi and Bangalore. And across a large number of markets, there was a night curfew reports either from 10 p.m. or 11 p.m.

Now when curfew gets in force at nine p.m. or 10 p.m., people plan their consumption in a way that allows them to get back home by 10:00 p.m. So we saw a very big hit within dine-in and in takeaway. In these key periods, the key days of December, in the key day part of dinner. Now despite these restrictions, we saw a robust dine-in recovery during the quarter. And now I think it’s important to recognize that the dine-in recovery was proceeding intra-quarter very well, but saw some moderation and saw some pressure in the second half of December.

So if I had to split open the quarter by October, November, December, the recovery was very robust until the second half of December then because of the constraints that I just called out, we saw the pullback on the recovery. So that’s number one. Number two is that on delivery, I think it’s important to recognize that in the third quarter, delivery grew. Delivery grew well versus both the pre-COVID period and versus the same time last year. And within delivery, like I mentioned in my opening remarks, our own assets grew significantly faster. So we do not see a pressure between delivery and dine-in. I think there’s certainly some play on the ground between dine-in and takeaway because sometimes when consumers are not comfortable dining out, they switch to take away. So there is some interaction there. Again, the numbers capture some of that interaction, but it is not a trade-off between delivery and dine-in. And we are very confident that — and we saw that happen, saw that happen last quarter. But as restrictions were revoked or whenever restrictions were not there, we saw a strong resurgence in all channels, especially in dine-in. So what we have seen in quarter three and what you were seeing get captured in the numbers is a direct result of operating restrictions and supply restrictions, not a reflection of the demand, either in dine-in or in delivery.

Percy Panthaki — IIFL — Analyst

Just a follow-up question on this. if I look at the operating hours for Q3, that is the December quarter this year, and compare it to the September quarter of this year, the immediately preceding quarter, would you say that there is a reduction in the December quarter in the operating hours versus the September quarter?

Pratik Pota — Chief Executive Officer and Wholetime Director

Just a follow-up question on this. if I look at the operating hours for Q3, that is the December quarter this year, and compare it to the September quarter of this year, the immediately preceding quarter, would you say that there is a reduction in the December quarter in the operating hours versus the September quarter?

Percy Panthaki — IIFL — Analyst

Okay. So what I’m trying to understand, and I’m sorry for digging deep here, if I don’t have enough time, I’ll restrict myself to one question only. But what I’m trying to understand is across different consumption segment, Q3 has been a little more robust compared to Q2 on the overall sales. We might debate on the sort of mix of the channels, et cetera, but because of the reopening trade, et cetera Q3 has been a little more robust. But what we are seeing for Domino’s is that, that’s not really the case. The two-year growth for Q2 was 11%, the two-year growth for Q3 was 13%. So, very, very small kind of increase. If I look at even the sort of sales per store on a two-year basis, I think that average number of stores added over two years is about 11%, 12%. The sales growth is 13%. So it’s only 1% to 2% growth in the sales first over across a 24-month period.

So it seems that the recovery, which we saw in Q2 and that was a robust recovery, but it has more or less stagnated at that level and there is not much further recovery going ahead. So what do you think, like going ahead? Of course, Q1 — I mean, Q4 will be impacted by COVID, but assuming that by March and COVID is out of the way, do you think that the sales per store still has some amount of — sort of catching up to do or some amount of leeway to grow versus what we’ve seen right now?

Pratik Pota — Chief Executive Officer and Wholetime Director

So Percy, let me answer the question in two parts. The first point that I think is important to underline is that for the restaurant industry, in the food service industry, December is a huge month and the second half of December is when sales and orders spike. In this largest peak period in the year, we had very strong operating constraints putting. And therefore, the impact of that 10-day, 12-day closures or restrictions was disproportionate. It wasn’t just linear. It wasn’t just the 12% of hours reducing at that time. It was a far greater and a far more disproportionate impact. As you can imagine, given the nature, given the importance of consumption in those days for our category. And had we not had those restriction and headwinds, we would have seen the performance would have been significantly higher.

And we saw, we saw the numbers in the month of December hitting very strongly, and we saw the numbers get challenged the moment we had restrictions, the moment there was curfew imposed. The moment mobility on the ground was restricted. We saw that across the country, especially in the peak metros which matter for us the most. So I think it’s important for us to recognize and factor in. In other consumer companies, and I won’t speak on behalf of them, but I dare say maybe that relationship is not as it is for our industry. It’s much more linear and much more evenly spread out. But I think our industry gets impacted disproportionately in December and which is why I think it was a body blow for the entire industry and for us in the last couple of weeks of December. That’s your first part.

Percy, second part of the question about sales per store, I’m sure you are factoring in the impact of stores place and strategy when you look at like — when you look at sales per store. Because we are, as I mentioned earlier, very deliberately embracing a split store, but obviously, the store will have a lower revenue, at least for the first couple of years and before it had a light pass back to recovery. So we are doing that as a part of a deliberate strategy. So I’m sure you’re factoring that when we look at the numbers. But look, we see growth. We do not see a demand challenge. I think we have struggled with operational challenges in the ground because of restrictions, operating out constraints, curfew hours, etc. etc. but we do not see a challenge on the demand front. Did it answer your question?

Percy Panthaki — IIFL — Analyst

Sure. Yes. Thank you. The last point on this is, if I were to remove the last 10, 15 days of the quarter, say, take only the first 75, 80 days of the quarter, then on that basis, the 7.5% LFL, how much higher would it have been?

Pratik Pota — Chief Executive Officer and Wholetime Director

Look, Percy, in all fairness, I wouldn’t want to speculate a number because that’s hypothetical. But I can tell you the number would have been significantly higher. It will not be fair on my part to give a number because that’s all hypothetical and subjective, but we saw a significant impact of the restrictions in that last fortnight of December, especially the last 10 days.

Percy Panthaki — IIFL — Analyst

Okay. Yeah. That’s all from me, Pratik. Thanks and all the best.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you.

Operator

Thank you. The next question is from the line of Manoj Menon from ICICI Securities. Please go ahead.

Manoj Menon — ICICI Securities — Analyst

So hi, team. Just again two questions only. Just one again on the SSG, LFL, Pratik. I’ll just tell you, maybe Vivek was, I would say, asking that question. So just following up on that. So — no, Pratik, the problem which I have is — look, there are definitions which are globally accepted. So that’s point number one. Point number two, in retail industry, or restaurant industry. The second aspect is, let’s say, when I look at a, let’s say, an FMCG company, I know that I’m not asking a question saying that, look, what is your penetration-led growth versus, let’s say, per capita consumption growth. So when it comes to retail, SSG is obviously an element which is needed for an absolute evaluation and also for a relative valuation. The second aspect actually here is that, as I said, I’m not aware of any global such template. The most important point the way I see here is that, look, the smart investor, the way I understand, does not really care whether there is SSG or new store growth. SSG is only a hygiene element to actually evaluate saying that, look, what is the core growth there. So I would strongly request you and the Board to reconsider this and give LFL and SSG both.

Pratik Pota — Chief Executive Officer and Wholetime Director

Manoj, first of all, thank you very much for your feedback. I’d say a couple of things. And of course, I think your feedback has been heard and we certainly got it together and respond to it. But why we do that, let me just give you a couple of points.

Manoj Menon — ICICI Securities — Analyst

Sure, sir.

Pratik Pota — Chief Executive Officer and Wholetime Director

I think LFL, Manoj, is not an outlier metric. It’s not — it’s a metric that’s reported by the QSR industry and indeed by the Domino’s franchisees across the world. Most franchisees actually report LFL and not SSG because LFL, like I mentioned earlier, is a far more accurate descriptor of the true underlying growth in the business, after taking away the noise of a store that we’ve split deliberately and by design. So I would say that if you look at the trend line on LFL, we get a very good, very accurate and a very appropriate measure of how the business is trending and performing. That said, we’ve heard you, Manoj, and thank you for your feedback.

Manoj Menon — ICICI Securities — Analyst

Understood, sir. See, sir, sometimes, we are just being messengers or journalists in that sense, right? I mean, kind of just because investors, many of them normally don’t come on a call and convey it, they’ll probably do it one-on-one. I’m sorry for that, actually. Thanks.

Pratik Pota — Chief Executive Officer and Wholetime Director

We appreciate. Thank you.

Manoj Menon — ICICI Securities — Analyst

Yes. Sir, the second part is just wanted to pick your brain on a longer-term trend, which may be thanks to COVID, it may have happened actually. I guess in some part of e-commerce, etc. I’ve been hearing this from them saying that, look, now convenience is actually a far important vector for the consumers, and that has fundamentally changed consumer behaviors, et cetera. The point I’m trying to understand is when you move from 30 minutes to 20-minute delivery, et cetera, is this also one of the things which you first of all, agree that hypothesis is that convenience. And to that extent, are you being the pioneer would need to now create new benchmarks. That’s just one question here.

The second aspect is also — is it also to do with, let’s say, when I look at some of your competing brands, some of these listings, et cetera, recently, so is it also a case of likely relative competitive intensity increase, while respecting the fact that there is a huge opportunity for everybody to grow. But at the same time, there are competing brands which may have reached certain threshold site, which begets scale? Thank you, sir.

Pratik Pota — Chief Executive Officer and Wholetime Director

So Manoj, let me respond to the question in two parts. I think you made a passing reference to the fact that trend is becoming a much bigger driver in multiple categories. I think the exciting part about the category is that the home consumption, the home delivery market is growing, driven by convenience, driven by the need to break boredom to find some relief from homemade food and a much greater acceptance in the lower gatekeeper barriers of non-homemade food. But even as that plays out, I think the relevance of on-premise occasions, relevance of dine-in occasions remains very high because that’s an occasion to celebrate, to socialize, to together with your friends and get together and live it up. And of course, that’s constrained right now because of COVID. But when things normalize, you will see a strong resurgence of dine-in even as the home delivery consumption habit holds up and indeed grows. I think that’s an important point to keep in mind in our category that we are in a good place from point of view of category growth and category formation. That’s number one.

To the second part of the question about the delivery speed. I think 25 years back, we pioneered the concept of home delivery. And for the last 25 years, we’ve always been the defining benchmark in this category. The consumer has looked at us as delivery experts and as people who provide the best-in-class delivery experience. We have decided to challenge ourselves and delight the consumers and surprise the consumers by reaching her even faster. We know that time is the enemy of food. The faster the food comes to you, the better it will taste all as the equal, the better will be your experience. And therefore, we are challenging ourselves to really get to our customers much faster and give a much better customer experience. I think we do not navigate our decisions by what’s happening in the competitive space. We’re guided by the consumer and how we delight more.

So that’s been the primary driver to be honest, of our effort to go from past [Foreign Speech], 30 to 20 minutes in delivery timings. And like I mentioned earlier, it’s something that is working for us. We are seeing a profit incentive [Phonetic] to be the customer satisfaction. And we believe that this will become now the new definitions for good delivery and great delivery in the Indian marketplace. We — look, we have to challenge ourselves. Nobody will challenge us. We have to challenge ourselves and we have to raise the bar by ourselves. And that’s what we are doing on this.

Manoj Menon — ICICI Securities — Analyst

Absolutely, completely understood, because — yes.

Ashish Goenka — Executive Vice President and Chief Financial Officer

If I can add, Pratik, to what your remarks and I think all of you have seen that we have added in the last three, four years, the new design is designed for our stores with a belief — with a very strong belief that dine-in as a segment is — will continue to be very attractive for customers, who would like to come to the store, watch the pizza being made. That’s why our stores are opened. Pizza is considered as a theater. And our new design is very attractive for people to be visiting the store. So that’s the belief. And that’s why all our new stores, wherever we open, whether in India, Sri Lanka or Bangladesh, have really designed for dine-in or take carryout experience. And the other thing on the delivery point to view on 20 minutes, I just want to really remind everyone that we start making the pizza the time you order and then we deliver within 20 minutes. So it’s not a packaged or preprepared food in any manner that some of the cloud kitchens do deliver. So I just wanted to say that achieving 20 minutes is a freshly made pizza after ordering requires a lot of effort, and this is what we are pioneering in India.

Manoj Menon — ICICI Securities — Analyst

Thank you, sir. I truly appreciate actually. In fact, we at ICICI had visited one of those open kitchen stores two years back and written about it as well. So truly pretty excited about that. Thank you. Appreciate it.

Ashish Goenka — Executive Vice President and Chief Financial Officer

Thank you.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, Manoj.

Operator

The next question is from the line of Jaykumar Doshi from Kotak. Please go ahead.

Jaykumar Doshi — Kotak — Analyst

Yeah. Hi. Thanks for the opportunity. My first question is, when I look at your revenues versus December ’19, it’s up 13%. When I look at employee cost, it’s down 3%. And when I look at other expenses, it’s up 27% versus December 2019. So is there any change in the mix in terms of are you handling larger volumes of delivery through third-party logistics providers and that cost is not getting captured in employee costs. Can you explain this part, please?

Pratik Pota — Chief Executive Officer and Wholetime Director

Sure. I request Ashish to chip in here and respond, please? And I’ll add…

Ashish Goenka — Executive Vice President and Chief Financial Officer

Yeah. Sure, Pratik. Thanks, Jaykumar, for your question. I think, yes, you are right, we have, as you know, very consciously being variabilizing our cost to give a better flex to our P&L. And part of the reason you see a reduction in employee costs because of the variabilization of costs and that cost getting reported under manufacturing and other expenses. But even if you go to normalize for that, Jaykumar, I think it’s — I would like to highlight that even if we were to normalize for that, we have seen a reduction in our employee cost, both sequentially and versus prior period because of the fact that we have also been driving productivity and reducing wastages across our cost line, especially on manpower. And also, we have been getting benefits of operating leverage. So it’s a combination of all three.

Jaykumar Doshi — Kotak — Analyst

Understood. What percentage of your delivery volumes are currently being handled by third-party? And what was that number pre-pandemic?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, we don’t deliver through third-party. Ashish, you should that.

Ashish Goenka — Executive Vice President and Chief Financial Officer

Yeah. Yeah. To clarify, we still have our own delivery fleet. Just that the — when I say verbalization of manpower, instead of fixed service contracts, now we have variable contracts with the same employees, where we have various models in terms of flexi-working hours, pay per delivery, but it is not third-party delivery that we’re using, but deliveries are happening

Jaykumar Doshi — Kotak — Analyst

But is it captured in employee expenses? Or is it — does it get captured in other expenses?

Ashish Goenka — Executive Vice President and Chief Financial Officer

It gets captured in other expenses. So technically speaking, they are no longer employees. And therefore, as per accounting norms, we get clubbed under manufacturing and stuff.

Jaykumar Doshi — Kotak — Analyst

I see. That’s helpful. Second is just from a definition perspective, how do you sort of define split store in terms of — in what areas of an existing store, if you open a new store, you consider that as a split store? And when does that split store again come back in both the mother store and split store come back into the network for LFL calculation?

Pratik Pota — Chief Executive Officer and Wholetime Director

Ashish, you want to take that one?

Ashish Goenka — Executive Vice President and Chief Financial Officer

Yes. So I’ll answer the second part first, Jaykumar. So the — we believe that a store takes about 24 months to maturity, and we allow that period for the store to then come back to the base in terms of the calculation of LFL. So all stores, which have opened up to, say, 31st March of 2020, are taken into account in terms of calculating our LFL.

Jaykumar Doshi — Kotak — Analyst

Right. No, no. And in terms of definition, if you are opening a store within 0.5 kilometer radius, one kilometer radius, how do you sort of define that store as a new store or a split store?

Pratik Pota — Chief Executive Officer and Wholetime Director

Yeah. Any store, Jaykumar, that is in the delivery area of a mother store and takes away orders and revenue is defined as a split store. And the extent of the split varies depending on where the store is located and how much of the mother store areas it feeds into. But if it eats into the mother stores orders and revenue, it’s defined as a split store.

Arnab Mitra — Credit Suisse — Analyst

Understood. So right now, in this quarter, you mentioned earlier that 1,052 stores were considered for split LFL calculation, 100 stores are not considered, right? Now when you get to, let’s say, about 2,000 stores, assuming you had 200 stores for the next two to three years, will that gap widen significantly? Will this 1,000 versus 100 become maybe a 300, 400-store gap, 200, 300-store gap?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, Jaykumar, the way that we work is that, as Ashish mentioned, stores that are opened or split before 1st of April, 2020, would have got — taken into the calculation for this year. So on a rolling basis, we will open more stores and we split some of them. So we don’t expect this gap to widen because already, as I mentioned in my opening remarks as well, split stores comprise a significant part of the overall stores that we’ve got.

So we don’t expect that ratio to change significantly because of — again, what I mentioned in — earlier in my remarks, so I think to Vivek as well, which is that our opportunity is not just in doing fortressing and going into existing markets or existing store areas, but also we have a large opportunity in opening new towns, which is why we opened 17 towns this quarter. We’ve a large opportunity in looking at new — virgin areas in existing markets. So the opportunity is tremendous across all of these markets. And therefore, we don’t expect this gap in SSG and LFL to widen.

Jaykumar Doshi — Kotak — Analyst

Understood. Thank you so much.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you.

Operator

Thank you. The next question is from the line of Arnab Mitra from Credit Suisse. Please go ahead.

Arnab Mitra — Credit Suisse — Analyst

Hi team. My first question was on new stores. So in the past, how we used to think of Domino’s growth was there was an SSG number and there would be net new stores and you typically started at 70%, 75% in the first year itself. So if, let’s say, you add 15% stores in a year, one would assume, let’s say, a 10% addition to the top line. So given that there’s a lot more of splitting given this 20-minute target that you have, should we, therefore, build a lower contribution from new stores and the overall growth of the company? Of course, for the longer term, it increases the competitive advantage. But in terms of the absolute sales that it generates incrementally for the system, it will be lower than what we have seen in the past?

Pratik Pota — Chief Executive Officer and Wholetime Director

Arnab, it’s — I think — let me respond to that by repeating what I said a little while ago, which is that when we look at the performance of our new stores that we are opening, the new store payback is well under three years and anything that’s improved over the years. The recovery of the mother stores, again the glide path to recovery has improved, and we are looking at a recovery again well under three years. So if anything, the equation of same-store versus existing stores, that equation has improved. I think it must also keep in mind, Arnab, that there is also a lot of noise in the numbers on account of restrictions and the COVID-related issue that we spoke about earlier. And it’s important to shift that apart while looking at your modeling in our projections.

I think from our point of view, it’s important for us to underline that our performance of new stores is very encouraging, very robust. When we are opening 50 stores or 75 stores last quarter, even we see them doing well and paying back in well under three years. We see the mother stores wherever there’s a split, doing well, recovering well in the three years, much faster than three years. So from our point of view, the performance of the new stores is very, very encouraging.

Arnab Mitra — Credit Suisse — Analyst

Sure. My actually, question just a follow-up was that incrementally, let’s say, this year, you’ve added 175, 180 stores, the percentage of new stores which are essentially cannibalizing some sales from earlier stores, that has increased and will possibly increase given that you have the target of lowering the delivery time. So from that point of view, while I completely take what you say in terms of payback period, that all is intact. But the incremental overall sales addition from new stores is at a slightly lower pace for the system average. Would that be like how you would also see it?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, Arnab, I would repeat again what I said, that when you open new stores, the new store opening logic is not governed only by splitting existing stores or only by doing faster delivery, but the logic for opening a new store is driven by three or four things. New town opening, a new town opportunity. We are present in 322 towns. India has more than 700 towns with one lakh population. So there is a huge runway for us to enter new markets. Go deeper in existing markets, now say we have one store, when you open the second one, where we have 2, we can open third one and so on and so forth.

Number three, open more stores in areas, in existing towns, even in large markets, where we have a large network, but we see the opportunity as being even in virgin areas. We are seeing the urban sprawl grow in metro after metro [Indecipherable] urbanization. And therefore, there’s an opportunity comes up in these new emerging micro markets. And then, of course, there is room for us to split the store to do faster delivery. So all of these are very important and different reasons for opening a new store. It’s not just driven by a split. So which is why we expect this delta between SSG that we spoke about earlier, is not too wide. So maybe the mild quarter-on-quarter depending on the phasing of stores, but it will not be a democratic trend of widening, no, not for sure.

Arnab Mitra — Credit Suisse — Analyst

Got it. And my second — yes, sure.

Ashish Goenka — Executive Vice President and Chief Financial Officer

If I may just add, Pratik, and to — specific to your question, Arnab, the incremental sales or revenue that we see from a split store versus a new store in a new town and the buildup of revenue is actually not very different. Yes, so that, I think, answers — should answer your question. And secondly, the ratio of split to a new that we are seeing in the past couple of quarters is not unlikely to be very different in the future as well.

Arnab Mitra — Credit Suisse — Analyst

Got it. Got it. And my last question was on the inflation that you mentioned on food as well as fuel. If you could just let us know in the pricing that you have taken, does it kind of mostly cover for the incremental pressure that you’re seeing on the cost side? And any kind of negative reaction you’ve seen from a consumer demand point of view after the pricing is working? That would be the last question.

Pratik Pota — Chief Executive Officer and Wholetime Director

So I’ll take on that question, Arnab, thanks. So we did make a pricing intervention towards later half of December. So I think the pricing has gone in well. We are continuing to see headwinds on inflation in the current quarter as well. So we’ll keep watching the space very closely. As you know, the situation is quite dynamic. We are seeing the way crude has been moved up and the pressure on commodities are continuing. Right now, we believe that the pricing intervention that we have taken towards the end of December should cover for a large part of the inflationary headwind that we’ll face in quarter 4, but we will keep watching this space closely. However, we are committing to delivering us a very healthy level of margins.

Arnab Mitra — Credit Suisse — Analyst

Okay, thanks. That’s it from my side. All the best.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thanks.

Operator

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

Avi Mehta — Macquarie Capital — Analyst

Hi Sir. Sir I just wanted to kind of, again, check on this and LFL definition. What I wanted to understand is that the gap between overall revenue growth in LFL, that has reduced over the years despite store addition as a percentage remain more or less constant at around 10%, 11%. I wanted to just understand conceptually, is this reduction in gap that more because of splitting? And the reason why I say is, first quarter, the difference between LFL and SSS was 6%. Second quarter, it was 3%. So what number should we assume to be, so that we can understand the new store performance?

Pratik Pota — Chief Executive Officer and Wholetime Director

Avi, I’ll try and answer this question making it a repetition to you, but please bear with me. I think we are seeing tremendous opportunity in opening new stores. The new stores come with very good paybacks. The mother stores that we split, recover revenues very, very quickly. We also obviously are seeing new stores get incremental system revenue growth. Now I think there will be some noise quarter-on-quarter in terms of the gap between LFL and system growth. But I think the underlying point to recognize is that we are seeing strong underlying growth of like-for-like of stores that we haven’t split, bolted on a company by growth coming from new stores that we open, which do well, which pay back in under three years, and that together needs for system growth. There may be some dispersion and some difference quarter-on-quarter. I think the larger point is that both our split stores and our new stores are doing exceedingly well.

Avi Mehta — Macquarie Capital — Analyst

Okay, sir. Okay. I mean the inherent reason I was asking is just to understand this better and so we can appreciate if it is split-related, as you rightly said, it will recover with the lag, but if it is new performance-related, we would like to understand what is the reason to, I hear you?

Pratik Pota — Chief Executive Officer and Wholetime Director

And Avi, just to sort of repeat what Ashish said a little while ago, I think in terms of the payback and the performance of both our new stores in new virgin areas and also the performance of our split stores, both of them are very strong and very robust and not very dissimilar in terms of payback. I think sometimes you might see the numbers vary because of the timing of the store opening into our quarter, depends on when we opened in the quarter, we opened in the first month of the quarter or the second month or the third month, etcetera, there might be some noise setting because of that. But conceptually, the larger point is that both our split stores and our new stores are doing exceedingly well and doing similarly.

Avi Mehta — Macquarie Capital — Analyst

Okay, sir clear. Sir, the second bit was essentially on the — as we reopen now, while you pointed towards operating restrictions, what you had highlighted in the last quarter is there is an increase in promotional activity that you witnessed. In that context, a, whether that is sustained?. And b, with the price increase, have you seen any consumer pushback if you would kind of give us a sense on how that is happening? Thank you.

Pratik Pota — Chief Executive Officer and Wholetime Director

Avi, I think on your second part of the question first, we implemented, as you know, price increase in the month of December, but it’s been now almost 45 days since then. We have not seen a pushback from customers on pricing acceptance. I think it’s important to remember that even after the price increase, we remain the most affordable and there I say the best pizza. And therefore, the most value for money pizza offering in the market. We have been tracking our value for money scores very closely in the last six to eight weeks. It is something that have improved, and there’s been no pressure on value for money. So we feel good about the way the market and the consumer has accepted our price increase.

Avi Mehta — Macquarie Capital — Analyst

Yeah. On the promotion point, sir, as if you could kind of just comment on that?

Pratik Pota — Chief Executive Officer and Wholetime Director

I think what has happened, Avi, on the promotional intensity is that as inflation has hardened and there has been very real cost pressures across the category, we’re seeing the promotional intensity across the industry become a little bit more moderated. And we expect that to continue also in quarter four. We are seeing trends become a little bit more selective about promotions, use a lot more of targeted promotions and targeted discounts rather than blanket across-the-board discounts.

And our strategy is similar. We are using very targeted discounts based on discount affinity, based on the purchase propensity and responsiveness to discounts. And we are doing very, very focused discounts and promotions to drive conversions without having it across the board discount being given out.

And just to also underline what I said in the last call as well, we are competitive in our promotions, and we will remain competitive. Our promotions are obviously structured in a way that we incentivize customers ordering from our own assets, and therefore, the best promotion and the best pricing always to customer on our own assets and we see that translating into a higher growth and higher stickiness for our own assets.

Avi Mehta — Macquarie Capital — Analyst

If I hear you correctly, you’re saying a relative price index, if I were to kind of put that, that remains more or less similar to second quarter despite the price increase because of the change in promotion intensity? That’s a right feedback to takeaway, right, sir?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, I didn’t say that. That was your interpretation.

Avi Mehta — Macquarie Capital — Analyst

Yes, that’s my interpretation, but I just wanted to say…

Pratik Pota — Chief Executive Officer and Wholetime Director

No, no, no. So just to clarify, of course, promotions continue, but for the category as a whole, there have been some moderation given the inflationary pressures, but our pricing has been received well and it’s gone down smoothly.

Avi Mehta — Macquarie Capital — Analyst

Thank you very much, sir.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, Avi.

Operator

Thank you. The next question is from the line of Gautam Rathi from CWC Advisors. Please go ahead.

Gautam Rathi — CWC Advisors — Analyst

This is Nishit. Thanks for the opportunity and congratulations, Pratik, for opening 75 stores, great achievement. Very, very happy to see that. I just wanted to understand, I know you’ve already answered this question before, but still just trying to get slightly better qualitative view, if you could share something more on that. Is the fact that you came out and said hyper-growth is what you are looking to target, right? And so the question I’m trying to understand is with all the noise that was there in the quarter with the last 15, 20 days, seeing restrictions with you closing stores and all those things are there, were you seeing hyper growth in the period that things have started to normalize, right, as per your this thing? Or was that the big reason?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, thank you for the question, Nishit. I think the — I think short of using semantics, I think it’s important to recognize that the operational constraints during the quarter materially impacted the performance. And of course, the constraints that were increased during the spinoff of December aggravated that impact. I think our opening of 75 stores underscores and points to our belief in the hyper growth potential of this category in the period ahead. The fact that notwithstanding the restrictions we have, if anything, increased the pace of new store openings. The fact that, as I mentioned earlier, Nishit, our experience with new stores remains very strong.

Our split stores experience remains very strong. I think that points to the fundamental momentum in this category. It’s hard to see that translate entirely into numbers because of the operating restrictions, but we feel good about the inherent and underlying momentum of this category.

Gautam Rathi — CWC Advisors — Analyst

No, Pratik, there’s a follow-up…

Pratik Pota — Chief Executive Officer and Wholetime Director

I recognize, Nishit, that and we discussed it last time. Sorry, sorry, if I may just finish. Yes, sorry. I think it’s important to remember that COVID and the pandemic is going to be a structural pivot point for this category. It is leading to and it will lead to even more — the industry becoming a lot more organized as consumers seek out and prefer the safety of known brand, established brands with hygiene standard brands can be taken as read. So we will see the structural change happen, and we are seeing already play out.

You see the formation and — but the growth of big brands within this category. All of these are the tailwinds. I think there are these off and on headwinds that come from COVID and the restrictions that are imposed because of that. So it’s hard to pull about the noise. But the fundamental belief that we had in the categories potential and the growth two quarters back, one quarter back, remains absolutely unchanged. If anything, we are even bigger believers.

Gautam Rathi — CWC Advisors — Analyst

No, I think just this one — because the only point I’m trying to understand here is you mentioned December is a very important quarter. And if my understanding is right, December 2019, the share of dine-in would have been much higher, right? And so if you see a massive de-growth in that category, which has not come up, so all the good work that would have been done and the delivery takeaway is kind of optically getting worse. Is that — I’m just trying to understand the — trying to peel the layers of this 12%, 13% number that is out there, right? Is that fair to kind of — because otherwise, this number would have been much better.

Pratik Pota — Chief Executive Officer and Wholetime Director

No. So I think like I said earlier, I think the impact on the ground that we had in December was material and significant. And that happened because of restrictions coming in, in the most important period, the most important days of the month, the important days of the year. So the answer is in the affirmative is that yes, had we not had those restrictions, our performance and the numbers would not be significantly higher. It’s hard to hazard a guess to what would have been, and I wouldn’t want to go down that path. But yes, we were impacted materially by the restrictions in December. But it’s important to remember also that there were restrictions ongoing even before that, especially on dine-in.

Gautam Rathi — CWC Advisors — Analyst

No, that’s fair. That’s fair. And one last thing. You said you — can you share your NPS number because you have — great if you can get that number?

Pratik Pota — Chief Executive Officer and Wholetime Director

No, I mean, I think this is a fair question to ask. And look, we are manically focused on tracking NPS. And we feel really good about and really proud of the progress that we made and the team that has driven it. I am really proud of the work they have done. We have moved the needle on NPS significantly, and we have moved the needle despite the operating challenges on the ground in terms of COVID, in terms of restrictions and constraints. I think quarter-on-quarter over the last two years, our NPS scores have moved up, they’ve moved up in dine-in, they’ve moved up in delivery, they’ve moved up in takeaway. So I mean, I would not be able to share the numbers, unfortunately. But I think the reality is that our numbers are absolutely right out there in terms of the investment class.

Gautam Rathi — CWC Advisors — Analyst

Thanks a lot, Pratik. I’m really excited to be part of this journey.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you so much for your questions.

Operator

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

Vishal Punmiya — Nirmal Bang — Analyst

Yeah. Thank you for the opportunity. And firstly, congratulations to the team for the launch of Popeyes in India and really best of luck for that business. In terms of store additions, continuing from the previous question, with 16 net additions this quarter, are we revising the store opening target from 150, 175 for FY 2022?

Pratik Pota — Chief Executive Officer and Wholetime Director

Vishal, as you know, we’ve already opened 150 stores. So it would be fair to say that the number that we’ll be delivering would be higher than 150 to 175, to be closer to 200 stores that we opened in this financial year. So that’s what we are targeting. Of course, remember that there are challenges on the ground in terms of COVID and operating restrictions, so those are the on-ground challenges. And they would certainly impact the way — the pace at which we open the stores and the phasing of these stores, but our objective is to go after now a revised number of 200 stores.

Vishal Punmiya — Nirmal Bang — Analyst

Understood, understood. Secondly, you’ve mentioned that for the Popeyes business, there would be an in-house delivery fleet with 100% use of e-bikes, if you can also help us with the number of e-bikes that you use today in the domestic Domino’s business? And is there any target in terms of e-bikes for the domestic Domino’s business in terms of the number of bikes as well as in terms of the investment that would be put behind that? Thank you.

Pratik Pota — Chief Executive Officer and Wholetime Director

No, thank you, Vishal, I think the Popeyes use of e-bikes, while we’ve called that out, the reality is that we have been moving a large part of our fleet in Domino’s, to electric in the last couple of years. A dominant majority of our new bikes that we purchase are e-bikes. There are some delivery situations in which e-bikes become difficult, mountain, hilly areas, et cetera. Other than that, in most other store locations, all the new sites that we — the fleet that we buy is e-bikes in nature. So you will see us progressively increase the contribution of e-bikes in the Domino’s system as well. And it will become — it’ll comprise a large and dominant part of our overall fleet in the next three to four years.

Vishal Punmiya — Nirmal Bang — Analyst

So would it be fair to assume that…

Pratik Pota — Chief Executive Officer and Wholetime Director

Apart from…

Vishal Punmiya — Nirmal Bang — Analyst

Yeah.

Pratik Pota — Chief Executive Officer and Wholetime Director

Yeah, please go ahead, sorry.

Vishal Punmiya — Nirmal Bang — Analyst

Yeah. So would it be fair to assume that the mix of e-bikes would be more than 10% of our total number of bikes for the Domino’s business?

Pratik Pota — Chief Executive Officer and Wholetime Director

Vishal, we don’t give a number out, but since you’re asking a very specific sort of thing, the answer is yes. I mean it will be significantly higher than that.

Vishal Punmiya — Nirmal Bang — Analyst

Okay, okay. Thank you. Best of luck.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, Vishal.

Operator

Thank you. We take one last question from the line of Chanchal Khandelwal from Aditya Birla Capital. Please go ahead.

Chanchal Khandelwal — Aditya Birla Capital — Analyst

Thanks. Can you hear me?

Pratik Pota — Chief Executive Officer and Wholetime Director

Yes, Chanchal.

Chanchal Khandelwal — Aditya Birla Capital — Analyst

Yeah. Thanks for taking my question. Just one thing on your journey to become a food tech company, you’re already 1,500-plus Domino’s. Now if I look at all the other brands put together, you’re less than 100 stores. My thought is how fast you want to accelerate? It’s time for you to accelerate, competition is heating up in this space, why are you slow here? And how — and see if you take a three-year view, how many stores, if you can give some guidance there will be useful.

Pratik Pota — Chief Executive Officer and Wholetime Director

Chanchal, just to make sure what I got the question right, the question is about the pace of expansion of the new brands, is it?

Chanchal Khandelwal — Aditya Birla Capital — Analyst

Yeah, all the three brands put together, Hong’s Kitchen, Ekdum! and Popeyes.

Pratik Pota — Chief Executive Officer and Wholetime Director

Got it. No, thank you for the question, I think let me begin by underlining, how excited we are with the prospect and the potential for all of these brands. Let me start with the newest brand that we have, which is Popeyes. The first one that we opened in January met with a very, very strong, very strong consumer response. And just to update, we opened the second store today. And we expect to open the third store as well in the near future.

So the momentum that we are seeing in Popeyes and the response that we have seen from consumers is very positive. And we feel very good about being able to scale up the Popeyes network in the periods ahead. On Hong’s Kitchen, we’ve had the learnings now from our experience on the ground. We have now become the largest QSR network, as we say earlier, in Delhi-NCR. And we are now fine-tuning the model and we were looking to scale this up progressively outside of Delhi-NCR in the periods to come.

Similarly, on Dunkin’, as I mentioned in my last call, we are focusing the brand a lot more on coffee now. And that is the early feedback and early indicators are positive. And again, you will see us do more of that in the periods to come. Ekdum!, like I said, is still a phase behind Hong’s, but again, there’s tremendous potential in the brand that we see. Biryani, of course, is the largest category and the fastest moving category. It is delivery friendly. It is sharing friendly. So it’s a category that we intend to really double down on. So we see again a good potential there.

So between the portfolios of brands, we see our network expand significantly over the next three to four years. We do not have a number to give you right now. But as a portfolio, between Domino’s India and the momentum that we are seeing there, plus the potential of these new brands, I think we have a really exciting portfolio we’re gong to building out.

Chanchal Khandelwal — Aditya Birla Capital — Analyst

Sure, Pratik. That was useful. But I mean, Popeyes when you’ve signed up, do you have any target in terms of number of stores given you’re parent? And also, I mean, I’m a little disappointed by seeing the Hong’s Kitchen. Have you got the unit economics, right? Or you’re still working on getting the unit numbers before you scale it up?

Pratik Pota — Chief Executive Officer and Wholetime Director

So Chanchal, on Hong’s Kitchen, first your question, I understand that there is a question on the piece of expansion. And like I said earlier, I think we’re in a place where — we are in a good place to be able to expand. Remember, we wouldn’t be expanding even within Delhi-NCR, if we haven’t got the economics, right? So there is a convergence of multiple tailwinds here in Hong’s. The food is working well.

We’ve got the value for money credentials being underscored. We’ve got the in-store operations piece refined. Our delivery experience is very positive. And of course, the financials increasingly have fallen in place. So which is why we feel good about we’ll be able to expand next year on Hong’s.

On Popeyes, I want to take you back to our press release that we issued when we signed up with RBI for the master franchise. We had talked about the potential for hundreds of Popeyes stores in the country. And again, whatever we are seeing makes us believe that the potential is even more. So we are very excited by Popeyes. And you will see us scale the network progressively in the period ahead.

Chanchal Khandelwal — Aditya Birla Capital — Analyst

Sure. Thanks, Pratik and wish you all the best.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, Chanchal.

Operator

Thank you. I would now like to hand the conference over to Mr. Pratik Pota for closing comments, over to you, sir.

Pratik Pota — Chief Executive Officer and Wholetime Director

Thank you, everyone, for joining us and for your time on the call today. I hope and trust that we able to answer your questions. And of course, if you have any follow-up questions that you believe that you want to throw more light on something, please free to reach out to our Investor Relations team and to Laksh. And we’ll be happy to get back to you and respond to your queries. Thank you so much. Have a good evening, and stay safe. Thank you.

Operator

[Operator Closing Remarks]