Jubilant FoodWorks Ltd (JUBLFOOD) Q4 FY22 Earnings Concall Transcript

Jubilant FoodWorks Ltd (NSE: JUBLFOOD) Q4 FY22 Earnings Concall dated May 30, 2022

Corporate Participants:

Deepak Jajodia —

Pratik Pota — Chief Executive Officer

Hari S. Bhartia — Co-Chairman

Ashish Goenka — Executive Vice President and Chief Financial Officer

Analysts:

Nihal Mahesh Jham — Edelweiss Capital — Analyst

Vivek Maheshwari — Jefferies — Analyst

Percy Panthaki — IIFL — Analyst

Amit Sachdeva — HSBC — Analyst

Nishit Rathi — CWC — Analyst

Tejas Shah — Spark Capital — Analyst

Latika Chopra — JP Morgan — Analyst

Avi Mehta — Macquarie — Analyst

Devanshu Bansal — Emkay Global — Analyst

Shirish Pardeshi — Centrum Wealth — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day and welcome to the Q4 FY ’22 earnings conference call of Jubilant FoodWorks. As a reminder, all participant lines will be in the listen-only mode. And there will be an opportunity for you to ask questions after the presentation concludes. [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, sir.

Deepak Jajodia —

Thanks. Good evening, everyone, welcome to Jubilant FoodWorks quarter four and FY’22 earning call for investors and analysts. We are joined today by senior members of the management team, including our Chairman, Chairman, Mr. Shyam Bhartia; our Co-Chairman, Mr. Hari 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 and year ending 31 March, 2022. 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 result could vary from the statement. A detailed statement in this regard is available in Jubilant FoodWorks results released and earning presentation. I would now like to invite Mr. Hari Bhartia to share his with views with you. Thank you and over Sir. Thank you Deepak and good evening, everyone, and welcome to our earnings call. This is our ninth quarter of reporting results under the backdrop of pandemic. I am incidentally proud of the way our teams come together, not only [Indecipherable] to innovate to serve our customers, but accelerated our growth and delivered on expanded plans. The operating context during the year was marked by a lot of uncertainty, periodic disruptions. On the other hand, a highly inflationary environment, which led to significant cost pressures. The relentless focus on driving productivity and calibrated price actions helped minimize the impact of inflation on our business. Thanks to our timely investments and the spirit of all our partners we have set an all-time revenue, profitability and network expand record in FY ’22. [Indecipherable] to the remarkable progress registered in our core business, we have made significant strides in investing in avenues that could become additional growth drivers for the company and create a substantial value for our stakeholders. During the quarter, the delivery channel registered a robust growth on our strong base of last year. Timing and takeaway channels combined reported a moderate growth. However, we continue to see a sequential improvement in dining and takeaway channels and the delivery momentum continued to be strong. We opened the highest ever 80 [Phonetic] new stores in the quarter for Domino’s India and enter 17 new cities thereby enhancing our reach to 337 cities. We added 230 new stores and 48 new cities in FY ’22. We intend to continue with this new phase of network expansion and plan to open around 250 new stores in the FY ’23. Popeyes which serves Bengaluru consumers across its four stores received a very enthusiastic response. We are confident that Popeyes will help us build yet another profitable, sizable, and scalable business. In the medium term, we see a potential of opening around 250 to 300 stores. Our quarterly and full-year results were also particularly strong for our international markets where we delivered healthy system sales growth and expanded our store network. In Sri Lanka despite a tough geopolitical and macroeconomic environment, our operations were uninterrupted and we delivered a strong quarter. In Bangladesh, we moved decisively to increase our stake in Bangladesh subsidiary to 100%. This will significantly, help us to accelerate the pace of our business expansion. As most of you know, Pratik has decided to pursue an opportunity outside Jubilant FoodWorks Limited. I on behalf of the Board and all our partners would like to put on record our sincere appreciation for his outstanding contribution by keeping our company to scale new heights despite recurrent challenges in the operating environment. He has been instrumental in laying a strong foundation for the company, to progress towards our vision of becoming a multi-brand, multi-country food tech powerhouse. On behalf of the Board and all our employees, we really wish him a super success in his new endeavors. As all of you already know, the Board also approved the appointment of Sameer Chandrapal [Phonetic] as the Chief Executive Officer and Managing Director. Sameer has 25 plus years of experience with companies like Amazon, McKinsey, GE, and Hindustan Lever in various leadership roles. He comes with a deep understanding of customers in emerging economy and has enormous knowledge and experience in delivering large-scale diversified e-commerce businesses and solving complex business problems through technology. Apart from strong technology experience, Sameer has had a good success in building partnerships and also building partnerships through investments, which is good for any businesses inorganic growth opportunities. He is a strong dynamic and value-driven leader with impressive track record of delivering consistent high-quality performance in tough consumer businesses. He brings in passion to serve customers and build businesses by leveraging technology. As we look to further our investments across our portfolio of brands to become a food tech powerhouse Sameer will be a great addition to this journey and I’m confident that his leadership will bring immense value to company, investors and shareholders. When he joins us in the first week of September, he will be working with an impressive set of leaders who are presently running our businesses and functions. The Board welcomes Sameer to the role and wishes him every success. With that let me turn it over to Pratik to share his perspective for the last quarter.

Pratik Pota — Chief Executive Officer

Thank you, Mr. Bhartia for your very kind words, and good evening everyone. Thank you for joining the call today. The quarter and the full-year results once again demonstrate that our teams are executing well against our key business priorities and that we have positioned the business well to deliver growth despite the prevailing challenges. Revenue from operations was in quarter four INR11,579 million, up 12.9% versus the previous year. In Domino’s the like-for-like growth was at 5.8%. We faced and continue to face intense and broad-based inflationary headwinds, across commodities, fuel and other costs during last quarter. This was offset by driving business efficiencies and productivity, lower and more targeted discounting, and calibrated price increase. As a result, EBITDA was INR2,897 million, a growth of 16.2% and at a margin of 25%, which expanded by 73 basis points year-on-year. Profit after tax was INR1161 million, up by 11.3% with a PAT margin of 10%. We continue to expand our network rapidly with 87 new store additions for India for JFL. We added 80 new Domino’s stores to close the year at 1567 stores. Progressing well on our fortressing strategy, I’m happy to report that more than 70% of our orders are now being delivered in under 20 minutes, without I must season to add any compromises, any dilution of safety or other traffic rules.

Our Dominos app installs were 7.7 million during the quarter we continue to be the highest-rated app on both iOS and Android. During the quarter, we rolled out a number of small changes to the app UIUX to make the experience even more intuitive and seamless for our customers. For instance, we reduced the number of steps for on-boarding a new customer from 5 to 1, thereby reducing the time and effort required to order their favorite pizza. We added seven new stores to emerging brand portfolio during the quarter with four stores for Popeyes and one store each for Dunkin’, Hong’s and Ekdum. On Popeyes, we are enthused by the response, we have received from our guests in Bangalore with sales being significantly ahead of our expectations. Our endeavor is to significantly scale up our presence first in Bangalore and then progressively in other markets across the country.

Turning to our international business in Sri Lanka despite challenging macro and high inflation, the company registered system sales growth of 80.6% during the quarter and opened three new stores. In Bangladesh system sales grew by 44.5% and we opened one new store. The Bangladesh market has very low [Technical Issues] penetration and is one with tremendous promise and we are well placed to leverage the opportunity to grow with a wholly-owned subsidiary.

Before I conclude, if I may be allowed to strike a personal note. This is, as you know, my final earnings call as the CEO of this incredible company. I wanted to place on record my deep gratitude to the Chairman and the Co-Chairman and the Board of Directors at Jubilant FoodWorks for having entrusted me with the responsibility of leading this company over the last five years and for their support, their encouragement, counsel, and guidance. I also want to express my deep appreciation to all of you for your support, your encouragement and constructive feedback that you’ve extended to me over the last five years. I must say that I learned a lot from your questions, your reports and our interactions and I grew into some of that while driving the transformation here. And so, I mean I feel confident that we have the right growth levers and the right leadership team for to JFL evolve into a vibrant multi-brand, multi-country food tech powerhouse.

I would also like to take this opportunity to congratulate Sameer Chandrapal [Phonetic] and warmly welcome him as an incoming CEO. I wish him all the very best to take this wonderful company to greater heights. With that I would now like to turn the turn to the moderator, and request 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] Ladies and gentlemen, we will wait for a moment, while the question queue assembles. The first question is from the line of Nihal Jham from Edelweiss. Please go ahead.

Nihal Mahesh Jham — Edelweiss Capital — Analyst

Yes, thank you so much, and congratulations on the strong performance. Sir, three questions from my side. First is that, is it possible to give what is the recovery, specifically in the dine-in channel and the delivery channels separately. I’m not sure if that has been given [Speech Overlap].

Pratik Pota — Chief Executive Officer

So Nihal can you just back up on the question, please. It wasn’t very clear.

Nihal Mahesh Jham — Edelweiss Capital — Analyst

I’m sorry, I was asking that could you give the specific recovery in the dine-in channel and the delivery channel for this quarter?

Pratik Pota — Chief Executive Officer

Got it. So, thank you. Thank you, Nehal. So as I mentioned in my remarks, and as Mr. Bhartia also mentioned in his opening remarks, we had a strong recovery and strong growth last quarter. The growth was both own delivery notwithstanding the robust base from last year. The growth in delivery was on the back of a strong order growth as also growth in ticket. In dine-in, we saw a strong and sustained growth and we saw a sequential improvement of course as you can imagine January was a little soft for obvious reasons of Omicron but thereafter we saw a strong recovery in dine-in and a sequential improvement in dine-in channel as well. So, the growth was across channels. It was on the back of both orders and tickets and we see dine-in also improved sequentially.

Nihal Mahesh Jham — Edelweiss Capital — Analyst

Sure. Mr. Pota, that is helpful. The second question was, you’ve obviously laid out the split stores that we’ve added this year and the medium-term target of 3,000 stores is something that we have been highlighting. Would it be possible to give a sense that how will this 3000 look in terms of the number of incremental split stores that we are looking at going forward and also the kind of city that you expect, you will be in. That will be my second question and I maybe I will come to the last one after that.

Pratik Pota — Chief Executive Officer

Got it. So Nihal, you’re absolutely right. We see a very clear and very exciting runway to add 3,000 or more Domino’s stores in India. The expansion work will come from a combination of three broad themes, one is forecasting [Phonetic] existing markets and therefore, like you said splitting stores to improve the speed of delivery, improve customer service levels and become even stronger in existing markets. Number one, number two opening up new virgin territories in existing markets as suburbs evolve, as new market — macro market evolve that the second big driver of store expansion. The third one, of course, will be entry into new cities. And as you know, and as you’ve noticed, we’ve entered into 17 new towns last quarter. So our expansion will come from a combination of this as to what precisely that combination will be and what the split will be, it’s hard to tell, but it will be a balance of all of these three things. I think the other thing I want to mention since you asked about new towns specifically is that it’s important to also call out that our performance in new towns, including the ones that we entered last quarter has been very strong, very encouraging. New towns are markets where there is already a high awareness for Domino’s and for the brand and there is, therefore, anticipation when the brand enters the market. So our revenues are strong and we start off and sustain a high level of revenue. We also have strong flow-through into store-level margins. So entry into new towns is also profitable and does not come with any dilution.

Nihal Mahesh Jham — Edelweiss Capital — Analyst

Sure, thank you so much. Just one last question, and this goes to the promoters, with the new CEO coming in, while you did highlight certain attributes that he brings on the table are there any specific two or three key factors that we will be looking at or would be a part of this KRA? and I’ll be done.

Hari S. Bhartia — Co-Chairman

You know that we have in this — in the last four or five years, we have built a very strong digital backbone, who have strong operations in food services business and we want to continue to build on that, because going forward technology will continue to play a very important role. So one of the agenda for the new CEO would be to first focus on our multi-brand, multi-country approach, but bring technology to solve productivity, but also use digital to have better interaction with the customers and better understanding also.

Nihal Mahesh Jham — Edelweiss Capital — Analyst

Sure. That’s helpful. Mr. Pota congratulations to you and best wishes to you. Thank you so much.

Pratik Pota — Chief Executive Officer

Thank you. Nihal. Thank you so much.

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. My first question is, can you just talk about the demand environment in the context of macro high inflation some reports talking about a pullback in discretionary consumption and on top of that the fact that you have also taken up prices as have other QSR chains. So can you just talk about how do you expect demand to shape up in the next few quarters? More particularly the next couple of quarters, I would say.

Pratik Pota — Chief Executive Officer

Thank you for the question. Vivek, as you mentioned and as we called out as well, we are seeing significant inflation pressures. We have attempted to absorb some of those through on productivity and our own initiatives. But we have passed on some of that through price increase. Both last quarter and otherwise this price increase that we’ve taken has gone down well. Our growth last quarter as I mentioned came on the back of both orders and ticket. I think it’s also important to underline that even after the price increase, we remain the most affordable pizza brand in the country. Our value for money scores, which we keep monitoring very closely also remained very strong and we haven’t seen a moderation in those. So as of now, I think we recognize that there are inflationary pressures, but we are not seeing yet translate into any constriction of demand.

Vivek Maheshwari — Jefferies — Analyst

Got it, got it. And the other bit is, sorry. How many stores you have guided for FY ’23 the new stores number.

Pratik Pota — Chief Executive Officer

Yeah. So, we haven’t yet given the guidance. So, if your question is — so the guidance for FY ’23 for Domino’s is around 250 stores — 250 stores.

Vivek Maheshwari — Jefferies — Analyst

Right. That’s what I wanted to confirm, so if I go back to the cycle of 2013 to 2017 when SSS was slowing at that point of time particularly ’14 to ’17 you accelerated the stores and then, then you had to reverse a lot of that, how do you ensure that the same cycle doesn’t get repeated this time when SSS is slowing, you’re obviously again expanding very aggressively. What — that 250 number is something you haven’t ever done, how different, it will be from the cycle of ’14 to ’17 for example.

Pratik Pota — Chief Executive Officer

So I think that’s a fair question Vivek and we, I think we’ve spoken about that in a couple of calls earlier as well. I think we have a very, very strong and rigorous metric and yardstick for new store evaluation. While we give you a guidance, you can be sure that we do not chase numbers internally. And we’ve not opened and approve an store till it meets all profitability yardsticks and milestones. I think all the stores that we’ve opened in the recent past both in the last financial year and even preceding that most of these stores have met our profitability goals and guidelines and our store payback remains well under three years, between two to three years, sometimes even lesser. As you’ve seen in FY ’22 and more recently in quarter four, despite inflationary headwinds, despite opening 230 stores last year our margins have been robust. So you can be sure that the learnings from last time are very clearly etched in our mind and we will make sure that we use all possible rigor to ensure that our margins hold up even as we accelerate our network expansion.

Vivek Maheshwari — Jefferies — Analyst

So leaving aside the inflation bit because which is beyond control, but are you trying to say that this 230 number will not impact your margins in anyway?

Pratik Pota — Chief Executive Officer

We do not see a material impact on margins of the network that we expanding, no.

Vivek Maheshwari — Jefferies — Analyst

Got it. And the last question, beyond Domino’s the other brands, you did speak about Popeyes and my question is, you know the last two years, you would have lost a lot of time due to — due to pandemic. I mean everybody has — every other chain as well. Do you see a material change in the store expansion trajectory in brands, beyond Domino’s from a next 12 to 24 months standpoint? That is my last question.

Pratik Pota — Chief Executive Officer

That’s a good question, Vivek. Let me — I think put out or as I mentioned earlier, we have an aggressive plan of opening 250 stores for Dominos in FY ’23. We are choosing to prioritize both Domino’s and Popeyes for network expansion in FY ’23. For Popeyes, we will open anywhere between 20 to 30 stores in the year. For Hong’s Kitchen, we intend to focus on increasing brand awareness, increasing our online presence in the Delhi NCR market and for the first — in the next two, three quarters, we will be taking a pause on network expansion and putting all our energies behind Popeye’s and Domino’s. Ekdum, we are focused on driving unit economics and establishing that proving the models before we scale up. So that is a very clear outline of our network expansion plan across all our brands for the next two to three quarters.

Vivek Maheshwari — Jefferies — Analyst

Got it. Thank you very much and Pratik wishing you all the very best for future.

Pratik Pota — Chief Executive Officer

Thank you, Vivek. Thank you so much.

Operator

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

Percy Panthaki — IIFL — Analyst

Hi, sir. My first question is on advertising. So if I look at FY ’21, I think for the full year, the ad spend as a percentage of sales was close to about 8.5%, it was higher than normal because the sales itself — or the denominator itself shrunk and therefore that ratio went up, could you give me the number for FY ’22 how much is your ads ad spend as a percentage of sales?

Pratik Pota — Chief Executive Officer

So Percy, as you mentioned rightly in both because of the revenue shrinkage on account of COVID plus the fact that we choose very deliberately to stay invested in brand marketing through the COVID period or advertising promotion was significantly higher than average. In FY ’22 that got corrected. We are ensuring the however that we make all the necessary investments in driving brand awareness, driving innovations, driving all our all our key priorities and the number is much more in line what we had done in the past.

Percy Panthaki — IIFL — Analyst

What I’m trying to understand here is in FY ’23, is there any sort of reduction here possible, as a percentage of sales, obviously not in absolute terms versus FY ’22?

Pratik Pota — Chief Executive Officer

No, but I think, again, that is great question. I do not expect us to have any reduction in marketing spend in FY ’23. We believe we are at the right level where we need to invest behind the brands, we need to invest behind all our key priorities and invest most importantly driving and stopping growth [Indecipherable] demand. We talked earlier about the fact that we are in an inflationary environment. It’s very important to have the brand invested behind to drive demand, to drive new users and to ensure that we support our key priority. So we don’t expect marketing spend to reduce and flow through into the P&L [Phonetic] in FY ’23. That will not, — that that’s not part of the plan. I hope that’s clear.

Percy Panthaki — IIFL — Analyst

Right, right. Secondly, on Popeyes, can you give us a little more idea in terms of you would obviously have some kind of agreement with the brand owner as to what kind of number of store openings you need to do over a three to five-year kind of period. So while have given us an idea on FY ’23 you said some 20 to 25 stores, but how much can we expect, let’s say, by the end of FY ’25 how many stores, can we expect.

Pratik Pota — Chief Executive Officer

So Percy, let me go back and talk about a little bit more about Popeyes and what we have seen before I answer your precise question. As I mentioned earlier, we are quite, quite excited to see the response to Popeyes, in the first few stores in Bangalore. Consumers really loved the [Indecipherable] flavors and in chicken sandwich, which is of course a differentiator for Popeyes, we are a very clear winner. We have managed to given our — given our standing — at JFL we have got a very strong partnership going with RBI in advantage terms and we are looking to scale up or Popeyes aggressively across the country. Without putting a target for FY ’25, let me say that in the medium term, we expect Popeyes to have at least between 250 to 300 stores, and it will have a national presence in the medium term.

Percy Panthaki — IIFL — Analyst

Right. Sir. And my last question is, given all your expansion both in Domino’s as well as other brands and also the inflationary scenario that is present in front of us, how do you see overall company margins for FY ’23. I don’t expect you to give exact number, but what I was looking at is versus the full year FY ’22 margins, do we see any sort of downside to that number.

Pratik Pota — Chief Executive Officer

So look, I think first of all, the premise of your question, even as we make the investments required to drive our growth levers be it Popeye’s of course expansion into more Domino’s Markets and more Domino’s stores. We are also making very careful choices, we also are toughing ourselves to drive productivity and efficiencies to ensure that we do not compromise and dilute on margins. We also are watching inflationary trends very, very closely and we will do what is required to ensure that we — while we remain value for money, we also do not compromise on margins. So that’s, that’s a fine tightrope walk. I don’t expect us to have any impact on margins in FY ’23 on a trend line basis.

Percy Panthaki — IIFL — Analyst

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

Pratik Pota — Chief Executive Officer

Thank you.

Operator

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

Amit Sachdeva — HSBC — Analyst

Yeah, hi, good evening and thank you for taking my questions and congratulations for good set of numbers, sir. My question is just on Popeyes, my earlier question has been answered. Sir Popeyes, you are talking about 200 to 300 stores, and you’ve obviously mentioned that initial plan is going ahead of your initial target in terms of throughput [Indecipherable], the response customers have given. So my sense is that 40 to 60 stores a year given the incumbent presence of for example Domino’s all over India with 1570 odd stores and you probably would have the privilege relationship with landlords and the incumbent infrastructure that’s needed for the store already, isn’t that 40 to 50 stores a year target is pretty conservative [Indecipherable] or probably not aggressive enough and if you are happy with the economics, which store is generating, is it too less a target. I’m just stressing it something is 250 stores in medium-term, is it like too conservative a guidance?

Pratik Pota — Chief Executive Officer

I like that question Amit, and I like the implicit premise of the question. Look, you have, you’ve seen us open 200 plus stores on Domino’s last year 230, you’re talking about 250 stores plus next year. So you can be sure that we have the capability and the bandwidth and of course the capital required to accelerate our network expansion for Popeyes as necessary. We’d also don’t want to get ahead of ourselves. Remember we got four stores right now in Popeyes and therefore we want to give a guidance that we believe is aggressive yet achievable. If the numbers continue to play out the way we’re seeing it right now, we have the capability, we have the wherewithal to go fast on the expansion. But I think let’s start, let’s start running before we can slide.

Amit Sachdeva — HSBC — Analyst

Sure, sure. So that’s very, very helpful. I was just wondering that it is probably lopsided towards the current thinking extending to lockdown rather than I probably has it a guess that it is the 250-300 is bit of an open number, and based on your success that might be sort of looked at each year, how it could be if I’m — if I’m correct in thinking that.

Pratik Pota — Chief Executive Officer

I think that would be a fair statement to make, I mean this is an outlook that we have as things stand today, we’d be happy to be proved in hindsight, a little bit conservative estimates and of course get, if we can grow faster. We would love to do so.

Amit Sachdeva — HSBC — Analyst

Sure. And Pratik just if I missed that, what kind of — I know this is too early days, but this format has a certain gross margin and basic economics that we have our targeted economics in some sense. I know that’s too early, but what could be the typical gross margins that business will operate at? And could you also your vision of dine-in versus delivery mix for that format. I’m not saying reality today, but what would you be — what would be the optimum reality for it, this format.

Pratik Pota — Chief Executive Officer

Yeah, yeah. So let me answer in reverse order. I think this format certainly, and this brand certainly will have slightly in fact a more elevated dining mix as compared to what we see at Domino’s for sure. We are seeing that already and we expect that to sustain in the future as well. On your, on your first question rather than talk about gross margins, and you are aware, we do the benchmarking across the categories so you know of other players in this space. What gross margins they have, rather than talk about gross margins at this stage, I think it’s important talk about overall profitability at the restaurant level and at the other business level. And on that, we do not expect in the medium term to be any difference from what we see at Domino’s.

Amit Sachdeva — HSBC — Analyst

Okay. Sure. So essentially you’re saying is EBITDA margin level, it should not be not much different from what the format is on a sustainable basis.

Pratik Pota — Chief Executive Officer

That’s right.

Amit Sachdeva — HSBC — Analyst

Okay. Okay. Okay, great, that’s very helpful, Pratik. I’ll probably take the rest of it offline, but thank you so much for being with us for all these years and wish you all the best for your future endeavors. Thanks a lot.

Pratik Pota — Chief Executive Officer

Thank you, Amit.

Operator

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

Nishit Rathi — CWC — Analyst

Yeah, hi. I think this is Nishit. Most of my questions are answered. I just wanted to take this opportunity to thank you. You came in at a very, very difficult time and have helped the company and all of us through those times. Just wanted to place my heartfelt gratitude towards that. And thank you very much. Really appreciate it.

Pratik Pota — Chief Executive Officer

Thank you, Nishit. Thank you for your kind words. And thank you for all the support that you’ve extended to me and all the value add that you’ve given me during our interactions. Thank you.

Nishit Rathi — CWC — Analyst

It’s been a pleasure Pratik, thank you so much.

Operator

Thank you. 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. Pratik my first question pertains to our loyalty program. We have been, it has been in the works for a while. Off late as a consumer, I can see some activity on my app on loyalty side. So if you can elaborate, if we have made any progress there?

Pratik Pota — Chief Executive Officer

Yeah. Thank you, Tejas. Thank you for the question. I was wondering that you would come or not. No. So first of all, I think, let me — let me reaffirm what I had alluded to last time as well that we are extremely excited about the loyalty program and we believe would be a significant driver of growth and our retention for us and growing customer lifetime value over time. As we have briefed on around an earlier earnings call we were testing various models of different loyalty program constructs, to see which will be the most effective. We done AV testing [Phonetic] around that. I am happy to report that after having tested two different models we’ve arrived at a winning model and we have scaled up the loyalty program, nationally in quarter one. The reason why I didn’t talk about it in the opening remarks is because it’s technically in this quarter, not the last quarter. And we had tested two different models, one was a cashback-based model. The other was a milestone-based model which owns the customer a free pizza overtime similar as you know to the U.S. loyalty model and that’s that construct one-off in our AV testing [Phonetic], and that has been now scaled up and sent it cheesy rewards. So, it is a very simple construct. For every purchase the customer owns one slice of pizza or 100 points and after completing six transactions and six purchases, the customer can redeem those six licenses for a free pizza and this has now scaled up nationally. Of course, it is — this is happening as we speak. So it’s too early to talk about the impact, but we are confident about its potential value to us over time.

Tejas Shah — Spark Capital — Analyst

Sure, sure. Very interesting. Pratik, the second question pertains to the kind of ramp-up that we are doing in the front end. [Indecipherable], we have always supported this kind of ramp up with an ample investment on supply chain and even in our opening remarks or the press release, we have actually called it out on the supply chain focus as well-integrated supply chain. So if you can elaborate that the kind of ramp that we’re seeing on the front end will it entail any additional CapEx on the back end, at least this year?

Pratik Pota — Chief Executive Officer

No that’s a really good question, Amit, and you’re absolutely right. One of the biggest reasons for our success over the last 25 years has been our very prescient and a very proactive investment in supply chain, well ahead of others and that has helped us grow the Domino’s network, it’s helping us grow our new brands as well and we intend to do sort of also invest in the back end in supply chain and in supply chain capacity even as we grow the front-end. We have, we are putting up a larger commissary in Bangalore and in Mumbai. We are also in the process of expanding our network in Kolkata, and in the western part of the country in Ahmedabad. So apart from Greater Noida, where we have a large commissary, which had set up four years ago, we will now have a new expanded commissary in Bangalore, in Mumbai, in Kolkata, and in Ahmedabad and a ramped up capacity in the Mohali near Chandigarh and all this will happen in FY ’23 and FY ’24. You can be sure that this is one area where the Board focuses, very, very closely and ensure that we are investing to stay ahead and to make sure we have headroom to grow on the front end and as we expand our Popeyes network, we’ve seen supply chain centers will be multi-brand supply chain centers and therefore allow us to expand and grow other brands as well much faster.

Tejas Shah — Spark Capital — Analyst

Thanks, thanks for details. And last one on Russia. So we are seeing that many U.S. based QSRs are not allowed or they are withdrawing from the countries for political reasons. So as a franchise where do we stand? Do we have any advisory from Domino’s global whether to continue operation or withdraw from the country?

Pratik Pota — Chief Executive Officer

So on Eurasia and especially on Russia, I’m going to post of all say that I think you’re aware that we do not have operating control of the business. We have a board presence and we work with the DP [Phonetic] Eurasia very closely. I think there the trading update that was released as recently as last week, and which will tell you that I think the performance has been very strong in both Turkey and in Russia. We are very confident about the longer-term prospects of the business of DP [Phonetic] both in Turkey and in Russia. If you step back on the temporary headwinds that we’re seeing both these markets, there has been no advisory or no update at all from Domino’s vis-a-vis, Russia and therefore there is no change. Business continues in Russia as usual.

Tejas Shah — Spark Capital — Analyst

Thanks, Pratik. Thanks for all this years for very detailed answer and insightful answers. Best wishes for your future endeavors.

Pratik Pota — Chief Executive Officer

Thank you, Tejas.

Operator

Thank you. The next question is from the line of Latika Chopra from JP Morgan. Please go ahead.

Latika Chopra — JP Morgan — Analyst

Yeah, hi, thanks for the opportunity. Hi, Pratik. My first question was on these 250 Domino’s stores you’re planning to roll out in FY ’23. Would it be possible to give some sense on this, on how much of these will be in the existing markets in form of bit [Phonetic] stores and how much of them will be then in the cities? And my second question was any product thoughts on the inflationary trends on wages shift and raw material and rentals, that has margin in the industry today? Thank you.

Pratik Pota — Chief Executive Officer

[Speech Overlap] So Latika. No, thank you for the questions. Let me answer your first question, I think I had sort of pointed out earlier, also in one of my responses that we have a plan to have these 1250 odd stores that we’re opening next year, be a balance of new towns where, as I said earlier, we are seeing a very strong and a robust response both on topline and on bottomline, combination of that along with split stores in existing markets, in line with the fortressing strategy and of course entering new markets and new micro-markets in existing towns. We are working through what the split will be, but you can be sure that it will be a good balance of these three. It will be probably more a combination of splits and new towns and less so of micro-markets, but that number we are unable to share right now.

On your second part, yes, we are seeing inflation trends continue this quarter as well. On commodities, we are seeing some pressure on labor and on manpower nothing, nothing that is unmanageable, but there is some inflation on manpower as minimum wages get revised. On rentals, however, while I think there is — we are expanding more rapidly, we are yet to see material pressure on rentals.

Latika Chopra — JP Morgan — Analyst

All right. And Pratik just to clarify, when you said that you don’t anticipate any pressure on operating margins you are taking into account the investments that will be done behind Popeyes, is that fair understanding.

Pratik Pota — Chief Executive Officer

Yes, Latika that’s right absolutely.

Latika Chopra — JP Morgan — Analyst

All right, thank you Pratik. It was good, interacting with you always and wish you the best.

Pratik Pota — Chief Executive Officer

Likewise, Latika, and thank you so much.

Operator

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

Avi Mehta — Macquarie — Analyst

Hi, sir. Just a quick clarification. Would it be fair to say that the need to take further price hikes is now behind us, given the comments that you made on margins and inflation?

Pratik Pota — Chief Executive Officer

Yeah. Avi. So I will request Ashish to take this question.

Ashish Goenka — Executive Vice President and Chief Financial Officer

So we actually would be aware of the situation is quite dynamic. However, recently, we have seen some stabilization in commodity prices and some moderation also came through in fuel prices post the government reducing the excise duty. So if things were to stand as they stand today, we probably will not need to see — we will probably be able to hold at the current level. However, we are watching the situation very closely. And as Pratik has mentioned earlier, we will take the necessary steps as and when required perfect.

Avi Mehta — Macquarie — Analyst

Perfect. And just two bookkeeping questions, a. if you could share the CapEx number that we can expect in FY ’23 on back of these store additions and investments. And b. [Speech Overlap]

Ashish Goenka — Executive Vice President and Chief Financial Officer

So, I think CapEx would follow the store guidance Avi because actually in large part of our CapEx that we spend are for the store expansion. So as Pratik has mentioned, we are looking at about 250 stores for Dominos and about 20 to 30 stores for Popeyes. So you could expect the CapEx to be in line with that. And apart from that we would also be stepping up our investment in committees to build our back-end supply chain capability, which also Pratik alluded to in the previous question, so you could — we could see CapEx to be moving in line with these two investments definitely. [Phonetic]

Avi Mehta — Macquarie — Analyst

Sir, any number there, which you could share.

Ashish Goenka — Executive Vice President and Chief Financial Officer

So Avi it is difficult to give a number and we normally don’t give a guidance number. But directionally, it will be slightly higher than what we expected in FY ’22.

Avi Mehta — Macquarie — Analyst

Okay. And lastly, sir, I don’t know if this was discussed, but is there any growth number that you could share on how delivery growth has been versus dining growth just was it a large in this quarter, per se, or has dining kind of seeing moderation Q-o-Q, some understanding on that please? Thank you.

Ashish Goenka — Executive Vice President and Chief Financial Officer

Thank you, Avi. As you are aware, we don’t share numbers and a drill down of how the numbers were specifically, but directionally we had a strong growth in delivery on the back of order growth and in dine-in after the — after the blip in January on account of Omicron, we are seeing sustained recovery of dine-in over the previous periods.

Avi Mehta — Macquarie — Analyst

Okay, perfect. Sir. Thank you. That’s all from my side.

Ashish Goenka — Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go ahead.

Devanshu Bansal — Emkay Global — Analyst

Hi, sir. Thanks for the opportunity. I wanted to check if you can quantify the blended price hike taken towards the end of Q3.

Ashish Goenka — Executive Vice President and Chief Financial Officer

Devanshu, sorry, can you say it again? Oh, price hikes? [Speech Overlap]

Devanshu Bansal — Emkay Global — Analyst

Blended price hike towards the end of Q3 if you can quantify the amount.

Ashish Goenka — Executive Vice President and Chief Financial Officer

Devanshu, I think you’re alluding to the price increase we took at the end of Q3. Is that the question?

Devanshu Bansal — Emkay Global — Analyst

Yes, yes.

Ashish Goenka — Executive Vice President and Chief Financial Officer

So I think it was in the range of about 5% to 6% at a menu price level, which we have seen flown through in quarter four. And as you would be aware, we had also taken another round of price increases towards early April, which was in a similar range.

Devanshu Bansal — Emkay Global — Analyst

Sure. And Pratik, I also wanted to take your comment on Q4 seeing both volume and realization growth, was this at the company level or the store level.

Pratik Pota — Chief Executive Officer

Yeah, so this was at the store level and at the company level. We saw, we saw growth in orders come by book and we also saw an increase in ticket. And so, yeah, I mean I don’t know if you want me to clarify any further, but it was a combination of ticket and orders.

Ashish Goenka — Executive Vice President and Chief Financial Officer

And if I may just add on that Devanshu, I think as you would have noted, our wireless system growth was at 12.9%. We also had a strong like-for-like growth, which is 5.8%, so therefore we did see very good growth in our stores. And as Pratik mentioned a combination of growth, driven by both volume and ticket price — ticket side.

Devanshu Bansal — Emkay Global — Analyst

Sure sir. Thanks, that’s helpful. That’s it from me.

Ashish Goenka — Executive Vice President and Chief Financial Officer

Thank you, Devanshu.

Operator

Thank you. The next question is from the line of Shirish Pardeshi from Centrum Wealth. Please go ahead.

Shirish Pardeshi — Centrum Wealth — Analyst

Yeah, hi, good evening team. Thanks for the opportunity. Just two questions on — first on Popeyes. You have said you want to use the understanding in the Bangaluru market. So right now we have about four to five stores. What maximum stores you will open in Bangaluru and then expand in all India or if my understanding is that this learning at purpose stores in Bangaluru is good enough for us to expand in India?

Pratik Pota — Chief Executive Officer

Shirish, I think certainly the scope for us to expand the network more in Bangaluru. I would not like to give specific numbers because that is strategic information and competitive sensitive information, but we see the scope for us to expand more in Bangaluru and then scale up across other markets as well.

Shirish Pardeshi — Centrum Wealth — Analyst

Pratik, let me we reassemble the question. Is the learning for Bangalore is good enough for us to go pan India?

Pratik Pota — Chief Executive Officer

I would — look with the way learnings go. I think it would be false to say that learnings are ever — ever, there is an end to learning. Learnings evolve they are organic that will increase over time. Do we have enough learnings to drive expansion? Absolutely. We do, which is why we are scaling up starting from this year, but the learnings will continue and we will keep learning and evolving as we get more incremental inputs and stimuli.

Shirish Pardeshi — Centrum Wealth — Analyst

My — one follow-up on Popeyes example, you said you were over-excited. So in the initial remarks, you said that we have seen the parameters crossing our thoughts. So, is that the operational metrics you’re referring, or is it that the growth metrics you are referring?

Pratik Pota — Chief Executive Officer

So is it, what metric?

Shirish Pardeshi — Centrum Wealth — Analyst

Are you looking at the growth metrics or the growth of top line which you are excited seeing the brand acceptance and all or you are looking over on the store metrics, which you have seen, surpassing your expectations?

Pratik Pota — Chief Executive Officer

We are looking at the overall delivery and overall experience of Popeyes both from the point of view of customer experience and customer feedback. Our own operations delivery on the ground and every other metric that we use to monitor a normal store performance, so on all of those metrics, we are quite encouraged by what we see on Popeyes and that gives us the conviction to scale up the network from this year.

Shirish Pardeshi — Centrum Wealth — Analyst

Okay. My second and last question, I am referring Slide 3 where we have showcased our aspiration to move to 2,000 to 3,000 [Phonetic] stores in the medium and short-term. Aspirationally, I mean, I’m not saying from the guidance perspective, aspirationally at 3,000 stores what is our comfort level in terms of why the gross margin or EBITDA margin, we would like to work. This is on the context, the incremental competition and QSR penetration in India.

Pratik Pota — Chief Executive Officer

Yes. So Shirish, I mean, look, I think, first of all, let’s talk about the fact that our outlook, we are right now at 1500 stores odd. We’re talking about doing almost 2x of AVR right now and that’s the potential that we see in 3,000 plus stores. I think that itself is a sizable and an very aggressive in a very confident outlook that we are spelling out, number one. Number two, in response to a couple of earlier questions I’ve mentioned very clearly that our expansion of the network is not margin dilutive. We are seeing on new markets and new stores performed very well. New store payback is between two to three years. New markets where we enter have very strong revenue and very strong bottom-line performance and we are therefore not expecting the margin dilution. Now what precisely be the gross margin, when we got 3,000 stores, I think that’d be premature on that would be, I think it is speculative. But the outlook that we are spelling out here on Slide number 3 is one that we get to with sustainable profit margins and sustainable growth. Yeah, I think that — I will leave it at that.

Shirish Pardeshi — Centrum Wealth — Analyst

I got that Pratik. My only worry at this time is that we are — we are trying to expand the footprint, but in the medium to short-term in the wake of chasing the topline growth are we also trying to look at the margin stability and sustenance?

Pratik Pota — Chief Executive Officer

Of course, absolutely right, I think which is why I called out the point that we are looking at growing sustainably and growing profitability and it’s not, I repeat, it’s not a question of either-or. It is and question, we will grow and we will grow profitably.

Shirish Pardeshi — Centrum Wealth — Analyst

Sure.

Pratik Pota — Chief Executive Officer

And we will expand a [Indecipherable] profitably.

Shirish Pardeshi — Centrum Wealth — Analyst

Sure. Thank you, Pratik. And all the best to you for the new assignment.

Pratik Pota — Chief Executive Officer

Thank you, Shirish. Thank you so much.

Operator

Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Pratik Pota for closing comments.

Pratik Pota — Chief Executive Officer

Thank you. Thank you everyone for joining the call and for your questions. We hope that we were able to answer them. If you have any follow-up questions, or clarifications please reach out to the Investor Relations team. Thank you, and [Indecipherable].

Operator

[Operator Closing Remarks]