Restaurant Brands Asia Ltd (NSE: RBA) Q4 2025 Earnings Call dated May. 19, 2025
Corporate Participants:
Navin Agarwal — Moderator
Rajeev Varman — Chief Executive Officer
Sumit P Zaveri — Chief Financial Officer
Kapil Grover — Chief Marketing Officer
Sandeep Chaudhary — Independent Director
Gaurav Ajjan — Head: Strategy & Investor Relations
Unidentified Speaker
Analysts:
Unidentified Participant
Pranay Roop Chatterjee — Analyst
Atul Mehra — Analyst
Rishi Mody — Analyst
Presentation:
Operator
Good afternoon, ladies and gentlemen. Welcome to the Brand Asia Limited Q4 FY ’25 Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask question at the end of today’s presentation. Should you need assistant during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I would now like to hand the conference over to Mr Naveen from Motilal Oswar Financial Services Limited. Thank you, and over to you, sir.
Navin Agarwal — Moderator
Yeah, thank you. Good evening, everyone. On behalf of Motilal Oswal, I’m Trivedi would like to welcome you all to the restaurant brand Asia’s 4Q FY ’25 earnings conference call. From the management today, we have Mr Raji Verman, Whole-Time Director and Group CEO; Mr Sumit, Group CFO and Chief Business Officer; Mr Gaurav Ajan, Head, Corporate Development and IF; Mr Kapil, Group CMO; Mr Pandeep Day, Brand President, Indonesia; and Mr Thomas, Brand President, India. I would now hand over the call to the management for the opening remarks. Over to you, sir.
Rajeev Varman — Chief Executive Officer
Good evening to everyone. Thank you for joining the call. We will make this call very quick so that you have enough time for Q&A. I just will take a couple of minutes to walk you through the priorities of working our business here in India and then what our priorities for the business in Indonesia. So as we have been speaking in the last few calls, our priorities didn’t change and they kind of continue in the stead in a way to get more traffic into our restaurants. So the first pillar that we talk about every time is about traffic, traffic, traffic. And this year that we just ended was no different than the previous year as we continue to drive more traffic into our restaurants. And that has been one of the key focuses is to get more people into the restaurant. And as we are seeing more-and-more people are coming back into the restaurants, you know, to actually experience the brand within the four walls. So we saw dine-in traffic growth of about 9%. This is on-top of our value campaign that we have started. So the previous year, we had done a value campaign on the INR99 rupees you know combo or the meal crispy meal. And then just last year, we did — we did a 2479 and 2 for 99 crispy Chicken and a crispy and crispy Chicken. So the first campaign, which is 99 value combo, we drove about 5.2% traffic into our restaurants in dine-in. And then just last year, with the two campaign, we drove another 9% on-top of the 5.2%. So that continues to work well. We also continue to build our cafe pillar. In fact, today we have 90% of our restaurants with cafes. That’s up from where we were in the previous year at 77%. So we pretty much put cafe into every restaurant that we wanted to put cafe. So that’s continuing to build that pillar as well. The third pillar that you will see is that we have been actually doing for the last couple of years, but you will see an additional focus, a rigorous focus in this coming year is on innovation and we will continue to build that pillar as well for the next few years, driving through value, driving through our cafe business and then driving through innovation. The second pillar, which is a digital-first brand, this is a pillar where we continue to digitize both you know, consumer-facing as well as employee facing all processes into digitization. So 90% of our restaurants now have self-ordering kiosks and table ordering. So literally everywhere that this was possible to do, we have completed doing that. And all future restaurants will continue to have self-ordering kiosks. So that’s a very, you know, speedy implementation of the self-ordering kiosk. Also the app business that you know that we started a few years ago. Now that it’s been in its — this will be the third year in the running, but we have started building on it. The number of transactions that we’re doing on the app is 3x what we were doing in the previous year. So that one has moved really well and we really believe that this is a strong business for us in the future. So that’s the second item in the digital-first brand. And then last-time I told you about profitability focus, that is to be fully focused on profitability on delivery business that we have moved that profitability by 1% in this year over FY ’24 and we continue to kind of drive that piece this year as well and you will see those initiatives come through this year. The second piece that we wanted to and we have communicated to you in the past is about efficiency and our P&L efficiency, driving more EBITDA out of our restaurants. We have done that as well. So if you just take the restaurants that we have opened in the last couple of years, which really don’t have a history behind them or are basically new restaurants and look at all the restaurants prior to that, which is FY ’23 and before, we moved the profitability of those restaurants by 1.7% on our P&L. So these focus — focus on our delivery profitability or running a profitable delivery business, more profitable delivery business and then also bringing in efficiencies on our P&L, these will continue as well. So growing traffic in the restaurant through value leadership cafe and innovation, digital-first brand through digital SOKs and table ordering, QR code ordering and then through our app that we are building up and then profitability focus on profitability within the restaurant, which is our four walls efficiency that we bring into our P&L and our delivery profitability. Now just coming to the Indonesia business and Sandeep will talk more about that business. By the way, right after my two minutes, I’m going to transfer it over to Sumit, who will walk you through all the numbers. I’m not sharing a lot of numbers because he’s going to share those numbers with you. Now on the Indonesia business, we spoke about three things, right, three buckets that we had. One was to bring in sales, right, to grow back sales post the geopolitical headwinds and bring more business back into our restaurants. We have seen some good recent — if you look at our business from November till April, we have pushed up our dine-in areas by 10%. So things are changing there. And it’s not just the Burging business. If you look at the competition over there, the market in general is now turning. I think the bottom is over and everyone’s on the climb back to what numbers they used to have pre geopolitical issues there. So good, good green shoots, very early time there’s a long road ahead. So I don’t want people to jump to conclusion, but we have now seen a turnaround as we saw this dine-in ADS come back into our business. The second piece that we keep talking about is rationalizing our restaurant portfolio there. We continue to do that. We had closed 24 restaurants the previous. Now we have closed another eight. So there is a total of 36 restaurants that we have rationalized. So we have got — and maybe this year, we will look at a few more that are on our pipeline to potentially close. If you’re not able to get some good deals on leases and so forth on those, we will look at rationalizing those as well. So that was the second bucket wherein we are rationalizing, cleaning up the portfolio. And the last piece is really the corporate overheads. We haven’t seen a lot on the P&L and in this — today’s upload that you saw for FY ’25 and you’ve seen very little in FY ’24 as well because even though we have rashed light the G&A and bought down the overheads. There have been closing costs of restaurants as well as severances that have kind of addressed been on the P&L for those years. But the run-rate, just to give an example, we are over INR65 crores in G&A as we had taken over the business. Today, we have bought that down to a run-rate of INR40 crores, so about INR25 crores reduction. And then we are further looking at another INR4 crores to INR5 crores of reduction in this coming year. So that rationalization, bringing down, optimizing our overheads, optimizing our restaurant base, which is to close-down non-performing restaurants and then revitalizing and getting sales into our restaurants for which we have seen some initial good results. That’s basically the same plan that you and I outlined to you last-time. We will continue to work that plan as we move forward. With that said, I’m going to turn it over to Sumit Zaveri who is going to walk us through the numbers. Over to you, Sumiti.
Sumit P Zaveri — Chief Financial Officer
Thank you,. So I’ll just kind of talk you through the highlights of our financial performance for the quarter and for the full-year. From the percentage of growth, we ended the year at a total store count of 513. For the full-year, we grew by 58 stores for the quarter. It was just three stores because substantial part of our growth achieved towards the end of December itself. So that’s why it’s just a small growth — incremental growth of three stores in-quarter four. As far as revenue is concerned, a good growth led by SSSG of 5.1%. For the quarter, we — we achieved revenue of INR489 crores for the full-year, an 11.5% year-on-year growth. And if you really look at it in terms of translation of that into company-level EBITDA, we achieved INR26.6 crores of company-level EBITDA higher from INR10.6 crores that we had done in same quarter last year. So there is almost like a 2.5 times our growth in company-level EBITDA over last over last year. Now if we just — I would really kind of just touch upon one more line, which we’ve been talking about as one of the levers of our efficiency translation is gross margins. If you look at it from quarter perspective or your perspective, our gross margins were in the region of 67.7%, 67.8%. If you look at the trajectory that we’ve been taking consistently on Slide number 10, you’ll realize that we’ve been growing at that pace on a year-on-year basis, 0.5% to 0.7% year-on-year basis over last three years consistently. If we go back and when Gaurav talks about it, you will realize that we would — we would continue the same trajectory as far as gross margin improvement is concerned, even going-forward over next three to four years to our target to get closer to 69% to 70% over the next few years. So that’s something is a strong margin improvement trajectory that you will see us continue to deliver as we go along — they go along in over next few years. Coming quickly onto the full-year numbers, just a highlight as far as full-year is concerned, we got to a revenue of INR1,968 crores for the full-year, a growth of very similar growth to what we achieved in-quarter four-quarter four, 11.8% year-on-year growth and a positive full-year of 1.1% led by a strong traffic growth that Raj was talking about in early part when you were talking about our overall performance with company-level EBITDA showing a 32% growth over previous year to INR99.44 crores for the entire year. Quickly looking at Indonesia part of the business I’ll just kind of talk broad numbers here again. As far as-is concerned, we’ve been talking about rationalizing the portfolio, which we’ve kind of done. So on a full-year basis, we came down by eight stores in-quarter four stores ended the year-on budgeting at 143 stores with an ADS of 18.5 million and as far as-is concerned, 25 stores with an ADS of 14.1 with total revenue of 269.3 billion for the full-year. And we are really kind of wanting to take you through, you will see it in subsequent slides as well. But Burger King we did report a positive 2% SSSG for the full-year. When Sandeep talks about that and of the recent rents, you will really be happy to see that the overall SSSG now starting to see positive at 5% overall and 10% on a nine-in basis as well. So, but Sandeep will take you through those. But we are starting to see signs of — signs of recovery. I wouldn’t say that we’ve kind of completely got out-of-the challenges that we’ve been facing in Indonesia. But we continue to make improvements as far as Indonesia, our business is concerned. So just since I’ve already spoken about the broad numbers, I’m not taking you through the financial performance slides that are already available in Slide 13 to 13 to 15 and rather hand it over to Kapil to take you through the marketing initiatives.
Kapil Grover — Chief Marketing Officer
Good evening, everyone, and thank you, Sumit. Let me outline the marketing strategy that helped us deliver a very strong quarter. First and foremost, as always, a consistent value strategy across three pillars of price point, digital app coupons and a shareable value meals platform. These platforms of 24 79 and 99, the crazy app to use available on the app led by 99 meals, which is growing every quarter and the thematic shareable meals bundle helped us deliver great value to our guests across different occasions and across different price points. Moving to Slide number 18. As Raj mentioned, our menu innovation continues to be driven by consumer insights and recaps. Last year, we had innovations across burgers with the relaunch of the in the junior size, which makes it more affordable for our guests a new ICE Class here in Americano that strengthens our cafe menu and the Pizza puff, which is a guest favorite. Okay. Just to continue on the innovation conversation, I just want to share with the group that we recently launched a new range of Korean products on our menu with the Korean burger, chicken burger, fried chicken, wings and fries. And this is obviously inspired by a massive trend that we are all seeing on Korean culture, Korean music, drama. So we took out a leaf from the authentic Korean cuisine and we innovated on the process. So we dunked our patties and chicken snacks in this delicious Korean sauce to give a very authentic, very-high quality Korean flavor in every bite. The burgers were launched with a premium bun, so we upgraded the product there as well and we are getting fantastic reviews from food bloggers, journalists and fans across-the-board. I will certainly have more to share on this in the next quarter call. Moving on to BK Cafe, our 100% Arabica bean cup, great quality coffee at a very affordable price. We now have 464 DK cafes as of last quarter across the country, which is about 90% of our store base. We have clearly been one of the fastest cafe expansion in Burking System and in India in the recent years. And we continue to now build awareness. As Raj mentioned, the expansion part is done. We now are building — focusing on building awareness through social media, including the recent AI-based coffee fortunes activations done on New Year’s, it caught us great response. We had over 6,000 people participating and actually playing the whole program for reading their fortunes. Now I’m on Slide number 21. We continue our journey to build known diner sales via BK app. As I mentioned earlier, it’s a way to give more value to the consumers through coupons and build frequency, but it also is laying the foundation for our CRM scale-up in the future. Our acquisitions continue to grow at a very healthy pace with app installs growing by over 28% over last year. We also saw 2.5 times growth in our app user base and a 3x growth in orders via BK Apple. So that’s all from my side. I’ll now hand over to Sandeep to share the Indonesia business update.
Sandeep Chaudhary — Independent Director
Thank you,, and a very good evening to all of you. Yes, there were geopolitical challenges, there were external challenges, but then we are always focused on things which are within our control. We still a sharp focus on controlling cost. As Raj mentioned, we kept on driving efficiencies and at the same time focused on getting back traffic into our restaurants. Working as a brand here in this market, we have a competitive advantage of having a twin engine, twin engine of burgers and chicken. And we continue to work-in our strategic pillars of retaining our leadership in burgers and also continue to work on building credibility in chicken by offering great taste, by offering innovation and strong value proposition to our guests across the menu layers and across the channels. And as a result, yes, early days green shoots, we are seeing some great positive momentum in our business. Now that takes me to my next slide. Now this is a bit of an eye-chart, but I want you to focus on two things. First, we are generating almost about one million higher sales for the last five, six months. And secondly, as we speak of a normalized business period, which is in the May month without having any impact of seasonality, we have reached almost 98% of the level sales of October 2023. So that’s a good news and we are confident of maintaining this momentum. As far as Popeyes is concerned, we will continue to play to our chicken destination strength because we know that we not only win on taste, but we as a brand have the maximum variety of many as far as chicken offerings are concerned. We have fried chicken, we have drilled chicken, we have multiple flavors in wings and boneless popcorns. We also have fried chicken sandwich, grilled chicken sandwich. So we win on paste and we win on the right. The one thing which we have done recently is actually we have elevated our services by providing guests a very casual dine-in experience through table ordering, through table servicing, through serving the food in a particular sequence, serving the food in cutleries and so on and so forth. It’s currently in a test phase and we are gathering on the learnings and then subsequently, we will scale it up across the restaurant. So that’s broadly from the side and I hand it over to Gaurav to share the overall outlook.
Rajeev Varman — Chief Executive Officer
Yeah. This is Raj here. I’ll hand it over to Gaurav in a minute. Guys, sorry, we uploaded the results a little late. You know, we’ll try to do that much sooner next time. But I just wanted to highlight if you have not seen the results or not yet downloaded the deck. And just the highlights for India, again, just reiterating this, as of 31st March 2025, the year that ended, we added 58 restaurants year-over-year to reach 513 restaurants on that date. Additionally, 11.8% year-over-year increase in revenues at INR1,968 INR168 crores of sales. That’s 11.8% increase in year-over-year. Our average daily sales SSSG as we Call-IT, the same-store sales increase was 1.1% for the entire year and 5.1 5.1% for the quarter-four. Our gross margin, which ended last year at 67% went from 67% to 67.7%. That’s a 0.7% improvement year-over-year. Our four walls EBITDA, our restaurant-level EBITDA went to INR206 crore INR206 crores, INR206.8, so almost INR207 crores, that’s up 21.2% year-over-year. And the final number I’m going to share with you is the company EBITDA number, which last year was about INR76 crores. That went up to INR99.4 crores and that’s a 32% year-over-year increase in our company-level EBITDA. So I just want to reiterate those because some of you might be just downloading the deck. Over to you, Gaurav.
Gaurav Ajjan — Head: Strategy & Investor Relations
Thanks, Raj. Good evening, everyone. Once again, sorry for the slight delay in uploading the results and the investor presentation. We will make sure that from next quarter onwards, there is a sufficient time gap. I am there on Slide number 28 titled the Way Forward India Operations. So restaurant accounts at the end of financial year ’25 stood at 513. If you recall, our previous guidance was reaching 700 restaurants by FY ’27. We revised that to a more longer-term guidance. We are looking to open 60 to 80 new restaurants every year for the next four years. This will take us to about 800 restaurants by FY ’29. On the gross profit margin side, we ended FY ’25 or the gross profit margin for FY ’25 was 67.7%. As Sumit mentioned on Slide number 10 that we’ve increased the gross profit margin every single year that we’ve been there in the country. And we want to continue on this journey of increasing our margins. We are targeting an annual increase of 0.5% to 0.7% over the next four years and this will take us closer to a number of about 70% by FY ’29. With that, I would request the moderator to please open up the floor for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dwanil Desai from Total Capital. Please go-ahead.
Unidentified Participant
Hi, good afternoon, everyone and congratulations for decent performance in a very challenging time. So my first question is that if I go back-in time in FY — since FY ’22, you know, we have added almost 250 to 270 stores. And stores which are older than two years are almost now 80% of the total store count. So despite that, our ADS has remained in that range of 115 to 120. So while this and on-top of that, we also added almost 400 capex which had additional 8,000 ADS. So we have not seeing the increase in ADS despite stores maturing in FY ’22, ’23, ’24. So some thoughts on that?
Rajeev Varman
Yeah. Thank you, Mr, for your question. Actually, you know, if you take-away the last two years that we’ve built about 60, 70 restaurants each, that’s 140 out of 513. So the ratio is much smaller. But anyway, coming to your question here in this last two years as you’ve seen, especially the last year that the industry has run a negative SSSP in that environment to kind of hold-on to our previous year’s sales that was — it’s in itself a very big challenge. And we have done that. What’s happening is we are seeing a more-and-more increase in traffic coming into our restaurant. So we are driving that as our initiative to bring more people into the restaurant and experience the brand over there very successfully as well, right? And then we have also, on the other hand, had this whole goal of optimizing delivery profitability, right? So what we have done is in the past, there was a lot of discounts either coming from the aggregators or on the brands itself and that drove a lot of traffic, but without a lot of profit. And the last two years and especially this last year, we have started to focus on profitable sales. So we have increased the profitability of that business by 1%. We continue to do that over this next year. So the objective of there is not to just bring in that the ADS over there, but also to bring in a profitable ADS over there and we’ll continue to kind of walk-through that path. The final piece is the cafe. So the cafe just came in, right? So it’s brand-new. It’s got — if you look at the restaurants we opened two years ago, right, FY ’23, they’ve gone up in 80s by INR2,000 rupees. If you look at the ones we opened in FY ’24, they have gone up INR5,000 rupees. So I think in this current year, right? So they’re moving up about INR1,000 rupees per year. And the newer restaurant that just opened, you know, they have, of course, a long way to go. But as we are seeing these are moving about INR1,000 apiece. You will see that as our base becomes bigger, which is now that we are at 500 restaurants, we add more-and-more restaurants in the future, it will be a smaller percentage of the total base. Also, one of the strategies that we have changed with development is we used to open a whole bunch of restaurants in Q3. We are now kind of spreading it out and we will have openings in Q1, Q2, Q3. Bring in a few more quarters of sales into those restaurants sooner than later. So you should see and we will see that kind of moving in the right direction and the ADS moving in the right direction. But that ADS movement is a big pillar for us, a big opportunity for us, and we are completely focused, as I said, on the three pillars to drive that with those three pillars. One is to continue driving value, to continue driving our business through our cafes and then finally through innovation. So those will continue in addition to our digital that Kapil was outlining. I hope that answers your questions.
Unidentified Participant
Yeah. That’s helpful. And sir, one more question on the same line is that we have done phenomenally well on driving traffic in our stores, right? So in order for us to go to the next level of ADS, do we intend to move the APC values higher? What is the path to one set, what are the actions that we are taking on that front to increase our APC yeah.
Gaurav Ajjan
We have a very good strategic plan you’ll see in the coming summer and beyond to kind of address the business as you outlined it. But the traffic is the hotline of the business. We want to continue bringing in more traffic. You know, the traffic in most of the businesses in the industry have not reached pre-COVID levels yet. So there is a lot of opportunities. Those people still exist and they still want to experience the brand. And so those — the traffic will continue to be one of the big pillars for us to drive more people into our restaurants and bring them in. But yes, we have innovation and you will see some of that coming in the summer and beyond, we shall address exactly what you said.
Unidentified Participant
Thank you. Got it. And one last question on Indonesia. I think before this geopolitical tensions and we were kind of climbing back. The idea was that around 21 million 22 million will do the breakeven, you know, for the Indonesia business. And since then, we have reduced a lot of costs. So two questions. One, has our breakeven points come down and since now we are near to that number at least in May and if that trajectory continues, do we see this year you know breakeven — cash breakeven in Indonesia. Yeah.
Rajeev Varman
So thank you again, Mr. That’s a good question you asked. Look, we are positive for the first time in a given quarter. Q4 in Indonesia for Burging business was positive 2%, right? So that’s why I said and then by the way, April and May has been also strong. So it is coming back. Has it come back to the levels we want? No, by far, right? But it is starting to turn that way. We have started seeing — and most of this traffic that is coming in, most of the sales that is coming in is at the restaurant. It’s not through delivery. We are doing the same thing in delivery over there. We are optimizing delivery to make sure delivery business is profitable over there. So we are more focusing on bringing people back into the restaurant. And similar to India, in Indonesia also, we see a lot of traffic coming back into the restaurant, as I said in this last November through April, if you take this entire period, we pushed up the ADS of our dine-in business by 10%. So yes, we are moving that direction. Also the — if you look at the closures, we have done the overheads that we have reduced, yes, they have bought down the breakeven point and we are kind of working towards that. And when we reach that, we will be the first one to kind of let you guys know. But yes, we are marching towards hitting those numbers and making sure that we stop off the losses there. Good tailwind now in the last quarter and a little more. So we hope that these tailwinds will continue and people will come back. We have done a UNA, which has got some very good information that we learnt about what how the people are coming back and we’ll use that study to kind of start driving that business back into it’s required pre-COVID — geopolitical sales. So we are — we are working on it most of the same.
Unidentified Participant
Okay. Great. I wish you all the best. Thank you. Thank you. Thank you so much. Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participant in the conference, please limit your question to only two questions per participant. Should you have a follow-up question, we request you to rejoin the question queue. Next question is from the line of Pranay Rup Chatterjee from Berman Capital Management. Please go-ahead.
Pranay Roop Chatterjee
Good evening, sir. Am I audible? Yeah, absolutely. Okay, sir. Thanks for the opportunity and good set of numbers. Sir, could you throw some color on the Indian demand scenario, right, and not just thing in general as well because especially in QSR, anyway, in outside of KSR, we have not really seen our management teams really committing that there is a turnaround in-demand, etc. If you look within QSR, we have seen a range of results, right? You have one player who is reporting double-digit numbers for the last two quarters. You have couple of listed players who have reported flat numbers and you have shown about 5%. So what is your sense? Is there enough indicators or evidence that there is a turnaround in SSG in the QSR sector that you are seeing or is it company-specific actions that you’re taking that is driving some of these? And hence it’s still a wait-and-watch.
Rajeev Varman
Yeah. Thank you, Vive. Good question, Mr Chatterjee. See, I will tell you, you have to have a balanced strategy, which also starts from value and strategy cannot be done overnight, right? You cannot suddenly implement something and then recognize the sales-through it. So this is a long-term strategy that we have worked from in September 2014 and we continue to kind of drive that strategy when the market gets a little weak, if you have a strong value proposition that people know of, they keep coming back. So we continue to drive that portion of the business. But also it is just not just that value strategy. There are several pillars that I outlined, you know, understanding the Cafe business and rolling that out on a speedy fashion. I mean, we took a little over two years to roll-out the entire business and we think it’s going to be a strong long-run strategy for us, right? So that’s another — another tool that we have put in our arsenal that continues to. You will find that we have been doing innovations. Couple has been rolling out products for a while now, whether it will be boneless chicken or the high fries or the chicken nuggets and so forth. So we have been growing this. But we have not been advertising or bringing in forefront because we are focused on other stuff like value. Now you will find as we move forward that there will be a 360 degrees approach to innovation. You saw the Korean campaign just this last month and there was a 360 degree campaign did very well for the marketing and the operations team did very well, brought in businesses. So I think if you — if you ask me this question, I’ll just say reflect on the last two years and I said we did FY ’24, we did a positive traffic of 5.2 and on-top of that 5.2%, we did another positive 9% in this last year-on our dine-in business, right? So the focus is about building that business out. So if you — if you ask me, yes, doing a 5% and then 9%, that’s a 14% two years traffic increase on your portfolio. Are we looking at next year? Yes, our plan is to continue that route, you know and continue to build that traffic in the business. And then we have put in this new levers, whether it’s the cafe, all the cafes are done, whether it’s the innovation piece that you will start seeing in there, whether it’s the digital piece where the — the couple was talking about the coupons and the other ways that we kind of drive our business through our. So you will see all these three things playing in and there will be other stuff that we will roll-out and we’ll talk about in-quarter three and quarter-four. But a lot of things are in-place and we just — we have just sit past on our same pillars. That’s why we don’t come every call and give you new pillars. It’s the same pillars. It’s just more work and more hard work to continue driving those pillars. I hope that answers your question. Thank you,.
Unidentified Speaker
I’ll interpret as that it’s primarily a strategies that you have executed over the last two years that is driving the growth and you haven’t seen any demand uptick in the wider market. And that’s how I interpret that. My second question is on your cost-control, right, and it’s specifically for the India business. Now, while I know that there are several levers that you can use to expand your store margins, what interestingly saw is that in Q4 2025, the latest quarter, if I add-up all your store costs across the stores, it comes to about INR280 crores and I’m simply doing revenue minus the store EBITDA business. So that’s INR280 crores. If I do the same math two quarters back of revenue minus disclosed store EBITDA, it’s still INR20 crores. But in the same-period, you have added about 50 crores 55 stores, right? So we have added 50 stores over two quarters, but the total cost is flat. So which one is it? Is it option A that you know when new stores open up, there is a lag for when the total normalized first store cost actually comes into the P&L and hence, we will see those incrementally come in for those 50 stores we have added or is it option B, where you are basically those costs are fully ramped-up, but you have reduced certain specific cost line items. You know the answer to this is not linear. There are so many things we are doing that you’re welcome to come join Gaurav separately through this. You will be very happy to watch it through. See, there are a lot of initiatives that we are doing, which are partially done, partially in certain — some of them only in certain markets yet, whether it’s reducing the utility costs that we are working on that has been partially rolled-out, whether it is about these SOKs, which just finally got done finally in all the restaurants. But there are several initiatives that we are putting in. There are DCs that we are opening, as you know on an annual basis that brings down the costs in certain markets. So a lot of — you know, it is a lot of small simple things that we do that continues to drive costs overall, right? But those initiatives are not completely rolled-out in all markets as we can quickly do that. So as they get rolled-out, out, you find the cost coming down. The new restaurants when they open, the top-line is not — it takes about two years for a restaurant to reach the average kind of top-line ADS. So they start-off at lower kind of radiances and then kind of prime up to the average. Those that are above-average kind of sites, they kind of start-off at their two-year low and then go up to much higher radiances. So you will see that there are multiple factors that work, whether it’s our initiatives, whether it’s the DCs we are opening, which are driving costs and on the gross margin side, whether it’s the volume of the restaurants we are opening and so forth. So Gaurav will take this down. He’s made a note for himself. Please reach-out to him and he will take the time to kind of walk you through this. It will take some time to explain all this to you.
Pranay Roop Chatterjee
Yeah. Sure, sir. Thanks a lot and all the best. Thank you so much.
Operator
Thank you. Next question is from the line of Aliascar Shakir from Motilal Oswal Mutual Fund. Please go-ahead.
Unidentified Participant
Yeah, hi. Thanks a lot, Rajal and any good numbers in such a volatile market scenario. I have couple of questions. First is on the India region. Now you could speak about the areas we have worked to improve our ADS and KG and why we were not able to improve our ADAs despite all the effort because of the change in growth that we have seen in the store addition. So if you can just share your some thoughts on how we see the future in the next probably three, four quarters in this quarter, we’ve seen a big improvement already. So I mean in terms of your SSG, should we expect the positive momentum to continue? And if you do the mid-single income of SSG, then what is the room we have in terms of ADS and margin improvement from your — and I’m actually looking at even comparing you with and despite you having much lower ADS actually, the margin that is not such big. So that’s why I’m asking this question.
Rajeev Varman
So Ali, thank you for your question. I hope you’re doing well. Look, Ali, I mean, I outlined our traffic over the last two years, that’s no different. We continue to drive-in that direction. We spoke about having laser-focus on our last annual report on profitability. We continue to focus on that. Look, I don’t want to make a forward-looking statement beyond what Gaurav gave you, the two items on a forward basis. But share this with you, we have had a very strong April and saved the few days when we had the this issue with the war. We have actually had a decent May as well. So we continue on the track. We want to completely focus on our pillars, which is driving traffic into our restaurants and continuing to focus on both delivery and restaurant-level profitability and we have done that for the last two years. We have shown it. We have quarter-after-quarter, we have come and shown you our numbers and we keep showing you positive numbers, improvements year-over-year and we don’t — we don’t — we don’t think we will show you anything different. We will continue in that March in a forward way. That’s all I can share with you. I don’t want to make any forward-looking statements other than that. Got it. Understood. Very useful. Just one quick follow-up without giving me any forward-looking statements. Just from a potential point-of-view that if you are aiming to do a mid-ind SSG, do you have further room to improve your margins from both SSG point-of-view and efficiency point-of-view or only it will be SSG-led margin improvement. No, Ali, you’re absolutely right. If the top-line goes even up by INR10,000 over the next little while, you will find the leverage all through the P&L completely all the way to company EBITDA. See, the restaurant-level EBITDA is leveraged by several line items. The company-level EBITDA is leveraged by one-item, which is the overhead, which kind of is in the long-run believed to be more than anything but fixed, right? It’s slight inflationary increases on an annual basis. So you will find those leverages coming all the way down to the 20 level EBITDA.
Unidentified Participant
Got it. This is very useful. Second and last question is on Indonesia. So while I certainly commendable in terms of the reduction in the losses at company-level. But when I see your presentation, Slide number 14, the improvement is more come because of the corporate G&A coming down, whereas the restaurant-level pre-Indest margins, in fact, on a Y-o-Y basis comp positive has become negative. So if you can throw some light in terms of what has happened here and despite having a 2% SSSG? And I mean you have you made this clear that you will be very strict on loss — curbing the losses in Indonesia, otherwise we will probably not move-out of it. So I mean your thoughts on that.
Rajeev Varman
Yeah. Thanks. Again, good observation. Look, we have had some inflation in beef prices over there and also some currency depletion over there. So you’ve seen those two things happen at simultaneous way, literally in the same quarter. So you did see some impact of that. However, you know, the pricing has been taken. It’s not just us, it’s a uniform across the market. The industry has taken pricing to cover the inflation and you’ll find that kind of washout over the next couple of quarters and kind of fallen track. Look, you know, I think by reducing the overheads, you now reduced, as I was telling to Mr Chattery earlier, you have reduced the breakeven kind of ADS. And I think we are now seeing positive sales coming in. Look, no amount of cost-saving is going to help that business unless the sales comes back to where it used to be. And we are working on that. And obviously, as a company, we are astute on all options available to us to make sure the shareholders and the investors get the best bank for the buck on our decision. So we will keep all those options open, as you’ve just mentioned, but we’re working very hard right now to kind of capitalize on this increase in sales.
Unidentified Participant
Got it. So is this like a two or 3/4 time period in which you should see the improvement significantly coming through or else it’s something which will take longer?
Rajeev Varman
Let’s wait another quarter. Let’s see where it goes. We’ll have a chat post that.
Unidentified Participant
Yeah. Sure. Perfect. Perfect. Thank you. Thank you so much. Thank you. Yeah, thank you.
Operator
Thank you. Next question is from the line of Gaurab from JM Financial. Please go-ahead.
Unidentified Participant
Hi, sir. Thank you for taking my question and congratulations on excellent execution. Sir, my first question is with regards to the capex per store now. Given you have driven multiple cost initiatives, what would be the average store cost for us in Indonesia — in India and then Indonesia? Indonesia, we’re not building any restaurants right now, so we don’t have any latest costs. But will share with you our cost here in India. And of course, we have we have done some, you know, we are putting in a cafe now. We are putting in self-ordering kios in all our new restaurant, right? So when the restaurant comes in now, they come in with self-ordering curos, they come in with the cafe already built-in there.
Rajeev Varman
So over to you, Sumit, if you can just hope for as you know, we’ve been kind of sharing these numbers on the basis.
Sumit P Zaveri
We still continue to spend roughly around INR2.7 odd crores to set-up a restaurant in India. And this is average cost, obviously not led by the format there depending on which format and we concentrate on the cost kind of two. But on an average, if you look at it across even from the perspective of balance sheet gross block, realize that we’ve been spending around INR2.7 crores. This is a number that has been now consistent for almost three, four years, I would say, and we’ve been able to kind of maintain this cost at these levels in-spite of the really adding cafe as part of our stores or this year adding kiosk as part of the store is because we’ve also brought in lot of efficiencies on our capex cost line. So we’ve literally been able to offset the inflation impact on the capex side or as well as add more into our stores by — but still remain at an overall of INR2.7 crores first-quarter. So that’s literally where we stand, Gaurav.
Gaurav Ajjan
As far as capex option, India is concerned. We will continue to improve on this cost line going-forward as well. We are working on several initiatives. I’ll not go into detailing out the initiatives there, but we do believe that we should be able to further optimize these costs as we as we go a lot. As we keep achieving some of the milestones that we are working on or maybe going-forward over next in subsequent calls, we will start calling out the construction on capex side that we are hoping on as.
Unidentified Participant
So just one follow-up. So given that there is a of 60 to 80 restaurants, that will be needed to open in a year and I’m assuming there will be some refurbishment or some ite rate capex as well. So what would be capex guidance for at least INR26 if you can highlight?
Sumit P Zaveri
So on the capex side, with respect to new stores, 60 crores to 18 restaurants that we are talking about, roughly, roughly INR2.7 crores plus the deposit of that we could that we place including that will be around INR3 odd crores. The large incremental capex that we had, which was initiative led more or less the cycle of those initiative led capex has now come to an end because we are working on — we are working on cafes over last two years and then last year, we also added the digital investments on the — on the physical asset side and each of those stores. So those have now literally kind of come to an end. And as we kind of went into touch — touch that a little bit of if required, we’ve kind of done that. So beyond the new-store capex and maybe incremental capex on the digital side to the of our maybe anywhere between INR10 crores to INR15 crores, we don’t expect anything more on the capex side over and beyond the new-store capex at least in the coming financial year. The incremental investment of capex cycle literally is now, I would say we’ve literally completed that across the entire portfolio. And we don’t have any initiative that we would have on the capex side rather now we would start working towards how do we optimize all these investments that we’ve done on the capex side as well as to the digital side or how do we really kind of start optimizing and on the business side is what our concentration would be there, which is what, honestly what Kapil in his presentation also talking about or if you see the initial slides, what Raj spoke about that our concentration now is going to be really optimizing the return on some of the other investments that we’ve done over the last couple of years is what you will see us doing into this coming part of the financial year. And without really welfing deep into overall strategy, you will see this literally evolving as we kind of go in into this year. Honestly, the way we look at it is Korean was the first step into where we kind of start to establish these credentials and you will see us see our strategy on a per se evolving on the product as well as on the digital side over next few quarters.
Unidentified Participant
Thank you. Sure. Thanks for the detailed answer, Sumit. And just last question from my end is, you have really soon how you have improved the gross margins over the couple of years despite continuing on this value platform. So assuming that given that you will be targeting the 70% gross margin, do we — should we build incremental improvement on the EBITDA margin as well or are driven from the leverage or would it be largely to assume that 20 bps, 50 bps improvement that you’re targeting in the gross margin would reflect on the EBITDA margin.
Sumit P Zaveri
Yeah. So yes, Gaurav gave you — and I’ll repeat that. Our intention is to move that gross margin number to about close to 69% to 70% over the next few years — over the next two, three years, right? So that’s the intention. We will get it to that point and those — that money really rolls down all the way to the store-level EBITDA and actually to be honest with you, all the way down to company-level EBITDA. So that’s the intention with that number, that line items. But there are additional line items that we are working on, whether it’s utilities, whether it is rents, you know that we are working on, our total labor, now the SOKs are there, self-ordering cures are there in the restaurant. So all these things kind of work hand-in-hand. So when you look at our P&L improvements, a 32% increase — increase in company-level EBITDA year-over-year, it’s coming from very small-single initiatives. It’s not one big arrow. It’s a lot of hard work and I think this is really I Call-IT a business of pennies and seconds and grams and degrees. It’s for a reason. It’s a lot of small things that you work hard on and it all contributes towards the EBITDA level.
Unidentified Participant
Thank you so much. Thank you. Thank you, Rajesh.
Operator
Thank you. Thank you for the participants to ensure that the management is able to address question from all participants, please limit your question to only one question per participant. Next question is from the line of Atul Mehra from Motilal Oswal Asset Management. Please go-ahead,
Atul Mehra
Hi, team. Am I audible? Yes, Mr Behra, please continue. Great. Sir, my question is, when we look at the India business older cohorts, maybe 2022 cohort or 2023 cohort, what would be the kind of restaurant-level EBITDA margin these boards would be making? I’m asking this in the context of the general time it would take for a store to mature. So it could be reflective of steady-state profitability at the system-level. So just maybe if you could share some insights on this.
Rajeev Varman
Yeah, Mr Mehra, I would advise that you spend some time with Gaurav to kind of go into the very extensive answer that he will give you because it’s not linear again. See, number-one is, we don’t have mature stores. We have stores that were opened in 2024, 2014, which continue to grow. So — and you probably have stores in the industry that were opened 25 years ago, which are still growing. So this is a — this is a — this is a kind of a business that continues to grow in many parts of the world. I mean, I’ve been running this business for a very long-time. So it’s not that we will mature and then come to a stagnation. There’s always the inflationary increase, but there’s also increase in traffic from new traffic coming in, new initiatives like we put the cafe and so forth. So, so that’s the first part of the answer. The cohorts are doing better. I just gave you a very simple example. We don’t share COVID level kind of gross margin and EBITDA level information. So I gave you a small example just to let you know-how the business just started three years ago, right? How the that we first open are up INR200 rupees over two years and the that we opened last year are up INR1,000. So they’re growing at about INR1,000 rupees on the Kefe side of the business. I’m not promising that would be the trend for the next five years, but that’s what we’ve seen in the last two years. And that’s all we can share with you what we have seen. But yes, the cohorts that are more, I would say, more mature, if you will, I think a better way of defining it are more mature than the younger restaurants, the newer restaurants are doing higher radiances and if you do higher radiances and if your rent is decent, you do gross margins and you do — you do a restaurant-level profitability, which is much higher. But feel free-to spend time with without kind of sharing any detail there inside just some information that we got to keep for competitive reasons to ourselves, but he will show you how we work that platform out. We’ll help you understand it there.
Gaurav Ajjan
But I’ll just add, just to add to what Raj was saying and since we keep getting this question consistently on vintage, I just want to highlight two data points from our presentation. One is, if you look at the year-on-year growth on restaurant EBITDA, Slide 10, we saw 9.7% growing up to 10.5%, which is the entire portfolio. At the same time, initial slides which Raj referred to, which is Slide 4, if you see, we did try to kind of reflect that as the older restaurants grew at a faster pace or a better pace in terms of EBITDA and we reflected that the restaurants that opened in FY ’23 on an annual basis grew at or at a pace of 1.7% on an EBITDA over previous year. So to your question, really while we are seeing the EBITDA seeing the positive SSG growth, we are also seeing a better improvement in the restaurants that were opened prior to FY ’23. So I’m just without bearing into what the profitability is just to still kind of give you a reflection of what’s happening with our portfolio. And we’re just highlighting these two data points, which forms part of our presentation on Slide 4 and Slide 10, Mr.
Atul Mehra
Got it. Got it. Thank you very much. Just one other question was on Indonesia. So while it’s encouraging that we are seeing signs of growth returning. In terms of at a strategy level, what are the — in terms of deliverables from Indonesia for the coming financial year and I asked from the content that we have a large India business, which is doing fairly well. When do we kind of take a call which is more strategic on Indonesia, the sense of divestment or just down on efforts on India completely and not adding any kind of rest of the world discussion. So when do we really take that call, which is a more strategic long-term call on Indonesia in terms of any timeline or any thought process that you could share would be very helpful. Thank you. Thank
Rajeev Varman
You. Yeah. No, I’ll without again making any forward-looking statement, which is what it would be if I did make it. Look, we are looking at this very closely, right from all points of view, we want to do the best thing for our business over there in terms of our investors and our promoters, stakeholders, myself included in there. We want to do the right thing over there. It’s seen some green shoots that doesn’t mean that we have closed other options. We are looking at all options. We will make a good call very quickly. I was telling this earlier on in the last call that we are looking at the next two, 3/4 very crucially and very closely and we will do the right thing for the investors in that kind of timeframe. That’s encouraging thank you and all the best. Thank you. Last question please from. Thanks, operator. Thank.
Operator
Thank you. Next question is from the line of Mr Rishi Modi from Investment Manager. Please go-ahead.
Rishi Mody
Okay. Hi, folks. Am I audible? Yes, Rishi, please go-ahead. Thank you. Yeah. So just a quick bookkeeping one to start-off and then get on the operations front. So India store addition guidance you’ve given is 800 by FY ’29. So if I remember this correctly, we were supposed to add 70 by December ’26. So has the agreement been amended with International?
Rajeev Varman
Yeah, we spoke about this, I think a couple of quarters ago that because of COVID, we had rearranged an agreement with our franchiser. So these — this guidance that you’re saying is reflective of that agreement that we came with that. All right. Second, on the operations front on the India front, just wanted to understand if we changed the strategy on the convenience channel where we are focusing more on profitability. So now I think we’ve done a bit on that.
Rishi Mody
So just trying to understand now how are we going to ramp-up the convenience channel plus also, are we facing any issues with say rider availability or rider pricing? Just wanted to get your view on that.
Rajeev Varman
Yeah. So yes, profitability, but profitability is the third pillar. The first pillar was about driving sales and driving traffic. And what we’ve seen in the last two years is that while we optimize our delivery business to make sure that it’s only driving profitable traffic and so forth, we’ve seen a return of back into the business, which is a strong point that we kind of hang our hats on moving forward is a very strong dine-in business that’s building slowly and we have got all the tools. I think couple spoke about the app business that is driving a significant amount of people into our business, which is going to help in CRM in the future and kind of continue to build-on that traffic. That’s a healthy traffic when 30% of your business is known on your app. So we’ll continue driving that piece of the traffic. So for us, you know, my primary goal is — and by the way, this — when you have a goal, it doesn’t mean you’re not doing the other stuff. My final goal is to make sure that more-and-more business drive into our four walls, into our restaurant, dine-in business. We want to focus on building that strong over the next five years and we want to make sure that our delivery business grows, but grows profitably. It grows with healthy margins very similar to our business. So that’s two really broad goals that we are working on. In addition to P&L optimization, making sure bringing efficiencies on there, innovation on this side, digitization, all that will continue. But these will be primary goal is to bring traffic back into our restaurants and secondly, to drive delivery business on a profitable basis.
Rishi Mody
Okay. Okay, got it. And final question on the Illonesia piece, right? So you mentioned Indonesia or restaurant EBITDA margins declined because of beef from inflation and some currencies and impact. But I’m just trying to understand because our gross margins have expanded in Indonesia, I’m not wrong by about 180 bps on a Y-o-Y basis for Q4, but our EBITDA, the restaurant-level EBITDA margin has declined by about 300 bps. So just trying to tie the two up from like — I mean our restaurant opex has also increased in the last couple of quarters on a Y-o-Y basis. Restaurant opex for stock in.
Rajeev Varman
Yeah,, this is yes,, your observation is correct. What we’ve been doing over the last, I would say over the last two quarters in order to kind of support the recovery of revenues in Indonesia, we’ve also paraly, parallelly been spending little more on the marketing side as compared to what you would have seen it last year because last year was literally at the middle of the geopolitical scenario that we were facing. But since the time the geopolitical scenario started to get eased out, the new government which we were talking about even last year as well as that was kind of getting to ease out, we really now tried to — we are working towards getting the sales back and which is also the reflection that you are seeing in our EDS growth over last from almost from period November to 1st fortnight of first fortnight of days. So there is that — there is that element of spends that we have in Indonesia in order to recover some part of the sale. It will settle down. Finally, this will literally kind of settle down back to the of the 5% marketing investments that we otherwise would put in the market similar to what we have in — that we have in India. It’s just that some of these investments were kind of front-ended in order to get the sales back to the pre-COVID levels of — so on the percentage of sales in the last two quarters, AMP spends, like you said, it will settle down to INR500 crores. So how much it around 8% if I remember the call over last two quarters in-kind of spend. So but you can see that slowly settling down because of just — and you will see that settling down over next couple of quarters as well as we continue to things back as far as the.
Rishi Mody
Okay. Got it. Thank you. That’s helpful. Thank you. Thanks, guys. Really appreciate it. It. Back to you, operator. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question of the day. I now hand the conference over to management for closing comments.
Rajeev Varman
Yeah. So thank you, everyone again for joining in. I’ll just reiterate the few main performance KPIs that we delivered last year again. We are at 513 restaurants as of 31st March 2025 with 58 new restaurant year-over-year. Our revenues grew by 11.8%, which is $19678 million. INR, SSSG was up 1.1% for the whole year, 5.1% for the last quarter. Gross margin moved up from 67% to 67.7%, it’s up 0.7%. Our restaurant-level EBITDA was up 21.2%, which is INR206 crores. And then finally, our company-level EBITDA was INR99.4 crores, which is up 32% over last year. So with that said, thank you so much for your interest on the call today. Appreciate it. Have a wonderful evening. Thank you very much. Thank you.
Operator
Thank you. On behalf of Motil Oswal Financial Service Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.