Sapphire Foods India Ltd (NSE: SAPPHIRE) Q4 2025 Earnings Call dated May. 07, 2025
Corporate Participants:
Sanjay Purohit — Whole Time Director & Group Chief Executive Officer
Vijay Jain — President & Chief Financial Officer
Analysts:
Videesha Sheth — Analyst
Gaurav Jogani — Analyst
Saurabh Kundan — Analyst
Devanshu Bansal — Analyst
Ashish Kumar — Analyst
Tejas Shah — Analyst
Aditya — Analyst
Subrata Sarkar — Analyst
Ashutosh Parashar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Sapphire Foods Q4 and Full-Year FY ’25 Earnings Conference Call hosted by Vogabe Advisors. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0 on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Sanjay from Sapphire Foods. Thank you, and over to you, sir.
Sanjay Purohit — Whole Time Director & Group Chief Executive Officer
Welcome to Sapphire Foods Quarter Four and Financial Year ’25 consolidated financial highlights. I’m joined by my colleague, Vijay Jain, who is our CFO. First, a quick briefing on the full-year performance highlights. In a — in what was a difficult year, we still delivered double-digit restaurant count and restaurant growth. Our number of restaurants grew at 10%. We added 91 restaurants during the year to close at 963 restaurants.
Our sales grew at 11%. Adjusted EBITDA, our adjusted EBITDA grew or declined by 4% in the entire year. KFC for the full-year was at negative 4% SSSG. And with negative 4% SSSG, we opened with our store openings, we delivered a double-digit revenue growth of 11% and despite the negative SSSG and the operating deleverage as a result, our — still our EBITDA margins were healthy at 17.3% and we crossed a significant milestone of 500 restaurants during the year, thereby doubling our count over three years.
Pizza Hut had a very — had very good 3/4 from April to December and then we slid back-in the 4th-quarter, which we’ll talk about a little later. We ended the year at minus 1% SSSG. In the quarter, we were plus 1% SSSG. Sri Lanka had a very strong turnaround in the full-year. We grew revenue in LKR terms by 14% and restaurant EBITDA margins were healthy at 15.4%, first time in three years that we’ve been able to clock above 15% restaurant EBITDA. We were rated the number-one QSR in India for the second consecutive year-on our — on the Dow Jones Sustainability Index.
It’s a big achievement for the organization. And then in the recent Yum Global Franchisee Convention, we were recognized as the world’s top four Pizza Hut franchisee among thousands of franchisees, we were rated as world’s Top Four Pizza Hut franchisee with the world’s best Pizza Hut franchisee for people practices. And finally, the big award was of that of the world’s best KFC franchisee. So these awards mean a lot.
And as I said many years ago, we aspire to be India’s best restaurant operator. Certainly, we are among the top one, two best global yum franchisees certainly. Quickly the quarter-four highlights, we delivered a revenue of INR710 crores, 13% growth led by KFC Indian Pizza Hut, Sri Lanka. We added six KFC restaurants and took our total count to 963 as of 31st March 2005 also. Consolidated — consolidated restaurant EBITDA decreased 1% year-on-year and margin was at 12%. Adjusted EBITDA of INR50.8 crores was a 7% decline year-on-year and our adjusted EBITDA margin was 7.2%. Consol EBITDA was 16% or INR113 crores and increased year-on-year by 3%. Consol PAT was INR2 crores or 0.3%. Adjusted PAT was INR3.3 crores or 0.5%.
Let me now take you to the KFC slide. In-quarter four, our SSSG trajectory was continuing to improve versus the last previous two quarters. However, on a base of last year where we had declined in terms of SSSG, our delivery mix continued to increase vis-a-vis dine-in and takeaway. And our big campaign for the quarter was to focus on what we call new consumers of KFC and it’s centered around our epic core variety campaign with also value around our core offerings being called out. This is the going-forward focus of the brand, how do we represent our core variety to consumers with value, chicken buckets, zinga Burger, boneless chicken and roll the — apart from this, the other positive of the quarter was our own delivery business after two or three years of being stable or slight decline actually improved and had the — has the greater SSSG uplift in this quarter versus even the aggregator channel. It’s still small part of our business.
The drop-in ADS that you see from a quarter-to-quarter basis really reflects new-store and some amount of seasonal movement from quarter three to quarter-four. The brand priorities are quite clear.
This is the slide number 21 and this is something that I’ve spoken about earlier. We’ve launched a premium burger called KFC Gold. Apart from being the premium — premium burger, it has also been launched in our — in our popcorn and in our boneless range. So it’s really a lot of sauces and a lot of bits that are very popular with the younger generation.
On Slide number 23, you can see our emphasis on boneless that we are trying to drive. Kiosks continue to be digital kios continue to be rolled-out. Now we have implemented in about 238 restaurants.
Over to Vijay for the financial numbers.
Vijay Jain — President & Chief Financial Officer
I’m on Slide number 26, which presents sales contribution. Dining plus takeaway came in 57% and the delivery was at 43%. Sanjay mentioned about our own delivery growth. Our own platform growth was 3x the growth which we experienced on aggregator platform. So that was a big positive for us.
In terms of SSSG, the trend continued to improve. We were at minus 1% and overall revenue grew by 12% on back of 73 restaurant additions, which we had in last one year. Gross margin dropped marginally. However, restaurant EBITDA dropped to 15.7%. This was a result of operating deleverage, lower ADS, which we experienced in Q4 compared to Q3 and higher delivery mix.
Slide number 29 shows full-year trend. Clearly seen that despite two challenging years now, back-to-back two challenging years in terms of SSSG, the brand has still delivered a healthy EBITDA of 17.3% in the last financial year.
Sanjay Purohit — Whole Time Director & Group Chief Executive Officer
Let me now take you through Pizza Hut and I’m referring to Slide number 31 in our deck our six pillars of the Pizza Hut strategy continue as articulated earlier, to drive taste superiority through pizza and sites innovation, differentiated dine-in experience like casual dine-in restaurants and a hot and fresh delivery experience.
We should offer competitive value-for-money, mass media advertising to drive consumer awareness and consideration and be cautious in terms of store expansion. So this strategy actually resulted in improved performance in the nine months between April and December ’24 when our ADS moved from 41,000 to 48,000. However, starting JFM quarter or quarter-four, we have not been able to invest in mass media advertising and that’s resulted in an impact on our transactions. And that’s really arising out of a difference of view between two franchisees between us and our sister franchisee with respect to marketing strategy and the additional investment that we have been doing from April to December behind mass media advertising.
Now while Yum is aligned with investing similar to us, the difference in opinion has meant that we have not been able to advertise in-markets which are common markets. And that — so we still spend money, but we spent money below-the-line and that below-the-line advertising was not as effective. We believe that this difference we should be able to resolve in the next couple of months.
Having said that, one of the pillars of our strategy was a continuous innovation pipeline. In accordance with that a strategic pillar, we’ve had a really exciting refresh of our core pizzas, which is the juicy Licious pizza that we launched in April ’25.
Now while we are not able to do mass media advertising in — in parts of our market, which are common markets between us and our sister franchise. At least in Tamil Nadu, which is a supphire exclusive market, we’ll be going behind mass media advertising and then we spend money on below-the-line and other markets.
And clearly, we see that Tamil Nadu is driving differential performance versus the rest of the market on, because consumers are being aware of this range before they come and that’s pushing them to come to our stores and that’s driving them — that’s driving transactions, whereas in other markets without the help of mass media advertising, we’re not able to address new consumers and not able to tell them about this innovation. Like I said, we expect this to get resolved in the — in a couple of quarters and we’ll see it play-out. You can see the picture of Juicy pizza on Slide number 33,
We’ll get Vijay to talk about the financial numbers.
Vijay Jain — President & Chief Financial Officer
Slide number 36, channel-wise sales contribution. So dining in takeaway mix at 58% — 48% and delivery at 52%, in-line with the previous quarter. In terms of SSSG, positive SSSG of 1% for the quarter. However, the ADS dropped to 42,000 and overall revenue grew by 5%. Gross margin dropped by 70 basis-points and on back of the increased value and promotional offerings, this combined with low ADS meant that this combined with low ADS and increased marketing spends, although below-the-line, but we continue to spend behind additional marketing as well, meant that the resturned EBITDA was impacted, which came in at 4.6% negative. Slide number 39 gives four-year trend.
The gains made in the first-nine months of the last financial year where we were able to clock 48,000 ADAs and hit 5% profitability, clearly has been eroded in-quarter four due to pull out of mass media campaign. And as mentioned by Sanjay, we’ll need a slightly longer horizon on the brand. And once we’re able to resolve this in the next couple of quarters, we are sure we’ll be again back on the path of recovery for the brand.
Sanjay Purohit — Whole Time Director & Group Chief Executive Officer
A quick update on Sri Lanka. Quarter-four has capped a year of a very impressive turnaround for the Sri Lanka business. We have grown SSSG and TG double-digit and restaurant EBITDA has crossed 15% after two years of coming well below 15%. We — from a new launches perspective, we continue to support melts has come out in a single form. We’ve introduced some really good size.
We opened one store in Dara Mullah and for the numbers over to Vijay.
Vijay Jain — President & Chief Financial Officer
Slide number 43, dining and takeaway mix at 62%, similar to previous two quarters. The SSSG was 16%, backed by a double-digit transaction growth. Overall revenue grew by 19% in LKR terms and 31% in INR terms. Gross margin dropped, however, restaurant EBITDA improved by 250 basis-points year-on-year and came in at 14.8%. Slide number 47, which gives a four-year trend, clearly seen the business has made a strong comeback and has delivered the highest EBITDA margin in the last three years at 15.4%.
Sanjay Purohit — Whole Time Director & Group Chief Executive Officer
Yeah, that’s the update for the quarter. It’s been a difficult quarter and especially on Pizza Hut, but we expect that we believe that the strategy still is the right strategy to pursue and we will sort the differences in opinion that we have. The good part is that Yum is aligned on what we plan to do and we should start — we should see an uptick in performance in the coming months, two quarters.
I’ll stop now here. I’ll stop here now and open this to questions.
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 their touchdone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Sanjay Purohit
We can start with from Ambit Capital.
Operator
The first question is from the line of from Ambit Capital. Please go-ahead.
Videesha Sheth
Hi, good evening, team. I hope I’m audible. My first question was if you can give some color on the broader demand scenario. And specifically on TFC, SSG, although the momentum of has improved, it’s still in the negative territory. So if you could comment on whether with a high single-digit decline in the base, is it logical to assume that FSG would turn positive in the first-half of FY ’26?
Sanjay Purohit
Yeah. So the demand situation continues to be neutral. It’s not improved or it has not worsened off over the last three or four quarters. So it’s still a tight demand situation. And then coupled with heightened competitive pressures has meant that growth has been difficult to come by. You are seeing minus 1% SSSG in-quarter four on the back of, I think again low very low-single digits the previous year. So as we move forward, certainly we’ll see a more stable SSSG, but it was on the back of earlier low SSSG quarters.
Videesha Sheth
Understood. Understood.
Vijay Jain
And your trend is flattish. The current trend is flattish SSSG, that’s the current trend which we are experiencing?
Videesha Sheth
Got it. Got it. Right, sir. The second question was on your commentary on Pizza Hut. You’ve talked about the longer horizon required in terms of reviving the brand. So is the visibility on even early double-digit margins deferred given that attaining the 50,000, 55,000 ATES threshold would be difficult in the medium-term? Basically, how should one think of margins when it comes to Pizza Hut? Those are the two questions from my side. Thanks.
Sanjay Purohit
I think you’ve got the — you’ve got the intention right that once we move towards 55 ADS, that’s when we’ll deliver double-digit. We were expecting and in a scenario where all of us were aligned, we would have expected this to happen between 12 and 18 months. I think perhaps that has got extended a bit.
Vijay Jain
In the immediate scenario, when I look at the coming year, I think it would still be range-bound to a flattish kind of to low single-digit restaurant EBITDA which we experienced last year because the first step would be how do we get the movement back from that 41 42 level, we reach 42 level. It’s the same place where we were probably a year-ago. So it’s the same journey we have to start again. So in the next 12 months, I don’t see this EBITDA moving beyond a low-single digit number.
Videesha Sheth
Thank you for your answers. I’ll get back-in the queue for follow-ups.
Sanjay Purohit
Thank you, Viti, sir.
Operator
Thank you. The next question is from the line of Gaurav Jogani from JM Financial. Please go-ahead.
Gaurav Jogani
Sir, the first question is with regards to the network addition guidance. You know, in the current weak environment scenario, if you can help us how are you looking to now alter this leadership growth both in the KFC and the Pizza Hut.
Vijay Jain
So I think our last guidance still stands. In the previous quarter call, we said KFC we can look at opening 70 to 80 stores or anywhere between 60 to 80 stores, that guidance still stands. And that’s the medium-term guidance, not just for this particular year. I think we can continue to add 60 to 80 stores. For Pizza Hut, we said our restaurant expansion strategy will be extremely cautious and that’s what we continue to follow. So we don’t see additions which are, let’s say, beyond 2025 stores in a year now.
Gaurav Jogani
And sir, this would be the net additions or the gross additions that you would be guiding
Vijay Jain
Is our net additions.
Gaurav Jogani
Net additions. Sure. And sir, the next question is with regards to PSC margins. We have been doing a very resilient performance when it is coming to the margins. Despite that ADS remaining where it is, still the 17.5% margin is recommended. Now I just wanted to take your sense given that given the FP environment, as you mentioned, this is where it is right now, what kind of margins can we expect in the next 12 to 18 months going ahead?
Vijay Jain
I think holding on to the current level margins would be a good achievement. And for holding the current level margins, we will require some SSSG, even if it means low single-digit SSSG. And I think that’s what our immediate task would be to get back into positive SSSG territory. Currently, we are experiencing flattish, but as we move into a territory which is positive SSSG, holding these margins would be important. So that’s what I think the near-term 12 to 18-month guidance would be.
Gaurav Jogani
So sir, just follow-up here. I mean given that I’m assuming that you would have taken your cost which would have helped you to achieve this kind of a margin despite the lower. So won’t experiencing a better EDS then would flow-through the margins and then improve the margins slightly going ahead.
Vijay Jain
So if we start getting SSSEs of 5% and plus, then definitely we can see improvement in margin. So it’s all linked to the SSSG. I said that if we are experiencing flattish and maybe even low-single digit, if we are getting a low-single digit, we should be able to hold margins. If we are able to get beyond 5%, 6%, we should be able to improve margins as well.
Gaurav Jogani
And sir, just last question from my end on KFC only. If you can highlight what really is the problem that you’re facing with the KFC franchise? I mean, is it the macro slowdown which is which is impacting the business? Is it competition or is it something else that is taking longer-than-expected for the brand to recover?
Sanjay Purohit
I think it’s a combin combination of macros with the combination of also competitive intensity. So I don’t think we were expecting in the in the coming financial year because of tax swaps and inflation to inflation reducing, we are expecting discretionary spends to increase. However, quarter-four, there was — the earlier trend continued and that’s reflected really in the SSSGs that we saw and hence in the EBITDA margins.
Gaurav Jogani
Okay. Okay. So if I summarize it right, you’re saying that it’s a combination of slowdown and the competitive intensity, which kind of led is leading to this slowdown and you’re still hopeful that these tax-offs and inflation should — the reducing inflation rather should help to drive the demand improvement going ahead.
Sanjay Purohit
Yeah. Correctly capture.
Gaurav Jogani
Sure. Thank you for participating.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participant in the conference, please limit your questions to two per participant. The next question is from the line of Saurav from Goldman Sachs. Please go-ahead.
Saurabh Kundan
Yeah, thank you very much for the opportunity. My question is on the comment made earlier by Sanjay that you are confident that in the next one to two months, the difference of opinion in Pizza Hut will be resolved. So just wanted to ask what gives you the confidence that in the next one, two months, you will resolve that difference.
Sanjay Purohit
No, so I never said one, two months. I said in the coming months, I mean it might take one to two quarters rather than one to two months.
Saurabh Kundan
All right. All right.
Sanjay Purohit
I guess what gives us the confidence is the fact that so the difference opinion really stems from our belief whether spending on or investing behind mass media advertising is resulting in increased transactions or not. We have certainly seen that and if there are — if there are questions in someone else’s mind on that, that is perfectly alright. I think the only way to do that is through data and through actually proving that this can work. And therefore, we continue to invest behind mass Media advertising in Tamilado, which is a exclusive territory and being able to showcase a differential performance there should convince everyone that this indeed is the right strategy to adopt. And therefore, perhaps let’s look at internal execution and see what can we do to actually capture the additional footfall that we — this can offer us.
Saurabh Kundan
Understood, understood. My second question is on the capex number. I’m just looking at the cash-flow statement. It appears that simply on a net store addition basis, it is again close to INR2 crores INR3 crores per store. I’m taking on-net basis. Now can that trend be expected to continue or were there any extra investments this year other than store additions.
Vijay Jain
Again, I don’t think that’s the right way to look at it. And even if I look at the net stores, we would have added roughly 100 plus stores this year, including. And if I remember the correct number correctly, I think it’s INR265-odd crore, which is reflected in the cash-flow. So even if you do the math on a gross basis, which is the way you are doing it does not touch INR3 crore. So let me just clarify that. Okay. Having said that, the number consists of multiple things, not just new-store additions, it also consists of the refurbishment of old stores, which were completed five years or 10 years. It also consists of tech investments as well. So there are lot of components to it. If I come down to the breakup in terms of the new-store, the KFC is still in the range of INR2.1 crore for KFC and Pizza Hut is in the range of INR1.35 crores for.
Saurabh Kundan
All right. Thank you very much
Vijay Jain
Thank you.
Operator
Thank you. The next question is from the line of Devanshu Bansal from Emkay Global. Please go-ahead.
Devanshu Bansal
Hi, thanks for the opportunity. Sir, a question on KFC. Q1 typically the strongest quarter with the rest 3/4 having some days where the consumption is weaker. This time around yield was also preponed to Q4, where I am suspecting that consumption may be lower. So we have a relatively cleaner Q1 this time around versus last year. So how should we read this flat SSB? Is there actually some demand improvement happening or it has further worsened in April so-far.
Sanjay Purohit
So again, April is April we had this year. So on-top of that, the flat SSSG really says that there is no material improvement or deterioration in the demand conditions. So that’s all that is there. And it’s really too early. May, June as in the quarter, the better months, it’s too early to comment on May.
Devanshu Bansal
And sir, we are sustaining with this FEC campaign for KFC, which was lost — which was launched last quarter also. So what are the key benefits that we have gained during Q4 and what are the expectations from this campaign going ahead.
Sanjay Purohit
So the campaign is really focusing — focusing on our — the variety that we offer in our core range. And through that, we expect to get more consumers who are aware of the brand, but not try the brand to come into our stores that we have identified over the medium-term as the biggest opportunity on KFC, increasing consumer penetration, while continued continuing to hold-on to brand. So that is what really this campaign is aiming to do.
Now this is not going to happen in one or two campaigns and one or two quarters and we should — we should we should sustain the intensity and the thought behind this idea that we present our variety in core and offer great value on core to pull new consumers in. This is the intention. You see this continue for over a period of time.
Vijay Jain
In terms of the benefit, we have definitely seen transaction improvement. So while our FSG was negative in H1 of last year, our transactions were also negative. And what we did experience in the last two quarters of last year, which is H2, that the decline in transactions was definitely lower than the decline in the overall revenue of for the same-stores. So definitely, the focus on the value has helped us arrest the transaction decline. Now we are largely neutral on the transactions. Hopefully from here we can group the transactions as well.
Devanshu Bansal
Sir, last question from my end.
Operator
Sorry to interrupt you, sir, but I may request you to rejoin the question queue.
Devanshu Bansal
Sure. No.
Operator
Thank you. The next question is from the line of Ashish Kumar from Infinity Alternatives. Please go-ahead.
Ashish Kumar
Thank you, sir and congratulations for a decent set of numbers in a very tough environment. Sir, a couple of things which I wanted to understand that given the fact that Pizza Hut as a brand is changing — is seeing some challenges, are we looking to add more brands to our?
And secondly, sir, when I’m seeing the percentage of delivery from the dine — from dine-in, even for KFC, it’s down to 30s and it’s constantly declining. So is a pure takeaway or a pure crowd kitchen concept is something which you might want to think about for some point of time?
Vijay Jain
The second question pertains to Pizza Hut or KFC or both?
Ashish Kumar
Well, both. Is at 26%. So basically our business is starting to become more-and-more takeaway business.
Vijay Jain
Okay. So let me just take it one-by-one. On multi-brand retail strategy, we have always called out that our people, tech process investments over the years are in a way to handle multiple brands. And while we believe both KFC and Pizza Hut has a multi-decade runway, we would love to add a third brand at some point in time. However, the parameters and the benchmarks which you have laid out are quite high, so that we don’t end-up wasting resources and the bandwidth behind the third brand, which becomes inconsequential.
So the two key elements are that it has to be a scalable or a scale brand, which can give us success. So we are only interested in success at-scale. Anything which is where either of the two stuff is missing, we will not be too keen to adopt the third brand or acquire the third brand. And to identify whether the brand can be successful at-scale, we have called out seven specific filters or seven mantras.
I’ll not go into the details right now. You can refer annual report or we can have a separate conversation. And each of the seven parameters are key for us to ensure that we achieve success at-scale. So that’s the view on the third brand. On the second part, to do a takeaway or a cloud, we have always called out two things. First, from a brand or customer propositions and especially this works in case of Pizza Hut, we want to be different compared to the number-one brand. I think that the positioning of just a delivery brand is taken by somebody else.
If we have to be relevant and relevant number two in the long-run, we need to offer the point-of-view of different and hence, a dining forward omnichannel strategy, I think works best for us in the long-run. And while currently we are seeing challenges on the brand, I’m sure by having a differentiated positioning, it will help us come out stronger or much stronger in the long-run. That’s first on the customer perspective.
Second, from a financial perspective, even if you look at a cloud kitchen or a takeaway, we don’t think the economics works clearly because 70% of our capex goes into the back-of-house, which is kitchen and your delivery takeaway component, let’s say, is today 50%, profitability in those channels are lower compared to timing profitability. So the economics doesn’t work as far as we believe. So no, the answer is no. We’ll continue with our dialing forward omnichannel strategy on both the brands.
Ashish Kumar
Okay. Thanks a lot.
Operator
Thank you. The next question is from the line of Tejas Shah from Avendus Spark. Please go-ahead.
Tejas Shah
Hi, thanks for the opportunity. So I just wanted to understand if you did to break-down the slowdown of across faults, conversion rates, bill cuts and ticket size. Are you seeing the highest pressure in terms of consumer sentiment?
Sanjay Purohit
Sorry, Tejas, I was not able to understand your question because the voice broke. Can you just repeat it?
Tejas Shah
Thanks so I was just asking if you have further doubled down on the slowdown or consumer sentiment. Like I’m seeing the max pressure, is it that footfalls have been compromised, emotion rates or they are coming and they are not actually consuming more than in terms of ticket size or cuts.
Sanjay Purohit
Footfalls more than anything else. But APC is all right and dine-in footfalls especially have been challenging and delivery, while it’s growing, it’s not really growing to the extent that it used to also.
Tejas Shah
Second is, if I hear you correctly
Operator
Sorry to interrupt you, sir, but if you’re connected to your headset, then you may please switch to your handset as your voice is breaking.
Tejas Shah
Is this better? Hello.
Sanjay Purohit
Go-ahead and find out.
Vijay Jain
We’ll figure out just go-ahead.
Tejas Shah
Yeah, sure. Yeah. So I just wanted to know from your comment, do you believe that the split franchise ownership structure in India is somewhere our ability to drive many argument interventions SSGs and sentiment.
Sanjay Purohit
So it’s not ideal, but that is how it is and we have lived with it for seven, eight years. And I think we can still deliver good outcomes even with a structure like this.
Tejas Shah
Those are relatively easier times. That’s why I’m wondering now and when times are challenging in terms of consumer sentiment across not only for us, but other basket at large also.
Vijay Jain
Yeah. To be fair, when we took over the brand, both the brands, I don’t think the numbers were easy then if I remember correctly, KFC was low-single digit or not low-single, 7%, 8% restaurant EBITDA, Pizza Hut was still 5%, 6%. So even those were tough times. So I think we have been able to negotiate — navigate quite well through the situation and we are confident that even right now, we are hopeful of solution and we will be able to navigate through the situation as well.
Sanjay Purohit
And so we found great joy in this strategy. Someone else might have found little less joy. I think the only way to — so fundamentally there is no major misalignment, it is how one wants to spend money. We believe that this still is the best way to go-forward and as we continue to spend in our exclusive market, this will play-out over the next couple of months.
Vijay Jain
Next couple of quarters.
Tejas Shah
Perfect, perfect. And if I may squeeze in one more regarding the —
Operator
I interrupt you, sir, but I may request you to rejoin the question queue for follow-up questions.
Tejas Shah
Thanks.
Operator
Thank you. The next question is from the line of Aditya from JPMorgan. Please go-ahead.
Aditya
Hi, sir. Thank you for the opportunity. My first question is on the delivery channel for KFC. It was good to hear that your own channels grew much faster than the 3P aggregators. It will be great if you could highlight what will be the contribution of your own channel to either the overall revenue of KFC or to the delivery revenues.
And as an extension to the last question as well, how the — how do you think about scaling up the own delivery channel? And is there any misalignment in that strategy versus either Zam India or versus assisted franchise funds.
Vijay Jain
So the contribution of our own channel is still small. It’s closer to now double-digit, 10%, I would say for KSK. And I think that’s a similar number for Pizza Hut as well. That’s the first part of your question. The second part, I was not very clear on the query. You were talking about whether there’s any misalignment on the own channel delivery strategy between us and anybody else. That’s what you’re referring to?
Aditya
Yeah, yeah. How — like do you want to scale it up aggressively, how important is this for you?
Vijay Jain
So own channel has always been a very important focus for us over the years. While the results wouldn’t have been there because whatever — no matter whatever we do, I think the aggregator channel grew considerably faster compared to us. And during those times, our own channel also performed very well. But yes, the aggregator channels performed much better and especially, of course, with the kind of money and the horizontal play sometimes could be a tough one to bid, but it has always been an area of focus. We have been always investing behind the app as well as a lot of product or promotional offers are sometimes unique to our own app.
So those measures have always been there previously and we’ll continue to work on the similar means going-forward as well.
Aditya
Thanks. My second question is a bookkeeping question on the depreciation charge. It was lower sequentially and year-on-year this quarter. Is it because of accelerated depreciation because you had some store closures for Pizza Hut? And do we expect it to revert to the Q3 run-rate in the next quarter?
Vijay Jain
So the depreciation charge was lower, right? That charge was lower because we had reversals on some of the — this is now post-India’s accounting, could be difficult for me to understand over call, I’ll try it. So when you — when you do a post-India accounting, you basically book higher amount during the initial period of lease under depreciation and the finance cost.
And if there are store closures or you have taken a provision for store closures, those provisions gets reversed. So what we have seen is benefit of some reversals coming in this particular quarter. And it should back to the earlier quarter trend. You are right, we’ll go back to earlier quarter trends.
Aditya
Thanks. That was very clear. I have few more questions, but I’ll come back-in the queue. Thanks.
Vijay Jain
Yeah.
Operator
Thank you. The next question is from the line of Subrata Sarkar from Mount Intra Finance. Please go-ahead. MR. Subrata, please go-ahead.
Subrata Sarkar
Hello.
Operator
Yes, sir. Go-ahead.
Subrata Sarkar
Yeah. So my question is that more so from an industry perspective, like since we have observed that the emergence or development of this industry in other Western countries. So like this particularly this is like what is our observation like it is — if consumption generally goes up at what rate to that of, let’s say, premiumization of increasing the power capital income. So is there any study like they need move to let’s say 2,500 to 5,000 bracket, what is the of generally to that of the income?
Vijay Jain
I’ll try and-answer the question to best of our understanding. So $2,500, when it moves towards $3,000 per capital income. If that’s the time when we see a exponential growth in the QSR industry, that’s what we observed across the various economies. And that’s one parameter which is on per-capita income. On — especially in case of KFC, there is another angle which is the protein consumption increase and we have seen that especially in Asian economies where chicken is a preferred source of protein compared to Western economics where beef is more preferred. That’s another angle which is a headwind or not headwind tailwind which actually helps us as the per-capita income grows, the protein consumption also grows.
And for a QSR which operates in a chicken segment KFC, this is another area which helps grow the number of restaurant count and the brands faster. So these are the two angles which you have seen in the recent economy, especially.
Subrata Sarkar
Okay. And sir, again, your thought on that, maybe say the way we derive this kind of analyst is like is there — do you think that the market which used to — which we have observed, let’s say, in developing countries like that discretionary consumption bucket. And right now the discretionary consumption bucket which India will experience, is there a change in that like whether QSR like the way it was at that point of time the discretionary consumption, out of that used to get a — one of the primary consumption was QSL of increase in QSL. Is it still relevant in today’s context, sir if I’m — I think I’m clear in my question
Vijay Jain
Not too clear, I still give what you are discretionary. Always the component which we are investing at ours is dependent on. And as the per-capita income goes, that’s the bucket of the consumer which grows faster and that’s where we tend to benefit and go faster along with it.
Subrata Sarkar
Can you reframe my question, maybe it will help you. What I mean to say like, let’s say, 12 20 years back or maybe five years back, when US, let’s say, 30 years back, when US observed the increase in discretionary the increase in par capita income and because of that leads to a higher discretionary expenditure and US rate is one of the prime share of that.
What my only question is like assumptions hold, if the assumption holds good with the increase in per-capita income, discretionary expenditure will go up. But my only point to understand from you, like the way QSR was relevated in terms of one of the proponent — one of the component of discretionary expenditure, does it still hold good in terms of share of discretionary consumption, QSR expenditure or there are other expenditure which will now become more relevant in the — in the bucket of discretionary consumption and that’s why growth may get hampered.
Sanjay Purohit
So good. I don’t think we have done such detailed analysis of one category versus another category. I’m thinking in general, when we observe the correlation of per-capita income and eating out occasions, you find as Vijay was saying that once you go above a certain threshold, there is exponential growth that starts to happen. I think we should just leave it at that for the moment,,
Vijay Jain
Maybe we can connect offline again if you — so that we can understand your query better as well.
Sanjay Purohit
So thank you so much, Subrata.
Subrata Sarkar
Okay.
Operator
Thank you. The next question is from the line of Saurav Kundan from Goldman Sachs. Please go-ahead.
Saurabh Kundan
Thank you for the opportunity to ask the question again. I just wanted to double-check that we have generated positive free-cash this year, right, if I’m not mistaken? Okay. I mean, and this should continue, I believe, because margins, let’s say, even at a low-single SSSG margins you said will be more or less stable and your capex requirements are only coming down because you’re adding fewer stores than last year. So we continue into the next year at least also, right?
Vijay Jain
So the current year we generate — so our capex and our EBITDA was largely similar again, this was a year where we opened from a financial year perspective, we opened 70 stores only for KFC and Pizza Hut was 15 stores only. Apart from that, there were couple of other components. For example, we had a loan which was made to our Sri Lanka subsidiary during tough times when they were facing macroeconomic crisis and there were dollar shortage. So there was a repayment of that loan which came in, that’s roughly INR25-odd crores. We were able to generate huge positive on a working capital cycle as well and that gave us a INR30 odd crore. So there were a couple of other factors as well. But yes, we don’t anticipate our cash-flow vis-a-vis our EBITDA to be I would not say neutral next year, but yes, we may have to dip into small amount of our cash — cash reserves.
Saurabh Kundan
Okay, you might have to dip into some cash reserve next year.
Vijay Jain
Because apart from, let’s say, there could be renewal fees which are coming off. As a Sapphire Foods, we would be now completing 10 years since our acquisition of the store. So there would be a renewal fee, which would be coming up for young payment coming year. And apart from new stores, there are always agend on refurbs. And typically when you try and complete — when you complete 10 years, there are a lot of refurbs which are on major side, major refer than minor. So we don’t expect the cash-flow to be positive coming year. We expect — we’ll marginally deep into our resources of cash.
Saurabh Kundan
Okay, okay. May I know about the renewal, sir,
Operator
But I may request you to rejoin the question queue for follow-up questions. The next question is from the line of Ashitosh Prashar from Mira Bels. Please go-ahead.
Ashutosh Parashar
Yeah, hi, thanks for the opportunity. Just a couple of questions. Firstly, on the Sri Lanka that now that the turnaround has sustained over the last few quarters. What do we see in terms of store additions? Are we going to — do we have the opportunity to accelerate from high-single-digits to maybe early double-digits over the next couple of years. So any outlook on that? And Q-o-Q, we saw a bit of moderation in both PVR at India as well as the in the gross margin. So any comments on that?
And secondly, on the corporate cost side, we have shown of the macro constrained like last two years, we have grown only by single-digit. So should we expect that trajectory to continue those new? Thanks.
Vijay Jain
I try and remember all the three questions. So if so the first was on the Sri Lanka store additions, which was, I think, yes, now that that it’s more stable year, we were looking at a low single-digit restaurant addition, I think now we can look at high single-digit restaurant addition at least in the coming year and maybe next two years as well, that’s on the Sri Lanka store addition. On a gross margin perspective, there were — you referred to both Sri Lanka as well as India.
I think our focus on driving value and our promotions are also tailored accordingly and that’s what has led to the decline in the gross margin for both the brands. Sri Lanka, we have been able to see that the joy which has come along with it, which is double-digit SSSG backed by translation growth. Hence, despite the dip in the gross margins, we were able to deliver a 250 basis-points improvement in-restaurant EBITDA. Unfortunately, while margins dropped gross margins drops in — dropped in India for Pizza Hut, we were not able to see excess SSG and that has led to a deterioration in our restaurant EBITDA. So we believe the current level of gross margins are stable level and we don’t anticipate this either going upward or going downward materially.
There was a third question, which was I guess that is the third one.
Ashutosh Parashar
On the corporate cost side.
Vijay Jain
On the corporate costs. Yeah, the corporate cost was single-digit, see typically the kind of thumb-rule which we use it, can the corporate cost grow at a two-third to three-fourth of the overall revenue growth. Our revenue growth last year was at a consol level, 13% 14%. And yes, a single-digit growth was a good outcome. I would say if the brand and we don’t target to grow revenue at low-single digit or low-double-digit, we typically target whether revenue can grow towards 15% 20% and our typical target would be then to grow — the corporate cost would grow at double-digit. Let’s hope this year we don’t see a situation where the revenue grows in low-single digit or low-double-digit.
Ashutosh Parashar
Got it. If I may follow-up on the value offerings.
Operator
So all the things are joined by the, but I may request you to rejoin the question queue for follow-up questions. Thank you. The next question is from the line of Aditya from JPMorgan. Please go-ahead.
Aditya
Hi, thanks again for the opportunity. My question is on any regional or statewise, city-wise divergence you are saying — who you are seeing in terms of and in the coming financial year, do you expect to shift your store expansion in any meaningful way in terms of CD tiers or regions of stage versus, say, what you did in FY ’25? Thanks.
Vijay Jain
So we are not seeing too many — too much variance between various cities and state in terms of the SSSG performance. Yes, in case of Pizza Hut, we are investing as Kamil Nadu is an exclusive territory. We said we will invest there heavily on our mass media and through a mass media campaign as well. There — and it’s very initial days, we are seeing slightly differential performance in terms of SSIG for our Tamil Nagu territory. But again, as I said, initial days. On coming to store expansion, 70% of our stores, which we added even in the last two years are in metro and Tier-1 cities. I think that ratio and mix will continue even going-forward, at least for the next two years.
Aditya
Thank you,.
Operator
Thank you. We will take that as the last question. I would now like to hand the conference over to the management for closing comments.
Sanjay Purohit
There’s one there’s one person for us.
Vijay Jain
We can take that one.
Sanjay Purohit
We can take that one question,.
Operator
So the next question is from the line of Pasha from Mira Bills. Please go-ahead.
Ashutosh Parashar
Yes. Thanks for the color. Just a question on the value offering. So what is the impact on gross margin of the value offerings is visible in Pizza, the same is not there in the case, we have held up the gross margins there very well. So any comments on that?
Vijay Jain
Actually, when you look at quarter-on-quarter, there we would have dropped very small amount of gross margin over there in case of KFC. Also, there are always an opportunity where on few product compositions of can we do some tweaking so that we can hold-on to gross margin. So some of the value offering impact has been negated by small tweaks here and there on in terms of our product composition. But there is certainly a drop even in KFC when you compare Q4 versus Q3.
Ashutosh Parashar
Got it. Thanks a lot for the sir. Thanks.
Vijay Jain
Thank you.
Operator
Thank you very much. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Sanjay Purohit
So thank you, you everybody for joining our conference and being patient with your questions. We will see you in three months’ time after to announce our first-quarter results. So thank you very much.
Operator
Thank you. On behalf of Sapphire Foods, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you