Westlife Foodworld Ltd (WESTLIFE) Q3 2025 Earnings Call Transcript

Westlife Foodworld Ltd (NSE: WESTLIFE) Q3 2025 Earnings Call dated Jan. 29, 2025

Corporate Participants:

Chintan Jajal — Investor Relations

Akshay Jatia — Executive Director

Saurabh Kalra — Managing Director

Analysts:

Devanshu Bansal — Analyst

Saurabh Kundan — Analyst

Avi Mehta — Analyst

Jaykumar Doshi — Analyst

Krishnan Sambamoorthy — Analyst

Gaurav Jogani — Analyst

Jignanshu Gor — Analyst

Latika Chopra — Analyst

Prathamesh Rajaykumar Dahake — Analyst

Harshad D. Gadekar — Analyst

Krishna Shah — Analyst

Presentation:

Operator

We ladies and gentlemen, good day and welcome to the Westlife Food World Limited Q3 FY ’25 Earnings Conference Call. 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, please signal an operator by pressing star and then zero on your touchstone phone. Please note that this conference is being recorded. We would like to remind you that certain statements made by the management in today’s call may be forward-looking statements. These forward-looking statements reflect management’s best judgment and analysis as of today. The actual results may differ materially from the current expectations based on a number of factors affecting the business. Please refer to the safe-harbor disclosure in the earnings presentation.

I now hand the conference over to Mr Chintan. Thank you, and over to you, sir.

Chintan Jajal — Investor Relations

Thanks, Dovin. Welcome, everyone, and thank you for joining us on WestLife Food World Earnings conference call for the 3rd-quarter ended 31st December 2024. I am Chintan, lead IR at. From the management team, I have with me Mr Saurabh, Managing Director; Mr Akshay Jhatia, Executive Director; Mr Shah, Chief Financial Officer. We will kick-off today’s conversation with sharing his thoughts on overall progress and outlook. This will be followed by Saurab taking us through operational, financial and strategic highlights. Post that, we can open the forum for questions-and-answers. We will be referring to earnings presentation and financial releases available on the BSE, NSE and Investors page of our website.

With that, I now request Akshay to commence this session. Thank you, and over to you, Akshay.

Akshay Jatia — Executive Director

Thank you,. Hello and good evening, everyone. I’m happy to have you on the call today. I trust you have seen the numbers. Saurab will take you through the details, but in summary, growth is gradually coming back and we are encouraged by signs of progress. Same-store sales were up by 3% year-on-year, moving back-in the positive territory.

A key highlight here is that it is a guest count-led same-store sales growth, while average remained stable. I think this reflects our well-rounded strategy focused on enhancing value, our value proposition while driving customer excitement through product innovation. We have been pioneers of value in the QSR industry with initiatives like the Happy Price menu launched nearly 20 years ago, democratizing the burger category in India. In fact, the QSR industry globally is built on two core pillars of value and convenience. I am pleased to report that our sustained efforts with everyday mixsaver meals and the mixsaver combo programs have significantly improved our affordability perception scores and increased customer footfall in our restaurants.

Our customers continue to see us as value leaders, which is crucial in a challenging consumption environment where every rupee counts. We remain committed to delivering exceptional food experiences at all price points. During the quarter, we launched the Mick Crispy platform, which showed our crunch tagline. The product has been very well-received by customers and is becoming a favorite for many. McCrispy along with McCafe has enabled us to drive the premium segment of our portfolio. Our customers are increasingly looking for experiences that offer both affordability and premium options, deepening their needs and occasions. Our ability to cater to these diverse preferences is a testament to our robust strategy and deep understanding of consumer behavior.

Lastly, the operating environment remains challenging. We are not yet — we are yet to see a significant increase in dining out rents. We anticipate that stability in retail inflation and any budgetary measures to boost disposable income and purchasing power could provide the necessary stimulus in the near-term to consumption. Despite these challenges, we continue to execute our strategy and expand our network prudently, in-line with our Vision 2027 plan with a long-term growth mindset. We opened a record 46 new restaurants in the calendar year of 2024. Our ambition is to fortify market leadership and deliver differentiated performance in the years to come, supported by a strong foundation and multiple growth levers.

Thank you for your continued confidence in us. I will now hand over to Saurav to take you through the operational and financial details of the quarter.

Saurabh Kalra — Managing Director

Thank you, Akshay. Ladies and gentlemen, good evening. Thank you for joining us for this Q3 results. I’m pleased to report to you that our revenue for the last quarter reached INR6.54 billion, reflecting our 9% year-on-year growth. Our same-store sales momentum has improved to a positive 3% Y-o-Y from a negative 6.5% in the last quarter. Our positive shift is driven by increased footfalls and transactions, while our average check remains stable, as pointed out. Our dual strategy of focusing on product innovations at McCrispy, like and offering value through McShrever has generated encouraging momentum despite current challenging consumer spending trends.

From a channel perspective, our growth has been pretty broad-based with both on-premise and growing about 9% Y-o-Y. Our omnichannel strategy is designed to deliver an exceptional customer experience at every touch point. To this end, we continue to invest, invest and enhance our capabilities across dine-in, delivery and drive-through. While growth may vary across channels, we believe that a broad-based growth approach is far more resilient and value-accretive over medium to long-term, given the evolving customer preferences on channels. Off-premised contribution stood at 42%, consistent with the two-year average.

Our average sales per store on a trailing 12-month basis was around 60 million. We are committed to further enhancing consumer experience through digital technology. Our digital journey is actually progressing quite well with increased enrollment in our flagship loyalty program, My McDonald Rewards and the adoption of the self-ordering kiosk across all our restaurants. We engaged with over 3 million monthly active users on our mobile apps and the digital sales that now account for almost 70% of our top-line.

Turning to profitability, our gross margin improved by almost 40 bps sequentially to 70.1% despite heightened inflation in key commodities such as oil, coffee, cocoa, et-cetera, we remitigated these inflationary pressure through supply-chain and cost initiatives and a 50 bps profitable portfolio level price increase. We expect the gross margin to remain stable at around 70% in the near-term, providing a healthy benchmark for reinvestment in strategic growth initiatives. Restaurant operating margin and operating EBITDA were lower by approximately 200 bps Y-o-Y due to operating deleverage on and higher A&P spend for new product launch. However, on a sequential basis, we saw an improvement in profitability due to a better scale and cost management.

We anticipate that this trend to continue as average unit volume improves, the cash profit-after-tax stood at INR520 million or 8% of sales. Despite near-term challenges, we are forging ahead with our network expansion plan. We added 15 new restaurants in the quarter and close to bringing our total store count to 421 across 67 cities as of December 31st. Approximately 95% of these restaurants feature, 92% are EOPS and 22% offer drive-thru services. We are on-track to achieve our FY ’25 target of 45 to 50 new restaurants, reinforcing our confidence on the long-term potential of both the industry and our business.

In summary, as I highlighted last quarter, our three key pillars to drive profitable growth in the near and to medium-term are, first, accelerating on the value platform. Second, augmenting our menu through product innovation and giving excitement to our customers; and third, robust cost governance. We are seeing promising signs and green shoots of these initiatives taking effect. Guest strong momentum is improving, particularly in dining, leading to a broad-based growth. Our breakeven sales have improved by 2% to 2.5% in the past quarter due to systematic cost governance, thereby enhancing like-for-like profitability sequentially.

Thank you for your time. I now hand over the call to the moderator and open the floor for your 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 touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. We have the first question from the line of Devanshu Bansal from Emkay Global Financial Services. Please go-ahead.

Devanshu Bansal

Hi, thanks for taking my questions and congrats on growth revival in the business. So first question is that there are few important changes that have happened in our business over the last couple of years. One once a change is the digital-led sales, which is now about 70% for us versus 50% earlier. These changes specifically are currently being underappreciated due to weak demand environment, but I wanted to check on the positive impact of these changes in terms of top-line margin once we return to normalcy.

Akshay Jatia

So, Devanshu, the way we look at it actually is that we’re acquiring a very loyal customer because we view digital touch points as a touch point where we understand the customer a lot better because we get their information, we get their buying trends in a digitized format. And as a result, we’re able to reach-out to customers regularly and personalize their experience in terms of offerings that we display to them as well as personalize their experience in the restaurants who are self-ordering kiosk, et-cetera. So in the long-run, the way we look at it is that it will increase frequency. It allows us to cross-sell to our customers, which can eventually have an impact on average ticket size positively. But most importantly, it gives us predictability in our business, where we are able to firstly have multiple cohorts who we know-how to, have multiple cohorts whose frequency we know and multiple cohorts who is buying hard habits we know. So as a result, you know, it helps with predictability, it helps with loyal customer-base and eventually sales growth.

Saurabh Kalra

So from that, just adding on to what — just adding on to what Akshay said, just one point. I think my — in my commentary also, I talked about it being a journey. So I think the question you asked is also around what will happen when it all terminates. I think gave you a flavor of we can bring predictability, we can control frequency, we will have our loyal customer-base with us all-the-time. So those are all advantages we all know. But to me, we are also approaching — approaching it very structurally because there is restaurant and network involved because our digital strategy is also really digital, right? So there is self-ordering kiosks which are there in the restaurant. So we foresee this journey completing and giving us all the dividends which digital sales gives to the business.

Devanshu Bansal

Understood. So Akshay, any margin benefits also that should apart from operating leverage because of better throughput so any cost-savings that can — that can be there with these digital initiatives.

Akshay Jatia

So we don’t look at it like that today. I think we’d rather focus on the throughput advantages we can get. And I think as we get more control in terms of the buying journey, we can definitely, obviously tactically intervene with our upselling, but most importantly giving the customers what they want. So I think throughput is what I would focus on.

Devanshu Bansal

Understood, Ankshey. Second strategic question is, we are sticking to our five-year vision of delivering billion to INR45 billion of sales by FY ’28, right? So ’24 and ’25 in-between are two years that have been impacted because of weak environment as well as some global actions. So is it fair to assume that now lower-end of the guidance seems more likely versus the upper-end of the guidance that may not be achieved?

Akshay Jatia

So the guidance, obviously, there is a reason why the guidance is a range. I don’t know what we’ll achieve because honestly, we are putting our best foot forward. We went through a certain crisis where our new base got established. We finally got momentum of starting to beat that base. We would like to do far more than what we have done already. But I would not say we should change, not change because when COVID came in, our current guidance looked highly unlikely for Vision 2022 too. But we did it.

So I would — I would rather say there are — there are demand challenges, there is a volatile world out there, there is — the consumer demand is not as what it should have been, but that could change, right? That could change in the next one year and you could see, okay, all of a sudden, you’ve got a high-single-digit growth. So things happen in business. I think there are times when you protect your base, there are times you improve your profitability. There are times you accelerate on-sales. The good news for us is we know our business is linked to a lot of momentum.

Finally, we’ve broken the negative momentum. Last-time when this had happened, it had taken us 2.5 years to get-out of the negative momentum. This year, we have been able to do in four quarters. So we are taking a little bit of heart out of our history and saying what is the art of possible rather than saying what could be the barriers is where we are. Now there is a range, we are still fairly committed to achieve that range.

Devanshu Bansal

Understood. Last question from my end. We are likely going to be anywhere around 13.5% post EBITDA margin in FY ’25. So we — in the PPT, we have indicated that we are making higher investments in terms of marketing otherwise to come over these community-based challenges and as well as weak demand environment. So I just wanted to check what are the one-off kind of investments that we have made in FY ’25, which may not be repeated in FY ’26.

Saurabh Kalra

So while I will not give you the answer directly of FY ’25 versus FY ’26. Obviously, it is — we have to reach what we have committed in the vision 2027 over the next two years. Now good news is if you look at it sequentially, we did see a significant improvement over the previous quarter. And our intent is to maintain this quarterly improvement and show it to us and through results that we will be able to make the EBITDA improvement sequentially going closer to what we have laid down into our Vision 2027 and you will see improvement over the last one year — over the next one year because there are multiple parts to it, right?

So the multiple parts include what is the product mix, what is the pricing strategy, then there is what are the cost governance initiative, what are you doing on the bottom stores, top stores. So there’s multiple work which is happening right now. I think we are fairly confident that we will be able to grow EBITDA percentage consistently sequentially.

Devanshu Bansal

Fair enough. Thanks for taking my questions.

Operator

Thank you. We have the next question from the line of Saurabh Gundan from Goldman Sachs. Please go-ahead.

Saurabh Kundan

Yes, hi. Thank you. It’s actually very similar to the previous participant, but I was looking at your AUV currently, you’re at EUR60 million and to reach the lower-end, I think rough-cut calculation shows that you have to increase the AUV by 15% over the next three years. And that if — I’m correct me if I’m wrong, but that should translate to a high single-digit SSSG on average over the next three years. So if you could just help us how you could expect to get a high single-digit SSSG, that will really help, whether you could — if you could just break it down into maybe transactions, footfall or new product introduction, that will really help get some confidence.

Saurabh Kalra

Okay. So I’ll give you a little bit of flavor on it. So obviously, when you look at the average unit volume of — and you compare it to the comparative store-sales, which actually means that all our restaurants which were present last year have done 3% better. So their AUV is higher. The AUV on a totality basis is lower because of some of the new-store additions and for some stores, which might have shut-down one or two stores, which we would have shut-down. So if you look at it in totality, the momentum of growing has come back and now some of the new stores might not have been at the system-level, which is causing some kind of to be transitionary blip because we opened the number of stores we did. And we also expect that them to reach system average in the next couple of years. So there will be — there will be some momentum, which will come from that side.

And like I said, we are a momentum business. Finally, we have reached positive. It doesn’t always change in 1/4. I remember still the time when we had launched the Happy Price menu campaign in 2004, it almost took us 3/4 of launching it to become positive and then one year to really have the next five years rung of good positive numbers. So this is all — we are true to our strategy. I think whatever we had laid down in Vision 2027, we are fairly committed to it. In fact, what we did do was because of all this crisis, we had augmented it and said accelerating value platform is now one of the key agendas we have. We are comfortable with what we are providing as input and we believe that this is just a matter of time when you’ll start seeing the momentum shift to even better numbers.

Saurabh Kundan

Thank you, Saurabh. So safe to assume that it will be largely on transactions driven — I’m talking about the SSSG because you’re focusing on value, so you’re trying to get more-and-more footfall.

Saurabh Kalra

Yeah, we would — we would largely want transaction-driven without having any impact on the average customer bill value, that would be — that’s pretty much how we’ve always thought about things. So — and that should continue.

Saurabh Kundan

Okay. And I think you mentioned in your — in your remarks that you feel that dine-in is still not fully back. So can you just dig a little deeper into that? Do you say that because some of your earlier, the impacted restaurants, are they still down in footfall? Is that — are you expecting them to come back or is it something else?

Saurabh Kalra

No, no, I don’t think I mentioned that in my comment. But however, I think there was a new baseline getting established — got established last year. We have to improve from there and we believe the growth will be broad-based across channels and across types of stores. We did see even in the last quarter, some of the regions not performing as well and some of the regions really doing quite well. So we have to work on those regions and that’s how things will pan-out.

Saurabh Kundan

Okay. And did you exit this quarter since you mentioned momentum, did you exit this quarter better than this overall 3%? I mean was the last few weeks better than 3% the.

Saurabh Kalra

So overall, if I was to — if I was to say it was — it was a quarter which was pretty much at par. But if I was to look at it very, very in detail, I would say the last 10 days in December weren’t as we would have expected it to be in the conventional sense. However, January, we see it coming back. So that’s how it is.

Saurabh Kundan

Okay. Thank you for that. One last question, if I’m reading the numbers right, the royalty as a percentage of sales seems to be quite low. So what explains that?

Saurabh Kalra

And last year December also we had told them that on an annual basis, we reconcile all the incentives, etc., which comes from the McDonald’s Corporation on-store opening, etc. So all the numbers have been reconciled. They’re not materially big impact on an annual basis. On the 1/4, it sometimes look a little better.

Saurabh Kundan

The next quarter you revert to what your normal royalty is as a percentage of sales.

Saurabh Kalra

So our normal royalty is what is given in the — given in our website. Yeah. On an annual basis, beyond that, if there are any incentives that we are pass-through, we do it once in a year in December.

Saurabh Kundan

Okay. Thank you.

Saurabh Kalra

Sir also, you would see it similar.

Saurabh Kundan

Yeah. Thank you.

Operator

Thank you. Ladies and gentlemen, in order that the management is able to address questions from all participants in the question queue. We request you to please restrict yourself to two questions per participant. You may rejoin the queue for follow-up questions. We have the next question from the line of Avi from Macquarie. Please go-ahead.

Avi Mehta

Yeah, hi. Thanks a lot. I just wanted to check on the impact of the geopolitical factors. How has that behaved in 3Q and whether that is changing, given the recent agreements, etc., that are coming? Thank you.

Saurabh Kalra

Hi, hi, Avi, how are you doing? I hope you are well. Yeah. So actually, Avi, I look at it a little differently. There was a new base got established last year. We are not — we are not necessarily looking at it. And for us, it’s history, it happened. We are not doing anything extraordinary for any type of cohort, specifically for any geopolitical, et-cetera ratios. We’ve taken it as a part of a base and we are seeing how do we grow from there. And the good news is some momentum got built last quarter.

Akshay Jatia

Correct. And largely, we are seeing a lot of appreciation of our efforts. There are some stores that still have some of this overhang, but largely like Saurav said, it’s history for us and we’re focusing on building momentum through the value levers or the levers in general that we’ve spoken about.

Avi Mehta

Got it, got it. So I mean, where I’m coming from is you pointed towards gradual improvement in-demand, your initiatives are on-track on value, doing very well over there. So I just wanted to get some comfort on whether the macro, is it giving us any sense of expecting a sequential improvement in same-store sales growth trends as we go-forward. That is what was the — and the only thing that I was trying to kind of balance the equation was this, which is the basis of the question. So would it be fair to say that it looks all-in place for a potential?

Saurabh Kalra

I’ll give you — I’ll give you this 100 a little bit — in a little bit other way. When people leave a brand for a certain reason, new habits get created. It is not a switch on or switch-off. I think that’s why I said we’ve created a new base. The IEO of growth remains pretty much muted for the entire year, which is the informal e-out sector. Luckily, Western fast-food is doing quite okay, which is also reflected in our 9% growth overall. But the eat-out occasions have not grown or have remained muted. In fact, O&D with whatever we see is almost flattish as much as July, August, September, if not a little lesser. So that’s what we see. So how I would read it is there are new habits got created and we need to improve from where we are and we are no longer talking about any factors impacting directly or?

Avi Mehta

Got it. Got it. Just a follow-up on that, given this weak demand environment across this industry that we are witnessing, has there been any change in competition or competitive intensity, whether it is from peers or aggregators.

Saurabh Kalra

Whenever there will be a — there will be a the pressure, everybody wants to give the best-value to the consumer. Eventually, when I look at it for us, right, we have put our best-value offering in everyday affordable pricing there of what is good for the business and what is good for the consumer and what is good for us being able to have a sustainable business as well. And that’s why we look at it this way saying we have to do what we have to work, we have started out for ourselves. So I don’t see anything from a competitive standpoint because we discuss what do the consumers want. In this environment, value will work and therefore, our number-one goal right now is to accelerate the value platforms?

Avi Mehta

Will there be closures or something?

Akshay Jatia

Sorry. Sorry. Sorry, Avi. So I think you know, we do also talk about value in its entirety, which is our value-for-money proposition. So it’s not only an entry-level price point, it’s the right price point across our entire pricing ladder. So whether it’s at the entry-level, at the core level or at the premium level, we feel that you know it’s the best quality product at the best price possible for the customers that makes a difference. And we supplemented or complemented with our experience as well as the quality hygiene standards that we offer in a McDonald’s, whether it’s at the restaurant or through our delivery, drive-thru or omnichannel experience. So I don’t want you all to get caught up in the thought that value is just price. So that’s what I just wanted to clarify.

And like Saurav said, we want to maintain this that a new base has been created and we are gradually improving from there. We’re quite pleased with how our initiatives are being appreciated by customers and we feel like we have the right product portfolio as well as the use-case occasions are drawn-out and we’re quite excited about our FY ’26 plans as well.

Avi Mehta

Got it. Fairly clear option, sir. Thanks a lot for this. I’ll come back-in the queue. Thank you.

Operator

Thank you. The next question is from the line of Jay Doshi from Kotak. Please go-ahead.

Jaykumar Doshi

Yeah, hi, thanks for the opportunity. Firstly, could you give us some update on how your chicken venture has progressed over the last two years since you launched, in how many restaurants you have fried chicken in available today of your overall network? And what would be ballpark salience that you would have reached in those — in those restaurants?

Akshay Jatia

Sure. So I think we have it in all our restaurants in the South as we’ve always maintained and select restaurants in other geographies where we feel the chicken eating occasion is relevant. I think we’ve made good progress in terms of our platform. We now have a holistic platform where we have a mixed spicy range, a mix crispy layer range as well as wings in the mixed spicy format. So we feel like now we have the right bone-in offering. In addition to that, we have our burger chicken as well as our chicken burger as well as our chicken sides, which include chicken nuggets, etc.

So I think we’ve done a lot of good work-in establishing this portfolio. And additionally, we’ve further improved the product with our most recent rollout in this quarter, ensuring that customers are viewing this as a differentiated product. So we’ve done a lot of process, process product improvement and long-story short, this quarter is when we are launching our final version of the back-end product. And moving forward, we are very bullish as we bring customers back to our restaurants are in using this as an added lever to add an occasion as well as build credibility as well as leadership in the chicken category or further build credibility and establish leadership in the chicken market. And I think that’s why we are so bullish on the South as well and it’s one of the growth levers that still has to play-out for the years to come.

Jaykumar Doshi

Understood., would it be possible to give us account in terms of how many restaurants you have these products available and whether it is high single-digit salience as a percentage of ADS or double-digit. I believe you had called it out early-on when you — the initial year that you launched and what we don’t know is whether it is improved in terms of salience or it has tapered off or it’s where it used to be.

Akshay Jatia

Yeah, sure. So we have 160 restaurants, I can share that. In terms of ADS, it’s remained largely stable. It hasn’t grown exponentially, but we have seen a stable base over the last six months. We haven’t broken out the number basis that first time. But at the right time, we will share some more flavor because like I said, we’ve been constantly working on getting the foundation right because it’s required a holistic approach, which includes the product, the training, the mindset, the mindset that we want to establish cheap chicken leadership in the South. And on-top of that, we’ve launched this McCrispy platform, which includes the Chicken as well as the McCrispy Chicken burger, which is again targeted towards our Southern customers as well as customers in the West who enjoy eating chicken burgers. So I think you’ll only see ADS go up moving forward. And at the right time, we will give some flavor in terms of how it’s contributing to growth. As of now, like I maintain the growth lever still needs to play-out.

Jaykumar Doshi

Okay. Understood. Second is on value, you did partly answer the question in response to the previous question. Again, is it possible to sort of give us some quantitative data points, which kind of help us better understand how your strategy to your focus on value earlier this year or doubling down on value has helped either in terms of driving transactions or you know, or has the mix changed in favor of value? The reason of asking this question is when we look at one of your peers post-delivery fee waiver and slightly more of sharper pricing, they have seen a massive pickup in same-store sales growth. So have you — are you seeing any such signs or do you anticipate you know similar trends in your business also maybe a quarter or two down the line?

Akshay Jatia

Yeah, so Jay, I mean, sorry to interrupt I got the gist of your question. I think like we maintained in our commentary as well, we have already seen a gradual improvement where we are at 3% year-on-year same-store sales growth and it come on the back of guest count-led growth, which means that our value proposition is working. But I want to maintain that value for us means value across-the-board. Obviously, sharp communication around entry-level price points does help customers enter the restaurants, but we do a very good job in terms of trading them up as well because we want to maintain profitability as we keep adding average unit volume. That’s when operating leverage truly plays out. We don’t want to cannibalize and downgrade our customers.

So I think the quantitative indication is already there in our current quarter same-store sales growth, which has been primarily cash count led and we’ve managed ensuring that value has been across-the-board because our average check has remained largely stable. So I think that’s how I would look at it.

Jaykumar Doshi

Yes. Sure. Thank you so much.

Operator

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

Krishnan Sambamoorthy

You. I ask,. Over the last couple of years, all of your peers have ramped-up their value offerings. You also — both of you also mentioned at the beginning that you have retained your value leadership. But has there been any perceptible loss in your — in your value market-share over the last couple of years this of launches by peers.

Akshay Jatia

So I mean, as we mentioned again in our commentary, in fact, our value scores have an affordability perception scores have increased significantly. And as a result, we’ve also seen a quantitative output or outcome, which is our increased customer footfall. So I mean, we answered that already. But again, to reiterate, we definitely are the leader in terms of value-for-money in terms of brand scores as well as affordability perception scores, which are increasingly important for brand trust.

Saurabh Kalra

And I think for us, quality of the consumer is as important as the value platform, which is sustainable to us so that it balances out the needs of the three stakeholders, right, the you guys shareholders and the second part is the consumer, whether that proposition is good enough. And third-part is for company profitability because we want to grow through internal accruals. So when you think about value platform, we think quite strategically about it. So whatever value platform you see, we believe they are good enough to be able to maintain high-quality consumer intake to the brand and this is something which we can sustain. We’ve got internal norms around what do we do for entry-level, what do we do for mid-tier, what do we do from high on the premium side of it. But we like to be within those ratios because that to us is broad-based growth, which also signifies good-quality growth. So that’s how we think about it.

Krishnan Sambamoorthy

That’s clear. Thanks a lot. The next question is on the pricing. The 50 basis-points that has been initiated in Q3. In what month was this and was it there for the whole quarter? And has it been more in the premium end-of-the portfolio and given what’s happened to coffee prices.

Saurabh Kalra

So good news is you were not able to observe it. So I think our pricing was pretty good. It’s a small portion. Yeah, it was done on a few leverages on a few products where we were not — we were actually cheaper than most people in the marketplace. So we keep doing this activity 50 bps not substantial. We did it in November.

Krishnan Sambamoorthy

Okay. Thanks a lot.

Operator

Thank you. The next question is from the line of Gaurav Jogani from JM Financial. Please go-ahead.

Gaurav Jogani

Hi, thank you for taking my question. So just one question on the margin side. So effectively, what I read is that it is largely because of the suppressed AUV that the margins are getting impacted.

Saurabh Kalra

Gaurav, sorry, your voice is pretty — Gaurav, sorry, you’ll have to repeat it. Your voice is completely broken.

Gaurav Jogani

Yeah. Is it better now? Are you able to hear me now?

Saurabh Kalra

Yes, slightly better.

Gaurav Jogani

Yeah. So the question is, I understand that the margin impact is largely because of the negative leverage. But at what level of the AUV, do you think that you can possibly achieve the 2027 guidance in terms of the margins?

Saurabh Kalra

Let me answer it differently like what I had answered earlier. I think — I think we had to invest in a few areas which we did at that point in time. Now we will see sequentially we improving our profitability of literally for quarter-on-quarter, for a few quarters to be able to retain our baseline. I would not go with an AUV guidance. There is work which we can do now to be able to bring back our best number on profitability. So that’s the endeavor and that’s how we are thinking about it.

Gaurav Jogani

Okay. Sorry, if you can be more clear, did you really help me answer my question. I mean, see, the thing was that earlier even at a 6.5% kind of a kind of an EUV, we are blocking around 13% 14% kind of — sorry, 12% kind of in pre-IndAS plans. So given the entire conditions and I’m showing it would have given the cost line items more better, the understanding would be that even at a lower maybe AUV, probably you can still achieve margin guidance that you have given. So that is what I actually wanted to understand.

Akshay Jatia

So Dorav, we can’t understand the call is very broken, so we can’t understand what you’re saying. So we’ll take this offline. We can answer your question. Chintan can get back to you.

Gaurav Jogani

Okay, sure. Thank you.

Operator

Thank you. The next question is from the line of Jignanshu from Bernstein. Please go-ahead.

Jignanshu Gor

Hi, thank you so much for taking my question. I hope I’m audible.

Saurabh Kalra

Yes, loudly clear.

Jignanshu Gor

Okay, great. So congratulations on an improving performance. I think it sounds that the dine-in especially is coming back. So the context for my question is your 2027 vision statement and I know you touched upon this earlier on a — specifically from achieving the AUV perspective.

My question was, there is a — of course, as we are behind on a straight-line trajectory from where we would want to be from ’22 to ’27 and given the market conditions. In your view, what would be the key levers that you think will come in handy to transition from the current AUV number that we have at around 60 million to, let’s say around 70 million, which we need at the mid range of our 27 vision numbers. So is it guest counts? Is it a better mix with more premium products, more AAV per customer or dining versus JV? So what are your like top one or two ideas that you think should have the highest impact in that in that.

Saurabh Kalra

I think we had laid down the Vision 2027 with clear priorities on that debt and what is it that we intend to do in order to get AUV. However, there was — there was a part on making sure that we continue to lead family and occasions. The second one was around menu. Third one — third, then the rest of the two were more around growth in terms of the — or in terms of the new stores, et-cetera. But to me, while augmenting menu and product innovation continue — our menu continues to be an important lever, which you’re going to see us play-out, I think the guest count coming into value is an important lever for us in the short and medium-term to be able to ensure that we are continuously building some momentum in the business.

Jignanshu Gor

Okay, that’s very helpful and in fact, offers me a segue into my second and final question. The — you said one of the reasons the SSSG was positive was driven by guest count, which in-turn was driven by value products. Now from my understanding, majority of the menu additional launches that we did were slightly premium than their existing counterparts. Value focus was largely on combots. So

Akshay Jatia

I’m sorry, I’m just going to ask you that. I covered it in my questions — sorry, my answers preceding this, where I mentioned that value for us means broad-based value, value across price points. We followed multiple strategies and tactics through our retail network in the last quarter, where we were communicating value across our entry-level price point, our core as well as the affordable premium price points. So we made sure that we were bringing in customers by activating our restaurants on-the-ground through entry-level price points. We were trading them up and we were also communicating on media about our affordable premium price point as well as our entry-level. So it was broad-based value-for-money and I’ve always maintained that. So just wanted to clarify that.

Jignanshu Gor

So that’s very helpful,. Thank you. The final part of that question, I wish I wanted to complete was, we are comfortable with the value of products and hence the mix that we are getting post-trading up, et-cetera has been both gross margin and EBITDA margin-accretive. And that’s not a challenge that we see going-forward.

Saurabh Kalra

Yes.

Jignanshu Gor

Okay. That’s sure. Thank you so much. Yeah. And all the best for Q4, yeah.

Saurabh Kalra

Thank you.

Operator

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

Latika Chopra

Hi, thank you for the opportunity. I have few quick questions or clarifications. One was on your new-store addition. I know we are close to ending FY ’25, but when you’re looking at the broad demand environment and you touched upon how new-store AUVs are lower than the mature stores and probably they are not trending as per your initial expectations. Would there be any change in the thought process on locations which you will want to open new stores then? Would you target more of smaller towns or you would want to again target deepening presence in the big cities, which ensure a certain level of throughput here?

Akshay Jatia

No, I mean, there’s going to be no change in our development process because we don’t target cities basis only one factor. We use multiple factors in terms of evaluating our sites or the site pipeline that we put together and this is actually built-out over many years, not just one year because our real-estate process spans over nine months in terms of identification to opening. So nothing changes overnight. And again, like we’ve always maintained, we are invested for the long-term and most of the locations that we are opening or sorry, all of the locations that we’re opening are projected over a, 25 to 30-year — 30-year timeline. So in the long-run, I mean, all of them will be cash counts.

Latika Chopra

And this current pace of store addition is fairly comfortable for you.

Akshay Jatia

Sorry, could you repeat that?

Latika Chopra

The current — the current pace of store additions of 45 to 50 stores.

Akshay Jatia

Long-term profitable for us.

Latika Chopra

All right. The second bit was answer this similar question for chicken and I was just trying to check with you on the coffee piece, in terms of salience, any incremental flavor on how is that trending for you? Is that salience very varied across different geographies? What more you can do on beverages, if you can elaborate a bit more on that.

Akshay Jatia

Sure. So like we’ve always maintained, this is just the beginning of the coffee journey. It’s a lever that again going to play-out because our consumption story still has to play-out even as a country as well as a category. Cafes are definitely helping along with players like us who have set-up the proposition in terms of creating the market and educating customers in terms of what good coffee is. And I think we’re very well-poised to take advantage of that in the coming years. We have a great proposition. We have 400 plus Mid and I think the strategy is across cities, specifically our key cities where we see Cafe as a very established part of our brand now and it’s about increasing trials as well as frequency. So I think we’ve done a great job and the growth has to still play-out.

Latika Chopra

So the salience of coffee in your overall areas is stable you know over the last.

Akshay Jatia

Growing. It’s growing.

Latika Chopra

Growing. It’s growing. Okay. And the third bit I wanted to check was on price — how do you think about price increases? I know there’s been a lot of focus on value and you know, there is a focus on guest count improvement, but in the past, historically, you have taken a low-single digit kind of pricing on an annualized basis because there is some inflation in the system always. So how are you thinking about that for the coming fiscal?

Saurabh Kalra

Exactly how we’ve always thought about pricing that you cannot fall way below inflation for multiple years for sure. So every year take small, small price increases, don’t be shy of taking small price increases. And taking at least 50% of what the inflation is running as price increase would remain a norm. So typically 2% to 4% of price increase is what we have conventionally taken not more than 1% or 2% at one-go. For the year, it might be 2% to 3% or 2% to 4%. So we’ll continue doing what we’ve always done.

Latika Chopra

Understood. And absolutely last bit, MAU numbers that you have shared that they’re up low-double-digits. I just wanted to check whether this is the kind of growth that’s also translating in terms of, you know the absolute value sales that you’re doing through your own app ordering basically is the own app deliver — delivery orders increasing at a pace of similar to MAU growth, how should we think about it? Thank you.

Saurabh Kalra

Thank you. So the MAU actually both are of our own channels within our delivery app and also on the app, which we do dial-in. So it’s the cumulative number we don’t break-out. But having said that, I think the delivery growth is coming out of all three, right, the third-party operators and our own app. Good news is our own app is not lagging behind for sure as far as the percentage of growth is concerned.

Latika Chopra

All right. Thank you.

Saurabh Kalra

Thank you.

Operator

Thank you. Participants, if you wish to ask questions, you may press star and one. The next question is from the line of Pratamesh Dahaki from Motilal Oswal. Please go-ahead.