Q1 2027 Speciality Restaurants Ltd Earnings Call

Speaker #1: Ladies and gentlemen, good day and welcome to the Speciality Restaurants Q1 FY27 earnings conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator 2: Ladies and gentlemen, good day and welcome to Speciality Restaurants Q1 FY27 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 call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashutosh Joytiraditya. Thank you, and over to you, sir.

Speaker #1: Should you need assistance during this conference call, please signal an operator by pressing star, then zero, on your phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Ashutosh Jyotiraditya. Thank you, and over to you, sir.

Speaker #2: Yeah, hi. Thank you, Huda. Hello and good afternoon, everyone present on the call. I, on behalf of ICICI Securities, welcome you to the Speciality Restaurants Limited Q1 FY27 earnings call.

Ashutosh Joytiraditya: Yeah, hi. Thank you, Huda. Hello, and good afternoon, everyone present on the call. On behalf of ICICI Securities, welcome to the Speciality Restaurants Limited Q1 FY27 earnings call. I would like to thank the management to give this opportunity of hosting the call to us. From the management, we have with us Mr. Avik Chatterjee, Whole Time Director and CEO, and Mr. Rajesh Kumar Mohta, Executive Director of Finance and CFO. I now hand the call over to the management for their opening remarks, after which we will open the floor for the Q&A. Thank you, and over to you, sir.

Speaker #2: I would like to thank the management for giving us the opportunity to host this call. From the management, we have with us Mr. Avit Chatterjee, full-time Director and CEO.

Speaker #2: And Mr. Rajesh Kumar Mota, Executive Director of Finance and CFO. I now hand the call over to the management for their opening remarks, after which we will open the floor for Q&A.

Speaker #2: Thank you, and over to you, sir.

Speaker #3: Thank you, Mr. Ashutosh. Thank you, Madam Huda. On behalf of the management of Speciality Restaurants Limited, I, Rajesh Kumar Mota, CFO of the company, welcome all the participants to the investors call of the company following the approval of the results for Q1 FY27 by the board of directors.

Rajesh Kumar Mohta: Thank you, Mr. Ashutosh. Thank you, Madam Huda. On behalf of the management of Speciality Restaurants Limited, myself, Rajesh Kumar Mohta, CFO of the company, welcome all the participants to the investors call of the company after the approval of the results for Q1 FY27 by the Board of Directors and submission to the stock exchanges as per the LODR guidelines. We had already submitted our investors presentation as well, which we hope may have been seen by yourselves. I would just like to bring three quarter highlights for your ready reference. One, this has been the company's 20th profitable quarter, which means we are for the last five years into profits. Second, the same-store sales growth has been at 11.35% precise during the Q1 FY27 as compared to Q1 of FY26, with like and like stores operating during both the quarters.

Speaker #3: And submission to the stock exchanges as per the LODR guidelines. We have already submitted our investor presentation as well, which we hope may have been seen by yourselves.

Speaker #3: I would just like to bring three quarter highlights for your ready reference. One, this has been the company's 20th profitable quarter, which means we have been in profits for the last five years.

Speaker #3: Second, the same-store sales growth has been at 11.35%, precise, during quarter one, FY27, as compared to quarter one of FY26, with like-and-like stores operating during both the quarters.

Speaker #3: Third, there has been an improvement in gross margins by 1.2%, to 71.1% from 69.9% the previous year, primarily because of managing the portion inefficiencies and continued negotiations with our vendors due to volumes.

Rajesh Kumar Mohta: Third, there have been improvement in gross margins by 1.2% to 71.1%, from 69.9% previous year, primarily because of managing the portions, inefficiencies, and continued negotiations with our vendors because of volumes. This has been achieved despite the inflationary trend witnessed during the quarter of the current financial year. This concludes my opening remarks. I now welcome all the participants to the Q&A. Thank you.

Speaker #3: This has been achieved despite the inflationary trend witnessed during the quarter of the current financial year. This concludes my opening remarks. I now welcome all the participants to the Q&A.

Speaker #3: Thank you.

Speaker #1: 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 touch-tone telephone.

Operator 2: 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 touch-tone 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. The first question is from the line of Zaki Abbas, an individual investor. Please proceed.

Speaker #1: 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.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue is assembled. The first question is from the line of Zaki Abbas, an individual investor.

Speaker #1: Please proceed.

Zaki Abbas Nasir: Sir, good afternoon, and I think congratulations to the entire team for a fantastic set of numbers despite the cost pressures. Sir, my question would be, seeing a strong start to the quarter, how do you expect the balance of the year to pan out? Do you think we can cross that INR 600 crore top line with, I think 15 new stores opening, like we spoke last time?

Speaker #2: Sir, good afternoon, and I think congratulations to the entire team for a fantastic set of numbers despite the cost pressures. Sir, my question would be: seeing such a strong start to the quarter, how do you expect the balance of the year to pan out?

Speaker #2: Do you think we can cross that ₹600 crore top line with, I think, 15 new stores opening like we spoke last time?

Speaker #3: Good evening, Mr. Zaki. Thank you for your support. If I may say, the trend has been very positive, as we have seen now in this particular quarter, and we wish and hope we can continue working hard towards maintaining these kinds of numbers.

Rajesh Kumar Mohta: Yeah. Good evening, Mr. Zaki. Thank you for your support. If I may, see the trend has been very positive as we have seen now in this particular quarter, and we wish and we hope, we are working hard toward maintaining this kind of numbers going forward as well. Let's say for instance, your question of primarily asking about the total revenues of INR 600 crores, I would like to refrain, but yes, we are working hard to see good percentage growth going forward with Q3 of the financial year going to be the good quarter for us.

Speaker #3: Going forward as well, and let's say, for instance, your question of primarily asking about the total revenues of ₹600 crore, I would like to reframe. But yes, we are working hard to see good percentage growth going forward, with Q3 of the financial year going to be a good quarter for us.

Zaki Abbas Nasir: And sir, how did we expand the margins, sir, despite the cost pressures? I believe, I think Q1 was also slightly tough in terms of gas availability and input pressures. I mean, still we had a reasonable margin quarter. How was that possible?

Speaker #2: And sir, how did we expand the margins despite the cost pressures? I believe, I think, the first quarter was also slightly tough in terms of gas availability and input pressures.

Speaker #2: I mean, still, we had a reasonable margin this quarter. How was that possible?

Speaker #3: See, there have been—I would say there are two parts to this question, sir. From an answer perspective: one, we generally get into rate contracts, etc., for the financial year or on a six-month basis.

Rajesh Kumar Mohta: Well, there have been, I would say there are two parts to this question, sir, from an answer perspective. One, we generally get into rate contracts, et cetera, for the financial year or six months basis. Number one. Number two, gas crisis was all across. Like in Mumbai, we had pipe gas, so we did not suffer much from a cylinders availability point of view. But the biggest change what we witnessed was the management's proactive decision of converting from oil fired, gas fired ranges to induction processes. So which saved us from the crisis of availability of gas. So now we are operating on a hybrid mode, wherein we can immediately switch over to induction, that is electricity-based, from the gas ranges which we were having earlier. So this was one, and as a result of that, when there is a crisis, that becomes an opportunity.

Speaker #3: Number one. Number two, like the gas crisis was all across. Like in Mumbai, we had piped gas, so we did not suffer much from a cylinder availability point of view.

Speaker #3: But the biggest change that we witnessed was the management's proactive decision to convert from oil-fired and gas-fired ranges to induction processes, which saved us from the crisis of availability of gas.

Speaker #3: So now we are operating in a hybrid mode, wherein we can immediately switch over to induction—that is, electricity-based—from the gas ranges which we were using earlier.

Speaker #3: So this was one, and as a result of that, when there is a crisis that becomes an opportunity, so we worked on, in case of any inefficiencies, we improved upon all those with respect to correct portion size, etc., which led to benefits on raw material cost or neutralized the inflationary increase, sir.

Rajesh Kumar Mohta: So we have worked on, in case of any efficiencies, we improved upon all those with respect to correct portion size, et cetera, which led to benefits on raw material costs or neutralized the inflationary increase, sir.

Speaker #2: Sir, and one question, if I may add. Sir, if we see our investor presentation, our brands—we have a number of brands which are not very visible, and I think it's a large number of brands now.

Zaki Abbas Nasir: Sir, and one question, if I may add is, sir. See, if we see your investor presentation, our brands, we have a number of brands which are not very visible and I think it is a large number of brands now. How do you wish to handle this going forward? Do you wish to rationalize the brands or maybe drop some of them? That is part one of the question. Part two of the question, as I have been asking you in the previous calls also, what do you want to do with Sweet Bengal, sir? Because that is a, I mean, it can become an independent kind of a vertical. So I would like you to throw some light on that also.

Speaker #2: How do you wish to handle this going forward? Do you wish to rationalize the brands, or maybe drop some of them? That is part one of the question.

Speaker #2: Part two of the question, as I have been asking you in the previous calls also: What do you want to do with Sweet Bengal, sir?

Speaker #2: Because that's a—I mean, independent—it can become an independent kind of vertical. So I would like you to throw some light on that also.

Speaker #3: Sure. Thank you for that question. This is Avid Chatterjee, Whole-Time Director and CEO of Speciality Restaurants. I would like to take that question up.

Avik Chatterjee: Sure. Thank you for that question. This is Avik Chatterjee, whole time Director and CEO of Speciality Restaurants. I would like to take that question up. The company has been creating brands and has created brands over the past 35 years. Luckily, and thankfully because of the entire team's effort, we have been managed to have every store currently that operates in the company is profitable. Having said that, moving forward, we have done an analogy of what are the power brands and the brands to be focused on to power our growth. We are going to be having three verticals in Speciality Restaurants. That is the futuristic verticals. One is we continue to have Oriental as one vertical. Our second vertical is Italian with our new brand, Cecilia's, that's been as a growth engine.

Speaker #3: So, the company has been creating brands and has created brands over the past 35 years. Luckily and thankfully, because of the entire team's effort, we have managed to have every store currently operating in the company be profitable.

Speaker #3: Having said that, moving forward, we have done an analysis of what are the power brands and the brands to be focused on to power our growth.

Speaker #3: So, we are going to be having three verticals in Specialty Restaurants. That is the futuristic vertical. One is, we continue to have Oriental as one vertical.

Speaker #3: Our second vertical is Italian, with our new brand Siciliana that's been a growth engine. And the third one is QSR, under which Sweet Bengal, of course, falls in.

Avik Chatterjee: And the third one is QSR, under which Sweet Bengal of course falls in, and Walters Burger as our burger QSR growth model. Going forward, Speciality Restaurants to power the kind of numbers that we foresee is only going to be working on these three categories to power any form of growth. And your question on Sweet Bengal, we have managed to get an added shelf life with new technology involved with our sweets, modified packaging. We are going through brand evolution, and we will be in a lot of new markets in the times to come because of this great technological enhancement. So definitely growth of Sweet Bengal is on the card, and we are going to be powering it by technology, having the major foray and backing of it.

Speaker #3: And Walter's Burger as our burger QSR growth model. So, going forward, Specialty Restaurants, to power the kind of numbers that we foresee, is only going to be working on these three categories to power any form of growth.

Speaker #3: And your question on Sweet Bengal—we have managed to get an added shelf life with new technology involved with our sweets. With modified packaging, we're going through brand evolution, and we will be in a lot of new markets in the times to come because of this great technological enhancement.

Speaker #3: So, definitely, growth of Sweet Bengal is on the cards, and we're going to be powering it by technology, having the major foray and backing of it.

Speaker #2: So, would that mean that, sir, you're putting all your brands under one of the three verticals, broadly?

Zaki Abbas Nasir: Would that mean, sir, putting all your brands under one of the three verticals broadly?

Speaker #3: Sorry, could you repeat that, please?

Rajesh Kumar Mohta: Sorry, could you repeat that, please?

Zaki Abbas Nasir: Would you be then restructuring your entire brand basket under these three broad heads?

Speaker #2: Would you then be restructuring your entire brand basket under these three broad heads?

Speaker #3: Absolutely. It's Oriental, Italian, and QSR, and that's the focus of the company. Going forward, we will also be seeing a lot of the older brands going away from our portfolio.

Avik Chatterjee: Absolutely. It is Oriental, Italian, and QSR, and that is the focus of the company. Going forward, we will also be seeing a lot of the older brands going away from our portfolio because now is the time the company focuses on these power brands to have the growth that we intend to have in the times to come.

Speaker #3: Because now is the time the company focuses on these power brands to have the growth that we intend to have in the times to come.

Zaki Abbas Nasir: Sir, would you mind throwing a little light on your dine-in versus share of takeaway?

Speaker #2: And sir, would you mind throwing a little light on your dine-in versus takeaway share of takeaway?

Speaker #3: So, our delivery business has grown to 29% of the entire portfolio of revenue, and the rest goes to dining. We've had great growth in the delivery business, while dining continues to grow for us.

Avik Chatterjee: Our delivery business has grown to 29% of the entire portfolio of revenue, and the rest goes to dine-in. We have had great growth on delivery business while dine-in continues to grow for us.

Speaker #2: Thank you, sir. Fantastic. And best wishes for the year and the coming year, sir. Thank you.

Zaki Abbas Nasir: Thank you, sir. Fantastic. Best wishes for the year and the coming year, sir. Thank you.

Speaker #3: Thank you so much.

Rajesh Kumar Mohta: Thank you so much.

Speaker #1: Thank you. A reminder to all participants: anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is on the line of Ashutosh Jyotiraditya from ICICI Securities.

Operator 2: Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question is from the line of Ashutosh Jyotiraditya from ICICI Securities. Please proceed.

Speaker #1: Please proceed.

Ashutosh Joytiraditya: Yeah, hi. Thank you, sir. Thank you for the opportunity. In continuation to the question asked by the last participant on this dine-in mix. What I have seen in the presentation, the delivery mix has basically gone up over last year. Just wanted to understand, is it a deliberate strategy by the management, or it is mainly to do with the changing consumer preference or maybe a combination of both? If you can touch upon this thing.

Speaker #2: Yeah, hi. Thank you, sir. Thank you for the opportunity. So, in continuation of the question asked by the last participant on this dining mix—what I have seen in the presentation, the delivery mix has basically gone up over last year.

Speaker #2: And so just wanted to understand, it is a is it a deliberate strategy by the management, or it is mainly to do with the changing consumer preference, or maybe a combination of both?

Speaker #2: If you can touch upon this thing.

Speaker #3: Sure. While our dining business has also seen marginal growth, the delivery business has seen consumption occasions increase. Plus, the company has added new formats like Walter's Burgers, Sweet Bengal, and Hakka, which is our digital-first brand. So these are the ones that actually powered the delivery growth, because we have seen that customers are ordering from us or seeking our brands on more occasions.

Rajesh Kumar Mohta: Sure. While our dine-in business has also seen marginal growth, the delivery business has seen consumption occasions increase. Plus, the company has added new formats like Walters Burger and Sweet Bengal and Haka, which is our digital-first brand. These are the ones that actually powered the delivery growth because we have seen that customers are ordering us or seeking our brands at more occasions, not just for dine-in, but also for delivery.

Speaker #3: Not just for dining, but also for delivery.

Ashutosh Joytiraditya: Okay.

Speaker #2: Okay.

Rajesh Kumar Mohta: We have put into advertising and marketing, advertising in specific delivery segments, tactical discounting at times, recruitment of delivery personnel within the company to spearhead the team. I think all of these things have powered the growth for delivery, and we continue to see this rise in the times to come.

Speaker #3: Into marketing, advertising in specific delivery segments, tactical discounting at times, recruitment of delivery personnel within the company to spearhead the team, and I think all of these things have powered the growth for delivery.

Speaker #3: And we continue to see this rise in the times to come.

Speaker #2: Okay, so what I have understood from your answer, sir, is that it's a deliberate call by the management to let the delivery channel grow faster and improve this year.

Ashutosh Joytiraditya: Okay. What I have understood from your answer, sir, is that it is a deliberate call by the management to let the delivery channel grow faster and improve this year, despite that it being a lower margin business.

Speaker #2: Despite that, it is a lower-margin business.

Avik Chatterjee: Rajesh, moreover beside Mr. Ashutosh.

Speaker #3: Rajesh Madhav Desai: Mr. Ashutosh, see, what Mr. Havik said was that the focus on dining continues to be there, and it is because of dining.

Ashutosh Joytiraditya: Yes, sir.

Rajesh Kumar Mohta: See, what Mr. Avik said was that the focus on dine-in continues to be there, and it is because of dine-in. See, what happens is, there is a baggage which is there from the brand perspective. People know Mainland China, people know Asia Kitchen. So the brand value plays a very important role, which is resulting into increased delivery. Despite our, let's say, if I may say so, from what we gather from information from aggregators, our average order value is considered to be one of the highest as far as dine-in brands and category is concerned. So it is not like that we are focusing on delivery. It is, let's say, for instance, if I may use the word buy at the buy, because of dine-in, the delivery has also grown.

Speaker #3: See, what happens is that there is a baggage which is there from the brand perspective. People know Mainland China, people know Asia Kitchen. So, the brand value plays a very important role, which is resulting in increased delivery.

Speaker #3: Despite our, let's say, if I may say so, from what we gather from information from aggregators, our average order value is considered to be one of the highest as far as dining brands and categories are concerned.

Speaker #3: So it is not like that we are not focusing on delivery. It is, let's say, for instance, if I may use the word 'by the by', because of dining, the delivery has also grown.

Speaker #3: If you put a number into perspective, we were, let's say, we did a 71 crores of business of dining last year which has increased to 81 crores in absolute terms.

Rajesh Kumar Mohta: If you put a number into perspective, let's say we did INR 71 crores of business of dine-in last year, which has increased to INR 81 crores in absolute terms.

Speaker #2: Okay, okay. And sir, my next question is, can we just touch upon how the demand has been so far, like for Q2?

Ashutosh Joytiraditya: Okay. My next question is, if you can just touch upon how has been the demand so far for Q2?

Speaker #3: Sir, just to put it into perspective, when you ask about on-demand, July has been an extremely good month compared to earlier Julys for us. And the trend for the first 7 to 10 days of August has also been good.

Rajesh Kumar Mohta: Just to put into perspective when you ask on demand, July has been extremely good month compared to earlier Julys for us, and the trend for the first 7, 10 days into August has been good. We are seeing the tailwind which is available for both dine-in and delivery.

Speaker #3: So we are seeing the tailwind, which is available for both dining and delivery.

Speaker #2: Okay, okay. Understood, sir. Thank you, sir. That's all from my side.

Ashutosh Joytiraditya: Okay. Understood, sir. Thank you, sir. That's all from my side.

Speaker #3: Thank you.

Rajesh Kumar Mohta: Thank you.

Speaker #1: Thank you. The next question is from the line of Sanjay Narayan from Wealthwise Capital. Please proceed.

Operator 2: Thank you. The next question is from the line of Sanjay Narayan from WealthWise Capital. Please proceed.

Sanjay Narayan Mahajan: Good evening, sir, and thank you for the opportunity. Hello?

Speaker #2: Good evening, sir, and thank you for the opportunity. Hello?

Speaker #3: Yeah.

Rajesh Kumar Mohta: Yeah.

Speaker #2: Hello? Yes, yes. So I would like to thank Avik sir for clarifying and reiterating our brand. Just one suggestion before going forward with my question: if our presentation also captures our ethos and our plans, that would be helpful, because as analysts, when we go through the presentation, it helps us focus.

Sanjay Narayan Mahajan: Hello. Yes. I would thank Avik, sir, for clarifying and reiterating our brand. Just one suggestion before going forward with my question. If our presentation also captures our ethos and our plans, that would be helpful because as analysts, when we go through the presentation, it becomes slightly difficult to understand our focus. Since I have been tracking this company and been invested, it is easier for me to understand the management's focus in the business and what the driving trigger. That is just a suggestion. Regarding my questions, one of the questions that keeps coming back to my mind, we have great regards for Anjan, sir, and his marketing capability and the wonders he has done on the marketing side, apart from this core business also. So that always brings me to a question. We have Sweet Bengal for such a long time.

Speaker #2: Since I have been tracking this company and have been invested in it, it’s easier for me to understand the management’s focus in the business and what the driving triggers are.

Speaker #2: That's just a suggestion. Regarding my question, one of the questions that keeps coming back to my mind—we have great regard for Anjan sir and his marketing capability and the wonders.

Speaker #2: He has been in the market on the marketing side, apart from this core business also. So that always brings me to a question—we have had Sweet Bengal for such a long time.

Speaker #2: So, for confectionery businesses, like Chitale has Bakarwadi as their hero product, or Haldiram has Soan Papdi as their hero product, do management give thought to what Sweet Bengal can be recalled for as a particular product?

Sanjay Narayan Mahajan: For the confectionery businesses, like Chitale has Bakarwadi as their hero product, or Haldiram's has Soan Papdi as their hero product. Do management give a thought what Sweet Bengal can be recalled for a particular product? Because after 13, 14 years, having so much of brand presence and so much visibility in Mumbai and Pune specifically, very rarely I come across with a very strong product. On the sales, the sales numbers might be telling this is our strong product, but specifically with our pedigree and our core strength, that product never gets communicated in any of our communicated channels. So part A, do we really have one distinguishable product or a hero product in Sweet Bengal that can do a heavy lifting job for us? That is question one. And question two, related to it, what are we doing with it? If you are doing.

Speaker #2: Because after 13, 14 years of having so much brand presence and so much visibility in Mumbai and Pune specifically, I very rarely come across a very strong product.

Speaker #2: We, on the sales—the sales numbers might be telling this is our strong product. But specifically, with our pedigree and our core strength, that product never, never gets communicated in any of our communicative channels.

Speaker #2: So, part A, do we really have one distinguishable product or a hero product in Sweet Bengal that can do a heavy lifting job for us?

Speaker #2: That's question one. And question two, related to it: what are we doing with it, if we are doing anything?

Speaker #3: Sure. Very pertinent question. So actually, Sweet Bengal's most famous—or hero—product, as you said, is the Kheer Kodom. And that's already backed by data.

Avik Chatterjee: Sure. A very pertinent question. So actually, Sweet Bengal's most famous or hero product, as you said, is the Kheer Kadam, and that is already backed by data. What we do with it is that we promote it at every given occasion, and we always keep it on top of our shelf and top of the mind of the customer. Until date, the Kheer Kadam has been the most loved, the most talked about, and the most differentiated product when you compete against any other sweet brands. So to answer that question, yes, Sweet Bengal has Kheer Kadam as their most famous brand, and the second one right after that becomes the Mishti Doi. The third one after that is the Sandesh. So these are our pure Bengali categorized sweets that are the most famous and most differentiated and bring people back again and again for these products.

Speaker #3: What we do with it is that we promote it at every given occasion, and we always keep it on top of our shelf and at the top of the mind of the customer.

Speaker #3: To date, the Kheer Kodum has been the most loved, the most talked about, and the most differentiated product when you compete against any other sweet brands.

Speaker #3: So to answer that question, yes, Sweet Bengal has Kheer Kodum as their most famous brand, and the second one right after that is the Mishti Doi. The third one after that is the Sandesh.

Speaker #3: So, these are our pure Bengali categorized sweets that are the most famous and most differentiated, and they bring people back again and again for these products.

Sanjay Narayan Mahajan: And could you just elaborate how we are backing up this product with more visibility, the way the other brands have become bigger, like Soan Papdi for Haldiram's, that is synonymous, and Chitale Bakarwadi. Bakarwadi is synonymous with Chitale or Bhujia with Bikaji. Anything that really tinkles in our mind that probably these products should be synonymous to Sweet Bengal. Because with Anjan sir's experience and we have, as a shareholder and as an analyst, I feel that should trickle down somewhere into it. So any thought on that in the boardroom or any discussion that we need to back these products with more visibility? Do we have any plans for that?

Speaker #2: And could you just elaborate on how we are backing up these products with more visibility, in the way that the bigger brands have become bigger? Like, soon, probably for Haldiram, that's synonymous.

Speaker #2: And Chitale Bakarwadi, Bakarwadi is synonymous with Chitale. Or Bhujia with Bikaji. Is there anything that really triggers in our mind that Sweet Bengal—probably these products should be synonymous with Sweet Bengal?

Speaker #2: Because with Anjan sir’s experience, and what we have, I feel that should trickle down. As a shareholder and as an analyst, I feel that should trickle down somewhere into it.

Speaker #2: So, any thoughts on that in the boardroom, or any discussion that we need to back these products with more visibility? Do we have any plans for that?

Speaker #3: Absolutely. So, you know, visibility is directly proportional to store expansion into newer markets. There are two forms of visibility as I would look at it.

Avik Chatterjee: Absolutely. So visibility is directly proportioned to store expansion into newer markets. There are two forms of visibility as I would look at it. One is the visibility of a customer walking into an existing outlet. For that question, yes, our top three products are displayed first on the shelf, so hence there is a clear visibility for a person to buy it. Now, visibility for a new market expansion, the problem with Sweet Bengal for slower growth that we were facing in the company, that we had sweets which are perishable. So the shelf life becomes a big challenge for us to manufacture it from one expensive CapEx-loaded facility and then transport it to various other locations.

Speaker #3: One is the visibility of a customer walking into an existing outlet. For that question—yes, our top three products are displayed first on the shelf.

Speaker #3: So hence, there’s a clear visibility for a person to buy it. Now, in terms of visibility for new market expansion, the problem with Sweet Bengal for the slower growth that we were facing in the company was that we had sweets which are perishable.

Speaker #3: So, the shelf life becomes a big challenge for us to manufacture it from one expensive, capex-loaded facility, and then transport it to various other locations.

Speaker #3: And the shelf life was giving us a big challenge, but you'd be very, very happy to know that we have been able to crack a 30-day shelf life with our sweets and the new modern technology and packaging that we've put in.

Avik Chatterjee: And the shelf life was giving us a big challenge, but you would be very happy to know that we have been able to crack a 30-day shelf life with our sweets and the new modern technology and packaging that we have put in. And we will be in many new markets, hence visibility of our product and the revenue of our product will be grown from these new markets in the times to come.

Speaker #3: And we will be in many new markets; hence, visibility of our product and the revenue of our product will grow from these new markets in the times to come.

Sanjay Narayan Mahajan: Thank you. I will come back in queue. I have more questions to ask. Thank you. That is very promising.

Speaker #2: Thank you. I'll come back in too. I have more questions to ask. Thank you. That's very promising.

Speaker #1: Thank you. The next question is from the line of Vignesh Iyer. Consequent investments. Please proceed.

Operator 2: Thank you. The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead.

Speaker #2: Hi, thank you for the opportunity. I wanted to actually understand and raise an initial commentary. Could you share what was the same store sales growth number for Q1?

Vignesh Iyer: Hi. Thank you for the opportunity. I wanted to actually understand, I raised the initial commentary. Could you share what is the same-store sales growth number for Q1?

Speaker #3: Thank you. If I may, the same-store sales growth during quarter one of FY27 was precisely 11.35% for us.

Avik Chatterjee: Thank you. If I may, the same-store sales growth during Q1 of FY27 was precisely 11.35% for us.

Vignesh Iyer: Okay. Got it, sir. I just wanted to understand, how do you see this quarter to pan out considering mainly the fact that you will have around 20, 25 days of Shravan coming in, and how does that change for us, in terms of what the offerings are for us?

Speaker #2: Okay. Got it, sir. And just wanted to understand how do you you know, see this quarter to pan out? You know, considering mainly the fact that you will have you know, around 20, 25 days of Shravan coming in and and how does that changes for us?

Speaker #2: You know, in terms of what the offerings are for us.

Rajesh Kumar Mohta: See, what happens is, now with a large presence across the country, even in Southern India, and with our presence in Northern India being low compared to how we are in Western and Eastern India, these kind of cyclicality, say because of Shravan, et cetera, do not have a major impact on us.

Speaker #3: See, what happens is, key now, with a large presence across the country, even in southern India, and with our presence in northern India being low compared to how we are in western and eastern India, these kinds of cyclicality—say, because of Shravan, et cetera—do not have a major impact on us.

Speaker #2: Okay. Because we do have, you know, reasonable exposures in Mumbai as well, which contribute to our total revenue. So my question was more from that point of view.

Vignesh Iyer: Okay. Because we do have reasonable exposures in Mumbai as well, which contributes to our total revenue. My question was more from that point of view.

Rajesh Kumar Mohta: We fully appreciate that when we talk in terms of Mumbai, sir, it would be more in because of Ganpati Days, there would be a slight impact as far as Western India is concerned. What happens is, there are pockets, like let's say for instance, there would be a substantial growth in the revenue of Sweet Bengal during those periods.

Speaker #3: We fully appreciate that when we talk in terms of Mumbai, sir, it would be more so because of Ganpati days. There would be a slight impact as far as western India is concerned.

Speaker #3: But what happens is there are pockets, like let's say, for instance, there would be a substantial growth in the revenue of Sweet Bengal during those periods.

Vignesh Iyer: Right.

Speaker #3: Such utilization happens because of our various brands and our presence across cities and regions.

Rajesh Kumar Mohta: Such kind of utilization happens because of our various brands and presence across cities and across regions.

Speaker #2: Got it. Got it, sir. That's all from my side. Thank you.

Vignesh Iyer: Got it. Got it, sir. That's all from my side. Thank you.

Speaker #1: Thank you. The next question is from Harsh Kumar again, an individual investor. Please proceed.

Operator 2: Thank you. The next question is from the line of Harikumar K, an individual investor. Please go ahead.

Harikumar K: Hello. Am I audible?

Speaker #2: So other audience.

Speaker #1: Yes, sir.

Operator 2: Yes, sir.

Harikumar K: Thank you for the opportunity. Congratulations on a good set of numbers. My first question is regarding, do we still see a corporate pressure on weekdays, as in that the footfall is more skewed towards weekend, as in Friday, Saturday, Sunday, and not towards the weekday? That is my first question. Second, is profitability becoming disproportionately dependent on just three-day weekend window, or is it the entire week that is driving all this?

Speaker #2: Thank you for the opportunity. Congratulations on a good set of numbers. My first question is regarding whether we still see corporate pressure on weekdays, meaning that the footfall is more skewed towards the weekend—Friday, Saturday, and Sunday—and not towards the weekdays?

Speaker #2: That is my first question. And second, is profitability becoming disproportionately dependent on just the three-day weekend window, or is it the entire week that is driving this?

Speaker #3: Sure. So I’ll take up your first question. The answer to that is yes, we do have weekday tactical offers, discounts, set meals, and corporate lunches, and it varies from brand to brand.

Rajesh Kumar Mohta: Sure. I will pick up your first question. The first question, the answer to that is that, yes, we do have weekday tactical offers, discounts, set meals, corporate lunches, and it varies from brand to brand. On weekdays, we also have tactical discounts or offers or say combo meals for delivery. Yes, that does help us and of course, in any food business, weekends being the most highest in demand. We do see the best traction on weekends, but that does not mean that weekdays are any less. What we have been seeing is in some locations, and it is location-driven, we have seen that even weekdays are sometimes better than weekends. It depends on the kind of geography we are in. Are we in a corporate area where weekends are slow and weekdays are better, or are we in a more residential area? It actually varies location to location.

Speaker #3: On weekdays, we also have tactical discounts, offers, or combo meals for delivery. So yes, that does help us. And, of course, in any food business, weekends being the highest in demand, we do see the best traction on weekends.

Speaker #3: But that does not mean that weekdays are any less. What we've been seeing is, in some locations—and it's location-driven—we've seen that even weekdays are sometimes better than weekends.

Speaker #3: So it depends on the kind of geography we're in. Are we in a corporate area where weekends are slow and weekdays are better, or are we in a more residential area?

Speaker #3: It actually varies from location to location, but overall, if you see, yes, our company's weekend sales are much higher than on the weekdays. And on weekdays—it's actually the same worldwide, as well as in the industry.

Rajesh Kumar Mohta: Overall, if you see, yes, our company's weekend sales are much higher than the weekdays. It is actually worldwide as well, as an industry. On weekdays, definitely we do have tactical offers where required.

Speaker #3: And on weekdays, definitely, we do have tactical offers where required.

Speaker #2: Sir, if you could quantify this, as in the previous concall there was a mention that it is 45:55 in proportion. So if you could quantify this for the latest trend in the last couple of years.

Harikumar K: Sir, if you could quantify this. As in the previous con call, there was a mention that it is 45/55 in proportion. If you could quantify this for the latest trend in the course of a year.

Rajesh Kumar Mohta: See, it continues to be on the same numbers what you said, sir.

Speaker #3: See, it continues to be on the same numbers that you said, sir.

Speaker #2: Okay. And my second question is regarding Bigger Issue. If I'm not wrong, it was launched last year, and during that time, we—the management—told us that we would be waiting for a year to figure out how this concept evolves.

Harikumar K: Okay. My second question is regarding Bizarre Asia. If I am not wrong, it was launched last year. During that time, the management told us that we will be waiting for a year to figure out how this concept evolves, and then there was no information in the coming con call. If you can just throw some light on this, that would be helpful to us.

Speaker #2: And then there was no information in the coming concourse. So if you can just throw some light on this, that would be helpful to us.

Rajesh Kumar Mohta: Bizarre Asia was created as a format on buffet for Oriental, and the company continues to be focusing on Oriental cuisine, as Mr. Avik mentioned earlier. Now, what has happened, it all depends upon the location. If we are into a mall, et cetera, we would continue to have Asia Kitchen. It was more done from an Oriental cuisine brand as a proof of concept, and which has worked favorably for us, but it is a large space for which we require huge amount of manpower, food. See, what happens is, when you launch a brand, there is an incubation period. We are almost like in October, we would be 2 years now, but we are still profitable at that particular location.

Speaker #3: See, Bizarre issue was created as a format on buffet for Oriental. And the company continues to be focusing on Oriental cuisine, as Mr. Avik mentioned earlier.

Speaker #3: Now, what has happened at all depends upon the location. If we are in a mall, etc., we would continue to have Asia Kitchen.

Speaker #3: And it was more done from an Oriental cuisine brand as a proof of concept, which has worked favorably for us. But it is a large space, for which we require a significant amount of manpower. See, what happens is, when you launch a brand, there is an incubation period.

Speaker #3: We are almost into October; it would be two years now, but we are still profitable at that particular location. So, the focus on expansion is more on Asia Kitchens, Mainland China, and wherever tactically we will get such a location where the buffet format would be there, we would have a BJN issue there.

Rajesh Kumar Mohta: The focus on expansion is more on Asia Kitchen, Mainland China, and wherever tactically we will get such kind of a location where buffet format would be there, we would have a Bizarre Asia there.

Harikumar K: Okay.

Speaker #2: Okay. So, just a quick follow-up on this. When you say your focus is on mainland China and Asia Kitchen, okay, the numbers don't pan out for this. As in FY22, we had a net addition of 31 stores for mainland China.

Rajesh Kumar Mohta: Thank you.

Harikumar K: And just a quick follow-up on this. When you say your focus is on Mainland China and Asia Kitchen, have the numbers been panned out for this? As in FY22, we had net 31 stores for Mainland China, whereas in FY23, it stands out at 35 or 36, if I am not wrong. Sir, what is stopping us from adding new stores or new geographies, if you can help us with this?

Speaker #2: Whereas in FY23, it stands at 35 or 36, if I'm not wrong. So sir, what is stopping us from adding new stores or entering new geographies?

Speaker #2: If you can help us with this.

Speaker #3: See, what has happened is, like, let's say for instance, when we talk in terms of Mainland China, Asia Kitchen, there was a phase where we renovated our old Mainland China which had been in operation for 9 to 10 years.

Rajesh Kumar Mohta: See what has happened, let us say, for instance, when we talk in terms of Mainland China Asia Kitchen, there was a phase where we renovated our old Mainland China's, which had been in operation for nine, 10 years, and we are continuing to do a renovation. And this renovation has created a throughput which is much higher than what we used to do when it was an older version of Mainland China. With Mr. Avik coming in and this renovation piece being taken over by him, internally we call it as Mainland China 2, this has given us a very progressive numbers for post-renovation. So that has continued. Now with respect to, let us say Mainland China Asia Kitchen, there is a brand called Gong also, which is from an Oriental cuisine perspective. So that is also forming part of the Oriental cuisine.

Speaker #3: And we are continuing to do a renovation. This renovation has created a throughput which is much higher than what we used to do when it was the older version of Mainland China.

Speaker #3: With Mr. Avik coming in and this renovation piece being taken over by him, calling it internally we call it as mainland China 2. This has given us a very progressive numbers for post renovation.

Speaker #3: So that has continued. Now, with respect to, let's say, Mainland China, Asia Kitchen, there is a brand called Gong also, which is from an Oriental cuisine perspective.

Speaker #3: So that is also forming part of the Oriental cuisine. Maybe, we may say that it is christened as Gong, which we started in Pune. Now we have it in Mumbai, Bandra. We are opening a Gong in Vasant Kunj, Delhi as well.

Rajesh Kumar Mohta: Maybe that is christened as Gong, which we started in Pune. Now we have in Mumbai, Bandra. We are opening a Gong in Vasant Kunj, Delhi as well. And there would be a second one in Pune as well.

Speaker #3: And there would be a second one in Pune as well.

Speaker #2: So then, can we say that we are focusing more on Oriental rather than mainland China? Because that again creates confusion for an analyst or an individual investor.

Harikumar K: Can we say that we are more focusing on Oriental rather than Mainland China? Because then it again creates a confusion for an analyst or an individual investor. That would be really helpful for me.

Speaker #2: So that would be really helpful for us.

Speaker #3: So, you know, I'll take up that question. When you look at the Oriental category, in the past we have expanded the brand Mainland China a lot.

Avik Chatterjee: I will take up that question. When you look at the Oriental category, in the past, we have expanded the brand Mainland China a lot.

Avik Chatterjee: Yes, sir.

Speaker #3: What we realized is that, at that point, there was a fair amount of brand fatigue and brand cannibalization that we faced. For example, if it's near 5-kilometer locations, we were eating into our own sales.

Avik Chatterjee: What we realized is at that point, there was a fair brand fatigue and brand cannibalization that we faced. For example, if it is near 5-kilometer locations, we were eating into our own sales and revenue.

Speaker #3: And revenue. Then, after the pandemic, when we had to shut down 29 of our stores, sadly, we got a lot of time to think about strategy on how to keep dominating the Oriental segment.

Avik Chatterjee: Then after the pandemic, when we had to shut down 29 of our stores, sadly, we got a lot of time to think on strategy on how to keep dominating the Oriental segment. Hence, we came out with a strategy that the Oriental segment of Speciality Restaurants needs to be on different price segments so that we can universally capture a way wider pie. Let me name the Oriental brands for you. Right at the top is Gong, which is an INR 2,500 average price per person. Right under that is Mainland China, which is INR 1,250 per person. Then we have Asia Kitchen, which is fairly mainly in mall locations, is INR 1,050 to INR 1,100 a person. Right under that is our delivery-first brand, which is Haka. That is an INR 600 per person delivery brand.

Speaker #3: Hence, we came out with a strategy that the Oriental segment of specialty restaurants needs to be at different price points, so that we can universally capture a much wider share of the market.

Speaker #3: Now, let me name the Oriental brands for you. Right at the top is Gong, which has an average price per person of ₹2,500. Right under that is Mainland China, which is ₹1,250 per person.

Speaker #3: Then we have Asia Kitchen, which is mainly in mall locations. It's ₹1,050 to ₹1,100 per person. Right under that is our delivery-first brand, which is Haka.

Speaker #3: That is a ₹600 per person delivery brand. What this enables us to do is, in any city, we can take over the Asian segment by having different facials of our brands itself, without giving brand fatigue and cannibalization.

Avik Chatterjee: What this enables us to do is in any city, we can take over the Asian segment by having different facials of our brands themselves without giving brand fatigue and cannibalization. This is our new Oriental strategy.

Speaker #3: This is our new oriental strategy.

Speaker #2: Okay. And just a last question from my side. Can you quantify, as a percentage of revenue, how much was liquor or wet mill income for this process?

Harikumar K: Okay. Just a last question from my side. Can you quantify as a percentage of revenue, how much was liquor or wet-led sale for this quarter?

Speaker #3: Okay. With milk, we have 8 to 9 percent of our revenues from our existing stores, which are food-driven. And episode one is our Wetlet restaurant, where we have 40 percent.

Rajesh Kumar Mohta: Wet-led. We have 8% to 9% of our revenues from our existing stores, which are food-driven. Episode One is our wet-led restaurant where we have 40%.

Speaker #2: Okay. And do we plan to increase this number to a particular target? As in, does the management have any viewpoint that we are targeting these numbers on a total basis?

Harikumar K: Okay. Do we plan to increase this number to a particular target? Does the management have any viewpoint that we are targeting this number on a totality basis?

Speaker #3: Absolutely. So, with every new format and renovation that we've done in mainland China or at Asia Kitchen, we have a very visible bar, which previously we did not have.

Rajesh Kumar Mohta: Absolutely. Every new format and renovation that we have done in Mainland China or Asia Kitchen, we have a very visible bar, which previously we did not have. What we have seen is whenever we renovated these restaurants and you have a visible physical bar with a bartender, bottle displays, bar offers, our liquor sale has phenomenally jumped up. In the times to come, every single Mainland China that is going to be renovated will have this bar, out of which at least five of them have already been done so. Every Asia Kitchen by Mainland China into malls are also going to have bars. In fact, we also have stressed on multiple contracts and liquor contracts with liquor companies and our partners, and liquor sale is going to be a big focus for us.

Speaker #3: So what we've seen is, whenever we renovated these restaurants and you have a visible physical bar with a bartender, bottle displays, and bar offers, our liquor sales have phenomenally jumped up.

Speaker #3: So, in the times to come, every single Mainland China that's going to be renovated will have this bar, out of which at least five of them have already been done so.

Speaker #3: And every Asia Kitchen by Mainland China, in the malls, is also going to have bars. In fact, we have also stressed this on multiple contracts and liquor contracts with liquor companies and our partners.

Speaker #3: And liquor sale is going to be a big focus for us. In fact, in our restaurant Gong, we are at 38% of liquor sales, which is very, very good and very high.

Rajesh Kumar Mohta: In fact, in our restaurant, Gong, we are at 38% of liquor sale, which is very good and very high. Cecilia has around

Speaker #3: And Cecilia has around 25.

Harikumar K: Okay. Just to sum it up, you mean you are planning to add liquor to every Mainland China store or Asia Kitchen store, and you are planning to increase that as a part of your revenue? If I am not taking it wrongly.

Speaker #2: Okay. Let's just sum it up. You mean you're planning to add liquor to every Mainland China store or Asia Kitchen store, and you're planning to increase that as a part of your revenue, if I'm not taking it in the wrong way.

Speaker #3: Absolutely.

Rajesh Kumar Mohta: Absolutely.

Speaker #2: Okay, I have a follow-up question. I'll just get back in the queue. Thank you so much.

Harikumar K: Okay. I have a follow-up question. I will just get back in with you. Thank you so much.

Speaker #3: Thank you.

Rajesh Kumar Mohta: Thank you.

Speaker #1: Thank you. A reminder to all participants: anyone who wishes to ask a question may press star and one on their touchtone telephone. The next question is from the line of Himesh Satra from Quest Investment.

Operator 2: Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touch-tone telephone. The next question is from the line of Himesh Satra from Quest Investment. Please proceed.

Speaker #1: Please proceed.

Speaker #2: Hello. Yeah. Hi, Solomon. Hi. Just wanted to get your understanding on the gross margin side. So, given that, you know, we have been seeing inflation going up, just wanted to understand the risk—if we can see any impact on the gross margin going forward.

Himesh Satra: Hello. Yeah. Hi, sir, thank you for the opportunity. Just wanted to get your understanding on the gross margin side. Given that we have been seeing inflation going up, just wanted to understand the risk, if we can see any impact on the gross margin going forward.

Speaker #3: Sorry, if I may—if I have understood correctly, you are asking about gross margins going forward.

Rajesh Kumar Mohta: Sorry, if I have understood correctly, you are asking gross margins going forward?

Speaker #2: Yeah. I mean, given that we have been seeing some uptick in inflation, does that pose a risk in terms of the gross margins?

Himesh Satra: Yeah, given that we are between some uptick in the inflation, does that have a risk in terms of the gross margins?

Speaker #3: Historically, we have been able to maintain our gross margins at the same levels, with plus or minus 50 basis points. But the whole idea is, whenever there are huge amounts of pressure on raw material and gross margins, they have been neutralized by taking a tactical few percentage price increase. Because, as you yourself understand, due to inflationary pressures—not only on gross margins but on other expenses as well—these changes become necessary.

Rajesh Kumar Mohta: Historically, we have been able to maintain at the levels of our gross margins with +/– 50 bps. The whole idea is whenever there are huge amounts of pressure on raw material and gross margins, there have been neutralization by taking a tactical few percentage price increase. Because as you yourself understand, because of the inflationary pressures, not only on gross margins, on other expenses as well, when we talk in terms of staff cost, power, light, fuel, et cetera. Even the licensing cost increases every year. We need to balance to ensure that the margins are maintained.

Speaker #3: When we talk in terms of staff cost, power, light, fuel, et cetera, even the licensing cost increases every year. So we need to balance that to ensure that the margins are maintained.

Speaker #2: Sure, got it. So, just wanted to clarify this for you—we haven't taken any price hike, right, till now, across the portfolio?

Himesh Satra: Got it. Just wanted to clarify this quarter we have not taken any price hike, right, till now after Foodpanda sale?

Speaker #3: We hear what had happened during this particular quarter. From 7th of June, we used to levy a service charge, which has been withdrawn. We don't levy any kind of service charge on our restaurants.

Rajesh Kumar Mohta: See here what had happened during this particular quarter from 7 June, we used to levy service charge which have been withdrawn. We do not levy any kind of a service charge on our restaurants. So that particular impact, we had taken some amount of price increase to neutralize that impact.

Speaker #3: So there was a so that particular impact there was we had taken some amount of price increase to neutralize that impact.

Himesh Satra: Sure. Got it. Just wanted to understand the margin profile in terms of dine-in and delivery. Because delivery record will have been only delivery. Is that also the reason why our EBITDA margin has also gone up?

Speaker #2: Sure, got it. I just wanted to understand the margin profile in terms of dining and delivery because delivery this quarter has been strong. So, is that also a reason why our EBITDA margin has gone up?

Rajesh Kumar Mohta: See, this is a combination effort. Let's say, for instance, wherever we are, as far as cloud kitchens are concerned, they are only 11 in our portfolio. We have kitchens within kitchens, primarily doing all the brand sales from our existing dine-in restaurants. This kind of an impact, yes, delivery gives you an added advantage. The moment there is a threshold revenue increase, the operating leverage triggers favorably for us. So it becomes beneficial despite direct variable cost on delivery.

Speaker #3: See, this is a combination effort. Let's say, for instance, wherever we are as far as cloud kitchens are concerned, there are only 11 in our portfolio.

Speaker #3: We have kitchens within kitchens, primarily doing all the brand sales from our existing dine-in restaurants. So, this kind of an impact—yes, delivery gives you an added advantage.

Speaker #3: The moment there is a threshold revenue increase, the operating leverage triggers favorably for us, so it becomes beneficial, despite the direct variable cost on delivery.

Speaker #2: Sure. Okay. And if I understand correctly, we are planning to add 32 stores during this year. I just wanted a rough split across which brands we are adding more stores to, and I just wanted to understand what factors are driving this high store count. Because if I look at the history, we have been operating at around 120-odd stores.

Himesh Satra: Sure. Got it. If I have understood correctly, we are planning to add 32 stores during this year. Just wanted a rough split across which brands are we adding more stores. Just wanted to understand what are the factors that are driving this high store count, because if I see in the history, we have been operating at around 120 odd stores. So what is the factor now that is driving this high store count?

Speaker #2: You know, so what is the factor now that is driving this high store count?

Speaker #3: Sorry, I don't know where you got the number 32 from. We are not working towards opening 32 stores in this financial year.

Rajesh Kumar Mohta: Sorry, I do not know where from you have gathered the number of 32. We are not working towards opening 32 stores in this financial year. We continue to maintain eight to 10 restaurants in a particular financial year, added with few Walters, which are a smaller format in QSR category.

Speaker #3: We continue to maintain 8 to 10 restaurants in a particular financial year, added with a few Walters, which are a smaller format in the QSR category.

Speaker #2: Okay. So, for how many stores are you planning for Walters?

Himesh Satra: Okay. How many stores are you planning for Walters?

Speaker #3: It would be 8 to 10, between 10 to 15. Because what has happened is, Walters is now on a growth path, since already one year has passed, and we are working hard towards Walters to grow from a QSR category.

Rajesh Kumar Mohta: It would be between 10 to 15. Because what has happened is that Walters is now on a growth path since already one year has passed, and we are working hard towards Walters to grow from a QSR category.

Speaker #2: Sure. I just want to understand: do we face any challenges when it comes to adding more stores? For example, can we go beyond 15 or 20 stores, or is there a challenge in terms of area, or perhaps the market that we are targeting—meaning the availability of the market is not there?

Himesh Satra: Sure. Just wanted to understand in terms of expansion, do we kind of face any challenges in terms of adding more stores? Or can we go beyond 15, 20 stores or there is a challenge in terms of area or probably the market that we are targeting, the availability of the market is not there?

Rajesh Kumar Mohta: See, as far as challenges are concerned, I would definitely say the biggest challenge is getting the trained manpower for restaurants because of we being into a dining space restaurant, maintaining service standards and consistency. So in my opinion, the biggest and the only constraint. Rest all can be managed with respect to locations, capital allocation, et cetera. But staff, getting trained staff is one of the challenge in skill, et cetera, to quadruple on the expansion of restaurants.

Speaker #3: See, as far as challenges are concerned, I would definitely say the biggest challenge is getting trained manpower for restaurants. Because we are in the dining space, maintaining service standards and consistency is crucial.

Speaker #3: So, in my opinion, the biggest—and the only—constraint; rest all can be managed with respect to locations, capital allocation, et cetera. But staff, getting trained staff, is one of the challenges in skills, et cetera.

Speaker #3: To quadruple on the expansion of restaurants.

Speaker #2: Got it, got it. Okay. And last question—in terms of the existing stores, do we just go with a broad number? What is the occupancy right now across our stores, and what can be the peak occupancy, probably for some of the top four or five brands?

Himesh Satra: Got it. Perfect. And last question in terms of the occupancy across the existing stores. Could you just throw us a broad number on what is the occupancy right now across our stores, and what can be the peak occupancy probably for some of the top preferred brands?

Rajesh Kumar Mohta: See, from an occupancy perspective, if I may, weekends businesses are very good, like Mr. Avik did mention in one of our questions. But overall, let's say for instance, when you look at even overseas or the world restaurants, weekends are the only business where you cross your capacity utilization. Weekends and weekdays are always a challenge where we do offer discounts, et cetera. But yes, footfall becomes a challenge during weekends, and it is location, brand, et cetera, which are very critical in this case. But when we look at installed capacity, et cetera, we don't look at a matrix as far as what is the total capacity utilization per se for our restaurants. It is more on revenue driven and how the chairs are getting filled during lunch and dinners of all on weekdays primarily.

Speaker #3: See, from an occupancy perspective, if I may, weekend business is very good, like Mashawik did mention in response to one of our questions. But overall, let's say for instance when you look at even overseas or global restaurants, weekends are the only time when you cross your capacity utilization.

Speaker #3: Weekends and weekdays are always a challenge, where, like, we do offer discounts, et cetera. But yes, footfall becomes a challenge during weekends, and it is location, brand, et cetera.

Speaker #3: Which are very critical in this case. But when we look at installed capacity, et cetera, we don't look at a matrix as far as what is the total capacity utilization per day for our restaurants.

Speaker #3: It is more on revenue driven and what how the chairs are getting filled during lunch and dinners of all on weekdays primarily.

Speaker #2: Sure. Sure. Those are the questions from my side. Thank you.

Himesh Satra: Sure. Those are the questions from my side. Thank you.

Speaker #3: Thank you.

Rajesh Kumar Mohta: Thank you.

Speaker #1: Thank you. The next question is from the line of Hitenja Pradhan from Maximal Capital. Please proceed.

Operator 2: Thank you. The next question is from the line of Hitaindra Pradhan from Maximal Capital. Please proceed.

Speaker #2: Yeah. Hi. So I hope I'm audible, and thanks for the opportunity. So, my first question is partly answered, but just to confirm: the outlets we are adding this year are mostly because it's a small format QSR.

Hitaindra Pradhan: Yeah. Hi sir. I hope I'm audible, and thanks for the opportunity. My first question is partly answered, but just to confirm, the Walters we are adding this year is mostly because it's a small format QSR. That's why the number of additions this year is high. Is that correct?

Speaker #2: So, that's why the number of additions this year is high. Is that correct?

Speaker #3: Absolutely correct.

Rajesh Kumar Mohta: Absolutely correct.

Speaker #2: Okay, okay. So, maybe a related question to that: in the medium term, which part of the portfolio are we prioritizing in terms of expansion?

Hitaindra Pradhan: Okay. Sir, a related question to that. In the medium term, which part of our portfolio we are prioritizing in terms of expansion? We have a mix of Oriental and then we have Indian and different formats also. What can we expect going forward? Which part of our portfolio are we prioritizing in terms of expansion?

Speaker #2: I mean, we had a mix of Oriental and, you know, then we have Indian and, you know, different formats also. So, what can you expect going forward? Which part of our portfolio are we prioritizing in terms of expansion?

Speaker #3: This would be all three categories of the power growth, which are Oriental, Italian, and QSR. We are going to be giving them equal weightage and grow them all together, because what happens is when we grow any of our Oriental brands, all our other Oriental brands are anyways live on delivery from that same very location.

Avik Chatterjee: This would be all three categories of the FAWO group, which is Oriental, Italian, and QSR. We are going to be giving it equal weightage and grow them all together. Because what happens is, when we grow any of our Oriental brands, all our other Oriental brands are anyways live on delivery from that same very location. So even if we open a Mainland China unit, there will be Gong, Asia Kitchen, AKVA, and Mainland China's delivery going out from that unit. So either we are growing with physical stores and we are growing with delivery stores parallelly. Apart from that, Italian cuisine has become something which is a wonder for our company because back in the day, we were Oriental heavy, but this Italian foray for us, has given us a very good operational leverage inside malls. Previously, we were making deals with malls for Asia Kitchen by Mainland China.

Speaker #3: So even if we open a Mainland China unit, there will be Gong, Asia Kitchen, Haka, and Mainland China's delivery going out from that unit.

Speaker #3: So either we're growing with physical stores, and we're growing with delivery stores, parallelly. Apart from that, Italian cuisine has become something which is a wonder for our company because back in the day we were oriental heavy, but this Italian foray for us has given us very good operational leverage inside malls.

Speaker #3: Previously, we were making deals with malls for Asia Kitchen by Mainland China. Now we're doing two deals simultaneously, together with Asia Kitchen and Italian.

Avik Chatterjee: Now we are doing simultaneously two deals together with Asia Kitchen and Italian. Hence, we are getting a better deal for the revenue and effort ratio. Over and above, we are also getting more leverage on manpower costs when we are doing two stores in the same spot, obviously resulting in higher revenue because of two units. Apart from this is Walters and Sweet Bengal.

Speaker #3: Hence, we are getting a better deal for the revenue and revenue and effort ratio. Over and above, we're also getting more leverage on manpower costs.

Speaker #3: When we're doing two stores in the same spot, obviously it results in higher revenue because of two units. Apart from this is Walters and Sweet Bengal.

Speaker #2: Got it. Understood. And sir on the oriental portfolio side I mean we had 11% of triple SG this quarter. So how did this oriental portfolio fare this quarter and I mean I understood from your commentary earlier it's mostly volume driven.

Hitaindra Pradhan: Got it, sir. Understood. Sir, on the Oriental portfolio side, we had 11% of SSSG this quarter. How did this Oriental portfolio fare this quarter? I understood from your commentary earlier, it is mostly volume driven because basically the service charge related price hike. Is the Oriental portfolio coming back on the growth path now? What is the outlook there?

Speaker #2: Because, you know, it’s basically with the service-related price hike. But did the—is the Oriental portfolio coming back on the growth path now? And, you know, what is the outlook there?

Rajesh Kumar Mohta: If I may. Our Oriental business is sub 50% of the revenues. When we talk in terms of growth in overall revenues, sir, Oriental is the biggest contributor. As Mr. Avik emphasized, this continues to be our Oriental, and we will continue to grow from an Oriental perspective.

Speaker #3: If I may, our Oriental businesses make up less than 50% of the revenues. So, when we talk in terms of growth in overall revenue, sir, Oriental is the biggest contributor.

Speaker #3: And as Mashawik emphasized, that continues to be our Oriental focus. And we will continue to grow from an Oriental perspective.

Speaker #2: Okay, sir. Thank you, sir, and all the best.

Hitaindra Pradhan: Okay, sir. Thank you, sir, and all the best.

Speaker #1: Thank you. The next question is from the line of Sanjay Narayan Mahajan from Wealthwise Capital. Please proceed.

Operator 2: Thank you. The next question is from the line of Sanjay Narayan Mahajan from WealthWise Capital. Please proceed.

Sanjay Narayan Mahajan: Sir, thanks for the opportunity.

Speaker #2: Sure. Thanks again for the opportunity. So, Sanjay sir? Hello? Yes?

Operator 2: Sanjay, sir?

Sanjay Narayan Mahajan: Hello? Yes.

Speaker #1: Yes sir. Continue. Continue.

Operator 2: Yes, sir. Continue.

Speaker #2: Yeah. So, can you throw some light on specialty hospitals and hospitality, and what is happening at that end? And how it could be value-aggregative for the shareholder, and the timelines, and anything that is taking some shape that you would like the investor to know about?

Sanjay Narayan Mahajan: Can you throw some light on Speciality Hospitality and hospitality and what is happening at that end? And how it could be value accretive for shareholder and the timelines and anything that is taking some shape that you would like the investor to know about the Durgapur team?

Speaker #2: The Durgapur team.

Rajesh Kumar Mohta: Mr. Sanjay, you mean to say hospitality would mean outdoor catering, Speciality experiences. Am I right?

Speaker #3: Mr. Sanjay, are you saying that 'hospitality' would mean outdoor catering and specialty experiences? Am I right?

Sanjay Narayan Mahajan: Sir, the question was from the angle that we have demerged the land into Speciality Hospitality, which we are thinking to monetize. That was what I gathered from previous con calls. Am I right on that? And what is happening at that end?

Speaker #2: So I was—so the question was from the angle that we have demerged the land into the specialty hospital, which we are thinking to monetize.

Speaker #2: That was what I gathered from the previous call. Am I right about that? And what is happening on that end?

Speaker #3: No, no, I appreciate it. See, what had happened was that there was a plot of land which was available with Speciality Restaurants, given by IDCO, Government of Odisha.

Rajesh Kumar Mohta: No, I appreciate. See, what had happened, that was a plot of land which was available with Speciality Restaurants given by IDCO government of Odisha for creating a food and beverage complex.

Speaker #3: For creating a food and beverage complex. See specialty restaurants continues to be focused on restaurants that was a plot which was given for food and beverage and which have been developed under a joint development and it would be it would be restaurants banquets and service apartments kind which would be overall utilized later.

Sanjay Narayan Mahajan: Okay

Rajesh Kumar Mohta: Speciality Restaurants continues to be focused on restaurants. That was a plot which was given for food and beverage and which have been developed under a joint development, and it would be restaurants, banquets, and a service apartment kind, which would be overall utilized later.

Speaker #2: Okay. So in any shape or form, would it be contributing to Specialty Restaurants? Because that's the way we look at how it would be evaluated by the company.

Sanjay Narayan Mahajan: Okay. In any shape or form, would it be contributing to Speciality Restaurants? Because what would be look at how it would be value accretive to our shareholders or our company?

Speaker #3: We would be holding around 34% of the demerged company, post completion of the building.

Rajesh Kumar Mohta: We would be holding around 34% of the demerged company post completion of the building.

Sanjay Narayan Mahajan: Any work is ongoing? What is the stage of development over there?

Speaker #2: And any work is ongoing? What's the stage of development over there?

Speaker #3: Sorry, I'm not able to hear you properly. What is the question?

Rajesh Kumar Mohta: Sorry, I am not able to hear you properly. What is the question?

Speaker #2: So any activity that has been at what stage of activity we are there on specialty hospital. So is the DAPA being signed? Is the construction on?

Sanjay Narayan Mahajan: Any activity that is being At what stage of activity we are there on Speciality Hospitality? Is the JDA been signed? Is the construction on? Where do we stand? Have we identified a development partner? What are the timelines to develop that?

Speaker #2: So, where do we stand? Have we identified a development partner, and what are the timelines to develop that?

Speaker #3: Mr. Sanjay, just to correct you, it is not 'specialty hospital,' it should be 'special.'

Rajesh Kumar Mohta: Mr. Sanjay, just to correct yourself, it is not Speciality Hospital. It would be Speciality-

Sanjay Narayan Mahajan: Hospitality

Speaker #2: Hospitality.

Speaker #3: No, it is under Specialty Hospital Private Limited, the name of the company.

Rajesh Kumar Mohta: No, it is under-

Sanjay Narayan Mahajan: Sorry

Rajesh Kumar Mohta: Speciality Restaurants Private Limited, the name of the company.

Speaker #2: Okay.

Sanjay Narayan Mahajan: Okay.

Rajesh Kumar Mohta: The joint development is progressing, and we would be able to complete the development by this financial year-end itself.

Speaker #3: The joint development is progressing, and we would be able to complete the development within this financial arrangement itself.

Speaker #2: Okay. That's pretty nice to know. Sir, if you can—if I can speak—one more question. The QSR segment seems to be very promising as per the private equity space and the interest shown by the other players in the market.

Sanjay Narayan Mahajan: Okay. That is nice to know. Sir, if I can squeeze one more question. The QSR segment is to be very promising as per the private equity space and the interest shown by the other players in the market. Where do we stand as of numbers today on Walters? How many outlets do we have? Because I did not find it in our presentation, specific numbers. I think we are opening 4 more in these upcoming quarters, but as of on this date, till this date, what is the number that we have Walters? How many Walters?

Speaker #2: So where do we stand as on num as of numbers today on Walters? How many outlets do we have? Because I don't I didn't find it in our presentation.

Speaker #2: Specific numbers. I think we are opening four more in this quarter upcoming quarters. But as of as of on this day till this date what what is the number that we have Walters with us?

Speaker #2: How many Walters?

Speaker #3: We operate three principal stores and two cloud kitchens currently, as on date.

Rajesh Kumar Mohta: We operate 3 principal stores and 2 cloud kitchens currently as on date.

Speaker #2: Okay.

Sanjay Narayan Mahajan: Okay.

Speaker #3: And like you yourself have seen in the presentation, the ones which are being opened—those are all physical stores, not cloud kitchens.

Rajesh Kumar Mohta: Like you yourself have seen in the presentation, the ones which are being opened, those are all physical stores, not on cloud kitchen basis.

Speaker #2: Okay. Okay.

Sanjay Narayan Mahajan: Okay.

Speaker #3: And from a revenue perspective, it is very insignificant to the total as of now. If you have seen the presentation, sir, it is 1.3% of the quarterly revenues which have been generated from Walters.

Rajesh Kumar Mohta: From a revenue perspective, very insignificant to the total as of now. If you would have seen the presentation, sir, it is 1.3% of the quarter revenues which have been generated from Walters.

Speaker #2: Okay. Any any color you would like to throw on what is what is really happening in this specifically burger space? Because there is there seems to be a lot of interest in this space and we also have zero down on this as a brand in QSR.

Sanjay Narayan Mahajan: Okay. Any color you would like to throw on what is really happening in this specifically burger space? Because there seems to be a lot of interest in this space, and we also have zeroed on this as a brand in QSR. Anything that you would like to talk about or help us understand in numbers of where the pub is moving? How big is the space, and what are the growth rates? Anything that you would like to help us understand?

Speaker #2: Is there anything that you would like to talk about or help us understand in terms of the numbers—where the PUG is moving, how big is the space, and what are the growth rates?

Speaker #2: Is there anything else you would like us to help you understand?

Speaker #3: Sure. From the previous quarter, we have grown almost 300 percent with the addition of only one new store. Also, overall, looking at the model, the central kitchen facility is helping us bring our margins higher and costs down.

Avik Chatterjee: From the previous quarter, we have grown almost 300% with the addition of one new store only and also overall looking at the model, the central kitchen facility, and also bringing our margins high and costs down. What we see is also similar to you, very promising segment in Walters Burger. In the times to come, we are going to be growing this very vigorously. We have, in fact, built a specialized team of QSR and five new stores coming up by the end of this year. Yes, as a segment and as a vertical, Speciality Restaurants will be heavily focused on Walters Burgers in the times and years to come as a QSR segment.

Speaker #3: What we see is also similar to a very promising segment in Walters Burgers. In the times to come, we are going to be growing this very rigorously, and we have, in fact, built a specialized team for QSR. We have five new stores coming up by the end of this year. And yes, as a segment and as a vertical, Speciality Restaurants will be heavily focused on Walters Burgers in the times and years to come as a QSR segment.

Speaker #2: Okay. Thank you.

Sanjay Narayan Mahajan: Okay. Thank you.

Speaker #3: Thank you.

Rajesh Kumar Mohta: Thank you.

Sanjay Narayan Mahajan: Okay.

Speaker #2: Okay.

Speaker #1: Thank you. The next question is from the line of Zaki Abbas Nasir, an individual investor. Please proceed.

Operator 2: Thank you. The next question is from the line of Zaki Abbas Nasir, an individual investor. Please proceed.

Speaker #2: Yes, Mr. Rajesh. Last quarter, we had indicated that we have cash of ₹162 crore on the books. With the continuing expansion and 15 new points to be opened, what would you expect to close the year at, sir?

Zaki Abbas Nasir: Yeah. Mr. Rajesh, last quarter we had indicated that we have a cash of INR 162 crores on books. With the continuing expansion and 15 new points to be opened, what would you expect to close the year at, sir? After whatever cash accrues, do you think we will be able to close the year above this, or this will go down significantly?

Speaker #2: After whatever cash accrues, do you think we'll be able to close the year above this, or will this go down significantly?

Rajesh Kumar Mohta: A very correct question to ask, Mr. Zaki. The way we have worked our cash flows, it looks like we will be able to maintain this number by the year-end because the CapEx would be taken care of by the cash generation by the business in months to come.

Speaker #3: A very correct question to ask, Mr. Zaki. The way we have worked our cash flows, it looks like we will be able to maintain this number by the year end, because the capex would be taken care of by the cash generation by the business in the months to come.

Zaki Abbas Nasir: Thank you, sir.

Speaker #3: Thank you sir.

Rajesh Kumar Mohta: Thank you, sir.

Speaker #1: Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you.

Operator 2: Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir.

Speaker #3: On behalf of the management, we are extremely thankful to all the participants who have spared their precious time and joined our investors call.

Rajesh Kumar Mohta: On behalf of the management, we are extremely thankful to all the participants who have spared their precious time and joined our investors call. Thank you so very much.

Speaker #3: Thank you so very much. I'd just like to add that the next phase of specialty restaurants will be as much about building scalable brands as it is about building restaurants.

Avik Chatterjee: I would just like to add, the next phase of Speciality Restaurants will be as much about building scalable brands as it is about building restaurants. Our focus is simple, profitable, disciplined growth while making our brands relevant to the next generation of customers. Thank you so very much.

Speaker #3: Our focus is simple, profitable, disciplined growth, while making our brands relevant to the next generation of customers. Thank you so very much.

Speaker #1: Thank you. On behalf of ICICI Securities Limited that concludes this conference. Thank you for joining us and you may now disconnect your line. Thank you.

Operator 2: Thank you. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.

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