Alsea, S.A.B. de C.V. (ALSEA) Earnings Call Transcript & Summary

Welcome to Alsea's earnings conference call. With us are Alberto Torrado, Executive President of Alsea; Rafael Contreras, Chief Financial Officer; and Salvador Villaseñor of Investor Relations. Our speakers will present the results for the first quarter of 2021. At the end of the presentation, we will have a Q&A session. As a reminder, all forward-looking statements on this call are subject to risks and uncertainties that could cause actual results to differ materially from the expectations and assumptions discussed today. This may be due to a variety of factors, including the risks outlined in Alsea's most recent annual report. At this time, I will now turn the conference over to Mr. Alberto Torrado. Please go ahead.

Good morning, everybody, and thank you for being with us. Welcome to Alsea's First Quarter 2021 Earnings Conference Call. We will be discussing the most significant events from the first quarter of the year. As you all know, we have faced important challenges since the start of the COVID-19 pandemic relating to lockdowns and social distancing measures enforced throughout all our geographies. This challenge remained as we enter the new year with several Mexican states subject to strict COVID-19 restrictions, Europe suffering from second and third waves in different countries with accompanying government sanitary measures and all countries in South America still under various forms of lockdowns and other restrictions. These restrictions put in place by the authorities in each country mean that many units were closed for some of the period and the rest operated at a reduced capacity and/or with limited opening hours. Despite the impact of these restrictions, we were able to achieve MXN 10.2 billion in sales compared to MXN 12.1 billion in the first quarter of 2020, reaching 84.4% level of sales versus the one reported during the first quarter of 2020 and about 75% of the sales of the first quarter of 2019, obviously, 2020, a quarter which was largely unaffected by the pandemic since the closure of units due to the contingency measures that began in March 15 in Europe and towards the end of the same month in Latin America. As in previous quarters, we were able to mitigate the impact of the store closings through deliveries, at-counter pickups and implementation of our digitalization strategy. As we mentioned last quarter, we continued to invest -- strengthen our information analysis area and carry out direct marketing to increase the number of online orders. Our marketing shared services department continues to improve our digital marketing strategy, enabling us to reach a greater and more target audience in an efficient and cost-effective manner. Our loyalty programs continued to grow successfully with approximately 690,000 active users of Wow+ and more than 478,000 active users of Starbucks Rewards at the end of the first quarter of 2021, which represents an increase of 6.2% and 1.3%, respectively, quarter-over-quarter. Transactions via our own apps are also growing strongly. Orders through the Domino's Pizza Mexico online ordering, which includes both app and website, increased by 50% in the first quarter of 2021 when compared to first quarter of '20. And Starbucks Reward registered more than 4 million transactions in Mexico during the quarter. In addition, we strengthened our digital strategy during the first quarter by implementing Starbucks Mobile Order and Pay and Wow+, which is our own delivery platform recently launched in March. Another highlight for the quarter was achieving 65% growth in delivery sales compared to the first quarter of 2020, reaching a 31% share of sales in Mexico, and we were able to sell through delivery and this obviously includes Domino's Pizza. The same amount of sales that we achieved in the whole year of 2019 was achieved in the first quarter of the year. This was enabled by our own delivery capacity as well as throughout our agreements with our aggregators. In terms of brands, during the first quarter, Domino's once again led the way with sales close to 2019 levels in Spain and growing 10% in Mexico and more than 40% in Colombia, all this compared to the first quarter of 2019. Starbucks and Burger King also posted strong sequential results, and for example, Starbucks Mexico recovered 94% of the level of sales reported in the first quarter of 2019. However, some of our brands which rely more in on-premises consumption, such as Italianni's and Vips, continued to suffer due to the restrictions in place. Nevertheless, we began to see a sequential improvement with people starting to feel more confidence in returning to the restaurants as the vaccination program were rolled out. In addition, during the first quarter, we worked with Mexican authorities to enable the safe return to our customers to using indoor spaces at all our stores as well as to increase the outdoor space availability for seating, thereby increasing our capacity in some of our restaurants. With respect to our geographies, Mexico reached sales of 81.1% and Europe by 84.2% versus first quarter of '20. And finally, in South America, sales remained flat versus the first quarter of 2020. However, if we break this down month by month, on a consolidated basis, sales in January amount MXN 3.2 billion; in February, MXN 3.1 billion; and in March, MXN 3.9 billion. Sales in March were boosted by Easter week at the end of the month, and we are observing this upward trend continue in the second quarter. In response to the sustained disruption to operations, we have continued to control cost expenses. Year-over-year, we reduced our expenditure on rent, advertising, operational costs and other net costs significantly as well as making efficiencies in our workforce manager, thereby reducing labor costs. During the quarter, as a result of the consolidation of our South America back office in Colombia and administrative process for the South Cone in Chile, we were able to lower our operational expenses in the region by MXN 143 million year-over-year. Despite the drop in sales caused by the negative impact of temporary unit closures and limitations on operating hours, we managed to achieve a consolidated EBITDA of over MXN 2 billion in the first quarter, reaching 82% of the EBITDA level achieved during the first quarter of 2020, 74% of the EBITDA that we achieved in 2019 and all the total EBITDA that we achieved in the whole year of 2020. All our regions post positive EBITDA in the quarter, and we are very pleased with this result in view of the broader economic context. During the quarter, we were able to successfully negotiate the extension of our covenant waivers until June 30, 2022, and this demonstrates the bank's continued confidence in Alsea's success and our future. It strengthens our positions to continue facing the impact of the COVID-19 pandemic and ensures the continuity of our strategic projects, keeping our restaurants operating in optimal conditions as well as enabling the continued organic growth of the company. [ We're still ] meeting our loan payments and amortizations in timely matter. We are complying with all the bank's requirements, including the minimum levels of indebtedness, liquidity, stockholders' equity and CapEx set out in the waiver agreement. We continued to focus on maintaining a strong balance sheet and preserving liquidity. Rafael will discuss our balance sheet in more detail shortly. But it is worth noting that our cash balance is now MXN 3.4 billion, above the minimum level agreed with our creditors. Moving on to ESG. This year, we have included more sustainability metrics in our integrated annual report, demonstrating our focus on improving our commitment to ESG. On this regard, the Alsea Foundation, whose mission is to help ensure the full security of vulnerable communities, inaugurated the first food center that operates under a sustainable model in Cancun, Mexico, which we will be adding 500 people to the now more than 7,000 that benefit from the daily nutrition food program aiming to ensure proper physical and mental development. With this opening, the Va por Mi Cuenta program now has 13 dining rooms at its first Food Center in 7 states of Mexico. In relation to corporate governance, yesterday, in our General Shareholders' Meeting, we incorporated Leticia Jáuregui as our newest member of the Board as an expert in innovation strategies and exponential technologies. With this appointment, the company Board strengthens its commitment to continue building an inclusive community and to have a greater representation of women in relevant functions. We do not know for sure when the situation will return to normal, but we are encouraged by the positive trends showing month-by-month sales from January into April and are pleased with the continued strong performance of delivery and counter pickups. As we have mentioned before, we believe that Alsea's strong brand position, digitalization, financial flexibility, scale and technology positions us well for the future, especially versus our small and less well-known competitors. In our view, as vaccination programs progress and COVID cases continue to decline, we will see an important rebound in on-premises dine-ins since we are more than prepared to operate back at 100% as soon as the authorities allow traffic normalization. At the same time, we believe we will be able to maintain much of the increase in off-premise sales, given the convenience of digitalizations and delivery. This should enable Alsea to report a strong increase in cash flow and profitability as we go into the second half of the year and the first part of 2022. We also believe that many of the cost efficiencies we have implemented over the past year will continue to bear fruit in the future. In short, after a very difficult 12 months, we look forward to a much better future. And now Rafael will give you more detailed overview of our financial results. Thank you.

Thank you, Alberto. Good morning, everyone, and thank you for joining. To begin, I want to clarify that since this quarter on, all the explanations and notes reported in our earnings release include an effect from the statement related to the hyperinflation in Argentina as well as IFRS 16. These 2 factors are also included in the financial statements issued to the corresponding authorities. We also made a reclassification on the cost line by registering all the logistic expenses of the Alsea Mexico operation that previously were reported in operating expense, which now will be reported in the cost line. This is the reason why the consolidated cost as a percentage of sales of the first quarter 2020 increased to 32.2% versus the one presented last year of 29.8%. On April 14, our external auditors issued our audited financial statements for 2020. The 2 main differences compared to the information reported as of fourth quarter 2020 are: a negative effect related to the impairment of intangible and other assets for approximately MXN 70 million in addition to the MXN 150 million initially recognized for a total impairment amount of MXN 220 million in the full year. In accordance with IFRS, International Financial Standards (sic) [ International Financial Reporting Standards ], all long-term credits were presented in the audited financial statements as short-term liabilities since the first waiver had not been agreed for the 12 months ahead covering all 2021. Now that the current waiver deadline covers more than 12 months, these credits have been reported once again as long-term loans in our first quarter '21 financial statements. Since the start of the first quarter, we have been able to increase capacity in Mexico and some of Europe. Also, South America has returned to some restrictions, given COVID cases increased in some regions. Sales in the first quarter 2021 reached MXN 10.2 billion, 15.6% lower than the same period of 2020. Important to consider a MXN 250 million impact from unit closures last year. Even though we have been operating at the end of the quarter with around 90% of our units in Mexico, 90% for South America, and finally, 91% in Europe, in every geography, we have been impacted by the restrictions during the whole quarter, not being able to operate at normal capacity. However, we are looking forward to capacity increases in the second quarter given the vaccination rollout is picking up speed, and COVID cases are falling. We have made an extraordinary effort to reduce, from January to March, the number of negative units from 988 in the beginning of the year to 337 in March, achieving MXN 880 million in savings on expenses versus the previous year. At the end of the quarter, we had an extraordinary income from the sale of a Vips unit with a profit of MXN 36 million, which was offset by the extraordinary expenses in Europe from severance payments and expenses related to the LTIP program of approximately MXN 130 million, reaching at the end of the quarter an EBITDA of MXN 2 billion. Our net debt-to-EBITDA ratio rose to 8.2x at the end of the first quarter as EBITDA declined and debt levels grew following pandemic-related losses. Nonetheless, the agreements with our main banks regarding waivers to our current covenants have given us the financial flexibility we need for the rest of the year. The debt structure at the end of the quarter was 87% long term with 58% in Mexican pesos, 42% in euros and less than 1% in Chilean pesos. Regarding the covenants in our debt waiver agreements, it is worth mentioning that these do not contemplate IFRS 16 effects. Taking this into consideration, we reported a pre-IFRS MXN 8.7 billion equity in the first quarter of 2021, well above the minimum consolidated equity of MXN 6.9 billion that we have in the covenants. As we have mentioned before, we maintain our conservative approach to CapEx without sacrificing needed investment, especially in digitalization. Total CapEx in the quarter reached MXN 312 million, mainly focused on maintenance on our -- of our stores. In terms of liquidity, at the end of the quarter, we had MXN 3.4 billion in cash, well above the agreed MXN 3 billion minimum liquidity level required by the new waiver terms. Thank you. We would now like to open the call to Q&A.

[Operator Instructions] The first question is from Mr. Ben Theurer from Barclays.

Can you hear me?

Yes.

Okay. Perfect. So first of all, thank you very much once again for the very detailed breakdown on a monthly basis and how performance has been within the different regions, different formats. It's very helpful and very much appreciated. Now 2 things I wanted to touch base on. So first, can you elaborate a little bit on what you've been seeing, particularly within the last, call it, 3 to 4 weeks, depending on what you have data on, around the Easter break season? Obviously, that is usually a relatively strong one. What your expectations are into May around Mother's Day, obviously, in Mexico it's an important one, comparing that versus year. So just a little bit like the weekly trends in Mexico as well as in the other regions. That would be the first question. And then the second question, I guess, is more for Rafael. Could you elaborate a little bit, and I've tried to understand it, but now as you report everything within IFRS 16 versus what was last year not, a little bit of those reclassifications and how to think about what the base for operating income was before you used IFRS and now using it because it seems there's a little bit of a discrepancy from an operating income perspective. So what might be treated as what -- within costs just to better understand because it was quite a magnitude.

Thank you. I'll take the first one. I'll leave the second one to Rafael. I'm Alberto. First of all, I'm glad you asked the question because we are very well surprised about what is happening in Mexico. As I mentioned and as you guys know, there's a lot of restrictions now because of the third wave in Europe. We are almost closed there. And the same in Latin America, even in Chile, where we -- where the vaccination procedure is supposed to be doing very well, we have the shopping malls closed and a lot of restrictions. So Mexico is performing very well. So my expectation, and I'll give you some numbers, is that we continue this way. We have been, obviously, tracking the numbers of people that have been affected by this. And we have not seen a trend that is growing, not official numbers, but also the internal numbers and the benchmark we do with other companies we work with. So I'm positive that the numbers are going to be -- continue growing and because we are having these events like the kids day-to-day, May 10 and some others that you mentioned. But let me give you some numbers. We normally do $1 billion -- MXN 1 billion in sales in a week. This week, so far, we have averaged about MXN 760 million. But the last 4 weeks, we are ahead, about MXN 800 million a week. And that includes that Europe is really not helping us a lot. So Mexico is doing...

Just quickly, that's consolidated. That's all regions, that MXN 1 billion sales per week?

Yes, yes, yes. Just to give you -- the average of 2019 was MXN 1.026 billion, that's average weekly sales of the company. Obviously, this is all Alsea and this has exchange rates, everything. The average in 2020 was about MXN 690 million. But right now, we are averaging already, even with the situation, about MXN 760 million. And as I was telling you, the last weeks, we've been over MXN 800 million. So I am very positive that if the markets in Europe and Latin America start opening, we were having talks yesterday with our team in France and the government already issued some dates that they will be opening the economy. Actually, they will be opening by May 15. So I have high expectations personally that as soon as they open, as you know and we have seen in the past, the recuperation of sale is immediately. So I'm positive about the number that we're going to see this quarter even with this third wave that is happening.

In the second part, yes, a lot of people asked us to make the -- all the explanation with IFRS 16. That's why this first quarter, we made the explanation with IFRS 16. But also, a lot of people right now asked me to open the pre-IFRS 16 so you can make a better explanation of the operating expenses and the operating profit. So we are going to be able to open again this pre-IFRS 16 numbers. For this quarter, we're going to send you the open lines without IFRS 16 and we can talk about it in a one-on-one call.

Perfect. That would be much appreciated just to better understand. Thank you very much for the offer. I'll take you on that one, Rafael.

Our next question is from Mr. Robert Ford from Bank of America.

Alberto, I was wondering, how much did government programs and temporary concessions from unions and landlords help in the quarter? And given all the improvements that you've made to the cost structure, how should we think about that going forward in terms of being much leaner as we start to see a more pronounced recovery?

Well, first, we just had our meeting yesterday. And in the quarter, we have about MXN 300 million in sales...

Versus prior year.

Versus prior quarter in rents. We expect -- in this quarter, we are aiming -- and we are negotiating every day with our landlords. So we expect another similar amount, a little less for this quarter because things are getting better. And that was the first question. The second question was what?

It was really about just not -- it's landlords, it's unions, it's governments. But how should we think about that going forward, both in terms of occupancy and your labor costs because you're going to -- some of this is temporary, but some of it's recurring, too, right? And I guess I'm trying to understand what was temporary in the period and how we think about the more permanent cost structure moving forward.

I got it. Well, with our landlords, we are really trying and we've been successful in some of them to get into variability. And they understand that's, I would say, the new normal, if I may. So we have about 600 new lease agreements just in Mexico to negotiate this year, and we're doing well. I do believe, and it's my expectation, Bob, that the numbers for a normal year we will be saving in rents, not only because we are negotiating better and they are willing to negotiate with us, because also we have not had almost 2 years increase because of inflation, right? So I do believe that we were going to get better numbers as a percent of sales. Second, in terms of government support, as you know, in Mexico, we don't have any government support. We continue with labor support in all our geographies, including Spain, which is our biggest market with ERTE, which is still there and we are taking obviously that. In terms of labor, we are a lot more efficient than we were in the past, especially in Mexico because we are taking all the knowledge, as I said before, of the way that we used to do our store, labor schedules based upon Europe. So I think you will see the efficiencies that you will see in the P&L through -- all the way through all the year, and we believe we will maintain that. The only thing that we see in our P&L that is a new -- I would say, a new line that is increasing is aggregators, of course, because their participation is so high now that they are getting 1 or 2 points in our P&L, which is quite big. I mean we are selling, as I said, MXN 40 million a week of delivery without Domino's. So that's a big number. That's the only line that I see will increase. Labor, I don't think it will increase even with the new law of...

Outsourcing.

Outsourcing that was in consideration. Even with that, we already put the incremental minimum salary wage. So we really believe that you will see an efficiency labor going on.

And in Europe, the ERTE ends in June. But right now, we have around 22% of our staff inside the ERTE in Spain.

Our next question is from Mr. Álvaro García from BTG Pactual.

A couple of questions. My first one is on Wow+. I mean we've -- you've reported sort of -- in the release, you mentioned active users of 690,000 from 650,000 last quarter. I feel there's a little bit more stickiness there. So if you could talk about some of the strategies you're taking there to make sure active users remain active because, in the past, I know that was a bit of an issue. And then my second question, a little bit more strategic, regarding your balance sheet. So the stock has obviously done quite well. I know you're in the process of potentially launching a bond. But just given that the stock has done well, my question is on the sort of pressure you might be feeling from some of your top brands to really grow and maybe if it makes sense to issue equity here. Just would love to hear your thoughts on that here.

Thank you. We just launched our new Wow+ program, as you know, and I hope you guys try it because I think it's a very good tool and very unique. We measure our active users 90 days. Obviously, our list or our inventory of users is huge, but we only measure 90 days. So as I mentioned, it's growing about between 6% to 7% every quarter with very good results. We have close to 700,000 active users of Wow. And also, in Starbucks Rewards, we have approximately 1.3%, 1.5% growth, which actually is different members, one to the other one, but we continue to do both. We have an expectation to keep growing at these rates all the way to the end of the year. But I guess the change in numbers is because we are measuring them with 90 days' use. They have to be using the application at least in the last 90 days.

Nice to hear, nice to hear. And then on the second question?

The second question, yes, we are going to work this second quarter with the rating agencies, trying to have an international rating and trying to make a bond -- a higher bond in the U.S. maybe for the third quarter, depending on the rating that we achieve with the rating agencies. And with banks, after we have this bond because it's going to be part of all the loans or indebtedness that we have, we have to refinance all the long-term maturity with banks trying to push them maybe for a 5-year maturity long-term debt. Right now, we are not thinking about making a follow-on or something like that in terms of it. And we don't have any pressure from our client companies of making it -- the openings or the number of openings that we have under the contracts. We have a waiver. We can open the number of restaurants that we can open with the free cash flow that we're going to have this year.

Our next question is from Mr. Andrés Ortiz from Crédit Suisse.

My question is related to cash flow perspective for the second quarter. We saw, well, important cash flow this quarter. You are MXN 400 million away from your covenant. And we'd like to hear your thoughts about this, particularly because you have this also limit on CapEx that you can put of MXN 800 million each quarter, right? So basically, at this moment, you will be limited to the amount of CapEx you can deploy for the -- for at least the next quarter. Is that correct to assume?

Yes. Even though we have MXN 800 million limited CapEx per quarter, we are using -- or we are putting in our CapEx the free cash flow that we generate quarter-by-quarter. So last quarter, even though we have MXN 800 million, we invest around MXN 312 million in CapEx, mainly to maintenance and all these digital platforms. So for this second quarter, we think we're going to be around MXN 300 million, MXN 400 million in terms of CapEx. In terms of free cash flow, before the amortization that we have in the long-term credits, we're going to be without a cash burn in the second quarter, but we have to pay around MXN 300 million with long-term amortization that we have in the long-term credit. So at the end of the quarter, we are going to be, in our projection, around MXN 3.1 billion in cash, but the covenant is MXN 3 billion plus the ICO's that we have in Spain that is around MXN 1.8 billion. So at the end of the quarter with the covenant, we're going to be around MXN 4.9 billion in terms of cash if you compare with the covenant that we have with banks. So we have a lot of room.

Understood. And my second question is regarding Europe, considering the sharp restrictions that you're currently seeing there. Could you give us a sense of what levels of sales are you going to see, particularly in Spain and France?

Well, in Europe, as I told you, because of all the -- first, because in Spain, as you know, at the beginning of the year, we have this big storm in Madrid, which Madrid is our biggest market. So we didn't have good sales in the first quarter. Europe right now is doing about 70% of the sales that we did in '19, the first quarter of '21, and about 70% of what we did in '20. It's the only geography where, really, we are not reaching budget. The rest, we are doing okay even in Latin America with FX.

Our next question is from Mr. Thiago Bortoluci from Goldman Sachs.

Yes. We have 2. The first one is on mobility and top line momentum. Obviously, all regions have been negatively impacted by the pandemic, but high-frequency data actually suggests that mobility in Mexico has been performing relatively better than in the rest of LatAm, right? If you had to compare the potential upside from the economic reopening from Mexico, South LatAm and Europe, how would you rank each one of those regions just for us to get a sense on where the upside really relies on? This is the first question. And the second one is actually a follow-up from the last quarterly results call. We would just like to hear from you if you have any update on the overall strategy for your Vips big brand in Mexico. These are our questions.

I was telling you, I'm actually, as I said, very surprised of what is happening in Mexico because Mexico is, as I was telling you, performing very well. We have brands like Starbucks and Domino's and even Burger King reaching 90%, 95% of sales of 2019 even with the restrictions that we're facing and the closedown that we had in January. And I really believe this is going to continue. I think we can have different opinions how Mexico has done the vaccination, but it's been quite successful. And I've been talking with some people. I think that this is due to that Mexico decided not to close everything in 2020. And that's why we are not seeing that peak in infections in this moment. My opinion is that as soon as -- as I said, as soon as they start opening, and in France, they say they will do in May, the same they say in Spain, so we cannot control what the government decides to do. But the only thing I can tell you, as I mentioned, is that we are ready for when they let us do business. And we are prepared, and we are seeing that as soon as they open -- they let us open, sales immediately get to normal levels, not 100%, but 85%, 90%. So we are thinking that the second quarter of the year will be doing sales close to 85% -- 80%, 85% of what we were doing in 2019. We're actually not comparing any more of our sales to 2020. We are only focusing in 2019 for obvious reasons.

And if you compare inside Mexico, out of Mexico City, we are reaching more than 95% in terms of sales versus 2019. So when they allow us to change the orange light to yellow light, we think in Mexico City, we're going to reach around 90%, 95% in terms of sales. Right now, we are in 80% because we are in orange and with a lot of restrictions here in Mexico City. And we have around 50% of our restaurants in Mexico City.

Yes. And this has also to do with offices, obviously, because offices are not yet there. And I'm quite surprised that I was telling you that even in the Starbucks where we depend on a lot of offices, we are around 95% already even with the situation that Rafael mentioned in Mexico City. So I'm quite positive. You might be surprised, but I'm quite positive of what's going to happen in the future.

And on Vips, any update?

Yes. Vips, we're facing a problem. I've been open in telling you guys, we're facing a problem because this is a -- it's one of those brands that depends strongly in a very high traffic, low ticket and a lot of people in the restaurants, right? And that's exactly the opposite to what is happening today because we cannot get a lot of people in the restaurant because our customer is really C class. And that's the -- and other people, and that is a problem. We are seeing better results. We are doing, correct me, Rafael, if I'm wrong, around 50% of sales right now that we were doing in 2019, which is quite low. So that's a challenge. We are working on that. But we are seeing, especially in -- as Rafael said, Vips is very concentrated in Mexico City. So we are seeing Vips outside Mexico City performing a lot better because the restrictions are not there. So I really believe Vips will see a change not only because everything we're doing to operate better and save and promotions, but also as soon as we can get to a different restriction from the government because outside terraces is not something that we can do a lot in Vips. We don't have those space. But I promise you guys that next time, some will remember me, we'll bring a complete -- a better, deep explanation how Vips is doing because, with no doubt, it's our most challenging brand right now in Mexico.

Our next question is from Mr. Rodrigo Echagaray from Scotiabank.

Rafa, just a couple of follow-ups. Can you repeat the remarks from earlier in the call with regards to the impairment changes? And also, you just mentioned a few minutes ago that there's additional cash that accounts towards the minimum established by the covenants, but I couldn't quite understand what you said. And then the third question is more strategic. I'm just curious if you are starting to see market share opportunities in the marketplace, perhaps more medium to long term. Obviously, many of the restaurants have closed, including restaurants from chains such as Subway. So just wondering if you have any thoughts on that.

Yes. At the end of the year, we talked with our auditors and we were -- we put MXN 150 million in terms of impairments. But last year, we made this calculation store-by-store or restaurant-by-restaurant, that increased impairment from MXN 150 million to MXN 220 million in all of the geographies. That's why we had to increase from MXN 150 million to MXN 220 million the impairment -- the audit financial versus the first quarter reported numbers. Then I'm going to explain. In the covenant, that is MXN 3 billion in terms of cash, the covenant mentioned that is the cash that I have plus the credit that I have in Europe that I don't use it yet because we don't need it. And I have MXN 1.8 billion in ICO's credit that I can use it if I need it. So right now, at the end of the quarter, we have MXN 3.3 billion plus MXN 1.8 billion for the covenant with banks.

And regarding the first question about market share, well, today, because we have so many restrictions, it's very hard to do an analysis of what's our market share. We are working on making sure that we have the information soon. But I'll give you some information that I think will show how much market share we are getting. Just in the Starbucks, for the first quarter in Mexico compared to 2019, we have almost 5% same-store sales. And that includes about 60 stores that we still have closed because of they're in offices or other type of nontraditional locations. And in Domino's, we are doing close to 14% same-store sales comparing to 2019. So I really believe that as soon as this finish, and we can open, we will measure that, and we will take that advantage. What we are seeing also is that in the convenience side of the business, obviously, delivery, carryouts, drive-through and things like that, I think Alsea has been leading the way with the brands that we have, with the deals we have done in aggregators and with our own platforms. And that's why our estimation is that we do about 12% of the total restaurant business in the country, which is quite a big number if you take into consideration that all the aggregators are playing very hard in that industry. I also said -- if you remember, I said that in week 14 of this year, we achieved all the delivery sales that we did in all the brands in 2019 in just 14 weeks. That's a big number.

Our next question is from [ Mr. Armando Suria ] from [ Banco Met ].

Yes. Congratulations for the result for this first quarter, Alberto, to you and your team. Regarding to the total debt of Alsea. We have been informed that your company is making a regimen to extend the maturities of this 2021 to the next 2 years. So my question here is what is the status of your negotiations for the creditor banks regarding the extension of these maturities. And what's your expectation of the month, of this year in which you will be completing these arrangements?

Well, in the waiver, we have to extend the short-term credit maturity until June 2022. Right now, we are signing the contracts with the 3 banks that has short-term credits, that it's BBVA, Scotia, Santander -- 4 banks, and Sumitomo. We already have the agreement. We are signing that. And I think -- I don't know if next week or what, in 15 days, we're going to have all the short-term credits extended until June 2022.

Our next question is from Mr. Alan Alanis from Santander.

Alberto, I have more strategic question regarding the future of the restaurant industry in the regions that you operate, specifically in Mexico. I mean what are you seeing in terms of the evolution on 2 fronts. The dark kitchens, you have mentioned in the past that you were testing them. How's the level of success of those that you're seeing right now and in the future? And the second thing is -- have to do with partnerships. I mean you already mentioned about the aggregators, which we -- I mean which have been very strong supporters of your growth. They take some of your profitability. And now we're seeing all of the banks in Mexico and retailers in Mexico launching their own e-wallet. And as part of the attraction to those e-wallets, they're adding promotions. How active and how interested are you in putting coupons and leveraging all of this explosion of e-wallets across the banks and across the retailers in Mexico as an additional source of growth?

Thank you. Well, let's -- first, dark kitchens. We're not spending a lot of time in dark kitchens, let me tell you why. I think we have a lot of things to do today to get the business back where it should be. I think we have to focus on what we have. We have to get the customers back to our restaurants. We have to have our restaurants very well prepared. We have to have the teams ready. We have to do everything that we have to do, which is the basic of our business. So we have a separate team that is analyzing the opportunities of dark kitchens. For a company that's a size of Alsea, this will not move that needle. Even though we tried this in 2020 and we're still doing some of that, I really want my team to be focusing on our core. So we have taken this to a new group and we are analyzing what is the best way to work with dark kitchens. As you know, we launched a brand, a digital brand, which It's Just Wings from Chili's as they did in the U.S., and we are experiencing some results. We also are doing dark kitchens of P.F. Chang's, which has about 40% of sales in delivery in some of our Vips. And we also did some testing of cheesecakes in some of our Vips also. So we're taking that to a different group. And I do believe that when things get to normal, we should have a very aggressive strategy in dark kitchens. But first, first and then second. So I'm not -- I don't think really that we should, today, spend a lot of time on that. That's my personal opinion. Second, we are obviously doing a very good partnership with our aggregators. We are working with all of them. We are trying to get promotions with all of them and this is because we believe that the consumer has to be the one that decides when they want the products, how they want the products and which products they want and they have to have the right to choose who they want to order from. So we want to be the first for the aggregators in every geography and in every category that the customers want to do. We also give our customers our own Alsea core because, as you know, we have our own delivery, not only Domino's, for the other brands. So we don't see a threat, I've been saying this many times. We don't see a threat in the aggregators. You mentioned that they are eating some margins. They are not because, at the end, this is a marginality opportunity as soon as our restaurants start opening full. And in terms of loyalty programs, e-wallets and things like that, I mentioned that we did in the first quarter 4 million transactions in Starbucks Rewards, just in Starbucks. This is a very big number. And obviously, a lot of players in the e-wallet and banks and others have been reaching us to talk about that. But again, I really believe that this is a huge opportunity that we are looking. But first, we want to do it right in terms of what our core business and then we will see the other opportunities that are there in the table. And I think Alsea will be a big player with 0.5 billion transactions a year. And because of the size of our transactions and the frequency of our consumers, I do believe that, that's going to be a huge opportunity of business for us in the future. You probably guys heard what Kevin Johnson said about Starbucks a couple of days ago about reaching 40 million digital customers. And most of -- more than 50% of their sales are digital right now. So we're going there, and we are following what our brands like Starbucks are doing globally and learning from them.

Our next question is from Mr. Álvaro García BTG Pactual.

You mentioned earlier, Alberto, the labor law in Mexico. I don't know if you or Rafa can clear up what the potential impact might be. Not sure how it works sort of internally for you guys, this cap on [indiscernible] on minimum wages per se, which you pay to your employees. But if you can clarify any potential impact, that would be great.

We have been analyzing the outsourcing law, which really will not affect Alsea because we don't play that game. So we have done an analysis. It will impact because of the [indiscernible], of course, but we have done the numbers, Rafa, and we actually just present that to our Board and it's not going to be an impact that we are concerned. We know the numbers and the numbers are very reasonable. And actually, I'm very happy. I have to tell you that I think that all our team members need a more competitive environment. And really, the government in this sense with the work of the private sector, I think they did a great job in terms of how they did the outsourcing reform. And I think that this is going to help the country and our sector to be more...

Equal.

More equal, not because in the industry, there were a lot of people play in that game and we are not. So that impact is not relevant. We have done the numbers, and it's already included in our budget.

[Operator Instructions] Our next question is from [ Mr. Federico Balasi ] from [ Banco ].

Just a follow-on from previous questions, maybe to take sensitive of what is happening with reopening. In the last weeks in Mexico, you can go inside of the restaurants. This Monday, maybe it's too early, but the people in the office has increased in Mexico to 20%, and we can compare with Chile where the population is huge, but there are some closing or lockdowns. How you see the sensitivity in the brands with these movements, if you can say something?

Again, as I was telling you, offices is an important part of our business, especially in Starbucks and in Vips, because that's the type of customer. And we just said we were reviewing the numbers when we see the different regions in the country. And that's exactly what is missing in Mexico. In Mexico, the mobility in offices, Corredor Reforma, Santa Fe and other high-density office areas are not reaching the sales that they normally do. And that's why, again, I believe that's an opportunity because they're going to have to come back soon. Even if they don't come back 100% they want, that will be -- that will increase our business. And taking this with the other question about market share, I mean we're still there. We can have 50 stores closed and waiting for them to arrive, but our competition can't. So that's good for us. So I really believe that even if they don't -- if they -- not 100% of the people come, the competition is not going to be there as it was before. So we're going to get a better -- a bigger piece of the pie. And we -- again, we have to wait and see because in any -- there's not one geography that offices have been there or opened. And Mexico is probably the one that is doing better. So again, I don't want to predict, but I'm positive that when they come back, we'll do very well. And we prepare for that.

And the second and last question from my side is in the last 4 quarters of last year, you closed some El Portón. Now you closed another Vips. This is more related with the landlords, with profitability, change to another brand?

No, no. As I said, we are cleaning the house since last year. We took this opportunity to take all the restaurants that were not profitable or were just in the line. We closed 120 restaurants last year, which is a big number. And we still have some more to close. We have not done -- we have not closed, not many, but another 20 probably. And we have not done that because some arrangement with landlords and things like that. So in this first quarter, we were still doing some negotiations. And -- but really, the main closures that we do is because they're not performing well, and we don't want to carry restaurants that are not doing well. I think, as we said, efficiencies are here to stay and that's part of efficiencies. We still have -- we measure, every month or every week negative EBITDA restaurants. So we still have an important number, but that's going down in a very impressive way since January to April. I will tell you, and I won't give you an exact number, but I think we have now about 20% of the restaurants that were negative EBITDA in January are now negative EBITDA. So that's a big, big down from where we started the year.

Our next question is from Mr. Renato Donati from AM Advisors.

So we saw that March represented almost 50% of the quarter's EBITDA for around MXN 1 billion. Do you think we can continue to see this run rate of MXN 1 billion per month going forward? Or March was a particularly good month?

I have in front of me, and I measure this every day, and the MXN 1 billion that I was mentioning is sales, of course. The average that I was telling you that we have up to week 16 is about MXN 760 million. And we have -- the last 4 weeks, we are higher than MXN 800 million. So I do believe that we're going to be, through the year, in an average of MXN 900 million all the year. That will be the right number. Now that's taking in consideration the assumptions that we are taking in terms of openings in the different geographies around our country. But I can give you some other information. Mexico is representing about, today, 40% of the sales in March. So that's -- in growth. So that's a good number that we have.

Sorry. It was at the EBITDA level. In your press release, you mentioned the distribution per month. And it said like, during March, you made almost MXN 1 billion or 50% for the quarter only during March, sir. So my question was, is this run rate of EBITDA per month was sustainable or March was particularly good at the EBITDA level?

Of course, month-by-month, the EBITDA is increasing because of the -- PAT increasing in terms of sales. And this also helped us in March. But of course, month-by-month, not as a huge increase that we have from February to March, but month-by-month, we're going to be seeing better numbers in terms of EBITDA -- growing in terms of EBITDA.

But I can give you a little bit more information about this. In the first quarter of '21, Mexico, we're about MXN 600 million positive EBITDA. This is without IFRS, okay? Europe was negative and South America was MXN 100 million. So again, Europe, which is about 35% of our business, it's actually not performing. But as soon as it's open, it's going to be quite good.

That was the last question. I will now hand over to Mr. Torrado and Mr. Contreras for final comments.

As you guys see, still a challenging environment, but I think the company has proved successfully in the past and this quarter, up to April, we're seeing quite good numbers. And hopefully, we'll see you guys next quarter and continue giving you good news. Thank you for being with us, and thank you for trusting in Alsea. Have a good day.

This concludes the conference call. You may now disconnect.