Americana Restaurants International PLC (AMR) Earnings Call Transcript & Summary

Good day, everyone. Welcome to Americana Restaurants 2023 Earnings Presentation. My name is Sonika Sahni, and I'm the Head of Investor Relations at Americana Restaurants. Today's discussion will be held by Amarpal Sandhu, CEO of Americana Restaurants; and Harsh Bansal, CFO and Chief Growth Officer of the company. We will conclude with a Q&A session to answer any questions you may have. Before we start, I would like to remind you of the disclaimer regarding forward-looking statements provided in our presentation, which applies to this call as well. I will now hand over to Amar for the update on summary performance.

Thank you, Sonika. Good day, everyone, and thank you for taking the time to be with us today. We will now recap our full year performance, followed by a Q&A session. I'll start by sharing highlights for 2023. We started off the year with the successful launch of Peet's coffee in the region. We are the first store opening in Dubai Mall, followed by a launch in Saudi Arabia in the second half of the year. This marks Americana's presence in the craft coffee segment in our key markets. Our investment in digital technologies was recognized on multiple fronts, Americana received the Digital Disruptor award by Yum! Brands as well as the Digital Excellence Award by CKE Global, and this underscores Americana's leadership and commitment through digital innovation. In line with our strategic growth initiatives, we successfully launched both KFC and Pizza Hut brands in Baghdad demonstrating our commitment to expanding our footprint into new markets. Additionally, we successfully launched Krispy Kreme in Kazakhstan. The most notable achievement, there's the store growth in Saudi Arabia with 143 gross openings in 2023, which is a record number ever in Americana's history in a single country. Finally, I'm excited to share that we have reached a monumental milestone with the opening of our 1,000 KFC restaurant. A testament to the strength and resilience of the #1 chicken brand globally as well as the execution muscle of Americana Restaurants International. This slide illustrates Americana's delivery against our stated commitments. First and foremost, despite business impacts due to the geopolitical tensions in the fourth quarter, Americana restaurants demonstrated resilience by achieving year-over-year revenue growth of 1.5%. As a result of our discipline [Technical Difficulty]

Please stand by, we'll be reconnecting with the host.

Michael, are we connected?

I guess, please go ahead. We can hear you.

Okay. So again, I'll pick up on the last statement, which was on the dividends. We reaffirmed our commitment to our shareholders through the proposed dividend of $130 million for 2023, in line with our guidance as a onetime special dividend of $50 million, subject to shareholders' approval at the upcoming AGM. And moving on with the performance recap for full year 2023 results. As mentioned earlier, we added 300 gross new restaurants. These include 270 openings for our power brands, KFC, Pizza Hut, Hardee's and Krispy Kreme. The company recorded $2.4 billion in revenue despite the challenging times in Q4. In the first 9 months of 2023, like-for-like growth was a solid 6%. The full year like-for-like revenue was negative 1.3%, which was the result of impact on the business during the fourth quarter due to the regional conflict. The business reported adjusted EBITDA of $550.8 million, a stable growth of 2.8% versus 2022 whilst maintaining a healthy adjusted EBITDA margin of 22.8%. The company generated $259.5 million in net income to current shareholders, a marginal increase of 0.1% year-on-year with stable double-digit margins of 10.8%. CapEx contributed to 7% of 2023 revenue which is in line with our estimates for the year, thus supporting us to maintain a healthy balance sheet and a strong overall financial position. The next slide showcases our efforts to continue to deliver down breaking restaurant rollouts across all our markets, each featuring cutting-edge concepts that redefine the dining experience and set new standards of excellence. Our in-house design and brand teams in collaboration with our franchisors have worked tirelessly to develop these concepts, drawing inspiration from emerging trends, consumer insights, and our own passion to delight our customers. Moreover, our pioneering concepts extend beyond just the food and beverage offerings. For example, we launched gaming zones in partnership with PlayStation in some of our KFC stores in UAE, Kuwait and Qatar. Now I'm going to turn it over to Harsh Bansal to take us through the financials.

Thank you, Amar. In terms of new store openings, 2023 has been a year of milestones. We have, for the first time in history, opened 300 gross new stores and as Amar highlighted, we opened 143 gross openings in Saudi, which is the highest openings by far in any single country in a year. Net new stores for 2023 were 252 which is in line with the guidance we provided earlier. The chart on the right reflects the capability of our execution machine which we have built over the last few years. Our gross openings in 2023 were 2.6x and net new store openings were 3.8x of what we have achieved in 2019. Moving on from stores to revenue. We generated $2.413 billion of revenue in 2023, which was a 1.5% growth over 2022. This growth is primarily attributable to NSOs or new store openings, which contributed $193 million in incremental revenue. Revenue growth was positive despite FX impact of $106 million mainly due to adverse currency fluctuations in Egyptian pounds and Lebanese lira. On a constant currency basis, our revenue growth was actually 6%. Our full year LfL revenue growth was negative due to the notable impact on business performance in the fourth quarter driven by the regional geopolitical situation which has impacted majority of international brands, including ours. The revenue in Q4 2023 declined 15% and this was largely driven by the LfL decline of $128 million in Q4 2023. So here, we give visibility on the impact in different markets. As you see on the slide, the impact of negative consumer sentiment has been varied across markets. For countries representing between 50% to 55% of our business, impact has been the least, and we expect this market to recover the fastest. This includes our core markets of UAE and Kingdom of Saudi Arabia. Kazakhstan has been largely immune from the negative sentiment and actually has delivered a very strong overall performance in 2023. In terms of medium impact markets, Kuwait and Qatar are larger markets for Americana in terms of share. We're already seeing an upward trend in these markets in Jan and Feb of this year. Jordan and Oman, though not a significant share of our business, have been impacted the most. These markets, we believe, will take the longest to bounce back to normal levels. Coming to Egypt. Egypt continues to be a focus market for us. Impact of macroeconomic headwinds and lower consumer spending has been amplified by the negative consumer sentiment. We continue to be laser-focused on Egypt to navigate the ongoing difficult circumstances. Here you'll see the sales evolution since September 2023. We started seeing the impact from mid-October 2023, and it bottomed out in November, December. We have seen a gradual recovery since then. Recovery has been varied across markets. On the medium and high impact markets, strongest recovery we have seen is in Kuwait and Qatar with KFC, leading the recovery given the flagship brand and the brand strength. While it is difficult to put a time line to full recovery given the uncertainty, we anticipate continued recovery over the next few quarters. Now moving on to our Power Brands performance. Despite the impact on revenue in the fourth quarter, our power brands demonstrated resilient performance in 2023 with a positive year-on-year growth for all brands except Hardee's. Zooming into the fourth quarter, LfL impact across other brands was very similar, which is around 22%. And then on an overall basis, our decline was close to 15% compared to Q4 of last year. In terms of share, our power brand shares remained strong and is very similar to 2022. Also in terms of channels, our channel share has been largely stable and home delivery is close to 39% from an overall share standpoint. Currency-wise, we continue to see building contribution from stable currency with proportion increasing to 82%, especially driven by Egypt devaluation, which has reduced from a share standpoint. From revenue to gross profit, as communicated in our H1 and Q3 2023 earnings call, we have seen a continued positive movement on the cost of inventory. This has been supported by the cool of in commodities as well as various pricing and revenue management initiatives. As you see on the chart, in Q4 2023 we saw a further improvement in cost of inventory of 3.4% versus same quarter last year and 1.7% versus Q3 2023, which has been a significant improvement quarter-on-quarter. In 2024, we expect a better gross margin versus 2023. However, we expect some dilution versus Q4 2023 as we will focus on value to build back the transaction momentum. In addition, we're also seeing some logistics cost increase given the challenging environment in the [indiscernible] region. In terms of profitability, Profitability in the fourth quarter has been impacted by the decline in revenue. We have taken proactive measures, including working with the suppliers, G&A optimization, franchisee release and rationalizing our controllable expenses to reduce the impact on profitability. Despite the decline in revenue, we were able to deliver healthy for all margins as well as overall EBITDA margins of 20% cash, which are, in fact, very similar to the margins we had in Q4 2022. Net income was impacted due to higher depreciation charge on account of new stores and a one-off impairment of [indiscernible] related derivative instrument of $4.8 million. For full year, we have delivered growth on all profitability measures demonstrating strength of our platform and our ability to navigate uncertain environments. Now on to payback on new stores. Performance and paybacks are very similar to what we reported in H1 2023, which is close to two years. For calculating paybacks, we have used the P&L period until September 2023 to avoid any impact from the ongoing negative consumer sentiment. We remain excited about growing our business through new store openings. Given the impact of negative sentiment, we have reshuffled growth plans between markets in 2024 that will have some impact in terms of openings in 2024, which Amar will discuss in a bit more detail in his guidance section. However, we remain committed to a target of 250 to 300 net new openings in the medium term. We continue to make efforts to optimize and monitor our working capital requirements. Our working capital was negative 9.2% as of 31st December compared to 7.9% last year. Despite sales decline in Q4, which impacted our inventory throughput, we have reduced the overall inventory levels versus last year by active management with suppliers and swift movement of inventory between high impact and least impacted markets, it also helped us to minimize the impact of write-offs, demonstrating the advantage we have as a platform operator to move and navigate between different countries. CapEx spend has been $168 million, which is largely driven by the higher number of openings in 2023 compared to 2022. In summary, as Amar mentioned, the Board has recommended the cash dividend of $180 million for AGM approval. This includes a special dividend of $50 million which has been recommended for AGM approval. This highlights the commitment to return surplus cash to the shareholders for dividends unless it is reserved for general corporate purposes. Thank you. And on that note, I will hand it over to Amar to discuss the way forward.

Thank you, Harsh. I'll spend a few minutes touching on the recovery efforts and initiatives. Americana restaurant has been operating in the region for more than 50 years. While every crisis is not similar. There is ample institutional memory and experience within Americana to deal and navigate with crises nimbly and effectively. And as we navigate the current uncertainties, our dedication to providing exceptional experiences and gaining the trust of our customers remains unwavering. Our business recovery initiatives will be anchored on four pillars which are: Targeting, pricing, promotion and marketing. By leveraging the capabilities of our digital channels, we aim to deepen our engagement with our loyal customers. While simultaneously, we are committed to driving awareness and acquiring new customers. On the second pillar of pricing, we are deploying tailored pricing strategies to leverage periods of heightened demand effectively. We're also testing the franchise delivery fee that will support traffic and check driving initiatives across various day parts. For promotion through our Americana digital platforms and loyalty program, we will offer strategically planned limited time offerings to incentivize repeat business. And the fourth pillar of marketing will enhance our targeted communication efforts. We've leveraged our CRM platform to convey the essence of Taste, indulgence that defines our brands. Focus will be on families and sharing occasions, recognizing the importance of loyal patrons and advocates for our brands. And moving on our recovery efforts. We will focus on three things: value, crave and familiarity to drive customer engagement and transactions. Value and bounce back offers ensure that visits are not only memorable, but also rewarding. Secondly, we are amplifying the essence of great-tasting food and indulgence that define our brands to evoke the sensory experience of enjoying our offerings. And lastly, we will continue to leverage nostalgia as a powerful tool to evoke fond memories and emotions. We will introduce bundles and occasions, providing an opportunity for families and friends to create lasting memories around the joy of sharing great tasting food at Americana restaurants or in their homes. Next, I'd like to spend a few minutes covering 2024 guidance. And our outlook for 2024, we maintain unwavering confidence in our business model, our brands and the markets where we operate. Our priority lies in nurturing sustained customer trust and stimulating transactions that will be based on the pillars of value, crave and familiarity that I mentioned earlier. Growth will continue to remain a top priority as we strengthen our presence in existing markets, driving top line growth and gaining market share. We are, however, revising our guidance to 200 to 225 net new store openings for 2024. We will strategically redirect expansion towards countries that have experienced lesser impact while allowing time for markets and recovery which stabilized throughout the year. We believe this is the responsible and the right decision for the business under current circumstances. Moving on to margins. We anticipate our gross margins to be better than 2023, and supported by favorable commodity prices and efficient inventory management. Raising the bar on operational excellence and efficiencies is a never-ending journey at Americana. We will continue to drive best-in-class operations and productivity initiatives with a focus on improving throughput during peaks, energy efficiency as well as smart staffing. We will continue to increase the share of wallet and share of voice through purposeful food innovation, developing next-generation digital technologies and locally relevant marketing initiatives. These strategies will enable us to stay ahead of the competition, drive growth and deliver value to our customers and shareholders. Our commitment to deliver value to our shareholders remains unwavering with dividend distribution in line with our guidance, reflecting our confidence in the long-term prospects of our business. Furthermore, our strong balance sheet provides a solid foundation to support our growth plans and investment initiatives. With ample liquidity and financial flexibility, we are well positioned to pursue growth opportunities while maintaining financial discipline and prudence. We will continue to explore inorganic opportunities that align with our strategic objectives, enabling us to enter new markets, all segments and consolidate our position and market share of our brands. In conclusion, we are optimistic about our business and brands that have operated in the region for more than 50 years. The strength of our team, combined with our performance-driven culture, gives us the confidence that we can continue to deliver sustainable growth. At Americana restaurants, our strategy is clear. We are agile to seize opportunities and overcome challenges in the dynamic markets where we operate. And most importantly, we have a proven track record of executing our plans. Thank you again for joining us today, and we are happy to move to the Q&A section now.

[Operator Instructions] Our first question comes from Mr. Karim Abbas from Franklin Templeton Investments.

Hi. Can you hear me?

Yes, please go ahead, Karim.

Okay. So thanks for the presentation. We really appreciate the slides that went into breaking down the impact of the boycotts. My question is actually more about the way forward. How do you expect some of the like-for-like trends that we were witnessing to evolve specifically, One, the issue you were seeing in Kuwait, I know that there's a headline about visas for expats coming back. Secondly, we were seeing pressure from the aggregators. Has your stance on how you deal with the aggregators changed? Are you participating in those more now that there's been the void costs? And lastly, if you could share, I know you said there's not much of a change in channel mix in year-over-year for the full year. But in Q4, was there a big change in channel mix?

Karim, I'm very sorry. I think we have lost the team once again. Just please stand by.

Hi, Michael [indiscernible].

Hi. The first question was from Mr. Karim Abbas from Franklin Templeton. Yes, we can hear you. I'm not sure how much of the question you've picked up from Mr. Karim from Franklin Templeton.

I can repeat if they can hear me.

Okay. Can you just confirm if you can hear us, please?

Yes, we can hear you, Karim.

If you wouldn't mind, just to quickly repeat your question.

Yes, I'll be quick. I'll be loud. So first of all, I really wanted to say thanks for breaking down the impact of the boycotts very clearly in several charts. That's appreciated. But I want to ask about the way forward. The question I want to get to is, first of all, in Kuwait, we had seen like-for-like weakness ahead in Q3. A couple of weeks ago, we saw a headline that's saying that the visas for expats have been resolved. I wanted to hear your feedback on whether you expect that to improve things. Secondly, we had witnessed some pressure from the aggregators, the delivery platforms. Have you changed your stance on that given the boycotts and needs have changed, has the strategy changed? And lastly, I don't know if the moderator can remember the last bit of my question. Oh, yes, the channel mix. You said that 2023 over 2022 channel mix didn't change, but there is a channel mix change in Q4 over Q4.

Karim, as usual, true to form multiple questions, right? So on Kuwait on the visa situation, yes, we are hearing the same in terms of allowing some of the expats back in the country, but I'm sure there will be a lag effect and we're looking forward to people with families moving back to Kuwait, which certainly will boost the business. Secondly, in terms of our position on the aggregators, nothing has changed. Our -- we work very closely with the aggregators in terms of driving business both on the aggregated channels as well as maintaining share on our own channels, we're striking the right balance on that. Recovery in Kuwait has been quite good. So we are optimistic about Kuwait in 2024. And Harsh, do you want to just comment on the channel?

Yes. Karim, on the channel, specifically in Q4, why we thought the dining would decline more and home delivery should be more. But we have not seen any significant difference largely in terms of channels. So the decline across channels are very similar. Having said that, we have been pushing a bit more in terms of offers and other things on home delivery. So that dipped the channel in Q4, but we don't expect in 2024, that should be the norm. We expect that the channel should not change overall from a mix standpoint.

And Karim, just to add on to the recovery, so if you recall the chart that showed lower impact, medium impact and high-impact countries, Kuwait is in the middle of the pack, would be medium impact countries. And in that pack, Kuwait is demonstrating the best recovery.

Our next question comes from Mr. Pratik Khandelwal from Gulf International Bank.

So my question is on the guidance, which you shared for 2024 that you will be able to maintain the gross profit margin. Can you throw some color like where it is spanning from? Are you expecting the revenue to go back to normal in 2024 itself? So just wanted to understand that a bit in details. And the second question was in Q4 specifically, we saw that margins are still -- gross profit margins in particular, are still healthy. So is it coming from the layoffs you have done at the store level and/or is it like the negotiation of rentals? Can you throw a bit of light over there.

Hello. Please standby. We have a technical issue with the line from Americana. They will be redialing once again.

Pratik, can you hear us?

Yes. We can hear you at this point, please go ahead.

Hello. Shall I repeat my question?

No, we are okay. We are clear on the question. So this cost of inventory only reflects food and packaging costs. It has nothing to do with any other cost. Now as I mentioned earlier, the improvement, as we have been saying in our previous calls, is driven by a few things. The first is cool off in commodities and the various other reasons are pricing and revenue initiatives, which Amar mentioned, which includes bandwidth pricing, differential pricing and others. Now from a next year guidance standpoint, we clearly have -- if you look at our margin evolution quarter-to-quarter, our Q4 margin is significantly better than Q1 so we expect full year 2024 to be better than full year 2023. Having said that, we don't expect the margins to be similar to Q4 given we would be doing some value to drive the transactions and build the direction momentum. And we are seeing some impact because of Red Sea crisis, but we don't expect that to have a significant impact in terms of overall gross [indiscernible]. I hope I just satisfied your question.

Our next question comes from Mr. Shadab Ashfaq from Al Ramz.

Yes. So like how the current situation impacts the medium-term growth plans of the company, specifically in terms of the number of new outlets you're planning? And like in terms of aggregate, how the numbers will achieve and also in terms of different country expansion strategy? And also, my next question is like how do you anticipate like Ramadan because Ramadan is starting from next month affecting the recovery process in the geographies that have been significantly impacted.

Guidance, there's no change to the $250 million and $300 million. We are just taking a temporary pause in the countries that are most affected during this year. And we are reprioritizing development towards the countries that are less affected. In terms of the Ramadan effect, the Ramadan is two weeks earlier, right? So it's never a clean month or a quarter depending on the shift. As far as recovery goes, we believe during Ramadan and during Eid, recovery we'll accelerate. That is at least what our cope is and our anticipation is. Having said that, there's also uncertainty around it. It all depends on what happens on the ground and how -- regarding the geopolitical tensions that are going on. However, the encouraging thing is in the last two to three weeks, we have seen quite a steady recovery, and we expect that this will continue.

Our next question comes from Mr. Taher Safieddine from JPMorgan.

My question is really on the slide where you talk about the average daily sales. I mean we can see on the red line that things are starting to close the gap versus '22, '23. So I just want to maybe hear your thoughts. When should we expecting on this maybe red line to convert to the black line in a sense that potential full recovery. And with that, do you anticipate that it would take maybe after this, another two, three quarters where you do these price investments and promotions and campaigns to maybe fully bring back the pre-boycotts type of traffic/sales per store and so on? So this is, I think, the first part and the second part, is there anything you can share on adjusted EBITDA margins and like-for-like into 2024? I mean should we expect the year-over-year trends to remain negative but Q-over-Q improvement. Is that a fair way? I'm not looking for a number, but is that a reasonable way to think about it as we build our forecast into 2024?

Yes. So in terms of the gap closing, I wish somebody had a crystal ball, right? So it is difficult to kind of a time line or a specific in a month quarter on when that would happen. If this trend continues, as you see on this chart, right? And then I think we will leave it to all the data scientists to extrapolate the information and see when those two got [indiscernible].

Okay. Sorry, once again, apologies, we are continuing to have technical difficulties with reaching Americana team. They will be redialing shortly.

Side stepping for a moment. I want to apologize to everyone for the technical interruptions that we are having, which is [indiscernible] for us. Yes, while we are very cost-focused organization, we will definitely invest in better confessing technology after this call. So again, going back to your question, I think I answered the first part of the question, which was on the recovery trend. We expect that recovery will continue and hopefully, stronger results or stronger top line as we move to Ramadan towards Eid. I think the second question you answered yourself, it's hard to predict at this point given the uncertainties, I mean, our goal is never to be below the previous year, right? And as you said, we expect quarter-over-quarter improvement.

But it's fair to assume that the low impact countries are actually on a factor way of recovery, right? Like UAE and Saudi should hopefully, if things continue at this way, we could get actually back to the pre-boycott volume as we enter the next few quarters, right?

Absolutely. The UAE, Saudi, Kazakhstan, Iraq are the least impacted countries and all indications are that we would be back to precrisis levels.

The next question comes from Ms. [indiscernible] from SICO.

I'm [indiscernible] from SICO. I just had a question about cost management. Can you just explain how you're managing the cost during these tough times? Have there been efficiencies in terms of staff reduction? I know there was an article recently about staff reduction, but is there any further reduction? Or have you also been possibly receiving some support from the master franchises?

Just one second, we are once again reconnecting. I think we heard your question just give us a second. Okay, we can hear you.

Did you hear my question?

Can you just give us one second, please?

No worries.

Hi Michael, can you hear us?

Yes, we can hear you. Did you hear [indiscernible] question? Or would you like her to repeat?

And we continue to look at efficiencies across the line items. And as a part of that, we also look at our organizational factors and G&A. And wherever we feel there is an optimization opportunity, we do that. In terms of specifics, our release measures has been across the board. We have pushed hard discussions with the franchisees, other brand principles who have been very supportive as well as with the landlords, the suppliers looking at other controllable expenses. So we have gone through each and every line item and see wherever we can bring in better efficiencies. So that will continue to be an ongoing focus for us as we go into 2024 as well.

Our next question comes from Mr. Harsh Mehta from Goldman Sachs.

So the first question is in terms of the market share, right? Which has potentially subset to local players. How confident is management that just could come back because we hold in the first time in [indiscernible] talk between points in terms of you are mentioning that there has been increased competition from local and international players across different categories. And this event that basically going to push that market share to the local players. Do you see that tricky? Or do you think it will return back? So that's my first question. And I'll ask the few questions maybe later on.

So, obviously, in terms of market share, certainly, we will have to work hard to get it back, but we believe we will get it back. If we look at empirical evidence in terms of previous board costs, it has -- yes, the duration might have been different, but it always came back.

And the second question is kind of [indiscernible], how do you see this within the past events and what are the learnings from those events that were kind of implementing to helping maybe get quickly through the current situations? We're definitely unprecedented and very [indiscernible] than earlier one, but what are you kind of relying on out of your past experiences?

Yes. So I think back in October, one of the first things we did is we pulled together the teams who had experienced previous boycotts because there is institutional memory and experience within Americana as well as look that data across various countries that were impacted by the previous boycotts. The learning is -- one of the learnings was that this time was a bit different given the popularity of social media. So the groups that are mobilized were slightly different from the past. However, our focus has been, first and foremost, we wanted to make sure about the safety and well-being of our employees and making sure that the engagement level within the organization doesn't drop because of this. So we did a lot of work, a lot of conversations, a lot of communication internally to ensure that people within the organization did not lose focus and the time we focus is on delivering great tasting food, great service and really out operating everybody else. And as well as staying relatively quiet in terms of our marketing efforts because the consumer in the early days wasn't ready for that. But over time, now we are doing more tactical, value-driven, core product-driven promotions, and we are seeing positive results and positive responses to that. And which is indicated in that chart that Harsh showed earlier in terms of the recovery trends that are happening.

The next question comes from Mr. Muhammad Usman Siddiqui from SICO Bank.

I just have one quick follow-up question on the support that you mentioned from the market. I just wanted to understand more historically, has there been any precedent where the franchiser has reduced the percentage of royalties at times of crisis, more exactly the need to buy costs, but -- and in the crisis that any franchisee has [indiscernible] in the country. So has there been any precedent in the past? And my second question is on the branch opening, do you have any plans to open your own home brand set where you have maybe scale up the opening of those brands in order to mitigate the negative impact on international ones?

So the answer to the first question is that we've been working with the franchisees very closely. Support comes in different forms. I prefer not to go into specifics because that's confidential information. But our franchisees have been very supportive during these times, and they understand the challenges and yes, every one of them has offered relief. Secondly, in terms of our own brands, which is we have two proprietary brands, which is Chicken tikka and those are in our plans for continued expansion. Not at the same level as the power brand, but certainly, we are looking at expansion for our proprietary brands as well.

So that tension in 2024 will it still be focused on the power brands?

Yes, largely, it will still be focused on the power brands. Once again, if you look at history and look at more than five decades of operating in this region, the power brand continued to recover after every crisis. They're household names, we have strong brand following. So the mix shift will not be significant in 2024.

We have a question from Mr. Nishit Lakhotia from SICO.

I have a question on the cost side. You mentioned that there was quite a bit of [indiscernible] from multiple aspects on the G&A and the efficiency that come. But I wanted to know how much of that was felt during the quarter in the sense that would we see a much bigger impact of the efficiencies in the first quarter? Because these were -- because the situation is so fluid that even if you had decided to let go of certain staff and reduce the number of staff in the affected countries, in the outlets, maybe by one or two people that would have taken during the quarter, right? So you will see the full impact of whatever efficiency we brought into the 1Q. So that's my -- some kind of guidance from the management on how much should we expect in the first quarter versus what you've seen during the quarter, in the fourth quarter on that front to be helpful. So that's my first question. And the second on the growth recovery as you've shown that the sales are improving, which countries you -- are you seeing more improvement from a month-on-month basis, January and Feb. Is it across the board? Or is it specifically certain countries where you've seen the impact of boycott [indiscernible] if you can give some clarity on that.

So Nishit, on the cost, as I said, we continue to look at cost efficiencies and opportunities. Now yes, we have taken certain measures given the sales decline in Q4, which would flow through the full year of 2024. Having said that, as and when sales pick up, we would like to get a certain reinvestment which we would like to do into the business. So while we expect some of the benefits to flow in for the full year of 2024 at the same time, as and when sales build up, we continue to invest in the business. So that's on the cost. Now from a sales recovery standpoint, as Amar mentioned, the least impacted markets, especially UAE, Saudi, Kazakhstan and Iraq have seen faster recovery. And even within the medium impacted markets, we are seeing a strong recovery in Kuwait and Kazakh. So these are the markets we expect to recover faster. And Jordan and Oman specifically, we have seen the least or the slowest recovery. And those are overall share that those markets for us is not significant but we do expect these two markets to take longer to get to the normal levels.

We see a follow-up question from Mr. Taher from JPMorgan.

Again, just maybe a follow-up question. I know it's been an eventual one hour for you guys, I'm pretty sure. But based on your experience against in general, I mean, you've been operating for more than 50 years, I'm pretty sure you have experience also across the [indiscernible] industry. But in general, in such environments where there are boycotts which tend to be maybe more emotion and so on. The institutional mind that you have. I mean the average where things go back to normal. What would be a fair just estimate based on your previous experience is 1, 2, 3 quarters? Maybe just to hear your thoughts, I know this time around, it's different. So that's, I think, the first part. And the second part are you worried that with an accelerated store openings into Q4 that these [ natural ] stores will have a drag on the performance into 2024, especially that the demand backdrop remains a bit challenging. Is that something you're concerned about? Or you have confidence that these new stores that are less than one year old are actually going to ramp up similar to the average that you've seen before?

So Taher, the 2-part question, right? First in terms of -- I would not want to predict upon a time frame on the recovery because every crisis is different. However, in previous crisis, it was 4 to 6 months is what it took depending on the markets on full recovery. Secondly, on new store openings, we very early -- first of all, we had pull back on deployment in Egypt because of macro situation and then the boycott obviously provided additional stress to that market. And then very quickly, the leases that we were in progress in some of the most significantly impacted countries we pulled back immediately in October, right? So we stopped the signing and all that, and we directed our efforts towards the countries where there is least impact. So I don't see any material drag on the performance from the new store openings that we've had other than the ones that might have already opened and -- but those are very few because, for example, the most impacted markets are Jordan and Oman and the number of openings in Q4 in those markets were probably less than a handful.

Thank you very much. We see no further questions. I'll pass the line to the management team for the concluding remarks.

Once again, I want to apologize for the technical difficulties. It was quite embarrassing for us, and we will be better prepared next time. So please forgive us for that. Thank you again for joining, and hope to connect with you soon.

Thank you very much. This concludes today's conference call. We will now be closing all the lines. Thank you, and have a good day.