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

Sonika, please go ahead.

Welcome to Americana Restaurants 9 months 2024 Earnings Presentation. My name is Sonika Sahni and I'm the Head of Investor Relations at Americana Restaurants. Today's discussion will be led by Amarpal Sandhu, CEO of Americana Restaurants and Harsh Bansal, CFO and Chief Growth Officer. 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. I will now hand over to Amar for the update on summary performance.

Thank you, Sonika. Good day, everyone and thanks for taking the time to be with us today. Before we go into the performance update, I would like to share progress on several operational fronts for the quarter. Starting with our portfolio expansion. We crossed the 700 store mark in the Kingdom of Saudi Arabia. We also launched Krispy Kreme in Morocco with the inaugural hot light store opening in Rabat. We have successfully opened 2 additional stores during quarter 3 2024 and we'll continue to build the pipeline for a successful scale-up of the brand in Morocco. In line with our growth plans for Peets Coffee, we opened our first coffee shop in Abu Dhabi, reinforcing our commitment to expanding our premium coffee offering in the UAE. To further enhance our digital assets, we continue to roll out kiosks for KFC with new rollouts in Kuwait and Qatar markets in this quarter, now covering 4 KFC markets, including UAE and KSA. These kiosks are part of our in-house integrated digital ecosystem designed to enhance the customer ordering experience. Furthermore, in partnership with Yum! Brands under Pizza Hut's opportunity for all initiative, we opened our first Pizza Hut store in Riyadh, which is operated by team members with hearing and speech impairments. This exemplifies Americana's commitment to inclusivity and creating employment opportunities for individuals with diverse abilities. This initiative reflects our core values and dedication to making a positive impact in the communities we serve. Next, we'll talk about our initiatives to drive transactions. We remain committed to exceptional customer experiences with strong focus on serving great-tasting meals and offering exceptional value to our customers. This slide offers a snapshot of our recent initiatives and progress in building transactions over the last quarter. We have implemented multiple initiatives aimed at boosting transactions, focusing on product innovation and attractive value offers for our customers. These strategies have been purposefully designed and evaluated to enhance customer engagement and drive traffic as well as sales across our brands and countries. We have introduced new menu items that resonate with customer preferences, ensuring our brands stay relevant and appealing. Further, we have enhanced the value construct by developing specific tailored product offerings to different markets as well as brands. For example, we launched limited-time deals in the UAE and meal deals for only EGP 99 in Egypt. Our value initiative is designed to enhance accessibility and increased order frequency across our brands and markets. By providing consistent value offerings, we continue to build customer loyalty and encourage repeat business. On the digital front, we have launched competitive promotions on our respective brand apps as well as aggregated platforms, aiming to increase our e-commerce share. In addition, we have introduced disruptive value initiatives across markets to drive traffic and improve conversion rates. By offering compelling deals 1 day a week we aim to attract and reengage lapsed customers, thus driving penetration and frequency to even higher levels. We've also partnered with banks to launch co-funded initiatives that strengthen our customer acquisition efforts. These collaborations have allowed us to reach new audiences and provide added value to our customers through exclusive offers. In summary, transactions remain our #1 priority as we continue to rebuild the business coming out of the pressure that we've had due to the geopolitical conflict. Next, this slide summarizes the efforts we made on the digital front. Despite the challenges of the last 12 months, we have remained steadfast in ensuring the future readiness of the Americana platform. Our strategic investments in enhancing our technology stack are centered on 3 key pillars: customer engagement, frictionless experiences for our guests and operational efficiency. By integrating advanced analytics and AI-driven tools, we are building Americana's customer data platform. This will enable personalized interactions that deepen customer relationships as well as drive loyalty. Our focus on continued enhancement of our digital assets and system-wide rollout of kiosks ensures that our customers enjoy seamless, intuitive experiences across Americana's omnichannel touch points. Additionally, these technology enhancements are designed to boost our operational efficiency, enabling us to allocate resources more effectively and scale operations sustainably. Together, these initiatives position us for robust growth and a competitive edge in the marketplace. Moving on to the business performance update for the quarter. We continue to navigate the challenges posed by the geopolitical situation and stagnation in consumer demand in some of our markets. At the end of September 2024, our portfolio expanded to 2,504 stores. We added 32 gross new restaurants in the third quarter, strategically focusing on markets, which are less impacted by the geopolitical conflict, such as the UAE, KSA and Morocco. We over-indexed in KSA with 14 openings, majority of which were Pizza Hut as we expanded into regions outside of Riyadh, primarily focusing on the western part of the Kingdom. Our top line continues to be impacted due to the ongoing conflict. We recorded $555 million in revenues, reflecting a 15.3% year-on-year decline. Like-for-like sales declined by 18% during the same period. It is important to highlight that the top line performance versus Q2 2024 has been stable with a marginal decline of circa 1% in sales. This reflects business resilience amidst continued conflict. Revenue decreased primarily due to a lower average check despite growth in transactions. Our adjusted EBITDA stood at $117.9 million, down 23.8% versus quarter 3 of last year. Further, net income for the quarter was $37.4 million, down 54.3% year-on-year. CapEx for the quarter was recorded at $26.8 million, contributing to 4.8% of quarter 3 2024 revenue. Now let's look at 9-month performance. We successfully opened 113 gross new restaurants with strategic focus on markets less affected by geopolitical conflicts. Over the past 12 months, we've added a total of 229 new restaurants, including 205 openings for our power brands. As at the end of October 2024, we have opened 127 new stores and 70 stores are currently under construction. For the first 9 months of 2024, our revenue reached $1.61 billion representing a 15.2% decline compared to the previous year. Like-for-like sales dropped by 19.6% during this period. Our performance has been affected by the ongoing geopolitical situation that began in quarter 4 of last year as well as softer consumer demand in certain markets. Americana Restaurants achieved an adjusted EBITDA of $350.6 million with an adjusted EBITDA margin of 21.8%. The year-on-year decline in adjusted EBITDA of 21.5% was primarily due to P&L deleverage resulting from the 19.6% decline in like-for-like sales. Despite these challenges, management's ongoing emphasis on cost control has helped maintain healthy flow-throughs. We recorded a net profit of $117.4 million for the first 9 months, which was affected by lower sales and increased depreciation charges resulting from the new store openings during this period, as well as implementation of corporate tax in the UAE. We maintain a very disciplined approach to capital expenditure, which accounted for 4.6% of revenue in the first 9 months of 2024. Now moving on to portfolio evolution for the first 9 months of 2024. As you can see from the chart on the left, we have opened 229 gross new stores in the last 12 months. The majority of these openings are for power brands and in markets less impacted by the geopolitical situation. On the right-hand side, we present the status of current store openings and our pipeline for the year. As you can see, we have opened 113 gross new stores in the first 9 months and have another 53 stores under construction. As of the end of October 2024, we have opened 127 gross new stores and 70 stores are under construction. Considering the ongoing developments in the region, we continue to maintain a cautious approach on new store additions. We have adjusted our full year guidance to 150 to 160 net new stores. This short-term adjustment will allow us to maintain a prudent and focused strategy on business recovery and effectively navigate the current challenges while still driving long-term growth and operational excellence. I will now hand over to Harsh, who will talk in detail about financial performance of the company. Over to you, Harsh.

Thank you, Amar and good day to everybody on the call. Our revenue in the first 9 months of 2024 was $1.61 billion. As highlighted by Amar, our business has faced several challenges, including prolonged regional conflict, which has triggered a boycott of international brands and a broader slowdown in the QSR segment, resulting in decline in disposable income as well as consumer spending. Consequently, our sales saw a decline of 15.2% in the first 9 months of 2024 compared to last year. We were also impacted by -- were impacted by $50 million from currency fluctuations, especially of Egyptian pound and Lebanese lira. In addition, we had $30 million -- $32 million impact from store closures as well. Our new store offerings positively contributed $139 million to our 9 months revenue. On the share of power brands, power brands continue to account for 93% of total revenues. Further, stable [indiscernible] currency sales accounted for 83% of the total revenue, which is 1% increase compared to same period last year. Amid the ongoing regional conflict, we have observed a notable shift in consumer preference towards home delivery. If you see, home delivery share has increased to 43% of the total revenue compared to 40% in the same period last year. We expect home delivery share to stay at these levels in the near term. Here, we talk about average daily sales evolution and average daily transactions. Since the implementation of various value-focused initiatives in Q3, which Amar touched upon, the company has witnessed a noticeable recovery in average daily transactions as well as average daily sales per store compared to Q2 of 2024. We have seen growth in Q3 2024 compared to Q2 adjusted for seasonality of 2 Eids in the quarter 2 of 2024. As you see in the line charts, we have surpassed last year in both sales and transactions by end of October, given October last year also had some impact of the conflict. We expect to be ahead of last year in November and December, given lower base and continued recovery on average daily sales and average daily transactions. We will continue with our strategic initiatives to build the transaction momentum for the next 6 to 9 months, depending on recovery traction in the forthcoming quarters. Moving on to the performance of Power Brands. We observed an 18% decline in like-for-like sales for our power brands in Q3. This decrease reflects both the impact of ongoing geopolitical situation, as well as some softness in the demand in the QSR markets, not only regionally but also globally. We have seen a robust recovery in Hardee's and Pizza Hut in Q3 compared to H1 of this year. KFC lagged recovery in Q3, largely due to country mix and subdued performance in the UAE. The impact in the UAE was because of [indiscernible] specific value campaign, epic meals, which resulted in average check dilution in Q3. We quickly acted on it and made requisite changes and it has shown positive effect since then and we are seeing stronger October performance in KFC in UAE. Moving on to our Power Brands performance in the first 9 months of 2024, we registered a 19.6% like-for-like decline at the portfolio level. Negative growth was observed across the power brands, majorly due to the reasons mentioned earlier. Customers have increasingly become price-sensitive with demand shifting towards value-oriented deals across countries and product categories. In response, we are prioritizing transaction growth by introducing market-specific value construct, value meal options and innovative product offerings to align with our customer demand for affordable choices. Here, we present the gross margin evolution. We reaffirm our forecast for improved gross margins in 2021 compared to last year, even with a strong focus on value-driven initiatives. Through an integrated approach to supply chain optimization and procurement, supported by tailwinds in commodity prices, it has enabled us to lower our inventory cost. As shown in the chart, we achieved 1.7% decrease in inventory cost in Q3 compared to Q3 of last year. We expect the Q4 gross margin to be better than Q3 as we will reduce the level of value offers given positive seasonality in December on account of the festive season. Moving on from gross margins to overall margins. 4 Wall EBITDA was $154 million with a 27.7% margin. Margin diluted 2% on account of operating deleverage with the sales decline and also due to higher home delivery costs with the higher share. The impact was partially mitigated through improved gross margin and other cost efficiency initiatives. We continue to pursue cost reduction initiatives and are diligently executing such actions. We were able to reduce the impact of sales decline on EBITDA and delivered adjusted EBITDA margins of 21.2% compared to 23.6% during the same period last year. Net income margin diluted compared to last year as a result of lower revenue and higher depreciation charges on account of new store openings and introduction of UAE corporate income tax, as Amar mentioned earlier. On this slide, you will see profitability for 9 months. Margin movements are very similar to Q3 and reasons are also largely in line with what we have mentioned earlier. Here we have working capital and CapEx. We have been focused on optimizing our inventory levels since the start of the year and have managed to decrease inventory to $144 million despite a drop in revenue. Overall, NWC is at minus 8.8%, which is largely in line with our NWC of 8% to 9% overall. On CapEx side, we spent $74 million, largely driven by new store openings and technology investments. In summary, whilst revenue headwinds continue, we are very much focused on building transaction momentum, rebuilding brand love with the customers and continue to optimize cost and maintain a very healthy balance sheet with being very prudent on CapEx deployment. We believe we can leverage our balance sheet for organic and inorganic expansion when the opportunity is right. On that note, I will hand it over to Amar for concluding remarks.

Thank you, Harsh. As we conclude, I want to emphasize our 2024 guidance of 150 to 160 net new stores. We've adjusted our projection to better align with current business trends, ensuring a balance between growth and recovery. We have the flexibility in our value chain to speed up the pace or slow down the pace of lease signings and securing new sites. And we felt it was prudent at this point to slow down the pace a little bit to better align with our strategy. This approach underscores our commitment to responsible capital deployment and sustainable long-term growth. We are focused on building a robust pipeline and are ready to accelerate development as soon as we observe stronger signs of recovery in the business. We continue to make substantial investments in technology and digital advancements to enhance our omnichannel customer experience, boosting engagement and loyalty. By utilizing data-driven insights and staying attuned to emerging trends, we are well equipped to expand our market share. Our steadfast commitment is to grow customers craving by providing great-tasting food at outstanding value as well as grow ease through frictionless omnichannel experiences. These core principles drive every aspect of our business and will continue to guide our medium-term strategy. In summary, while the ongoing conflict in the Middle East has presented challenges for our business, we believe the worst is behind us. Our confidence in our brands and core markets remains strong. However, we are not expecting a hockey stick recovery in the coming months. The resilience and adaptability of our brands and our team has been tested multiple times and it has strengthened through every hardship and this is no different. We have implemented proactive strategies to mitigate risks and seize new opportunities, ensuring our brands continue to resonate with our customers. Our deep understanding of the market dynamics allows us to pivot effectively and we are well positioned to leverage our strengths as conditions stabilize. We will navigate this landscape and emerge even stronger, reaffirming our commitment to delivering value for our internal and external customers, our franchisor and supplier partners and our shareholders. 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. Sandeep from [indiscernible] Capital. Okay. We'll put that on hold. We'll come back to you later. Our next question comes from Mr. Taher Safieddine from JPMorgan.

I think just my question is really on the Q-over-Q picture. I mean, year-over-year, it's a bit unfair. Last year, Q3 was a normal environment. And today, unfortunately, we live in a crazy world. But on a Q-over-Q picture, I'm just looking at the numbers and it seems that it has been quite a challenging one in terms of revenues are slightly down. There has been some almost 190 basis points EBITDA margin erosion. Even if I take a deeper look into the revenues by countries, I can see that UAE is dragging, Saudi is flat, Kuwait is down. So I think my question to you, gents is, I mean what is changing? I mean, clearly, you've mentioned that Q-over-Q, the recovery was shaping up in Q2. There is a couple of initiatives and we've seen many of those as we walk around and so on. But clearly, things have slowed down and it's quite worrying on a Q-over-Q. So maybe hearing your thoughts on that, specifically in light of what you mentioned about consumer demand on the QSR front, is this still contained in Saudi? Or is it spilling over into other countries? Maybe some color there would be helpful.

So Taher, Thank you for the question. And I would split it into 3 different aspects. One is Q3 over Q2. First of all, Q2 had 2 Eids with some days of Ramadan. So purely from a weighted standpoint, Q2 is always higher compared to Q3 just because we had 2 Eids and generally, Q3, especially September is a slower time with back-to-school because everybody has to pay the school fees and generally September is a slow month. Adjusting for seasonality, we have seen improvement in like-for-like sales of a couple of percentage points, if you compare Q3 to Q2 for seasonality. While, as Amar said, the recovery has not been hockey stick, the recovery has been in the right direction if you compare Q3 to Q2, adjusted for seasonality. So that is one. The second is, yes, we have seen some margin dilution in Q3 to Q2, partly driven by gross margin. The second was also because of the higher home delivery cost. And there were some other seasonality impacts coming in from utilities and maintenance given the summer season. But in Q4, we are seeing strong momentum of the business and we are improving ADS as well as ADT in Q4 compared to Q3 as well. Now demand softening, I would say, apart from Saudi, Egypt has always been an issue of macro or overall demand softening and boycott impact. But UAE and Kuwait, both remain strong from a demand standpoint. We are not seeing any noticeable change in terms of consumption. And some of the smaller markets, which have been more impacted with the ongoing conflict, we are seeing gradual improvement. Anything else you want to add Amar?

No, no, you've covered that.

Okay. And maybe just a quick follow-up. Just from a recovery standpoint. I know now we're moving into an easier comp year-over-year into Q4. But how should we think about the recovery? I know it's very uncertain. Clearly, there's a lot of things out of your control. But you said that the worst is over but it just feels that this is a very slow grind in terms of recovery. Is that a fair assumption? Or are we at least seeing light at the end of the tunnel? Maybe high-level thoughts would really help here.

Taher, as I mentioned earlier, we don't expect a hockey stick recovery but it's a gradual recovery. However, once we recover a couple of points, we don't go backwards. So month-over-month, we are seeing improvement and October is better than September and that trajectory continues. So even if we gain 1 to 2 points, every, let's say, 1 to 2 months, you add all that up and you can extrapolate the math on that. So that is kind of what -- again, nobody has a crystal ball. However, yes, there is light at the end of the tunnel. Our businesses a leverage business. It's all about top line. Once the top line recovers, everything else is -- everything else cures itself. Let's put it this way.

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

I think partly my question is already answered but I'd still like to get a bit of more detail around the consumption trends. We understand, in the past you had mentioned that Saudi was weak, especially in the sweet treat segment. Maybe if you could just elaborate in terms of you guys seeing this spreading across other segments within the QSR as well. And then if we were to look at this like-for-like growth, I know it might be hard but the decline on like-for-like, how would you kind of break it down between the impact from geopolitics versus the actual kind of softness in demand? And while the comps get better from fourth quarter onwards, how do you see the impact of weaker consumption trend, how long that would continue and its impact on your like-for-like?

Yes. So Harsh, I'm trying to -- just to make sure I follow your questions. First is on the consumer softness. Yes, we have seen softness outside of the sweet treat segment. There was some one-off impact of botulism in Q2. But even in Q3, in general, we are seeing lot of value in the Saudi market and that is true across categories and we are seeing some softness in Saudi across different segments. So that's one. The second is, in terms of recovery, it is difficult to split between the 2. But as Amar said, we are improving across markets month-on-month. Some markets recover faster, some markets are recovering slower. But we are not going back in any of the markets. I would say, outside of Jordan, which has seen limited recovery across other markets, we have seen traction from a recovery standpoint. And the good thing is, UAE and Kuwait, both markets, which contribute significantly to profitability, we are seeing good traction in Q4 compared to Q3 as well and we see that momentum building. In fact, we are also looking at performance compared to Q4 of 2022 because that was likely cleaner with the cleaner base, except Qatar, where there was a World Cup impact and UAE with some impact of spillover of World Cup, we are seeing a recovery against Q4 of 2022 as well. But difficult to give an exact percentage on boycott versus overall softening of demand.

Next question comes from Mr. Shadab Ashfaq from Al Ramz.

One of my questions has already been answered regarding the LFL growth in geographies. So my another question is, like I have observed more cautious approach to the new store opening. Could you please provide some detail on which geographies these new stores are coming up? And where these stores are closing [indiscernible]

Shadab, there is a lot of static on your line. So your question is why the slowdown on the new store openings. Again, given how the recovery is going, we felt it was prudent to slow down the pace. So we're not stopping developing, Still our guidance is 150 to 160 net new units, which is still healthy levels of growth and we are focusing the growth on markets that are less impacted by geopolitics. So it's KSA, UAE, Morocco, Iraq, Kazakhstan, these are the primary markets and Kuwait as and when we get an opportunity. Kuwait is showing really good recovery from the boycotts and we are focusing on more development in Kuwait as well. I hope that answers your question, if there's a follow-up, please [indiscernible]

Yes. So another follow-up is that -- and where the stores are closing down. So like they are in the impacted geographies or they are in like main 4 geographies where you have the more market?

See, the -- yes, there are some closures in the affected geographies as well. But when we look at store closures, we -- so there are 3 types of closures or 4 types of closures. There's performance. There is a contract expiry and the landlord wants to do something else with their property. There are some force majeures due to various reasons, municipalities want to do something else and the landlords want to redevelop and there's relocation. So these are spread out. These situations are spread out across the geographies. And I would say about 1/3 would be performance closures and 2/3 is all the other reasons.

[Operator Instructions] Our next question comes from Mr. Muhammad Siddiqui from SICO bank.

So my question is basically on a much broader level. I mean, we have seen the decline in sales primarily because of the power brands being American. So I wanted to know the management view. I mean don't you think it is maybe a right time to acquire a local brand because this kind of issues keeps coming up again and again and it's only that this time, the issue has been -- the conflict has been quite longer. But don't you think it would be a good strategy to maybe add a local plan that could mitigate you from any such risk moving forward? Or maybe if you believe in the story of the current brands, maybe is it a good time to maybe buy back your own shares?

So Muhammad, the -- I think that 3 things here. First and foremost, to answer your question on looking at local brands, we are working on a comprehensive strategic plan exercise with Bain to draft or develop our next 5-year strat plan for Americana. So definitely looking at other brands, trends, signals where the business is going, all that is part of that exercise. It's not fully baked yet, so we're not in a position to comment. Second, our confidence in the power brands is unwavering because they have demonstrated 50 years of resilience. Yes, we are going through a tough patch but we also see signs of recovery. And with the maniacal focus that our management has, that people in the restaurants have, we will recover the business. And I think the third component is about buying back shares that is happening, yes. The -- yes, so this is -- that is more associated with -- related to our long-term incentive plans for management.

[Operator Instructions] We have a follow-up question from Mr. Taher from JPMorgan.

Yes. It's Taher. Just maybe a few follow-ups. Can you just help us understand the average daily sales chart. I think now you've added average daily transactions per store on the gray line. But just looking at it -- and the reason I'm asking is just because our thought is -- the like-for-like has been stubbornly at around 18%, 20% for the last 3 quarters. So -- and you seem to be confident about the trend line beyond September. But just maybe you can help us just read this chart in an easier manner in terms of maybe average day sales. And you've also highlighted in your press release that you've seen a pickup in average data transactions on a Q-over-Q basis. So maybe also some color there would be helpful.

Sure, Taher. So first of all, if you look at the chart, you would see that there is seasonality in Q2 and Q3. So you see some blips because of largely driven by Eid. And that is just the normal seasonality, which happened in Q2 to Q3. Now there was a gap between the gray line and the red line because that is -- the red line is ADS for this year, and the gray line is ADT for last year. As you would see, in Q3, the 2 lines have merged and in fact, the transaction line is ahead of the ADS line, which shows that the transactions are recovering more. And for sure, we have had some check dilution because of the focus on value. But for now, the idea is to keep on building on the transaction momentum. And we are between 4% to 5% better on the transaction if you compare Q3 to Q2 adjusted for seasonality. And that is also reflected partly in the check -- sorry, partly in the overall LFL in Q3 to Q2. So on the percentages, Q3 to Q2, LFL is better by a couple of percentage points overall. But for sure, it doesn't reflect in because of the seasonality.

Okay. And then just maybe a follow-up. Is it the right way to look at this business on a 2-year stack? I mean I've just heard you talking about Q4 '24, maybe a good comparison or a clean comparison would be Q4 '22. Is that maybe the right way at this stage to look at the business overall in terms of store yields, in terms of margins and so on, just for us as analysts or investors and this -- I mean, assuming that we are not, again, fully out of the regional conflict.

So Taher, it's not right or wrong. It's another data point for us because Q4 of last year, there was -- I mean, it's not the right reference point. So we are looking at -- of course, last year, we are also looking at de-seasonalized forecast based on the trend last year and we are looking at 2022. I mean this is -- so we want to look at all metrics and all angles to the business.

Okay. All right. And -- okay. All right. And just maybe a final one from my side. Apologies, I'll just leave room to others. But just sitting in this maybe CEOs position now and maybe you have this extensive experience and maybe you've seen other episodes of boycotts here and there. I mean, -- do you see the -- I don't know, the risk reward today more to the positive, meaning the worst is behind and you have this sense as management that things are definitely on the right way and you are implementing the right factors? Or you still see significant risks to the business or the overall QSR backdrop? I don't know. I mean, it's a general of a question but I just want to maybe hear your thoughts on that.

See, we understand our market. We understand the risks. We have lot of agility built into the organization. We are seeing recovery, although not to the levels that we would want. However, at no point has the revenue gone backwards. If we have recovered 1 to 2 points, it just continues to build on that. So at least we are optimistic about the future. And we will -- now we will need to continue to work hard. We cannot lose focus and our strategies are very clear. So great tasting food, continue to drive transactions, make sure value propositions for every brand are strong. When we make mistakes, we fail fast and move on and come up with new strategies. And we are investing a lot on the technology side, on people capability. Our view on the business is long term. We don't run the business quarter-to-quarter.

We have a follow-up question from Mr. Muhammad Siddiqui From SICO bank.

Yes. Just a follow-up. Amar, you mentioned like the company won't be like a hockey stick recovery. But is this based on the assumption that the conflict stays? I mean what if there's a resolution to the conflict, do you expect based on the past history that the recovery could be more swift or would be similar to a hockey stick recovery if and only if the issue gets resolved?

Muhammad, we all wish it was a hockey stick recovery. But having endured this for 12 months, we don't want to make any optimistic claims or overly optimistic claims. Yes, during COVID, we saw a hockey stick recovery. And during the initial days of the conflict, because we had some empirical data where the conflict had lasted 4 to 6 months and then there was full recovery. So it hasn't panned out like that this time. We've been into this 1 year. Yes, the conflict has dragged down much longer than previous times. So time will tell. Nobody has a crystal ball but given the trajectory of the last 12 months, we don't want to make any claims of a hockey stick recovery. If we are -- if it happens, we will all be pleasantly surprised.

[Operator Instructions] We have a question from Mr. [indiscernible] from Jefferies.

Great. I have 2, please. First, as a part of your strategy currently, are you considering entering any new overall or no impact geographies, potentially, you see some opportunities in other CIS countries? And my second question, if you can please quantify impact of home delivery cost on your margins? And in the next quarters, given competitive environment among food delivery aggregators, some market entrants in Saudi, do you expect this to stabilize next year quarters as a percentage of your total revenue or home delivery revenue?

So on your first question, in terms of market expansion, yes, absolutely, as Amar mentioned, we are looking at our 5-year strat plan, which includes not only looking at category expansion but also looking at markets which we can expand outside the MENA markets where we operate. And as you said, we already have business in Kazakhstan. So some of the other CIS markets looks interesting but we are still doing the work and going through our internal diligence to see which markets could be interesting as well as could be open for business for us. So that is one. The second is on home delivery, while the share has increased from 40-odd percent to 43%, that has an impact on our margins. But overall, we expect, at least in the near term for the share to stabilize and diversification of aggregators is always welcomed. That partly helps their customers, also partly helps the restaurant operators with more competition coming in. Generally, the commissions become more competitive. So yes, Saudi, the landscape is changing very rapidly with the new aggregator coming in and they've made some good inroads. It needs to be seen how it pans out when they launch other markets.

Our next question comes from Mr. Mohammed Alghalbi from Alnahdi Holding. Please go ahead. We'll come back to you a little bit later. [Operator Instructions]. Next question comes from Mr. Maksim Nekrasov from Citibank.

Yes. Just a quick question on me. So in the presentation, you mentioned that you see a slowness in the consumer demand and particularly in the markets like Saudi, I wonder how can you really differentiate the impact of, let's say, macro -- slower macro? Or maybe it is driven by competition and maybe like some of the local competitors are being more aggressive in taking your share. And the reason I'm asking is because we actually see quite good results from food delivery aggregators, have just reported third quarter, the continued growth in Saudi, while for Americana business, we see declines in the Saudi and the UAE markets. Yes. So basically, the impact of macro versus possibly more intense competition on those markets.

Thank you, Maks, for the question. So I think 2 or 3 key important items. First of all, if you look at our Saudi home delivery business specifically and also more so aggregator business on home delivery that has also grown because what has happened is with more and more competition coming in Saudi most of the aggregators are running discounts and very, very deep delivery fee discounts to attract customers. So what is happening is that is cannibalizing into other channels. So home delivery because of very low delivery fees is cannibalizing to takeout, dine-in and drive-through channels, which is resulting in share moving towards home delivery and that does not necessarily mean overall QSR or out-of-home consumption as the market is increasing. Second is, while not many players are in the public domain, there are a few in the public domain in Saudi and they have reported the results. So at least there is some level of clarity on the results of local players. And you can check, they have also had difficult Q3 compared to some of the earlier quarters, which reflects, in general slowness in demand in Saudi, which is what we are highlighting also.

Okay. Thank you very much. It looks like we have no further questions at this point. So I'll pass the line back to the Americana team for their concluding remarks.

Thank you, everyone, for joining us today. Wishing everyone a good day. Thank you.

Thank you.

Thank you very much. This concludes our conference call today. We'll now be closing all the lines. Thank you and goodbye.