Restaurant Brands Asia Limited (RBA) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Nuvama Wealth Management, I would like to welcome you to the Q3 FY '23 Earnings Conference Call of Restaurant Brands Asia. [Operator Instructions] I would now like to hand the conference over to Mr. Prashant Desai, Head of Strategy and Investor Relations. Over to you, sir.

Thank you, Ryan. Thank you, everyone, and welcome to the Q3 FY '23 conference call of Restaurant Brands Asia. We are 4 of us today with us. We have with us Raj Varman, our CEO. We also have with us Sumit Zaveri, our Chief Business Officer and Chief Financial Officer. We also have Kapil Grover, our Chief Marketing Officer; and I am Prashant, heading Strategy and IR at RBA. I will now hand it over to Raj to give you an update on the India business, Indonesia business. And also, he'll give you an update on the launch of the Popeyes business, and then we'll take it from there. Over to you, Raj.

Thank you, Prashant, and good evening, everyone, and thank you for your interest in our company as well as your time joining us here this evening. So highlights and summary for the India business first, and then I'll go into Indonesia. So same-store sales growth was 28.1% for the 9 months ending in December. And for Q3, it was 8.6%. So slightly softer Q3 close versus the run rate from the previous 2 quarters. The revenues 9-month FY '23, INR 1,074 crores, and that was against FY '22, where we had INR 670 crores. So this is a massive growth of 59.2%. Strong SSG, obviously, at 28%. And then on top of that, we had new restaurant growth as well. The third piece is the revenues of Q3, which is FY '23, we ended at INR 370 crores. This versus Q2 FY '23 is the previous quarter at INR 368 crores, which is a flat kind of quarter we had. The expectation was to be at a significantly higher number, but kind of ended up flattish in this quarter in terms of revenues. Gross profit, we continue to drive 66.4%. I think the last 3 quarters, we have been reporting to you 66.4%. This is despite all the inflationary pressures on our business, we continue to maintain a decent gross margin. Again, I also tell you that this is -- we have not taken any price increases in this quarter. It is just through driving efficiency in our business. Restaurant level EBITDA, and this is, again, post Ind AS 116. So the 9 month FY '23, INR 181 crores, 16.9% against the previous year 9 months, which is at INR 105 crores. That was at 15.5%. So that's an improvement of 140 basis points. Q3 FY '23, INR 71 crores, that is 19.2% against the Q2 FY '23, which was at INR 60 crores, which is at 16.5%, which is again up 270 basis points. Company EBITDA, again this is post Ind AS numbers, 9-month FY '23, INR 123 crores, which is 11.5% against the previous year at INR 60 crores, which was 8.9%. This is a 260 basis point improvement. Q3 FY '23 for the quarter was at INR 48 crores, which is at 13%, against INR 42 crores previous quarter, which is 11.4%. So another 160 basis points improvement. So if you look at -- in spite of the slightly softer quarter in terms of revenues, our margins both at company level and at a restaurant level have improved significantly. So a great good job by the entire operations team and the growth team. Now on the growth front, we are at 379 restaurants as of 31st December 2022, opened a net of 45 restaurants in Q3 FY '23. Now there's 45 restaurants, majority of which opened towards the last week of December, that I just want to make sure we highlight here. Now we additionally have 23 restaurants that are in construction and another 40 restaurants are in the pipeline. BK Cafe, we have been talking about being at 250 cafes by the end of this fiscal year. We actually achieved that already. December 31, 2022, we are now at 252 cafes, adding 72 cafes in this quarter. So that's a good job done by our development teams. Now the BK upfront, again, we have been reporting quarter-over-quarter improvements and increases for the past 7 quarters. This quarter is no different. We increased revenues by 16% this quarter again. 5.5 million app installs, 17% growth over last quarter in the installs again. So that's on the front of the India business. Again, just summarizing, in spite of a softer Q3, very good results and margins on all line items were improved on our P&L, and hence, we were able to deliver an improved gross margin, improved restaurant operating profit as well as our company EBITDA. Now on the Indonesia front, there's a couple of things I want to update you. We'll come to Popeyes business later. Just overall Q3 FY '23, we did about IDR 296 billion, I'm talking about Indonesian rupiah, versus Q2 FY '23, which was at IDR 293 billion. This is approximately INR 156 crores. So it was a very flat Q2 over Q3. Now on the company EBITDA front, again, here, I think we did a very good job, again tightening up our belts in spite of the fact that you will see that Q3 loss was at IDR 34 billion over the Q2 loss of IDR 31 billion. This loss was actually only IDR 22 billion. The other IDR 12 billion that is added on there is the launch of our Popeyes restaurant, which the 3 restaurants we opened were on 29th, 30th and 31st, and then we had another opening on 2nd of Jan. So totally, we have 4 Popeyes right now. Now just quickly, I want to spend a few minutes today on Burger King strategy in Indonesia just so that everyone is updated on a business that we are building there for the long run. So 4 basic strategy pillars that we are working on. One is we are going to be -- and we have started this work, and in fact, the product level work is already completed, which is to build the Whopper franchise. And this is through both existing Whopper product that we have and innovation of the product that we do, which is we call the limited time offers, the LTOs. So both this focus, the Whopper is already ready. It's tested and it's already moving into the restaurants. And then we are moving into the product innovation piece. The second layer that I wanted to talk about is the chicken business. The chicken business today is sitting at about 30% of the Burger King sales. When I say chicken, I'm talking of BIC, which is bone-in chicken concept that we sell over there. That's on about 30%. We think that we can more than double this business, and the steps to take to move this is unlike the competition, which offers 2 levels of chicken, a spicy and a base classic level, both the competitions over there offer the same product, both classic as well as spicy. We only have one product there that we have been offering for the last several years. We are now launching the spicy version of it as well. So we will have 2 additional -- so we'll have this one additional BIC that we will launch. We will strengthen this layer and start building this 30% business onwards. And then the building of the premium layer. So beyond the Whopper, unlike here in India where we have King's Collection that Kapil has built -- our CMO has built over the last couple of years, in Indonesia, we have just started the process where we are now building a King's Collection layer over there, which will be premium burgers that will be available. So that work is in place, and we should be able to get that to fruition before April 1, so that we are able to install that menu into our restaurants. And the final piece is about the portfolio. So there's 2 work streams that we are working on. One is obviously rationalizing the existing restaurant. As you know, a lot of our base over there is built in -- traditionally from 2008 in malls. And if you see the consumption habits in Indonesia, there's more outside of the malls and freestanding drive-through locations. So our movement strategy over the next 5 years will be to rationalize what we have in our mall restaurants and then to continue our growth towards the freestanding drive-through locations. So these are 2 things that we will be working on and the 4 pillars is what we are kind of moving forward on. And then comes the Popeyes. So Popeyes launch in Indonesia was one of the best Popeyes launch that there has been globally for Popeyes. So we were informed that our transactions in the first day in the first restaurant broke all records around the world in all Popeyes that were open. I'd like to congratulate our team in Indonesia, led by our President over there, Sandeep Dey, who's done a fantastic job building the products and launching that brand over there. We are going to build 30 restaurants till 31st March 2024. These stores right now, if you look at the 4 stores we have opened, they are doing IDR 60 million ADS. So this is a fantastic business that we have started up. These 30 restaurants, as we build them, we expect to do a very, very high ADS compared to Burger King. We have also experimented one of the restaurants Popeyes by putting the Popeyes along with Burger King. And this is a Burger King that was doing about IDR 23 million in ADS, and we put a Popeyes that we're doing north of IDR 40 million in ADS, and combined is north of INR 60 million. So base same rent, and the strategy seems to work. It will not work everywhere, obviously space constraints and all that, but this is another thing that we are exploring as we kind of continue to build that business. So on Popeyes launch. This turnaround has started towards the Burger King business. Work is in place to build a strong menu in the premium side and then to continue to drive the value strategy that we have installed in the last quarter. With that said, I'm going to hand it back to Prashant, who will carry you through the India business. Over to you, Prashant.

Thanks, Raj. Raj extensively shared an update. So I quickly go through a couple of slides, one on the store opening status. As all of you will notice, we had very strong openings across the quarter this quarter. We opened 45 new stores, taking us to almost closer to 380 as a number. As you will recall, our guidance for the current year is about 390. So we are absolutely on track to deliver you 390. Another thing to highlight, that we've had 12 closures in the second quarter. Despite that we will deliver net addition of up to 390 this year. Coming to Slide 11. Despite the 5% reduction in ADS because of the headwinds that Raj spoke about, we've still been able to maintain overall revenue trajectory thanks to the growth in cafes as a business as well as the store openings. As Raj mentioned, a lot of our store openings happened in the last week of December. So the impact of that will happen in the next quarter. Our dine-in and delivery mix is almost very similar to what we had in Q2, which is 58% dine-in and 42% delivery. I now hand it over to Sumit to take you through the financial performance.

Thank you, Prashant. Good evening, everyone. I'm actually just continuing from all the things that we have discussed last time when we were discussing our quarter 2 results. From the perspective of revenue, we saw that we are very similar to in terms of revenue over quarter 2 as compared to quarter 3. But we've certainly seen a shift in some of the cost lines, and I'll talk you through that and kind of go back a little bit into last quarter's conversation as well so that you would realize why that shift has also happened, and also understand that it will be sustained going forward. Firstly, as far as gross profit is concerned, we continue to remain at 66.4% consistently, and we've really been able to kind of manage the inflationary pressures and deliver fairly robust gross profit margins. As far as total EBITDA is concerned, we've moved up from 8.2% to 10.4% on a pre-Ind AS 116 basis. And I'll just now kind of go back to last quarter. When we were discussing about the performance during last quarter, we mentioned that there were certain initiatives which we aggressively ramped up there, and we had to kind of -- in order to make sure that we deliver the right experience for the launch of those initiatives, which is one was Cafe. And you saw that we've kind of ramped up and achieved our target early. And the second one was improving the revenues through different day parts, the morning and the evening, breakfast and the late night day parts. In order to make sure that we are able to train the team properly, we have right resources as we ramp up fast. We had structurally got more people into our system. We've now kind of, as we've now rolled out and gone to a large base, we have now come back to the normal levels of staffing at all our stores. And effectively, the headcount, if I would say, or in terms of rupee terms as well, there is a reduction on a per cost -- per store per month basis of around 16% to 17% over quarter -- from quarter 3 -- quarter 2 to quarter 3. So that is something which is sustainable going forward, we believe. And the second one is, partially, it is on account of seasonality, but partially also we've now started looking at our utilities very, very closely, and we believe that we can get some efficiencies there. So we're working on that. So the efficiencies have started getting reflected in our results for the quarter as well. And that is what has helped us improve the store EBITDA from 8.2% to 10.4%, and company-level EBITDA moving from 3.2% to 4.2%. Just quickly summarizing the India performance. We were at the revenue of INR 370 crores, very similar to what we had in quarter 2, with gross margins at 66.4%. While we can very clearly see employee rate expenses now coming down by 1.2% and the other efficiencies getting reflected in occupancy and other expenses. We've been able to improve our pre-Ind AS EBITDA to 15% on a company level. And early double digits restaurant-level EBITDA for quarter 3, which is an improvement over quarter 2. With that, I'll hand it over to Kapil to take you through the initiatives that we kind of carried out during the quarter.

Thank you, and good evening, everyone. I'll start by talking about the Whopper. It's our core signature product. So while we continue to build our value program, we stay focused on building our signature Whopper equity as well. This quarter was the launch of the Boss Whopper. It is one of our most popular innovations or limited time products on the Whopper. It's an indulgent big eat which is apt for the festive season. Also happy to share, that Whopper has been selected as one of the winners amongst 50-odd many innovation ideas that were evaluated by Nielsen basis independent study, and it's amongst the top 10 most innovative products in India. And relevance and uniqueness were the 2 key criteria used for the evaluation. That just reinforces our confidence to stay invested in building the Whopper franchise. On the next slide, BK Cafe continues to expand rapidly and is perhaps one of the fastest-growing cafe concepts in the last year. We've added 217 Cafes in the last 3 quarters and now have a strong footprint of 252 Cafes. This incrementality continues to be there in a relatively young concept, just the average age of our Cafe is about 5.5 months. This portfolio will help us build incremental revenues and margins in years to come, and we'll add fundamental strength of the business in terms of building new occasions and frequency with customers. The winter season, we launched some limited time season specials. I've shared those pictures here. These are premium flavor drinks. More importantly, we've added [ Masala Chai ], which now completes our hot beverage portfolio in the Cafe menu. The next slide talks about the new initiatives we rolled out in the last quarter to build relevance in Southern markets. This is the Chicken King menu, which brings together our chicken favorite for our guests in Bangalore, Hyderabad and Chennai. We understand that the audience in South overindexes on non-veg consumption, and there is a liking for spicy flavors. We put together the assortment of our chicken burgers, fried and grilled, our wings in 3 formats, boneless, fried and grilled, with flavors of spicy and a lemon favor. All these variants are put together in a program called the Chicken King menu. We've seen early good signs of consumer feedback. People are really liking overall assortment and there's a lot of trials happening, and we'll keep our focus on this menu and keep you updated on the same. Last but not the least, we continue to build a brand focus on millennials and Gen Z through a variety of engaging programs on social media. I've shared some examples here on how we celebrated international festivals like Halloween or an Indian festival like Diwali with our fans for a very interesting online [indiscernible] of locally popular game. With this, I'll hand over back to Prashant to talk you through the outlook.

Thanks, Kapil. As you will see in the outlook slide, no significant change from the outlook that we have been sharing with you. We continue to remain committed on our store opening targets. This year, we'll deliver surely 390. Next year, the target remains at 470. For our same-store growth, we are all set to achieve our 25% same-store growth for this year. And next year, we continue to currently maintain a 7% to 10% SSG, particularly in light of some of the macro headwinds that we've seen. Should we decide to change or upgrade this, we'll come back to you when we come back to report the full year numbers with you. Our gross margin guidance remains the same, 67% for this year and 68% for next year. The CapEx guidance that we had given for full year we've already achieved. For the other thing that we want to highlight to you is all the new stores that we are now opening, they are all opening with the Cafe. So primarily no major change in the outlook as we speak. We'll come back to you with a revised one if required next year. I hand it over to Sumit now to give you some details on the Indonesian financial numbers.

Thank you, Prashant. I can now just go little part here because Raj in his earlier part has covered Indonesia in terms of strategy. We continue to still remain at an overall ADS in terms of Indian rupee terms of INR 96,000 to INR 98,000 [indiscernible] basis. Our endeavor is to kind of improve these from the current levels and take it closer to where we were on a pre-COVID level. So that's something we are working on, and Raj has already spoken about the strategy there. We currently have 179 stores. Our idea going forward, at least for the next 12 months, is to have a close look at the portfolio and if there is a need to rationalize the portfolio. We, at this point in time, are not looking at any substantial growth as far as Burger King Indonesia is concerned in the coming year. And our full focus would be actually to kind of turn the existing portfolio around. As far as Indonesia is concerned, we did a revenue of INR 153 crores in Indian rupees. At the company level EBITDA, we were at INR 28 crores in terms of loss, but this INR 28 crores includes the onetime cost that we incurred when we launched the brand, Popeyes Indonesia. The brand was launched towards last week of December. So obviously, there is not much -- the revenue is not reflected here, but we've got a fantastic brand launch. First month ADS of the 4 stores that operated through January average around IDR 60 million in terms of ADS. That's actually 3x what currently we have in our other brand and that only kind of shows the potential that we have on the Indonesia brand side. I'll not detail out Slide 23, 24 because Raj [indiscernible] spoken about the strategy. Just a quick summary of overall consolidated revenues, the INR to INR 526 crores revenue for the quarter, very similar to what we did in quarter 2. Our endeavor to kind of turn this business around, especially in Indonesia, so that we can kind of show improved performance at a PBT level, which currently stands at a loss of INR 56 crores. So with that, I'll hand it over to [ operator ] for the questions.

[Operator Instructions] Our first question comes from the line of Sagar Shah from Phillip Capital.

My first question was related to our India business. Our ADS have fallen from INR 127,000 to INR 120,000. So any reason for the same is part of an sometimes [indiscernible]?

Yes. Sorry, I think you were talking about the ADS drop from 127,000 to 120,000. There's a couple of factors. One is the traffic was softer in the month of December, specifically. We usually have a very -- the industry has a very high December. We did not see that kind of a high December. So that was one of the major reasons. Mall traffic was also muted. It wasn't the kind of traffic that we have seen in the past. There's also this whole bunch of stores that we opened that kind of fell into the quarter, right, for 45 stores. And when you know we are now opening a significant amount of these stores in high streets and so forth. And they obviously take time to ramp up. Even if you look at last year, if you look at the entire year from January 1 to December 31, we opened 100 restaurants in the year, right? These are all young restaurants that are opened that will ramp up over the next year and so forth, right? So this cumulative impact is where the sales -- ADS didn't make the cut. But again, I bring you back to the earlier comments we have made, which is despite the drop in ADS, the team has built up and worked very hard to put some systems and processes in place, and we have made some sustainable changes to way forward, both in the labor line and the other operational expenses line, delivering a higher restaurant level profit EBITDA as well as the company level EBITDA. Anything else you want to add, Sumit? Yes. You had another question, I think.

Yes. So basically for the India business, we expect the ADS to realize in the same level for next year and even in [indiscernible]. What you're counting on is gradual recovery, so can we expect a similar kind of ADS in the next year?

Sagar, as we mentioned in the outlook, right, currently, we remain confident of delivering a 7% to 10% same-store growth for next year. And as I said, should the situation change, we'll come back to you with a revised guidance when we come to you with the March numbers.

Okay, sure. My second question was related to our Indonesian business. Our Indonesian business, the ADS has remained almost quarter-on-quarter at same level. And you had said that the Indonesian recovery margin India recovery by around 2 quarters, 2, 3 quarter. So going ahead, do we expect the recovery of Indonesian operations to continue in the second quarter or it will take even more time?

So you're absolutely right. It was a flattish quarter there as well. We have highlighted that in our presentation. And you can again appreciate the fact that we have started tightening the business with our cultural way of operating. And we saw a significant decrease in the losses there from 31 to -- 32 down to 22. And the 34 that you see over there is actually a 12 million -- 12 billion that we spend in opening up the Popeyes location. So we have tightened our process systems there. Efficiency from the restaurants was improved. But there was a little softness there as well in December, which was the same here in India. We experienced it over there as well. Look, I've outlined a very clear strategy of what we are doing there, right? We already had a value platform that we rolled out right after taking over the business. We continue to work on that platform and build it. It will take time to build that platform. We have now instilled the Whopper platform with the product development that we have done in the last quarter. And we are also now working on the premium, which will take another quarter. By April, we should be able to launch the premium side of the menu as well. On the best side of this is the chicken BIC improvements that we are making. This is going to -- see today, that business is about 30% and the market average of that business with the market is about anywhere between 60% to 70%. So we can double this business. And what we didn't have was the product to do it. We were only selling one BIC product there. Now we will have a spicy version and a classic version. And we think that with those 2 versions as well as the strengthening of the Whopper as well as the premium products, we are setting up the business to grow in the future.

Okay. So basically you are [ continuing the ] menu innovation [ products ], basically the contribution of chicken portfolio, we moved from at least from 30% to 50% in the next months of the year. That's what you are telling, correct?

Yes. See, this is -- we are not going to move in a quarter, by the way. It will take time to do that.

That's why I said it would take a couple of years to do so.

Yes, it will take some time to build that business, right? But that's a strong business. We think it's a business that we have left out there in that business, and I think we need to capture that business. It's an audience that doesn't walk in today, right? So it's going to be additional traffic coming in, additional sales coming in. But yes, it will take time to build that business. We are just building that product. We will be rolling that out into the restaurants and then...

Okay. So my last follow-up question on the EBITDA front was EBITDA was 70 negative for Indonesian [indiscernible]. So can you give a guidance for Indonesian EBITDA is at what level of margins will be [indiscernible] see in the next 2 years, at least for Indonesian operations?

Sagar, Prashant here. As you know, both for the India business and in Indonesia business, we don't provide guidance on an EBITDA level given the number of initiatives that we are running. At Burger King, we've chosen to kind of provide you guidance purely on a gross margin level. Indonesia, as the business is still recovering and initiatives are taking place, as we speak, we have chosen not to provide a guidance on the Indonesia business.

Our next question comes from the line of Akshen Thakkar from Fidelity.

Just on the [indiscernible] question. If we go back to the original investment case, one would have thought at a brand like yourself to turn 10% EBITDA margins, and we [ at date a day ] which should be margin accretive steady still. You are at about 4% margins today on a pre-Ind AS basis [indiscernible] And I'm looking at the India business right now, the gross margin moves up 100%. So let's say, our cost structure remain the same and you get back to 5%. The 7% to 10% enough for you to move towards the 10% margin? Or are you seeing the path to get to 10% margin slightly longer? I mean, I know [indiscernible] EBITDA for guidance. But how do we look at margins getting to double digit? That's sort of potentially the question that I had.

In think so one of the things, as we have interacted in the past, we've tried to impress upon you that at Burger King, we like to believe to do things which are very solid from a longer-term perspective, whether it is with respect to the menu and the menu architecture that we've built, whether it's the launch of standard menu or continued investments on the Whopper and the King's Collection, our imperative to launch Cafe, we believe it will be a significant value addition to the overall business over a longer period of time. Some of these initiatives has led to us investing in the interim, which is exactly where Sumit mentioned. There are 2, 3 things actually. If you broadly structure, you see from where we are seeing this business from a pre-COVID to post-COVID, one big change we have seen is our check sizes have gone up significantly, but we are still to recover from dining traffic compared to where we were pre-COVID. As we continue to invest in the brand, it's our hope that we'll soon get the traffic back. If we get the traffic back with the kind of check size that we have, you will see a robust growth in ADS. Difficult part of our business, it's tough to predict this on a quarterly basis. But if you look at it from a broader trend over the next 2, 3 years perspective, you clearly see all of this panning out. We've been very focused to ensure that we don't slip up on our gross margin, which is an area actually, the qualitative side, the way we've built our business, including product mix, the way we built our supply chain from scratch, as a result of this, despite not taking any price increase, we've been able to maintain our gross margin at 66.4%. As Sumit mentioned, had it not been for all the initiatives that we have taken, probably our EBITDA margin that we reported this quarter would have been a little higher or lower. Now Akshen, coming to the point that you answered, where we were sitting when we spoke that there is a probability of us coming closer to a double-digit EBITDA margin for next year, given all these initiatives that we have taken, maybe probably instead of '24, we may probably go to '25 to give you a double-digit comparable pre-Ind AS EBITDA next year, maybe in the range of about 6% to 7%. But I keep communicating, right, where we are over here is we are here to build a solid business on solid foundation. Numbers will grow to 6 months here and there largely because of some of the initiatives that we have taken. Some of the macro challenges have also kind of contributed to this. But again, I will repeat over here, we kind of take you through a flavor of the business. I would just urge everybody listening as this is one of the guidance that we are giving. This is broadly the direction that we see this business. So you are right, Akshen, instead of '24, we may look at a double digit in '25.

And lastly, just on Indonesia. Given where your business plans are, do you see EBITDA breakeven in '24 or that again we are [indiscernible] now, we should be thinking about EBITDA breakeven [ in '25 ]?

So again, request to everybody listening on this call. Going forward, especially in the next year, we would like all of you to look at our Indonesia business now has 2 elements. One is the Burger King Indonesia business, where the team is doing a lot of foundational work to not just get back the revenue to its trajectory when we acquired on a pre-COVID basis, but also significant work to improve the margin profile of the Burger King side of the Indonesia business. The second side of Indonesia is the launch of Popeyes, which as Raj mentioned, has been phenomenal beyond our wildest expectations, the way the Indonesian public has responded to Popeyes as a chicken brand. Remind you, as we had spoken to you guys when we acquired the business, the largest player in Indonesia continues to be KFC, now with over 800 stores. And given the response that we have got for Popeyes, you will see very, very strong numbers being delivered by Popeyes in FY '24. We've spoken about 30 store openings in FY '24 out of Indonesia. A large part of that store openings will come out of Popeyes because we currently continue to be -- to monitor the Burger King Indonesia side of the business, rationalize the stores there in favor of freestanding drive-throughs. As the Burger King Indonesia side of the business is in our control, we'll open new Burger Kings. But a large part of our store opening strategy is going to be Popeyes, and Popeyes in Indonesia together at the same pace as Raj mentioned. From where we stand today, Akshen, I can only say that we will be disappointed if this business loses money next year. High probability we won't lose money next year. We'll probably deliver some reasonably decent EBITDA next year on Indonesia pre-Ind AS.

[Operator Instructions] Our next question comes from the line of Shirish Pardeshi from Centrum Broking.

I'm referring to Slide 16, where you have given some maths around how the stores has expanded. So maybe I'm looking if you can help me, what kind of growth as a percentage of revenue has grown? Or is there any transaction size you can meaningfully say? Or any meaningful number on the growth on ADS? So it will be helping us to model in the balance sheet.

Shirish, are you talking about the Cafe slide?

Yes. BK Cafe slide, where we have shown from last 1 year, 18 stores to 252 stores.

So Shirish we have mentioned in the slide, as you will see on the second bullet, currently, Cafe is relatively young. We are still doing an incremental revenue of about INR 7,000, which will be roughly about between 5% and 6% of the total ADS at a company level at about 8%, 9%, 10% at a store that Cafes are operational. Still very early days. We are also experimenting a lot. But as we mentioned in the previous call, even in an incremental INR 7,000, INR 8,000 of Cafe ADS, our paybacks on Cafe is about 2 years, and this is only going to improve as we go forward.

So I got that. I read that. The reason I'm asking this question, let me repeat. You've said that now all the new stores will definitely have the BK Cafe in that. So I think is that the way you look at that BK from 7 can move to 14 in next -- the new stores?

I wish I could guide you on the Cafe business. Currently, as I mentioned, we want to stick to the overall company guidance of between 7% and 10% on a same-store basis, which includes the Cafe business as well. As I said, the whole industry is currently facing some new macro headwinds. Give us at least another quarter or so for the macro headwinds to kind of move up. We've opened a lot of Cafes over the last 2 quarters in our business. We need to stabilize the Cafe business. Let the stabilization happen over the next quarter or 2. And then we'll come back and revisit the 7% to 10% guidance for everyone.

Sure, Prashant. My second and last question, on the new product development. When I look at the Chicken King menu, which you specifically said in the South, is that specifically in certain states where you've introduced? And is that the price lightening strategy you are expecting or you are really wanting to get your foot in Chicken segment?

Shirish, this is Kapil. I'll take that question. The specific menu is in Bangalore, Hyderabad and Chennai. It's a pilot that we're running in these markets. Now these are products which are already there in the menu. We put together an assortment as a campaign for the consumers to absorb that there are so much variety available at Burger King for chicken, burgers and also for wings. So these are products that are already there on the menu. We intend to now continue to promote it and grow this awareness of these products, grow trial of these products and build this layer as an incremental business in the South.

Kapil, that's helpful, but let me hop on that. Is that chicken brand has worked anywhere in the denoting developed countries which can share some meaningful thing? Or is just a product innovation we are trying to get more footfall?

No, this is our own concept. It's not a concept borrowed from any other market. It bases on local consumer insight. We see there's a preference of chicken in a certain flavor. So we're using that -- leveraging that insight to promote product here.