Sapphire Foods India Limited (SAPPHIRE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Sapphire Foods Limited Q2 FY '26 Earnings Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjay Purohit. Thank you, and over to you, sir.

Good afternoon, everybody. Welcome to the quarter 2 FY '25-'26 financial performance presentation. Our quarter has been a reasonable quarter for us. And the reason why I say reasonable is, one, KFC revenue grew by 7%. But if I exclude the impact of Navratri, Navratri was entirely in this quarter this year, whereas last year, it was in quarter 3. And therefore, on a like-for-like basis, actually, we would have grown double-digit even in this quarter. Pizza Hut revenue declined by 6%. However, importantly, in Tamil Nadu, which is a Sapphire exclusive territory, we grew double-digit revenue. I think it just proves the Pizza Hut Sapphire strategy and offers a clear hypothesis for why this brand can grow or why and how this brand can grow. Finally, Sri Lanka grew handsomely by 18% in LKR terms, owing to the continued investment that we did in brand innovation, marketing value, really the tenets of our -- of the strategy we would like to execute in India, and we retained the #1 QSR position in the country. We delivered a revenue of INR 740 crores, overall growth of 7% year-on-year. SSSG trends for both KFC and Pizza Hut this quarter remained similar as previous quarter, except, as I said, the impact of KFC due to the shift of Navratri days from quarter 3 to quarter 2. In quarter 2, we added 19 KFC restaurants, 2 Pizza Huts in India, 1 Pizza Hut and 1 Taco Bell in Sri Lanka. Our total restaurant count of 997 as on 30th September. And with immense pride, we inaugurated the 1,000th Sapphire restaurant yesterday at Gummidipoondi in Tamil Nadu, and this is a KFC restaurant. Our consolidated restaurant EBITDA declined by 12% year-on-year. Margin was 11.3%, down 240 basis points. Adjusted EBITDA was INR 45 crores, declined 24% year-on-year. This also has the Navratri impact. And excluding Navratri, our performance on adjusted EBITDA was better -- negative over last year, but still better from a trend perspective versus quarter 1. Our adjusted EBITDA margin was 6.1%. Consol EBITDA at INR 106.2 crores or 14.3%, declined 8% year-on-year or 230 basis points. Consolidated PAT was loss at INR 12.8 crores, 1.7% negative. And adjusted PAT, however, was negative INR 3.6 crores or negative 0.5%. Let us now look at the KFC highlights. I want to take you through to Page #20. Our KFC brand priorities are fairly consistent. We want to drive penetration and frequency for the KFC brand. This quarter, our major marketing spends were behind the Taste The Epic campaign to popularize our core buckets. We offered 9 pieces for INR 299. The promotion and the value campaign did offer some green shoots from a transaction perspective. While KFC was negative 3% SSSG for the quarter, up to Navratri, we were flat on SSSG, but positive on transaction. And therefore, we have extended this campaign to quarter 3 also, but included our 3 hero innovation products of Chizza, DoubleDown and the Gold Burger. Much of our advertising, like I said, on value was behind 9 for INR 299. We rolled out digital kiosks across 50% of our estate and our own delivery throughout the KFC app continues to be the best-performing channel. Our current pace of expansion should be in the region of 60 to 80 stores a year. And from an operational excellence perspective, we are now above 4 rating across Swiggy, Zomato and Google. I'll hand it over to Vijay for the financial numbers.

I am on Slide #25, which gives channel-wise contribution. Dine-in and takeaway for the quarter came at 55%, delivery at 45%. Delivery improved by 300 bps over last year. One of the key reasons was the way our own channel through our own app has performed. It has actually grown very healthy over the last 2 quarters or so. So that's one of the reasons as well. In terms of SSSG, it was flat ex-Navratri, backed by low single-digit in terms of SSTG, same-store transaction growth. Overall, revenue grew by 10% ex-Navratri for the brand, and we had 19 store additions during the quarter. Gross margin, while it dropped 110 bps vis-à-vis last year, this is in similar line as quarter 1. The reason we dropped on gross margin vis-à-vis last year was I mentioned previously as well that we continue to invest behind the value offers, namely the Epic Savers campaign. The restaurant EBITDA came at 13.8%, which was impacted by the negative SSSG on account of the Navratri impact, the higher delivery mix and lower gross margin. Slide #28 shows 4-year and 5-quarter trend. We continue to build on the transaction gains which we had in quarter 1. And thereby, we have further bolstered our Epic Savers campaign in quarter 3, as Sanjay mentioned, by adding 3 more hero products, and we are confident that quarter 3, we should be able to deliver slightly better on the SSSG terms.

Let's look at Pizza Hut. I take you to Slide #30. While the brand declined revenue by 6%, our Tamil Nadu results proved that the Sapphire dine-in forward omnichannel customer promise with sustained investment in innovation and mass media can definitely revive the Pizza Hut brand. Apart from all the work that we do at the operational end, our innovation pipeline continued to be strong. You'll remember, we launched the Juicylicious range in quarter 1 and quarter 2. And in this quarter, in October, we have launched the Ultimate Cheese Pizza and the Cheesy Pocket, which emphasizes or which looks at satisfying the customer need for additional cheese. It's a great product, and I invite all of you all to try it. We also launched the cold coffee range, and it's in about 80% of our stores now. Apart from innovation, we also focused on dine-in value. And you'll see in Pizza Hut, our dine-in contribution actually improved versus last year. Exclusive value offerings like Buy 1 Get 3, 4-course meal starting at INR 99 and Unlimited Pizza Fridays helped ensure that dine-in SSSG was better than delivery. And finally, in Tamil Nadu, both Sapphire and Yum! continue to invest in mass media advertising, and we saw a mid-teens delta in performance between -- compared to the rest of the country, both SSSG as well as SG. On the next page, you can see the Ultimate Cheese product has been marketed as Flip to the Cheese, so [Foreign Language] starting from the crust, very interesting product. And then the cold coffee, Cheesy Pockets, Juicylicious. There is -- on Slide #33, you'll see a picture of a food truck that we've just launched in Mumbai also to take care of congregation points that has started well, and we'll see how to scale it up later. Over to Vijay for the numbers.

Slide 35 gives channel-wise contribution on Pizza Hut. Dine-in and takeaway versus delivery mix came at 50-50. As you can see, the dining plus takeaway mix improved. The several promotions, which Sanjay spoke about, actually helped us gain dine-in share vis-à-vis delivery. Overall, Pizza Hut had negative SSSG, and brand declined by 6% while Tamil Nadu Sapphire territory, Sapphire exclusive territory had mid-teens delta in performance. Gross margin came at 74.4%, which is similar to quarter 1. And as the case was in KFC, here too, we continue to invest significantly behind the value offers to try and drive the transactions, whether it's Juicylicious, Unlimited Pizza Friday, Buy 1 Get 3, these are some of the examples on which we had investment through gross margins. Restaurant EBITDA came at 1.8%. If I exclude the additional marketing investments, which is over and above the Yum! agreements, the brand is at a breakeven level. Slide 38 gives 4-year and 5-quarter trend. And as mentioned by Sanjay, we have got the recipe to unlock the potential of the brand as proven and reflected in Tamil Nadu performance. We are sure that we should be able to replicate this model sometime in the near future pan-India.

Let's now look at the Sri Lanka business, which, again, if I were to remind you, is what has replicated in TN and clearly works. Our business has grown there double-digit SSSG and SSTG. Two years ago basis after the country went through a very significant economic crisis, at that point in time, we remained calm. We continued to invest in our people and in offering value to consumers. We are seeing the benefits of that coming back and reflecting in our growth on both same-store sales growth as well as system revenue. And because we have largely mitigated the quarter 1 impact of the employee minimum wage increase, our restaurant EBITDA also has come quite strong. And Vijay will take us through the numbers.

Slide 43, channel-wise has remained steady in Sri Lanka year-on-year. The SSSG came at 14% in LKR terms and while overall revenue grew at 18% in LKR terms. When converted to Indian rupees, the revenue grew at 23%. The gross margin improved by 220 bps year-on-year on account of a couple of things. First, we took a 4% to 5% price increase in quarter 2. And also, there was some reduction in our promotional offers, which helped us improve our margin by 220 basis points. Restaurant EBITDA came in at 15.4%. And if you guys would remember, quarter 1, it was 12.7%, and it was impacted by, as Sanjay mentioned, the minimum wage increase, which came in somewhere in May, but retrospectively from April, which we were not able to mitigate during the previous quarter, but we were confident that we should be able to mitigate, and that's reflected in our performance, which came at really healthy number at 15.4% for restaurant EBITDA. The Slide 47 is 4-year and 5-quarter trend. Sri Lanka is now delivering consistently and delivering strong performance. This is the same dine-in forward omnichannel format we are now trying to replicate in India, which -- the hypothesis of which has already been now proven in Tamil Nadu. Hopefully, we should be able to replicate this across other states as well for Pizza Hut India.

So that's it from us. I just want to repeat our messages. We think it was a reasonable quarter. KFC growing at double-digit, excluding Navratri. There is a clear way forward for the Pizza Hut brand, basis our experience in Tamil Nadu and Sri Lanka. And Sri Lanka, after a near -- after a really big blow to the business 2 years ago, has recovered and recovered really fast and continues to be the #1 QSR brand in the country. Along with all the work that we are doing, the macro trends also seem positive. GST reduction should put further money into consumer wallets as indeed has the income tax reduction. So we are hoping that as we get into the quarter 3 and into calendar year '26, we should see consumer sentiment improving. I'll now hand it over to you all for questions.

[Operator Instructions] The first question is from the line of Avi Mehta from Macquarie Capital.

Sir, I had 3 questions. And with your permission, I'll just put them out upfront. First, your comment on 3Q, any signs of a recovery as the festivities kick in? And would love your thoughts on whether you believe how we did in Sri Lanka, so something like that, levers are in place to be able to at worse maintain margins at current levels even if demand environment takes time to recover. So that was my first question. And should I put all the questions upfront, sir? Or how would you prefer.

Yes, yes. Upfront.

Okay. The second part, sir, I wanted to understand is now we've seen 2 quarters of stronger performance in Tamil Nadu market, given -- and it's clearly the proof is out there. I would just like to know what's the process and your time -- your thoughts on the time lines for this to flow through to other markets. And the last bit was just wanted to understand this resignation that has come in of Nominee Director of TR Capital, what triggered it would be useful. That's all from my side.

Very good. So let me just take it from the back. The resignation, Mr. Rohitt Mutthoo has left TR Capital. And therefore, being a nominee Director backed by TR Capital, therefore, he has to move out of the Board of Sapphire Foods also. So he's resigned from TR Capital and therefore, he has to resign from all his obligations that he used to fulfill for TR Capital.

TR Capital is one of the shareholders in Sapphire Mauritius, which is our promoter entity. So it has happened in a regular course and ordinary course.

So that is one. In quarter 2 -- in third quarter, we're seeing signs of recovery and really it is 16, 17 days, and we are overlapping Navratri. So the numbers look very good at this moment, Avi. So -- but I will just let a little more time go. Perhaps at the end of November, we could say that have things started to improve. The Sri Lanka and TN case is the same. You're right, there is a clear case on how we could grow the Pizza Hut brand. And I think we have got ongoing discussions with all relevant parties on how we could take this. It does call for additional investments. There's no doubt about that. So apart from the additional investments, I must say that we are aligned on all other aspects of the brand journey. However, it's -- we're not going to spend on building awareness. And so if you're not going to spend money on that, then all our innovation, all the work that we do on value perhaps becomes blind to consumers. So I think those are ongoing discussions, and it might take another couple of quarters for us to align.

And sir, on the margin front, by the Sri Lanka example, I meant margins because Sri Lanka, this minimum wage increase, you were able to effectively manage it. I think a similar situation is true for India that even if, say, worst-case demand doesn't -- takes time to recover, we would still should be at least at the margins across the brands. Is that a fair statement to make?

Yes. So from a KFC perspective, now we have got nearly 2.5 years of flat or negative SSSG. So therefore, margins undoubtedly are impacted. If you see quarter 1 was in the region of 15.5%, give or take a bit. Quarter 2 is lower because of lower level of sales. Quarter 3, we should recover that drop in -- that drop of quarter 2. But I think margins will remain in this region, which is lower than last year. So what we require now is SSSG to come back to start increasing from these levels onwards. From a Pizza Hut perspective, it's again, ADS has to improve. Once ADS improves, that's the way that margins will also start to improve.

The next question is from the line of Gaurav Jogani from JM Financial.

Sir, my first question is towards the negative base that we are overlapping and the negative SSG has been there for quite some time. So what does -- you feel that in the entire QSR market in that sense remains impacted? Or is it specific to our brands that we have seen this impact? So some light on the overall macro color on the QSR space, if you can give?

So in general, and this has been consistent with what we have said up till now, we are finding that consumer discretionary spends have been constrained. And that has been compounded further by a large number of competitors generally in food. Now this has been the case over the last, I would say, 2 years. Nothing has improved from that perspective. I think yet it is possible for large brands to grow, and large brands have the greatest ability to really change performance. I think in KFC, that's exactly what we are attempting. Perhaps it will take us a couple of quarters to really get the -- all our initiatives in place. In Pizza Hut, we know what we could do to drive growth. I think -- so that's -- so if nothing else happens in the macro environment, this is what has caused generally growth in the QSR segment at a brand level to be muted. However, on the macro front, we are clearly seeing the government taking exceedingly bold steps on GST reduction. Therefore, prices of all their food, the household basket should reduce and put money into the consumers' wallet, which then should go behind discretionary spends.

Okay. Okay. Sure. And sir, just lastly on the Sri Lanka bit, though we have seen a very handsome gross margin expansion, however, at the EBITDA front, still the EBITDA margin has kind of marginally declined. So are there any other expenses that have increased meaningfully that is leading to lower translation towards the EBITDA front?

In fact, that impact was seen in quarter 1 itself. So despite a healthy double-digit SSSG and SSTG growth in Sri Lanka in quarter 1, if you see we have dropped the margin bps in quarter 1, and that drop happened because there was almost a 27% increase in minimum wages in Sri Lanka happened in May effective from April. And it left us with a very small amount of time to try and mitigate that impact in quarter 1. This is what we mitigated starting quarter 2 with a combination of some restructuring in terms of the salaries, the incentive structures and a price increase which we took in July. Hence, the combination of this allowed us to still cross the 15% mark. So this is the impact. Yes, generally, a 14% SSSG should have led to probably even higher restaurant EBITDA. But unfortunately, the increase in minimum wages was too high and substantial that some of those benefits were eaten away because of that increase.

Sure. Sir, just a follow-up on this. I mean, though the performance may remain better in the next coming 2 to 3 quarters. However, until this cost kind of anniversarizes, we could possibly see this impact at least between the gross and the EBITDA line?

In Sri Lanka, yes.

The next question is from the line of Harit Kapoor from Investec.

So just had 3 questions, I put them up front. One was on how do we look at this continued kind of decline in dine-in shares because it actually -- or dine-in mix because it actually also kind of has a margin impact with every 100 basis points cut. So do you see in any way that we believe we can kind of arrest this and keep the shares around that 35%, 36% for KFC or do you believe this is slightly more structural in nature and you will see a kind of dipping trend? That's my first question. The second one was in KFC again, should we assume that we are starting off the quarter from a base of plus 3 because that's where the impact has been. And then depending on the market, macro, et cetera, hopefully, it moves above that. And third one was on the gross margins in both KFC and Pizza Hut, given that the focus is on value, providing more to the consumer, et cetera, are first half GM slightly the more normal for you as we look at to 67-odd in KFC and 74, 74.5 in Pizza Hut? Those are my 3 questions.

So the continued decline on the dine-in, a few reasons to that. So again, when you look at the dine-in decline, you're looking at the mix. So first of all, there are a few reasons why the delivery mix looks significantly better. The first one, our OLO, which is our own channel, our own app performance has been really good over the last 1 year. It has grown probably 2x to 3x more than what aggregators would have delivered in terms of the growth, our own app. So that's the first reason. The second, I think I would have called out previously that our late-night operating hours, which are typically the delivery occasions, 11:00 p.m. onwards, those are increased and continuously increasing, whether it was 11:1 earlier, now some of the stores going up to 2. Now even probably 10% to 15% of stores remaining open until 5 a.m. as well. So that's the second where occasionally are getting added, but they're getting added under delivery. So that's the second reason of delivery mix going better. The third was more structural post-COVID, a lot of our restaurants came in high street. The mall development actually stopped immediately during the COVID. And the high street, typically the delivery mix is higher compared to the mall mix. So that was the third reason. The fourth, the mall performance itself, dine-in performance in the mall itself has been a struggle. The footfalls in the mall have been challenging and mall typically is a dine-in portfolio for us. So these are the 4 reasons where delivery has got -- mix has got improved vis-à-vis dine-in. Having said that, a lot of steps which we are taking is to try and get the dine-in footfall back. The entire Epic Savers campaign, which we ran and invested a lot of gross margin was entirely on dine-in and takeaway channel. The transaction improvement you are seeing, a lot of it has come from a dine-in and takeaway channel. And even as we go forward, just like we did in Pizza Hut, most of the campaigns which we ran Unlimited Pizza Friday, whether it is Buy 1 Get 3, the 4-course meal at INR 99, all are these to do dine-in. And I'm giving you examples of both KFC and Pizza Hut that how the idea is to focus and get the transaction back in dine-in. So that was the first part. The second question was on KFC. If you can just repeat on KFC.

Yes. The second question was on -- we are starting from plus 3, would we assume that we start from plus 3 and forward depending on macro, your own initiatives...

Largely, yes, except for a small difference at a 3% on a quarter 2 base is a smaller base, that same 3% on a Diwali and a festive quarter could be 2.5% rather than 3%. That's the only small change. But yes, one should assume that we are probably starting 2.5% positive as we get into a quarter 3. The third was on the gross margin value and the gross margin percentage. The kind of investments which we have done in H1 across both the brands, KFC and Pizza Hut, we have dropped roughly 100-odd basis points on KFC or invested 100 basis points on KFC on the Epic Savers campaign in H1, and we have invested roughly 150 to 170, 180 basis points in Pizza Hut for H1 on gross margins. Again, those are Juicylicious campaign, Buy 1 Get 3, Unlimited Pizza Friday, currently 4-course meal at INR 99. So yes, this investment will continue. What could change is that if the particular promotion and offers are not working, the idea is how quickly we can move on to something next, which is we can try something out. So -- but the investment in the gross margins, we expect to remain at this level.

The next question is from the line of Saurabh Kundan from Goldman Sachs.

I just want to check on gross margins again, while you are investing in gross margins and doing innovations in both the formats. In this quarter after the GST cut, did you see any decrease in your input prices? And has that helped margins a little bit in any way now or going forward? Or was that completely passed on to the consumers?

So being a part of a QSR industry, first of all, there is no change for us in terms of the output tax rate, which continues to be at 5%. Yes, from our input prices, there is a very smaller marginal benefit which we see 0.5% or less. And that we have passed on to the customers, although we wouldn't have received the benefit immediately because we carry inventories. But yes, in good faith, we have passed on to the customers for both KFC and Pizza Hut. The way we have passed across is that rather than now trying to spread this 0.5% or so across all the product lines, it would be meaningless for the customers. We have tried to restrict this reduction and not restrict in terms of the quantum, but this entire quantum, we have passed across the top 7% to 8% -- 10% lines so that those 7% to 10% lines see a meaningful reduction, which could be anywhere between 5% to 10%. This is done starting 22nd September.

I think the idea there, Saurabh, was the government has done something quite bold and imaginative. And we have also got to respond to that move. And therefore, we passed this on. There are people within the industry who might have taken it across all products. But then in some cases, the impact would have been INR 1 or INR 2 on a particular product. It didn't make -- for us, we said let the consumer see some material change. So actually on our highest selling products, we took a material difference in our -- material reduction in our pricing and yet kept the overall quantum to that 0.5% or so.

Understood. Makes sense. Makes sense. Just one last question on Pizza Hut side. Assuming that this sort of lockdown or whatever the situation remains -- the status quo remains, you are not in a position -- the format is not in a position to find any expansion as of now for you. Is it fair to say that you will...

So you are right. And while you have chosen a different language than what we use internally. Internally, what we call is the strike rates for the payback period. So if the brand is overall in negative or just about breakeven, of course, the new stores would not be giving the desired paybacks. And at Sapphire, we have always called out that finally, our expansion would be guided by the strike rates and the paybacks we get on the new store performance. So while KFC, there is still a challenge on SSSG, our new store performance has been pretty healthy and reasonable. And hence, we have continued to -- with our expansion journey. On Pizza Hut, yes, there has been a struggle. So calendar year and with Yum!, we work on a calendar year. Last year, we opened -- last calendar year, we opened 20-odd or 20 stores. This year, we are so far negative 1. And yes, unless we see a revival in the brand growth in terms of SSSG and growth coming back, we don't see any meaningful additions to the count.

The next question is from the line of Devanshu Bansal from Emkay Global.

Sir, I wanted to check so -- sorry for stressing on this. There have been multiple questions here. So I wanted to check, so this 17 days that have happened in this quarter, so is it fair to assume the underlying trend in KFC is still flattish or because of the pricing corrections that we have done in light of GST cuts, there is some pickup in, say, like-for-like comparison for the 17 days?

Overall trend is flattish from SSSG point of view. So quarter 1 was flat. However, the SSTG was positive in quarter 1 as well, low single-digit. Quarter 2, while it's minus 3% because of the Navratri impact, ex-Navratri, SSSG is flattish. And SSTG continues to remain again positive low single-digit. So the trend is flattish. The SSTG is a definite improvement. We are at least in SSSG flattish territory versus what we were at least negative a year ago or so. So that's the positive. The price reduction is 0.5% or so, again, as we called out, spread across a few of our hero products, 5% to 10%. The quarter 2 has only seen 8 days or 9 days of impact and that too during Navratri. So 22nd is when the GST cuts came into effect. That's when the price reduction came into effect, and that's when the Navratri started as well. So I think it's too short a period to say that this reduction has made any meaningful impact from a customer demand perspective or not. And again, now when you look at the SSSG, last year, this time, the first 10 days of October, the first and second week of October, there was Navratri. So the numbers are not really comparable. Let's give it a bit of more time before we comment that the trajectory has changed from flattish to positive.

Sure. I understand. Vijay sir, my question was more post-Navratri 17 days this year and last year. So anyways, I get your point. So I was just checking on that front. Sir, my second question is on Tamil Nadu Pizza Hut performance. You indicated that the trends are in double-digit there. I wanted to check if this is largely because of same-store growth or there's a component of store additions in that market as well?

There were store additions also there, but same-store sales growth was about mid-single-digit and balance through store additions. But it's in line with the rest of the country.

And the important part to look over here is the delta vis-à-vis the rest of the brand performance and the rest of the country. So that's the mid-teens delta and across all the 3 parameters, whether it is SSSG, SSTG or overall revenue growth. The delta is 15% or so or mid-teens levels.

Okay. And lastly, a small follow-up here. So from a margin perspective, so is this better SSSG giving you the desired operating leverage to offset the additional marketing spend? Or are we still on a Y-o-Y basis, are seeing some dip in Tamil Nadu market?

So the margins are still positive, at least in Tamil Nadu vis-à-vis the brand showing negative performance in terms of the restaurant EBITDA. But whether they are at the desired levels, I would say no. And we have called out this entire journey, that this additional marketing investment backed by innovation has to be a 2- to 3-year journey, and it cannot be a 6 months or 9 months. Last year, I think we started on a positive note where we invested behind the brand for the 9 months, and we saw a 17% uplift pan-India. Post that quarter 4 last year, we stopped investing at least from mass media, while Sapphire continues to invest BTL, they did not give results. This year, at least starting April, we are investing mass media in Tamil Nadu and Tamil Nadu is showing results. But I think for us to reach the desired level of ADS, the investment has to continue for 2 more years at least.

Understood. And lastly, a bookkeeping question, Vijay. This INR 97 crores of depreciation, is this a sustainable run rate for coming quarters or -- because there is some debt. So I just wanted to check.

So again, when you are looking at the depreciation numbers, it's post Ind AS 116 number. The underlying real depreciation will be significantly lower. But yes, when you look at even that number, we don't see this number materially altering. There is -- there are no big impacts, which I would say will need to be carved out as we move forward. The number would keep increasing. So you cannot really look at the absolute value because as we keep adding more stores, the number would keep increasing. And there's always some impact where we take a call on store closures. So there are some small one-offs which can come. But I won't see the number as materially off the mark from a trend perspective.

The next question is from the line of Tejash from Avendus.

Sanjay, KFC has seen now multiple deceleration and slow quarters. And our explanations have ranged from -- our readings have ranged from post-COVID high base to brand boycott in between to private final consumption also kind of slowing down. Now given our parents Yum!'s depth of experience, both in terms of scale and history, what's their current diagnosis of the sluggishness that we are seeing in this brand? And how have global QSRs of this brand has historically emerged from such slowdowns?

Yes. So Tejash, I don't think we -- I don't think Sapphire called out brand boycott in any of our investor presentation. So you could go back and check. I don't think we've called this out. However, the -- what you've been saying that we have -- or the brand has seen now 6 to 8 quarters of flat SSSG or negative SSSG is absolutely right. Like I said, it's a combination of 2 things. One is private discretionary spending has been muted. That's the reason why the government, despite strong GDP numbers is still calling out very specifically that they need to do something to increase consumption spend. And a combination of that plus increased competition within the entire food space, including QSR. So I think that's the articulation. Plus we've also expanded stores significantly. And at one point in time, our growth rates, our SSSG numbers were quite strong. So if you look at 3 years, we have doubled the store count. I think it's a combination of all these factors. Having now said what is the way forward. So firstly, there is -- I think India is a little unique, because there's no other country in the world which has such a strong veg population. And therefore, internally, we say that we have 2 tasks on KFC. One is indeed, how do we grow frequency of consumption with KFC brand loyalist. And over a period of time, the big opportunity is how do we expand the consumer franchise for KFC. On the first part, which is increasing frequency, there are global models, which are really around occasions of consumption and innovation. Around the part of increasing consumer penetration, there are a few markets like India. So it's a matter of, in a sense, to some consumers almost introducing the concept of fried chicken in a QSR format to them. All of this is not is -- we believe, is possible to do, but it will take a degree of focus, and it will take time. I think we are aligned between Yum! and us on what our journey is, and it is starting to play out. But I mean it's not a silver bullet. Once we get some tailwinds of consumption going, I think in general, we'll see that positively reflected on KFC also.

Just one follow-up there. The way we have seen Tamil Nadu Pizza Hut as a very silver lining and gives us hope that it's just a matter of replicating that model. Are we doing any -- are we seeing any KFC experiment at micro or micro market level, which gives us confidence at this stage that if we replicate it at pan-India, we'll have some better numbers there?

Yes. So there are several experiments being carried out on KFC, which give us optimism for the future, but it's really too early to specifically call out in an investor presentation at this moment, Tejash.

Perfect. And the last one, Sanjay, you also called out all the initiatives and interventions that government would have made in the last 15 months to revise consumption. In pockets, let's say, some of the retailers are seeing some increased footfall at least to begin with. Are we seeing that in our formats that at least conversions can be still there or low, but are footfalls improving?

I mean it's tough to make a judgment out after just a couple of days. And like I said, when we are overlapping Navratri, the numbers at this moment from an SSSG perspective are very fine. But let's wait till -- perhaps wait till November and then December and see how things pan out. I just want to make -- just for ample clarity, I just wanted to call out, see, the Tamil Nadu experiment gives us a way to take the brand forward. But I mean, in no means we are trying to say that it is a solved problem in Tamil Nadu. Even there, and Vijay mentioned it in one of his answers previously, also saying that we have to keep at it for the next 2, 3 years, even in TN to really get to double-digit and then higher levels of profitability. So -- but we all seek some models that can give us this kind of growth. Certainly, there is a model to revise the brand. So I just want to -- but there is no silver bullet. It will still take persistent work even in Tamil Nadu to really bring the brand back to its glory days. That's it. I think that's the end of the question queue. So again, thank you very much. We've got 151 participants at the beginning of the call. I wasn't sure given that it's the start of the Diwali weekend and it's a Friday. But I'm just grateful to all of you all who have been on the call. Happy Diwali, spend time with the family and may all your wishes come true in the coming year. Bye.

A very happy Diwali to all. Thank you so much.

Thank you, sir. On behalf of Sapphire Foods Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.