Sphera Franchise Group S.A. (SFG) Earnings Call Transcript & Summary

Good afternoon, and welcome to Sphera Franchise Group Earnings Call to present the preliminary 2025 results. My name is Zuzanna Kurek, and I'm Investor Relations Officer at Sphera Franchise Group, and I will moderate today's call. Before we begin, I would like to mention that this call is being recorded, and that the recording will be updated on our website later today. As stated on the call invite, by joining this video conference, you automatically and implicitly consented to being recorded. If you do not consent to being recorded, please leave the call. In terms of the organizational aspect, we will follow our standard call setup, which means the management will deliver a presentation outlining the preliminary 2025 results, and later, we'll have a Q&A session. [Operator Instructions] As always, I would like to mention that we might be making forward-looking statements today during this call regarding the future performance of Sphera Franchise Group, and that the actual results may differ materially. We encourage you to review the disclaimer that we have included in this presentation, which you can now see on the screen. This disclaimer applies equally to all statements made in today's call. Now let's kick off the call. I would like to introduce the management that is here with me today and will present our financial results. I am joined today by Calin Ionescu, Chief Executive Officer; Valentin Budes, Chief Financial Officer; Monica Eftimie, Chief Marketing Officer. Happy to have you back, Monica. Thank you for joining us. Moreover, I am pleased to announce, we are joined for the very first time by 2 general managers representing our iconic brands, Marian Gogu, General Manager of KFC Romania; and Costica Misaca, General Manager of Pizza Hut and Taco Bell Romania. I will pass now the floor to our CEO, Mr. Calin Ionescu, who will share some insights about our performance in 2025. Calin, please.

Thank you. Hello, everyone. We meet again today to officially close 2025 and share with you the results of a year that was, without a doubt, a complex and challenging one for the business environment. Thank you for your presence and for the constant trust you place in the Sphera Group. 2025 was yet another year that tested our ability, discipline and capacity to adapt. We operated against a challenging macroeconomic backdrop marked by fiscal pressures, persistent inflation and a more cautious consumer sentiment, particularly in the early part of the year. In this environment, our priorities were clearly defined: to consolidate our operations, safeguard profitability and position the group for its next stage of growth. We responded with decisive measures to streamline operations and optimize our cost base, and the effects of these actions become increasingly visible in the second half of the year. The fourth quarter confirmed that we are moving in the right direction, marking the strongest quarter of 2025. Romania remained a primary engine of growth, accounting for 85.7% of total revenues and representing the market where we hold the strongest operational position. Italy returned to a positive trajectory, with a 2% increase in sales, while the Republic of Moldova continued its solid performance, delivering 19.7% year-on-year increase. This geographical diversification continues to provide balance and resilience in the current economic and political environment, both locally and international. At the portfolio level, KFC remains our strategic cornerstone and the foundation of our operational stability. Taco Bell continued to be the group's most dynamic brand, reaffirming its growth potential and strong presence among young urban consumers. For Pizza Hut, we advanced our streaming -- streamlining and the repositioning efforts with a clear and firm objective, to restore sustainable profitability. As part of this process, we made the decision to close 7 Pizza Hut units that had been consistently underperforming operationally and generating a negative cumulative EBITDA contribution. The context in the second half of the year accelerated the decision already grounded in a structural assessment of the network. We expect that existing demand will be absorbed by the remaining operational units without materially affecting customer access, and we have prepared an allocation option within the Sphera network for all impacted employees. The process was carried out with the agreement of our franchisor, Yum! Brands. At this stage, we do not anticipate additional closures to -- we continue to rigorously monitor unit-level performance indicators. We expect a positive impact on operational profitability to become visible in the 2026 result. Pizza Hut remains a strategic brand within our portfolio, supported by a solid consumer base and a differentiated presence in the local QSR market. In the last year, 2025, we also advanced meaningfully in diversifying our portfolio. The integration of Cioccolatitaliani marked our first step beyond the traditional QSR category and into concepts with pronounced experiential dimension and accessible premium positioning. This represented a strategic test and learn initiative, enabling us to expand our operational expertise in a complementary segment and to evaluate new avenues for value creation. Building on this foundation, we subsequently announced the addition of the Hard Rock Cafe franchise to our portfolio, a strategic step that marks our entry into the global lifestyle and experiential dining segment. Cioccolatitaliani represented our first move into diversification, Hard Rock Cafe is a natural extension of this trajectory. It strengthens our ambition to develop a more balanced portfolio, anchored in strong distinctive brands, with meaningful long-term growth potential. Most recently, we announced our intention to expand the Taco Bell brand into the Republic of Moldova, with the first food court unit in Chisinau, planned to open in the second quarter of this year. 2025 was not merely a period of adaptation. It was a year in which we reinforced the foundations for our next stage of development and advanced strategic initiatives that will shape the group's evolution in the years ahead. In 2026, our priority remains sustainable growth with a firm focus on profitability, carefully calibrated investments and the continued strengthening of each brand's competitive advantage within our portfolios. Thank you for your trust and long-term partnership. I will now hand over to my colleague, Valentin Budes, the group's CFO.

Thank you very much, Calin. Good afternoon, and thank you all for joining us today. I will walk you through the 2025 financial results in detail. Amid the challenging market environment and headwinds from macroeconomic volatility throughout 2025, Sphera Franchise Group delivered performance broadly in line with the revised guidance, meeting its updated financial targets. This performance reflects our ability to adapt swiftly to changing economic conditions, our operational and financial discipline and our continued commitment to transparency and delivering sustainable value for our shareholders. In the fourth quarter, we observed a clear turnaround in sales at group level. However, this improvement was insufficient to fully offset the significant pressure rising from the weakened consumptions and elevating operating expenses, which appear in the first half of the year. At the same time, this Q4 performance strengthens our confidence in efficiency measures and operational adjustments implemented throughout 2025 that will generate more tangible benefits in 2026. In 2025, we reached RON 1.6 billion in preliminary consolidated sales, up 1.5% versus 2024, if we are looking to the performance excluding IFRS 16. This year showed a clear sequential improvement after a slightly softer first quarter. Performance accelerated progressively, with Q4 becoming the strongest quarter of our year with RON 420 million, which is up 3.7% year-on-year. Romania remains our core market, generating RON 1.4 billion in sales, representing over 86% in total turnover. Italy delivered solid growth as well, with 2.4% increase, while Moldova recorded the strongest expansion rate in the group portfolio. These results reflect the geographic diversification of our group and the growing contribution of the newer markets. At brand level, KFC continued to be the main growth engine, with total sales of RON 1.4 billion, accounting for 86% from total sales. Taco Bell remained our fastest-growing brand with strong double-digit growth of 16.2%, confirming its relevance among younger urban consumers and the success of our development plan in the major Romanian cities. Pizza Hut was slightly below last year as we focused on the network optimization, while Cioccolatitaliani is in its early development phase. Overall, 2025 was a year of stabilization and gradual recovery, with a visibly stronger second half and improved exit momentum into 2026. Let's now look to the evolution of our key financial indicators. Again, all the figures are excluding the IFRS 16. Starting with expenses. Restaurant and G&A combined reached RON 1.5 billion in the 2025, up approximately 5% versus previous year. The increase was consistent across quarters, reflecting network expansion, inflationary pressure and the continued investment in the capabilities. Moving to restaurant operating profit. We closed 2025 with RON 152 million, which is down 22% versus 2024. The decline was more pronounced in the first half of the year, while Q4 showed a more moderate decrease, indicating improving operational performance towards the year-end. As a result, normalized EBITDA reached RON 140 million, a decrease of 16% year-on-year. And similar to the operating profit, the performance improved throughout the last part of the year, with Q4 showing positive momentum if we are comparing to the previous quarters. Overall, while profitability was under pressure in 2025 mainly due to cost increase and softer first half performance, we see stabilization and gradual improvement in the second half, providing a stronger exit into the new year of 2026. Turning to Q4. This was clearly the strongest quarter of the year. The sales reached RON 420 million, up 3.7% year-on-year, marking the highest quarterly growth rate recorded in 2025. This reflects gradual stabilization in consumer demand in Romania, the main market, and the positive impact of our value-focused pricing strategy, which helped us maintain the stable traffic and volumes throughout the quarter in our restaurants. Restaurant expenses increased 5.7% year-on-year, slightly outpacing the sales growth, with an expense ratio of almost 90%. However, the food and material costs remain well controlled, increasing only marginally and improving as a percentage of sales, a clear sign that cost discipline is taking hold. EBITDA amounted to RON 49.5 million, up 3.3% year-on-year, supported by improved sales dynamics and better cost management at the restaurant level. Excluding the normalized items of RON 2.2 million related to the closing and mandatory relocations, normalized EBITDA grew even stronger. We are speaking about 7.9% increase. Net profit for the quarter decreased 7.4% year-on-year, mainly due to the normalized items of RON 6 million related to the closures and relocations. However, normalized net profit increased 15.8%, reflecting improved underlying profitability and stronger operational momentum at the year-end. Importantly, same-store sales returned to positive territory, i.e., 1.1% year-on-year, reversing the negative trend from the previous quarters. Q4 confirmed that the measures implemented throughout the year are delivering tangible results, and the fact that we are entering 2026 from a more stable and balanced position. At the top line, restaurant sales reached RON 1.6 billion, which is up 1.5% year-on-year, a resilient performance given the macro challenges we faced, particularly in the first half of the year. Moving down to P&L. We see the restaurant expenses grew 5.1%, outpacing revenue growth and compressing our restaurant operating profit to RON 152 million, which is down 22.1% versus previous year, which I already mentioned. This was primarily driven by the payroll inflation and the broader cost pressures across all the categories. Normalized EBITDA came in at RON 148 million, with a margin of 9.4%, reflecting the 16.4% decline year-on-year. The food and material costs were broadly stable as a percentage of sales, and our cost control efforts partially mitigate the raw material inflation. At the bottom line, the normalized net profit stood at RON 72.7 million, down 25.2% versus the previous year, which was impacted by the elevated cost base in the H1. The key message is that while 2025 was a challenging year from a profitability standpoint, the trajectory improved significantly in the second half, and Q4 showed clear signs of stabilization, stating better foundation for 2026. Now on the business development side, the 2025 was an active year for our network expansions. We have opened 7 new restaurants: 3 KFC units in Romania, including 1 drive-thru and 2 food courts; 2 Taco Bell food court units in Romania; and 1 KFC drive-thru in Italy. And of course, our first Cioccolatitaliani, which was an in-line unit in Italy. We also closed 1 underperforming KFC in Bari in Italy as part of our ongoing network optimization efforts. As of December 31, the group operated 179 restaurants across the 3 markets. KFC remains by far our largest brand, with 131 restaurants, out of which 110 in Romania and 18 in Italy, plus 3 units in Republic of Moldova. Pizza Hut accounts for 28 units in Romania. Taco Bell grew to 18 restaurants, also in Romania. And we are still having 1 Pizza Hut sub-franchise in Romania, plus the Cioccolatitaliani restaurants in Italy. In Q1 2026, we already inaugurated 2 new KFC restaurants in Italy and Bucharest. Now let me turn to the capital market performance of 2025, which in terms of share price evolution, Sphera declined 6% over the course of the year, and the total return index, the Sphera total return was down only 1%, a more moderate decline once the dividends are factored in. Liquidity was also softer, down 13% year-on-year, reflecting the broader investor caution in terms of current environment. It's worth putting this into the context because BET index delivered an exceptional 46% performance in 2025, with the BET TR up to 55%. Therefore, while our share price underperformed the market, this was largely a reflection of the margin pressure and earnings decline we have experienced during the year, not a structural concern about our business though. On shareholder remuneration, we maintain our commitment to returning cash, paying RON 2.13 gross dividend per share with 2 events, one of 1.09 in June and one with 1.04 in December. As we enter 2026 with improved operational momentum, we remain focused on delivering the improvement that will support the re-rating of our stock over time. My optimism for 2026 is grounded in the encouraging trends observed in Q4, same-store sales returning to positive territory, an improved food cost ratio and the stabilization of the personnel expenses from a share of sales point of view. The normalized related to the restructuring and the closures reflect targeted measures with a clear objective, which is improving efficiency and restoring sustainable profitability across the portfolio. The conclusion is clear. Q4 confirmed the recoveries gaining traction, even though full year 2025 results remain heavily influenced by the cost pressures of the first half. We entered 2026 from a stronger position, supported by measures already reflected in our year-end performance and by improved operational disciplines as well. Our focus is to transform this stabilization into a sustained return to profitability, with the benefits of the efficiency materializing consistently throughout the year, rather than being concerned in one single quarter. This was all from me, and thank you very much. Now...

We're going to pass the floor to Marian to cover the KFC brand performance.

Thank you for the opportunity. Good afternoon, everyone, and thank you for being here today. It's a pleasure to join this call for the first time and to personally share with you the progress we've made from a sales perspective for the KFC brand across the 3 markets we're operating in: Romania, Italy and Republic of Moldova. I will start with KFC Romania. As you review our performance, I'm pleased to highlight that KFC Romania delivered a solid rebound in the last quarter of 2025, marking a significant positive shift after a challenging year. Same-store sales grew 1.8% year-on-year, effectively reversing the negative trend that has persisted for most of 2025. This improvement reflects both a renewed appetite among Romanian consumers and the tangible impact of our strategic investment, including the restaurant we opened during the year. On an all-store basis, U.S. Food Romania achieved 3.8% year-on-year growth in Q4, driven by the combination of improved same-store performance and incremental sales from new units. Throughout 2025, KFC extended its footprint across Romania through the opening of 3 new units: a drive-thru restaurant in Galati, enhancing all presence in an increasingly important format for convenience driving customer; and 2 food-court units in Iasi and Pitesti, contributing to stronger coverage in the dynamic commercial hubs. This opening support our long-term growth strategy and positioned the brand for sustained performance in the years ahead. Despite the cautious consumer environment in the first half of the year, the recovery you observed in Q4 confirms the resilience of the KFC brand and indicates that demand is stabilizing. Now we'll go to the performance in Italy. KFC Italy experienced a more challenging last quarter in 2025. Same-store sales declined by 3.6% year-on-year, while all store sales decreased by 1.4% year-on-year. This made Italy the only KFC market without -- within our group to register a contraction during the period. The results reflects tougher market dynamics, heightened competition and a softer consumer environment, which together put pressure on performance throughout the quarter. Despite these challenges, we continue to optimize and refine our footprint in the Italian market as part of our long-term strategy. In Q4, the group opened a new KFC drive-thru in Udine, enhancing our presence in formats with strong potential for convenience-led growth. At the same time, we strategically closed one unit in Bari during Q3, ensuring our network remains efficient and aligned with market demand. Italy remains a strategically important market for us with meaningful long-term opportunities. However, the Q4 results clearly show that the environment is more competitive and more sensitive compared with our operations in Romania and Republic of Moldova. We continue to monitor trends closely and adjust our strategies to ensure the brand is well positioned for recovery and future growth. Now we'll move to Moldova. KFC Moldova delivered the strongest same-store performance across the entire group in the fourth quarter of 2025. Same-store sales increased by 8.1% year-on-year, while all store sales grew by 8.3%, the same year-on-year. This is a remarkable acceleration, especially when compared to the previous quarters of the year, during which same-store sales were slightly negative. Although we currently operate only 3 units in KFC in the market -- Moldovan market, the results continue to highlight the robust potential of the KFC brand in the country. The strong Q4 performance was driven by sustained consumer demand, improved macro consumption trends and the consistently high brand relevance of KFC within the local market. These indicators reinforce our confidence in Moldova as a market with solid growth prospects and further opportunities to expand our presence in the future. I will conclude here, and thank you for your time.

Thank you, and good afternoon. This is also my first time joining you on this investors call, and I'm pleased to have the opportunity to walk you through the latest sales performance and -- of Pizza Hut and also Taco Bell in Romania. I will begin with Pizza Hut. In the fourth quarter of 2025, Pizza Hut continued to face pressure, with sales declining by 1% year-on-year, both on same-store and all-store basis. This performance reflects the ongoing challenges in driving traffic and maintaining momentum, particularly given the brand's greater reliance on delivery, a segment that remains intensely competitive within the broader QSR market. Profitability remains a key area of concern for management throughout the year. In 2025, Pizza Hut recorded a restaurant operating loss of RON 2.1 million, but when excluding normalized items of RON 2.7 million, the brand generated restaurant operating profit of RON 0.6 million compared to RON 1 million in the previous year. While these adjusted results demonstrate some underlying resilience, the overall negative performance reinforced the need for decisive action. As a result, management proceeded with streamlining the network, taking the difficult but necessary decision to close 7 units in the following weeks, units that recorded below expected operational performance and a significant negative impact on financial results. This initiative is aimed at restoring the profitability and long-term sustainability of the Pizza Hut business, ensuring that the brand operates with a healthier footprint, better aligned with current market dynamics and consumer behavior. We remain focused on stabilizing performance, optimizing operations and positioning Pizza Hut for a more sustainable trajectory going forward. Moving on, on Taco Bell. As we review the fourth quarter performance for 2025, I'm pleased to highlight that Taco Bell once again stood out of the -- as the strongest growth engine within Sphera portfolio. The brand delivered exceptional results, reinforcing its strategic importance for the group. In quarter 4, same-store sales increased by 4.3% year-on-year, a clear signal of sustained consumer demand and the continued relevance of Taco Bell proposition in the Romanian market. Total sales across all stores surged by an impressive 15.5% year-on-year, reflecting not only robust underlying performance, but also the incremental contribution of our newest restaurant openings. During the quarter, we extended the network with 2 additional Taco Bell restaurants in Bucharest, one in Promenada Mall and another in Sun Plaza Mall. With these openings, our portfolio reached 18 Taco Bell units by year end. Taco Bell remains the fastest-growing brand in Sphera, and its 2025 performance further validates both the strength of consumer appetite and the brand's significant scalability potential. We are confident that Taco Bell will continue to be a key pillar of our growth strategy moving forward. At the beginning of this week, Sphera announced that we will take Taco Bell to a new market, in the Republic of Moldova, and plan to open the first unit in quarter 2. The new unit will be a food court format located in shopping Moldova in Chisinau. The Republic of Moldova becomes the second market in the region, where Sphera operates Taco Bell after Romania. Considering the brand performance in Romania, we believe that this is a natural next step in our regional growth. That is all from my side. Thank you.

Thank you. And now I would like to invite Monica to share the final part related to marketing activity.

Good afternoon, and welcome to our call. It is great to be back. 2025 proved to be a challenging year from a marketing standpoint. Consumer behavior in the QSR segment demonstrated increased financial restraint, with dining out patterns noticeably more cautious compared to previous years. The marketing agenda across all brands became exceptionally dynamic, mirroring the intensified competitive landscape. To achieve our sales targets, we relied on tactical initiatives and value-driven campaigns. I will highlight only a few examples of the product innovation and campaigns we brought to market in the last quarter of 2025. At KFC, 3 campaigns stood out at the year-end, with a focus on innovation and Christmas tradition. Crazy Cheezy, our sixth main campaign of the year with 360 communications and focus on innovation, featured the warm cheesy sauce, burger wrap and loaded fries to increase sales and transactions. The initiative was aimed at both KFC heavy users who are looking for innovation, and KFC light users willing to try new products and sauces. The glaze campaign, a secondary campaign targeting Gen Z, with a dedicated communication plan aimed at increasing transactions, especially among regular users. The novelty consisted of a new Korean sauce paired with a wide range of products from a new burger to hot wings. The campaign included a successful prelaunch phase under the name of KFC Secret Menu. Christmas bucket, the nontraditional campaign during Christmas, with 360 communications as well, focused on the iconic Christmas bucket, aimed at generating sales by increasing the number of transactions related to sharing occasions. This year's novelty was the create your own bucket concept, adding as its main objective support for our bucket category, which emphasizing the idea of sharing. All 3 campaigns achieved positive in-store sales growth, contributing to a strong Q4 top line performance. For the KFC app, we continue to focus on a new deal platform, with the objectives of increasing transactions and sales in this particular channel by generating app downloads and increasing the user base. In December, we released the event calendar, another dedicated KFC app initiative with different offers, which helped increase order frequency and sales within the app. And now moving on to Pizza Hut. At Pizza Hut, we navigated a very active year, marked by a strong emphasis on value and innovation as key sales drivers. This strategic focus translated into particularly dynamic and intensive marketing calendar, especially in the fourth quarter. Garlic Cheesy Bites, the final campaign of the year, focused on one of our most iconic craft, cheesy bites, enhanced with a garlic-flavored cheese filling, an ingredient highly appreciated by Romanian consumers. The campaign was communicated nationally across digital platforms and street billboards, with the main objective of driving sales. Crafted Flatzz, a campaign where we launched a new range of pizzas designed for individual consumption occasion was communicated -- the communication -- its communication emphasizing a highly competitive price point of RON 20.9. The campaign has a main objective of increasing transactions among light users. Halloween tactical campaigns. For the -- for 3 weeks around Halloween, we launched a limited time Black Crust Pizza recipe featuring [ thin ] toppings. The initiatives allowed us to remain culturally relevant during this season and to resonate with the younger segment of our target audience. Q4 also marked the launch of group offers. At the end of November, we introduced 4 new group focused offers available exclusively through our website and mobile app, targeting consumers seeking value-driven bundles for small and large groups. And now moving on to Taco Bell. For Taco Bell, we rolled out numerous campaigns designed to broaden consumer choice and stimulate demand during the busiest quarter. Taco Day campaign. We used a global key brand moment to engage fans and drive incremental visits through a dedicated offer, a Taco Supreme for RON 5.9, and strong digital communication reinforcing brand love. The little crunch wrap campaign brought a strong value offer built around one of our iconic products to drive traffic and transactions. The campaign helped bring to -- the campaign helped bring in new users through an affordable price point, while also encouraging repeated visits among regular users. The Grilled Cheese Burrito campaign -- cheese again, focused on driving trial and boosting sales by highlighting a highly indulgent product with a strong cheesy experience. We supported it with integrated communication across channels to increase frequency and encourage customers to choose more satisfying meals. The campaigns delivered same-store sales and transactions above expectation, making Taco Bell strive in a difficult context for a QSR player. As youngsters are Taco Bell's main target, in Q4, we continue building our presence in the gaming space, integrating the brand into competitions, streams and community content to strengthen relevance among Gen Z and gaming audiences. And now moving from marketing to delivery. In the fourth quarter of 2025, delivery continued to play a meaningful role in our commercial mix, emphasizing the structural shift in consumer behavior, particularly during the winter months, when convenience becomes an even stronger driver of choice. Delivery contributed 19% of total group sales, up 1 percentage point versus the same period last year, fully aligned with a multiyear trend for convenience-led consumption. In absolute terms, delivery sales grew by 7% year-over-year, reaching RON 78.7 million. This performance reaffirms delivery as a resilient and reliable channel even in a more cautious consumer environment. Thank you. And now back to Zuzanna.

Thank you very much, Monica. This concludes the presentation of our preliminary results for 2025, and we'll now start the Q&A session. [Operator Instructions] Since I see we already have a lot of questions, we're going to jump in right to the Q&A. Just as a reminder, once we run out of the questions, we are going to conclude this call, therefore, please keep them coming. The first question is, thank you for the presentation. Hoping that Q4 is just the beginning. What do you see in trends for raw material price in the first 2 months of 2026? And what are your expectations for 2026? I will invite Valentin to address this question.

Yes. So the cost pressures are expected to persist in the first quarter of 2026. Basically, this will be the reflection of a broader commodity environment. That said, we are in the position that we have successfully completed some negotiations with key suppliers. This, particularly in the poultry category, which will result in a slightly better cost in Q1, if we're comparing even with the Q4 2025. In addition to this, we expect lower input cost for the Q1 2026 versus the previous quarter for main categories, such as shortening, potatoes and flour. All these are rather supported by recent negotiations or ongoing cost optimization measured that were implemented through 2025. If we are looking ahead to '26, the volatility in the raw material markets will remain, from our point of view. But we believe that the actions already implemented, positions us to be in a strong position to mitigate the inflationary pressures and the securitization of our willingness to protect the margins.

Thank you, Valentin. The next question is about Hard Rock Cafe. Can you please discuss the strategy approach for Hard Rock, considering it is a rather different type of franchise compared to the other franchisees -- franchises. Meaning not fast food, but rather, if I'm not mistaken, experimental casual dinner.

As we have announced to the market, we've developed 5 Hard Rock Cafe units in the following cities, Timisoara, Brasov, Cluj, Iasi and Chisinau. Hard Rock operates in a market niche where casual dining plans with a unique experience in entertainment. The brand will support us in diversifying our portfolio and strengthening our position as the market leader in the food service segment, being a brand that usually is high revenue with high profitability.

Thank you, Calin. The next question, what was the main driver behind the return to positive growth in Q4, particularly given the contrasting dynamics in the broader economy and consumption trends?

So here, I will take it. The return to positive growth in Q4 was primarily execution driven rather than macro driven. The broader consumption environment remained relatively soft, especially for Romania. So the improvement did not come from a sudden acceleration in demand. What made the difference was first, the stabilization of the traffic, supported by our volume-focused pricing strategy. We were disciplined in protecting volumes as we also said in our last call. And we have applied this rather than pushing for pricing, and I'm linking it to your next question. And this helped us to have a strong return to the same-store sales and entering with this KPI in the positive territory. Second, we start to see tangible impact from the operational measures implemented throughout the year, which are related to the -- our, as usual, very tight control measures, a more localized marketing calibration and of course, the subject that we have discussed related to the network optimizations. And basically, all these sections help us to fuel the store level performance and put us in the position to capture the demand more effectively in the peak season, which is [ embedded ] in Q4. [indiscernible] the Q4 benefited from a more balanced promotional calendar with an improved execution across all the brands. And here, I'm referring to mainly KFC and Taco Bell, which remain highly relevant and very focused on the affordable dining segment. So overall, it was less about macro rebound, but more about internal stabilization, disciplined execution and the compounding effect of all the measures and the efforts that we have together mobilizing against the 2025 headwinds.

So the next question I see it also repeated further on is how much of the growth in Q4 was driven by positive transaction count versus average ticket increases due to pricing actions? So maybe we'll wrap it up into one. Because I said the second question was, did you implement any price increases in Q4?

Yes. So it's linked to what we already said. It's not so much about pricing, but it is about the securitization of the customer in our restaurants which proved to be, again, a good strategy in Q4.

Thank you, Valentin. How many restaurants do you plan to open in 2026? A breakdown by brand would be appreciated.

So definitely, this will be visible in -- once our budgets for 2026 is published. But as a flavor, we are targeting for 2026, a number of around 20 new units. So a very focused strategy towards growth related to the network footprint. Out of these 20 restaurants, we see about 8 KFC in Romania. We are targeting 2 to 3 KFC in Italy. It would be on 1 KFC in Republic of Moldova. We see 2 Taco Bell in Romania, the -- well, proud new Taco Bell with the penetration of the territory in Moldova. And the -- around 4 to 5 Cioccolatitaliani once the pipeline is starting to materialize in openings for this new brand.

That may be -- of course, if we succeed to receive all our authorization, probably we'll work on end of the year, the first Hard Rock Cafe.

That's an ambitious 2026. The next question, should we expect any further financial impact in 2026 related to the closure of Pizza Hut restaurants?

So here, according to the accounting principles, we have provisions already in the financial statements of 2025, the cost that we have anticipated related to the closure of Pizza Hut. Of course, like in normal life, probably it will be a slight difference in the anticipation, but this, for sure, not materially impact the financial statement of 2026, in respect to the cost related to the closure. However, in terms of performance, we definitely -- we expect to see good outcomes from this network rearrangement. So in terms of performance, we are optimistic to pay results in 2026.

Thank you, Valentin. The next question, could you please share your key expectations and guidance for 2026, particularly regarding revenue growth, EBITDA margin trends and any assumptions about consumer spending recovery in Romania? What is your base case outlook for store growth and discretionary dining spend in 2026? And what -- do you expect any meaningful improvement in customer sentiment during this year. So I'm just going to give you a bit of color on how we're going to proceed with the budget. So in line with how we've done it in the past years, for the annual general meeting of shareholders, which is scheduled for 29th April 2026, we will publish the annual report together with the -- together with the budget for 2026. So if you see our financial calendar, the documentation will be public on 27th of March 2026. Therefore, until then, we will not be commenting anything specific related to the guidance for 2026. However, I will invite Valentin, if he wants to comment in a bit more detail on trends and what we are seeing in the market that's behind the construction of the budget.

So sure. So very briefly, 2026, our base case scenario assumes a gradual normalization rather than a sharp recovery in consumer spending. Regarding the consumer sentiment in Romania, we expect a gradual improvement during the year, definitely not a rapid shift. The disposable income dynamics and the inflation trends will remain key variables to monitor as we can see because we're already in February. And for sure, our positioning in the affordable dining segment give us a relative resilience in this respect. Even in a still cautious consumption environment, we are optimistic that we will be able to navigate very well. So overall, 2026 from our point of view, is expected to be a year of consolidation. And we are fighting for margin rebuilding with controlled growth and the continuation of the operational discipline that starts to pay results in Q4.

The next question, what drove the increase in other operating income in Q4 2025?

So in the other operating income, we have revenues related to recycled oil. We have some franchise fee that we are collecting. We have the lease and other liabilities, which are related to the write-offs of the closures. This is mainly the IFRS 16 related accounting treatment. And we have also the other miscellaneous income recorded in this category.

The next question, what level of CapEx per Hard Rock Cafe unit, should we assume? What is the experienced ramp-up profile in terms of revenues and EBITDA margin per unit, year 1 versus steady state? What average payback period or target IRR are you underwriting for these new locations?

So the CapEx for the Hard Rock Cafe format, it's definitely related to the format of the stores that we will decide to put in each of the locations. It can navigate from a magnitude of EUR 1.2 million to even EUR 2.2 million per location. If we're speaking to -- for a modeling purpose, we can have in mind an average of EUR 1.5 million, EUR 1.7 million per location. The EBITDA margin profile for this type of business is slightly different from the one that you can see in our current structures. So at a consolidated level, we speak about margins starting with 14% up to 22% depending again on the maturity and the format that we have implemented. We have a payback period of around 5 years, so pretty close to the current structure. And IRRs in our business case is targeted to be higher than 25%.

Thank you, Valentin. How do you see restaurant operating profit margin evolving in 2026? Again, we'll just give some general -- I mean we will probably not add anything on top of what we've already said. So we consider -- we would like to kindly ask you to wait one month until we publish the budget for 2026. And the last question, what is the total CapEx you expect to incur in 2026?

Yes. This is, again, subject to [ finalization ] will be published in the budget. But already knowing the magnitude of our average investment per restaurant plus the usual needs for the refurbishment and maintenance CapEx that it's pretty much in line with the track record of the past years. We can speak about a magnitude of higher than RON 100 million, but the exact calculation, to be visible once the budget will be finalized and published.

Perfect. Thank you for the answer. And I see we have addressed all of your questions. Therefore, we will conclude this teleconference. We thank you all for joining us today. Next time we hear each other will be on 22nd of May after we publish the Q1 2026 results. Prior to that, as I mentioned before, on 29th of April, we're going to have the General Meeting of the Shareholders, to which, as always, we invite you to join us, either live or online. We thank you all for your attention, and we wish you a great day ahead.