Ford Otomotiv Sanayi AS
IST:FROTO.E
Ford Otomotiv Sanayi AS
Ford Otomotiv Sanayi A.S., often known as Ford Otosan, is a dynamic example of strategic industrial collaboration, nestled in the heart of Turkey's thriving automotive industry. Established as a joint venture between Ford Motor Company and Turkey's Koç Holding, this company bridges east and west, blending global automotive expertise with local manufacturing strength. From its state-of-the-art facilities in Kocaeli and Eskişehir, Ford Otosan has become a pivotal production hub, exporting a significant portion of its output to Europe and beyond. The company specializes in the design and manufacture of commercial vehicles, notably the iconic Transit van, and has carved out a distinct niche as a center of excellence for Ford’s light commercial vehicle operations.
Profitability rides not just on production output but on the meticulous integration of research and development, logistics, and an ever-adaptive supply chain management system. Ford Otosan smoothly transitions from concept to assembly line through its robust R&D center – one of the largest in Ford's global sphere – emphasizing innovation in vehicle efficiency and safety. By assembling vehicles locally, the company circumvents heavy import duties, enhances cost efficiencies, and aligns closely with regional market needs. Simultaneously, its strategic export activities leverage Turkey's favorable geographic position, shipping polished automotive engineering to numerous international markets, thus sustaining its financial throughput and reinforcing its role in the global automotive supply chain.
Earnings Calls
In Q3 FY25, Devyani International achieved remarkable growth, with total revenue reaching INR 1,294 crores, a 54% year-on-year increase. The company expanded its store count to 2,032, exceeding its target with 111 new stores opened. Core brands like KFC saw revenue growth of 4.8% and improved margins, while new initiatives boosted brand contributions. Despite a slight drop in gross margins to 68.7% due to food inflation, EBITDA margins improved to 16.9%. Looking ahead, the company aims for 19-20% margins at 100,000 average daily sales, as consumer sentiment shows signs of recovery.
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Devyani International's Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Anoop Poojari from CDR India. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you for joining us on Devyani International's Q3 FY '25 Earnings Conference Call. We have with us Mr. Ravi Jaipuria, Non-Executive Chairman of the company; Mr. Raj Gandhi, Non-Executive Director; Mr. Virag Joshi, CEO and Whole-Time Director; and Mr. Manish Dawar, CFO and Whole-Time Director of the company.
We'll initiate the call with opening remarks from the Chairman, followed by key financial highlights from the CFO. Post that, we will have the forum open for a question-and-answer session. Before we begin, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the results presentation shared with you earlier.
I'll now request Mr. Ravi Jaipuria to make his opening remarks.
Good afternoon, everyone. I warmly welcome you to our earnings conference call to discuss the business performance of DIL for quarter 3 2025. We are optimistic that the recently presented Union Budget 2025, particularly the new personal tax regime, will bring much needed cheer for the middle class in the country.
In our view, the budget should enhance purchasing power leading to improved consumer spending. This is great news for the consumption sector, including the QSR industry, as it could drive stronger consumer sentiment leading to further expansion of the industry.
I'm delighted to say that DIL has successfully met its store expansion guidance, crossing an impressive milestone of 2,000 stores in the recent quarter across all brands and geographies ahead of the original target. This achievement further enhances our market presence and reinforces our strategic position in the QSR industry. It also offers our customers greater access to our brands.
Reflecting on quarter 3, our store expansion strategy has been a key driver of the company's growth. We remain committed to this approach, ensuring a balance between expansion and store level performance. In quarter 3, we added 111 net new stores, bringing our total store count to 2,032 as of December 31, 2024. Our core brands, KFC, Pizza Hut and Costa, added 107 stores in quarter 3, thereby further strengthening our brand performance.
DIL's consolidated revenue for the quarter stood at INR 1,294 crores, reflecting a 53.5% year-on-year growth. We have also seen slightly better margin performance because of better SSSG and certain fresh cost optimization measures. I'm glad to share that our brand continue to demonstrate consistency and excellence.
In recognition of this, KFC was awarded the Most Admired Retailer of the Year for market expansion at the Pepsi Images Foodservice Awards 2024. While the overall consumer sentiment remained a little subdued, during the festive season, our QSR in general and DIL witnessed some green shoots of recovery in metro and large cities.
For the budget-conscious consumers value menu items such as KFC roll variants and snackers were major attractions during the festive season. KFC Epic Savers and Pizza Hut discounts offered help in driving volumes with both brands experiencing recovery in demand by clocking highest ever stay sales of big festival days.
Our food courts business is gaining momentum with new locations being added during the quarter. As we expand our footprint, we remain focused on tapping into strategic opportunities. A key development during the quarter was the opening of the first food court in Kota established under the JV arrangement with PVR INOX.
Our international team also contributed to the overall growth of the company. In Thailand, we successfully added 9 net new stores, totaling to 305 stores in quarter 3. To conclude, I'm glad that despite the relatively quiet festival season, DIL has remained focused on store expansion, while continuing to explore new and innovative ways to connect with consumers.
As a leading player in the Indian QSR space, we are uniquely positioned to capitalize on the sector's recovery with market conditions expected to turn positive. In the coming quarters, we are confident that our efforts, having doubled our store count to 2,000 in just over 2.5 years, will yield strong and further strengthen our position in the industry.
With this, I would like to conclude my address and now hand over to Manish for the financial highlights. Thank you.
Thank you, Mr. Jaipuria. Good evening, everyone. A very warm welcome, and thank you for your valuable time for attending DIL's Q3 and 9 months FY '25 Earnings Conference Call, our 14th such call since our listing in August '21. DIL has achieved a significant milestone of 2,000 stores in quarter 3 FY '25, ahead of the guidance given in the past.
The total store count at the end of the quarter stands at 2,032 stores. Our core store footprint has now exceeded 1,900 stores, comprising of 152 KFC stores, 651 Pizza Hut stores and 209 Costa Coffee stores. The operating revenue for Q3 FY '25 was INR 1,294 crores, representing a growth of 54% versus quarter 3 FY '24.
The current year numbers include the Thailand business, which was acquired in January '24. The Indian business witnessed a growth of 9.6% year-on-year, mainly due to store expansion. Revenue was INR 873 crores with a growth of 4.4% versus the previous quarter.
The gross margin for the consolidated business was 68.7%, a drop of 60 basis points versus the previous quarter. The impact on gross margins was primarily due to food inflation that we've seen in core brands driven by rising oil, chicken, cheese and coffee bean pricing.
The brand contribution for Q3 FY '25 stood at 14.3%, higher by 70 basis points versus the previous quarter. Improvement in brand contribution was mainly on account of sales leverage and fresh measures on cost optimization in the Indian and Nigerian operations.
Consolidated operating EBITDA on a pre IND AS basis was INR 131 crores versus INR 114 crores in the previous quarter. The pre IND AS margins for the quarter for the consolidated business were 10.1%, an improvement of 70 basis points versus the previous quarter.
The consolidated reported EBITDA on a post IND AS basis was 16.9% versus 16.3% in quarter 2 of FY '25. The Nigerian currency showing signs of stabilization and broke its continuous weakening trend in quarter 3. The PBT for quarter 3 FY '25 on a consolidated basis was INR 9 crores versus a loss of INR 4 crores for the previous quarter. The improvement in PBT is primarily on account of better EBITDA.
Moving the discussion to our core brands, KFC in India added 44 new stores in quarter 3 FY '25. With this, the total store count for KFC in India stands at 689 stores at the end of quarter 3 FY '25. Average daily sales for quarter 3 FY '25 was flat at INR 96,000 versus the previous quarter.
Revenue at INR 570 crores increased by 4.8% on a quarter-on-quarter basis. Gross margin for KFC during the quarter was 68.6%. The brand contribution margin at 17.2% for the current quarter saw an improvement of 60 basis points because of better sales leverage and cost optimization measures.
During the quarter, Pizza Hut added 51 new stores, reaching a total count of 644 stores in India. Revenue for quarter 3 FY '25 was INR 190 crores versus INR 185 crores in the previous quarter. ADS for the brand was INR 35,000. Gross margin for the quarter was 76.2% and brand contribution for the quarter was INR 4 crores with a margin at 2.1%.
Costa Coffee added 2 new stores during the quarter, reaching a cumulative store count of 209 stores. Q3 FY '25 revenue was INR 52 crores, which grew by 5.4% over the previous quarter and 30.2% on a year-on-year basis, mainly due to expansion of new stores. The gross margin for the quarter was 75.5%, an improvement of 50 basis points over the previous quarter. Brand contribution in Q3 saw an improvement and stood at 16.9%.
We opened our first food court under the strategic tie-up with PVR INOX at Kota. DIL has an economic interest of 51% in the new company. Please note that this entity shall be consolidated in accordance with Accounting Standards 28. Total number of international stores was 374 with the addition of 9 new KFC stores in Thailand and 1 Pizza Hut store in Nepal in quarter 3.
The international revenue for the quarter was INR 430 crores with a growth of 9% versus quarter 2 FY '25. Gross margin was 64.1%, a drop of 100 basis points versus the previous quarter because of Thailand currency impact on closing inventory valuation. Brand contribution margin at 16.6% saw an improvement of 60 basis points versus quarter 2 FY '25. The reported EBITDA was 14.9% during the quarter versus 13.4% in quarter 2 of FY '25.
To conclude, we have been executing our expansion strategy in a very calibrated manner, while ensuring healthy paybacks in our core brands. A key driver of this has been our focus on small format stores over the past few years, which are highly capital efficient and offer stronger payback potential.
While SSSG performance has impacted returns in the short term due to subdued external environment, such trends are also typical during phases of accelerated expansion. Nevertheless, we remain confident that our strategy will drive sustained growth and profitability in the medium to long term.
On that note, I would also like to request the moderator to open the forum for any questions or suggestions that you may have. Thank you very much.
[Operator Instructions] The first question is from Gaurav Jogani from JM Financial.
Sir, am I audible?
Yes, Gaurav, you are.
So my first question is with regard to the store expansion that we have seen in Pizza Hut. It's been very strong expansion that we have seen here. And I think the same is the case with the other business segments also wherein the network expansion has been strong. So if you can highlight your guidance on the expansion in both of these formats going ahead?
So Gaurav, if you look at on a 9-month basis, we've added 93 KFC stores and 77 Pizza Hut stores, while we continue to add Costa and Vaango as well. The quarter 3 on Pizza Hut was high because we were delaying the store openings, given the brand performance. But there were some DA commitments that we had. And therefore, we've kind of made sure that we fulfill our commitments.
Going forward, obviously, as we've spoken in the past, we will be moderating Pizza Hut expansion, and you will see lower numbers -- even further lower numbers versus what we've done so far. So we continue to remain bullish on KFC, on the other brands, we've added new brands. We are monitoring Pizza Hut performance very closely. And therefore, depending on the brand performance, we will take a final call on the numbers.
And sir, on the other brands, the higher expansion is also due to the JV store expansion that you mentioned, the food court. Is that also a reason why the expansion is higher in the other brands?
So we have upped the game on our food court penetration as we've been speaking about food court expansion in the last 2 quarters. But the JV has opened only 1 food court in Kota, and that is not part of the consolidated numbers because we are not consolidating this JV fully given the auditors' opinion and so on and so forth. So if I were to take, let's say, the JV that we've opened in Kota, it will further add 4 new stores, 1 each in KFC, Pizza Hut, Costa and Vaango.
And sir, my last question is with regards to the margin performance. I mean the margin recovery is a tad better in the KFC business. However, we have seen our EBITDA margins even declining sequentially and the ADS remained flat Q-o-Q. So anything on why the margins in the Pizza Hut are weaker? And also if you can give a sense on how margin trajectory once KFC gets better in the future?
Thanks, Gaurav. So Gaurav, on margin expansion, I agree with you that Pizza Hut has seen a little lower margins, but we will see margin improvement coming from next quarter because we are going to be optimizing the marketing cost in Pizza Hut versus what we've done in the last 6 to 9 months.
At the same time, we've taken some fresh cost optimization measures also in Pizza Hut as well as KFC, which will start to yield the results from January onwards. So we are confident that as far as KFC is concerned, we will be able to come back to the margin levels that we've indicated in the past. And let's see how the Pizza Hut goes and the expansion on Pizza Hut is dependent on the overall brand performance.
Next question is from [ Aditya ] from JPMorgan.
Am I audible?
Yes, you are.
My first question is on the KFC performance. So if I look at your ADS and margin numbers and compare that with your sister franchise, there seems to be some divergence. I just wanted to understand, is this because of any region split or are you seeing any material difference in demand trend between different tiers of cities, which could be driving this?
So KFC, Aditya, as you know, our sister company or the sister franchise partner is predominantly present in the large metros because if you look at the country, I mean, they have a higher share of metro cities. And we've seen a better recovery in metros versus smaller ones.
You would know that they have Mumbai city, they have Delhi city, they have Chennai, which are strong markets for KFC. We've also seen similar trends. We've not seen any big divergence. It's mainly we've seen primarily the KFC numbers getting impacted in Kerala, Assam and West Bengal, which are very highly concentrated because of this geopolitical situation. And there also, we've seen an improvement and a turnaround happening.
So therefore, we have seen the green shoots because of the geopolitical situation also turning around. And therefore, that gives us the confidence that next quarter, hopefully, should be a better quarter from that perspective.
That's very clear. My second question is on the transaction growth of KFC. So is it right to assume that the transaction -- same-store transaction decline would be lower than the SSSG?
See, the APC, which is the value piece is holding very well. If at all, we've seen a small uptick in all of our brands as far as the APC is concerned. The decline, which is currently there, is primarily on account of transactions. And that's where this whole initiative on the low-cost meals and the value meals and the new promotions that Mr. Jaipuria talked about will help drive the footfalls and will help improve the situation on the transaction.
Okay. If I can squeeze one last question. Can you also give us a little bit more color on Vaango because you've been clocking double-digit same-store sales growth over the last couple of quarters, although ADS has declined a bit sequentially in this quarter. Can you see what -- can you explain what kind of trends you're seeing there and get more color on the format?
So Aditya, if you see Vaango is doing well on SSSG because of the older locations because that is how the SSSG gets calculated. The formula is 1-year old stores, right, whereas in Vaango also, we've expanded the footprint from a number of stores perspective. And in the 9 months that we've ended, we've opened almost 31 new stores in Vaango. And you would know that new stores typically start the journey at a lower rate and then they mature over a period of time, and that is what is driving the overall ADS numbers down.
The next question is from Percy Panthaki from IIFL Securities.
How do you look at margins going ahead, especially for KFC? I mean, we are in negative territory right now, but supposing we go into a minor positive territory, a low single-digit kind of SSSG for the next few quarters. In that kind of scenario, do we see KFC margins at around 17.5% to 18%? Or can it be better than that?
Percy, as I mentioned in the last call, we are targeting KFC to get to 19% to 20% margin at about 100,000 ADS, and we are tracking on that. It will take us a few quarters to be able to get there. But on an overall basis, we are confident that the kind of measures we've taken and once they start to kick in, and we are able to see the full results, at about 100,000 KFC ADS, we will be able to get to 19% to 20% brand contribution margins.
Understood. And these measures are more in terms of improving the ADS or are there any measures in terms of cost efficiencies also? And if you could just a little bit elaborate on them.
Both sides, it's ADS as well as the cost side. So on the cost side, we've relooked at how we deploy the labor, how do we consume the electricity. So it's basically, you are aware of all the store-level expenses. So we've taken a relook at everything deemed on a de-novo basis, and we've taken some measures as a result of that.
Understood, understood. Also, on international as a whole, what is the kind of growth that you are targeting for that piece, both in terms of revenue growth as well as in terms of number of stores for FY '26?
See, Thailand roughly as far as the store growth -- because -- I'm talking about Thailand because that's the largest piece there. Nepal is a small opportunity as we've discussed in the past. So Thailand, we are going to be targeting about 20 to 25 store count addition, which is roughly about 8% to 9% of the stores that we have. And then on top, we are targeting a SSSG of about 3% to 4% in Thailand. So therefore, that should give about 11% to 12% revenue growth on Thailand.
Nigeria seems to be kind of stabilizing as far as the currency is concerned. But right now, again, Nigeria, our objective is to stabilize the operations, bring the profit levels back because there have been huge losses as a result of currency devaluation. So therefore, Nigeria, we are evaluating the expansion, but there'll be very small numbers in Nigeria if that were to happen.
Right. And is there any visibility on Nigeria breakeven by when we can hope for that? And what are the losses on Nigeria on an annualized basis currently?
So Nigeria, okay, so let's say, for example, as I said, Nigeria, this quarter, we've seen currency stabilizing. So the brand contribution has come back very strongly as far as Nigerian business is concerned. So currently in Nigeria, our brand contribution sits at 20% plus.
Okay, okay. No, I'm just trying to understand for my modeling purposes for FY '26 full year versus full year of FY '25, supposing if the losses go away, then how much of a swing in rupees crore could I be sort of factoring in for the FY '26 numbers? I just wanted to understand that part.
I can work that number out for you, Percy, and then we can discuss it offline basis. But again, I would like to kind of talk about Nigeria, we would like to see one more quarter of currency getting stabilized and then kind of talk about those numbers.
And when you say brand contribution is 20%, would I be right in assuming that generally corporate overheads for a QSR format is about 5% to 7%, and therefore, your EBITDA margin also would be like in low to -- at least a low teens kind of a number for this quarter in Nigeria?
Yes, because Nigeria is a small business. So therefore, the corporate G&A is a little higher. But otherwise, directionally, you are absolutely in sync.
Next question is from Jignanshu Gor from Bernstein.
Manish, congratulations on an improving performance trajectory. I wanted to double down on one question on Pizza Hut. You said that any further growth in terms of store network or investments in marketing will be dependent on performance. So can you guide us what performance markers are you looking for to get convinced of a turnaround?
So it's typically, Jignanshu, as you know, I mean, it's ADS and SSSG numbers. And even on SSSG, we've seen improvement happening in the current quarter. What used to be double-digit negative a couple of quarters back, we are almost at a breakeven level. The industry has also seen a strong comeback on pizza. So that's how we are monitoring it. So therefore, that is what I meant.
Okay. Is there any specific ADS number that you have in your mind or a brand contribution margin number?
We will not be able to give you guidance on that.
Sure, no worries. If I can just follow up one more. This is regarding Vaango. I think we had aggressive store expansion last quarter, which has slowed down this quarter. But if you do a broad backward math, it seems the 40 stores that you've sort of added in the last 12 months are operating at far lesser capacity than the remaining 54. So is it something about the structural nature of the format, which is giving you pause in expansion? Or do you still remain very bullish about it? So I just wanted to get a handle on that.
Sure. So Jignanshu, if you look at when you're comparing, let's say, the base numbers to the new additions, the base has very, very strong operations on the airport also. And as you know, Vaango at airport does extremely well, and that is what kind of pushes up the base, whereas all of the new additions are typically in the food courts and high streets and so on and so forth, which operate at a lower level. Otherwise, for example, if I were to compare, let's say, like-to-like basis, the difference is only about the maturity profile of a store.
Okay. And hence, is the SSSG, let's say, 9.6% this quarter, is it different for, let's say, airport stores versus non-airport stores? Is that something you would be feel comfortable calling out?
It will be similar.
It will be similar, okay. And lastly, so in ADS terms, then you would expect this to sort of stabilize at a lower level than it was earlier as the mix of stores moves towards more high street?
Correct.
Next question is from Devanshu Bansal from Emkay Global.
Congratulations on reaching the store milestones. Manish, last quarter, we talked about experimenting with some marketing and pricing promotions in select markets, right? So how has been the response to such initiatives? And what is the margin impact of this in the current quarter?
Devanshu, it's been a mixed bag. For example, we've seen a good response on the KFC side to these promotions. We've not seen such a good response on the Pizza Hut side. So therefore, it's been a mixed bag. But on an overall basis, I think things are moving in the positive direction. And therefore, we are going to be recalibrating the marketing spends from January onwards.
Understood. Sir, just a follow-up on this. So Q3 is seasonally a stronger quarter, but the ADS is flat sequentially. So -- and we have taken these initiatives where you are indicating that the response has been good. So wanted to check the reasons for a lower pickup on a sequential basis in KFC? So just your thoughts on that.
So as I said in response to the earlier question, one is this whole location thing. And then we've also seen a very strong store addition in quarter 3. And that also, therefore, let's say, typically, let's say, when you have this kind of store addition, it impacts the ADS performance because any new stores would start at a lower level.
Understood. Last question, sir. You indicated Kerala, Assam, West Bengal not doing well for us. So can you either talk about the performance on the regions outside of these states, impacted states? Or if you could also -- if you could suggest otherwise the salience of these impacted states and what is the kind of improvement that we are seeing in these states?
Devanshu, we've seen a better improvement as far as SSSG performance is concerned for the states outside of these 3 states. These 3 states also have improved. And I think we have probably -- let's see how the number goes as we go along. We do expect that these states also probably have bottomed out, and that is the only difference, but they are not in line with the rest of the states. Now I think with the geopolitical situation stabilizing, we should see a better kind of picture in these states.
Any qualitatively, can you sort of indicate as in what is the difference of SSSG in these regions outside of these regions? Just to get a sense as in how things may turn up when sort of these states also recover?
See, I'll not be able to give you the exact numbers, but let's say, for example, if you look at the range of states that we operate in, I mean, on the higher side, probably the SSSG improvement sits at plus 10%, 15% also. And there are states -- so therefore, I mean, those are low weight stores, may not be adding so much weight, but I mean the range is wide. So it's not just a narrow range that I can tell you, and we'll be able to apply in the model.
[Operator Instructions] The next question is from Tejash Shah from Avendus Spark.
Manish, my question refers to your comment that the commitment was also one of the triggers, I'm sure it was not the sole, to expand or go aggressive on Pizza Hut store expansion this quarter. So given the subdued demand environment which you also called out and Chairman also called out in his opening remarks, I just wanted to understand how much flexibility do we enjoy on the expansion commitment? Was there an option to delay it considering that demand is still not in a great shape?
So if you look at, Tejash, our openings in this year on Pizza Hut are lower versus the previous year. And therefore, there is a flexibility available. But again, at the same time, we are very cautious that we should not be defaulting on our agreements. And that's how because, as you know, the DA works from January to December period. So therefore, we will be now kind of recalibrating Pizza Hut as we go along.
Sure. And Manish, given the team's experience with past cycles, we have seen first time in the listed phase, so just wanted to understand this aggressive expansion typically pursued during downturns, does it benefit us in full recovery cycle? Or do you want to wait for demand turnaround before acceleration on store expansion? Just wanted to understand from past experience, what has been more remunerative among these 2 strategies.
Tejash, see, it is a chicken and egg story, right? I mean if you were to look at our experience, the way we expanded during COVID time when nobody else expanded, and post COVID, we've seen great results. So -- and again, as you know, this business is not about putting up a large factory, that you create a capacity and then you can utilize for. I mean, this is about -- it's a brick-and-mortar business.
So you have to create store by store by store by store. And therefore, if we miss on the real estate opportunity, it's gone forever. If you are not able to create that whole bandwidth, it's not that, for example, if I were to say that there's a downturn of 3 years and I'll be able to open 400 stores together in the fourth year, it's physically not possible.
So it's a very different nature of business. And that's the reason we are kind of at it because eventually, if we all believe in the India story, and we all believe that India will grow, the economy will grow and the consumer sentiment will improve and the consumption will come back, then with the new budget and whatever steps the government has taken and will be taking, we should stand to kind of gain the most. As you've already experienced this -- as I've said, we've already experienced that during COVID time.
Very clear. And the last one, if I may, in the history of the company, both for Pizza Hut and KFC, what has been the most prolonged downturn cycle that we would have seen? Is this the current one the most difficult one or there is a history of such cycles in the past also?
See, in the past, Tejash, we've never had this kind of scale, right? So it's a combination of a slowdown in the consumer demand and consumer sentiment. And at the same time, we've been doing aggressive expansion also. So it's a combination of those two.
Now expansion is a very conscious strategy that we've undertaken. And we are confident about expansion because all of the expansion is happening on smaller formats, where the payback periods are strong. So therefore, as we see the consumer sentiment coming back, it should greatly benefit us. But at this scale, obviously, we've not experienced things in the past because it was a smaller operation in the past.
Next question is from [ Amal Chaudhry ], who is an individual investor.
Am I audible?
You are audible, Amal.
[Foreign Language]
[Foreign Language] let's say, key equipments on the CapEx side. [Foreign Language] But as far as operations are concerned, [Foreign Language]. But otherwise, on raw material side, packing material side [Foreign Language]. Obviously, because of the currency, the international operations also get consolidated [Foreign Language] but that's only a translation effect rather than a transaction effect.
Okay. And next is [Foreign Language].
So if you see Vaango is a healthier brand in our portfolio. South Indian brand is supposed to be the most healthy food in the country. So therefore, we already have that portfolio. Within KFC also, we have a range on the -- while our dominant range is fried chicken, but we also have grilled chicken available. Similarly on the pizza.
Therefore, we have a good balance. Even the newer brand, for example, SANOOK KITCHEN, [Foreign Language] it is a healthier brand versus the other brands that we deal in. So therefore, SANOOK, again, we are going to be positioning on that basis. So we are conscious of what you are saying, and that is part of the strategy.
Okay. [Foreign Language].
We've introduced and we have experimented with KFC coffee in some of the outlets. Now obviously, this is a different strategy versus, let's say, what McDonald's is doing by way of McCafe or what Burger King is doing by way of BK Cafe because they operate large stores. And therefore [Foreign Language] strategy [Foreign Language] to bring the formats down to focus on the core, to make it more efficient on the paybacks and the margins, and that is how we are operating.
Because if you see over a period of time, the trend in the QSR industry has seen more and more home consumption, and that you would have seen with all the brands. If you were to look at last, whatever, 3 to 4 years, even post COVID also, the home consumption is going up for the entire industry, it's going up for all the brands. And therefore, in that scenario, we are highly focused on the format of the store rather than large formats.
[Operator Instructions] Next question is from Latika Chopra from JPMorgan.
I wanted to check with you on your thoughts around this quicker 10-minute delivery platforms, which are announced by the leading food aggregators. How do you view this? Is this something which is feasible for formats that you run? Do you see this as an opportunity or a thread from a snacking perspective?
See, typically, what they are talking about, Latika, is all around the snacking platform, right? And that snacks -- those snacks are typically ready-to-eat snacks, which have always existed. So let's say, for example, typically, in any Indian household, any quick eating snacks are always part of pantry.
So therefore, the way we look at it, as far as fresh food is concerned, there is a cooking time and there is a delivery time, although we've kind of -- we are also in discussions with one or two players in terms of how can we participate and experiment.
So for example, let's say, just to give you as to how the dynamics work, take the example of Pizza Hut. Now Pizza Hut, the pizza is prepared after you get the order and the preparation time itself is about 7 to 8 minutes, depending on the pizza, it could be 9 minutes also. And then you have the delivery time.
Whereas if you look at a brand like KFC, KFC operates on a ready-to-eat basis, and therefore, KFC can easily participate in that journey. So we are in discussions. We will be experimenting with this. Let's see how it goes. There could be some menu items which can always participate in that whole 10-year journey, but let's see how kind of shapes up.
Understood. The second bit was just trying to check if there had been any change in agreements or any kind of inflation you've seen with any of the aggregators?
No, not yet. So the discussions are on because, obviously, there has been a pressure from the aggregators. But so far, we've managed to hold and it's fine.
All right. And the last bit I just wanted to check was on the 3 QSR brands that you're planning to bring and launch in India. The time lines remain from April this year onwards?
Yes, we are on track from quarter 1 of next financial year.
The next question is from Aliasgar Shakir from Motilal Oswal Mutual Fund.
Just a question on -- a little bit on the outlook. So as even Tejash was asking, this has been a little longer cycle of weak environment for us, and we've seen maybe about close to 8 to 10 quarters of weak outlook. Now that you are hinting that there is some recovery, just if you could give a little more pointed clarity in terms of how is the situation on the ground?
Are we, after 2 years of negative base, thinking of flat SSSG? Or do you think that things can improve from here, we are talking about a positive SSSG in the next couple of quarters? And what kind of margins do you think will it take time for you to come back to the 19%, 20% margin that you have mentioned? Or if we do the 5%, 10% kind of SSSG bracket, then we should be able to reach that kind of margin?
Sure. So, Ali, as you -- I mean, you're seeing the numbers of the QSR industry, and we've seen that kind of turnaround happening with almost all the brands. We've seen that in our numbers as well. And that gives us the confidence that maybe things are turning around. As we've said that we've seen, let's say, for example, quarter 3 is a festival quarter. We've seen bigger throughputs happening on those festival days, which again is an indicator that the consumers are opening up their wallets.
So therefore, SSSG turning around is one of the paramount factors to be able to make sure that we kind of come back to our original margins. Irrespective of that, we kind of took the steps in the previous quarter. We've seen the impact of -- for the results of those steps coming in the current quarter. So we are confident that, as I said, to Percy's question, that about 100,000 KFC ADS, we should be able to come back to our original margins of 19%, 20%.
And in the current quarter, are we seeing signs because I'm just asking from the point of view that there's 2 years of negative base. So on this base, are we seeing signs of SSSG bottoming out in the coming quarter?
It's been a mixed bag because as we operate in multiple states, multiple kind of factors impacting various states but now with the budget coming in, with the geopolitical situation stabilizing, I think we are hopeful that things should kind of turn around.
[Operator Instructions] As there are no further questions, I'd now like to hand the conference back to the management team for any closing comments.
Thank you very much. We hope we have been able to answer all your questions satisfactorily. Should you need any further clarifications or would like to know more about the company, please feel free to contact our Investor Relations team. Thank you once again for your interest and support and for taking the time out to join us on this call. Thank you very much. Bye.
Thank you very much. On behalf of Devyani International Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.