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Barbeque-Nation Hospitality Ltd
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Ladies and gentlemen, good day, and welcome to the Barbeque Nation Hospitality Limited Q4 FY '22 Conference Call hosted by AMBIT Capital. [Operator Instructions] Please note that this conference is being recorded. I would now like to introduce the management for today. We have with us Mr. Kayum Dhanani, Managing Director; Mr. Rahul Agrawal, CEO and Whole Time Director; and Mr. Amit Betala, Chief Financial Officer.
I now hand the conference over to Mr. Kayum Dhanani. Thank you, and over to you, sir.
Thank you very much. A very good evening, ladies and gentlemen. I take the pleasure in welcoming you to quarter 4 FY '22 conference call of Barbeque Nation. We are happy to announce yet another remarkable quarterly operating performance at Barbeque Nation. The quarter started with a strong Omicron wave leading to dine-in operation restrictions. However, recovery post the third wave was equally steep, leading to a strong revenue growth during the quarter. Over last 2.5 years, the business has effectively sailed through 3 COVID waves, led by strong resilience of the brand and the team.
We have seen diminishing impact of these waves in our business. Despite the third wave, the company reported a quarter 4 year-on-year revenue growth of 11% and an SSSG of 5.5% and EBITDA margins of 20.1%. Even though FY '22 was impacted by 2 COVID waves, the company has crossed pre-COVID FY '20 revenues with year-on-year revenue growth of 70% and SSSG of 64.7% and an EBITDA margin of 18.6%. The business has structurally become more robust, led by young and professional management team, a strong balance sheet, diversified revenue stream and profitable presence across multiple geographies and brands.
The company has proven track record of diversified growth engines like UBQ, Toscano and Barbeque International. We have continued our growth in store count and added 12 new restaurants during the quarter, taking the overall store count to 185 restaurants. We have also upgraded our restaurant designs with newer look and feel, thereby further enhancing guest experience. With this momentum, we are confident of growing our restaurant strength by 35 to 40 restaurants in FY '23.
Over the medium term, we plan to take over network to 300 restaurants by FY '25. While COVID-related worry seems to be subsiding as of now, the current operating environment has been challenged by a multiyear high inflation. While the input cost inflation has been significantly higher, the impact on our gross margins was limited due to improved operational efficiency. We will continue to take required measures to maintain our gross margins and profitability.
With this, I will now hand it over to Rahul to take you through the performance of the company during the quarter. Thank you.
Thank you, Kayum. Good evening, everyone. I hope you and your loved ones are safe and healthy. We faced the impact of 2 COVID waves in FY '22, despite which the recovery has been strong. In FY '22, we recorded 70% growth in revenue and 23% growth in EBITDA. Our delivery business has grown by 157% over FY '21 and dine-in business has grown by 54% over FY '21. Notwithstanding the impact of third COVID wave during the initial period of the quarter, the recovery in the second half of the quarter was quick and steep. Our operating revenues for quarter 4 FY '22 were INR 251 crores as compared to INR 226 crores in quarter 4 FY '21, thereby registering a growth of 11% over the previous year.
We reported same-store sales growth of 5.5% in the quarter and approximately 65% for the full year FY '22. During quarter 4 FY '22, our dine-in business has grown by 4% on a year-on-year basis. Dine-in business was impacted in the first half of the quarter by the Omicron wave, but recovered well during the second half of the quarter, which led to a year-on-year growth of 32% in the month of March versus March 2021. The share of delivery revenues to total revenues increased from 18% to as against 13% in quarter 4 FY '21. The delivery business has stabilized well, and we have not seen any noticeable cannibalization despite ramp up on the dine-in business.
Our restaurant network expansion has ramped up during the quarter with 12 new stores opened in quarter 4, taking the overall store count to 185 as on March 2022. We further added 3 new stores in April 2022 and have a robust under construction pipeline of 14 restaurants and an equally strong pipeline of work in progress stores. Our reported EBITDA was INR 50.4 crores in quarter 4 FY '22 versus INR 56.1 crore in quarter 4 FY '21. Without the impact of Ind AS 116, the quarter 4 FY '22 EBITDA was INR 22.8 crores, which is 9.1% EBITDA margin, as against INR 31.3 crores, which is 13.8% EBITDA margin in quarter 4 FY '21. The reduction in EBITDA margin during the quarter were predominantly due to the impact of COVID wave 3 and inflationary pressures on input costs. With strong recovery in the business in the month of March 2022, the EBITDA margins have also recovered to normalized levels.
With this, we'll now open the floor for interactive Q&A session. Thank you.
[Operator Instructions] We have the first question from the line of Percy Panthaki from IIFL.
First question on CapEx. In your cash flow, the CapEx is about INR 93 crores. If I adjust for the CapEx on the cloud kitchens, which might be about INR 3 crores to INR 4 crores and increase in the capital work in progress, which is another INR 15 crores, we should see CapEx of about INR 75 crores approximately adjusted for this. And on the basis of 21, 22 restaurants that we have added on a net basis that works out to close to about INR 3.5 crores per restaurant CapEx. Our understanding was that this number would be in the region of INR 2.7 crores or INR 2.8 crores. So can you just explain what is the reason for the higher CapEx per store?
Yes. Percy, so the numbers that you mentioned are correct. So INR 93 crores from the cash flow statement, INR 15 crores from capital work in progress. That makes around INR 75 crores as the CapEx incurred during the year. On these INR 75 crores, we have around INR 3 crores for extension kitchens, which leaves INR 72 crores. We have another INR 8 crores to INR 10 crores on maintenance CapEx, which is what we normally do, around INR 5 lakh per restaurant. So that leaves around INR 62 crores. And we have added 21 new restaurants in the year and we have 2 closures, right? So the net new additions are 23. So on these 23 stores on INR 2.7 crores per outlet, we have around INR 62 crores of CapEx. So broadly INR 62 crores, around INR 8 crores to INR 10 crores on maintenance CapEx and around INR 3 crores on EK. So that makes around INR 75 crores.
Okay. Okay.
So despite the inflation also on the CapEx side, we have managed to maintain the average CapEx of INR 2.7 crores per outlet.
And how would this trend in FY '23, given the inflation in commodities, et cetera, the CapEx per store?
So we will try and maintain the same number. I don't think we'll reach that. Yes, there has been inflation, even on the CapEx side, but we've also been very strategically passing on some of the CapEx on the landlords and taking up of the buildings wherein some scope of work is going on the landlords. So that helps us to manage this. And with some more work done on value engineering side in terms of the project, we have some rationalization on the unit space. At times, we have very strategically taken smaller space, not delivering the entire space, to just manage with number at INR 2.7 crores. And I don't see, even with the current inflation, this number should not get hit.
Right. In terms of store openings this year, we've had a very back-ended store opening. So do you think the same kind of phenomenon will repeat next year or it will be evenly paced out across the quarters?
No. It should be evenly based out. The reason for the current year back ended is we closed our fundraise by around end of last year, right? And then immediately after the close of fundraise, we've entered into a COVID second wave, right, and to that extent, a lot of the disruption in terms of how the BD team or the project team operated. It should not have happened, but yes, it happened. And our typical cycle of a restaurant or a site coming inside the system to launch is approximately 150 days. So even during the second quarter, we were very comfortable with the pipeline of new stores. And that's why you'd see -- as and when they started coming on board, you saw around 7 sites last year -- sorry, in quarter 3 and 10 -- 12 sites in quarter 4. This quarter onwards I see a steady opening of around 3 to 4 sites every month.
Okay. Secondly, just wanted to touch upon the pledge issues. Recently, RBL sold off some of the shares which were pledged. So what was the reason that they had to sell the shares pledged? Was there any kind of default on the loan servicing or something like that? And if so, what was the reason behind that?
So Kayum, would you like to take that?
This is the operator here.
Yes. Kayum?
Yes.
Yes. Would you like to take that?
Actually Mr. Dhanani had dropped from the call during this question. We just reconnected him back. So the participant may have to repeat that part of the question.
Okay. So what I was asking is that recently, RBL Bank has sold off some of the shares, which were pledged. So what was the reason that they had to sell this off? Was there any kind of default on the loan covenants or servicing? And if so, what was the reason behind the same?
Basically, they -- RBL was part of the consortium or rather is part of the consortium of bankers where -- in my other company, other business operations, where they had this -- the Barbeque Nation share as security. And during this COVID, we have had some issues with the other business and whereby, while the restructuring process was going on, they have taken a call. They have decided to offload the shares in the market and recover their part of the loan because their committee wanted to come out of this association. So this is what they have done. It was definitely not in our control, and this is what has happened.
Okay. Sir, just a lot of investors have been asking what is the sort of endgame for this as far as resolution of the promoter debt is concerned. Would it be possible for you to share any kind of insight on this?
So as far as the debt is concerned, the post-COVID, there were issues with the other businesses. And just like Barbeque Nation, we have deleveraged ourselves in multiple ways. And the restructuring process is also almost through with other banks. And business has improved a lot post-COVID. I don't see any such events happening in future. And I can assure you that -- and, of course, there are -- these pledges were, of course, disclosed even before the IPO. And then there is hardly any pledge of shares is pending with -- of Barbeque Nation with any bank now.
We have the next question from the line of Trilok from Dymon Asia.
So we obviously -- when I look at the numbers now, we are doing nearly INR 50 crores EBITDA on a quarterly basis. So based on the initial comment that you had about 300 stores in next 3 years. And is my understanding correct when you said -- what's the FY '23 addition number that you're targeting in stores -- revenue total stores?
So we are planning to add around 35 to 40 restaurants. So we'll reach anywhere between 220 to 225 restaurants in total.
Okay. So my -- obviously, the first question was, is it fair to assume that -- what I was thinking from a per restaurant perspective and the total addition that you will end up doing in next 2 years, at least till FY '24. You might see -- at least have probability of in a normalized year, let's say, in FY '23 at least, the possibility of -- for an EBITDA sort of doubling in the 2, 2.5 years from here on, assuming FY 2024 there is no external disruption. Is that thought process correct? Or do you think there is something else that we're missing some other points?
So based on our model, like we have always also mentioned, we believe we should do around INR 7 crores of revenue per outlet at a store margin of approximately 21% and a corporate level EBITDA margin of approximately 15%. The numbers that you will see in FY '22 would have in at least 2 occasions impacted by wave 2 and wave 3. To that extent, there is some disruption. But otherwise, in our month-over-month number that we see -- like we also mentioned in the month of March, which was a pretty normalized month for us, the business has pretty much performed at the same level.
So our priorities today is continue to expand the network in a thoughtful manner, try and maintain your rent percentages at the -- as a discipline that we've maintained over last 15 days, and keep the guest excitement on, so that this percentage of INR 7 crores should maintain, right? And on a normalized basis, we expect a same-store sales growth of around 5% to 7% on the existing portfolio. Obviously for FY '23, given that FY '22 numbers were slightly impacted by second and third waves, FY '23 strictly on SSSG basis would be far higher, but on a normalized basis...
Yes. That's obviously a function of [ base ].
Yes.
So, just to add further. When you say 21%, this is pre Ind AS, correct, margins?
Yes. Yes. So all the numbers that I mentioned was pre Ind AS.
And when -- just from a delivery perspective, we had started as an experiment and now we are seeing this kind of numbers, INR 45 crores you guys did this quarter as well. So where do you see that settling or do you think the delivery probably will phase out once normalization returns? Any thoughts, because this quarter also in some manner you had some benefit of wave 3 also impacting you. If you can give your thoughts or color on how should we think about delivery revenues going forward.
So first of all, no, delivery was not an experiment. Delivery was a very thoughtful exercise that we wanted to do. We actually started it in November 2018, right? So we ran it almost 1.5 years pre-COVID also. But the real attraction in this business came in post COVID. It got accelerated. And also pre-COVID we didn't have Barbeque-in-a-Box. During COVID times we launched Barbeque-in-a-Box, which has got phenomenal response from our guests. And that's why you see almost 7x, 8x growth in delivery over FY '20 base. It has always been a priority for us, right? And as the industry delivery volumes are going up, we're also benefiting from that. On the smaller base, obviously, our growth rates are far higher.
So our plans on delivery would be to keep growing it at almost 20% CAGR over next few years. And I don't think it is a substitute to dine-in. Like you see over the last 4 quarters, despite the fact that the dine-in ramp-up has been extremely strong, our momentum on deliveries had also has been continuing extremely well, right? So even if you look at as compared to previous quarter, which was a seasonally better quarter, our delivery revenues have been holding up pretty well. I don't see that there is any risk of cannibalization from this. If at all, we plan to only grow it higher.
Understood. And if I may ask, there is a lot of inflation that we have seen across food items, and you would also be facing across other items apart from food as well. What sort of gross margins or what kind of price hikes do you plan to take or you have already taken any will help us to mitigate gross margins? And how do you -- how do you plan to tackle inflation in the near term or at least near to medium term?
Yes. So it has definitely impacted us also. In quarter 4, we did not take any price hike. We actually, I would say, entered quarter 4 with Omicron wave. And then in the month of March, the priority was to get as much volume as you can. And I'm happy to see the volume numbers that we saw in the month of March. In the month of April and May, both the months put together, we have taken approximately 5% price hike, which should help us to reclaim the gross margins that we used to do earlier. Also, during quarter 4, while the impact of inflation was far higher, a lot of work on the ground done on managing the consumption per pax of various high commodity items, menu reengineering, tracking our wastages, trying and having as much precision on forecasting as possible. So those measures were taken, and that's why the impact that we see on gross margin is far better than actual inflation. Having said that, this quarter, we have taken price hike and we're already seeing that the gross margins should revert back to where it used to be earlier.
So whatever pricing that you've already initiated will be sufficient to take the gross margin back to maybe the previous level. Is that -- and is there any -- I mean, intuitively obviously, it's very -- it's not a price sensitive, price elastic, inelastic segment. But have you seen any impact or what kind of -- has the price hikes been well accepted by the customer? What kind of -- if you can give some quantitative sense how the April has been? Or has the trend been as good as March or it's like lower than that?
So yes, it has been. Well, April month had 2 seasonal impact, one is the month of Navaratra and also Ramzan, right? So in both these months, there is some impact on non-veg consumption, Navaratra, and then Ramzan the veg consumption goes slightly lower, right? So barring that impact, I think, the volumes have not been impacted by the price hike. Also like that, our value proposition is that we are a value for money brand, right. So we want to maintain that. But having said that, we are also a celebration-driven brand, right, which means that if somebody is coming in a group of 4 or 5 and spending approximately INR 4,000 for the meal of 4 or 5, that INR 4,000 is going up to INR 4,500 also does not pinch that strongly, right, to the customer base that we adjust to.
So I think the business has got flexibility to take price hike in the range of plus/minus 5% to 10%. But it has to be done in a calibrated manner so that the value for money perception of the brand should not go off the track, right? So it's the tactical balance between the 2 that we keep taking. And like I said, the price hike that we have taken in quarter 1 is good enough. In case the inflation further goes out of whack, I think the business has headroom to take some more price hike to maintain the gross margins.
[Operator Instructions] I now invite Mr. Harit Kapoor from Investec to address the management.
So just the first question was around the gross margin side. You just said that this 200 bps contraction is largely due to the cost side, that you're not able to kind of offset it with the pricing. So Rahul, assuming that you've passed it on and things are normalized, you should kind of get back to your erstwhile level. My question was more on fiscal year '24. If you have a normalized commodity cost environment, some of these on-ground benefits -- on-ground initiatives that you've taken, could some of those fructify into gross margin improvement? Maybe in the last few months, these initiatives are not fructified because of the high inflation. I just wanted to get your sense on gross margin slightly longer out apart from these last 6 months -- apart from the next 6 to 9 months.
So that will be. And barring inflation, if I just look at the same pricing level -- at the same consumption level that used to have in, say, FY '20 versus now, there is benefit on the gross margin levels, right? So I think longer term, if you look at 3 to 4 years, we would endeavor to take this gross margin percentage from anywhere between 65% to 66% that we currently have to a band of at least 67% to 68%, right? So those measures will keep impacting the business.
And on the -- just as a follow-up on this. So you said about the 5% price hike. Have you guys seen that across dine-in formats, [ whichever ] and seating? So across dine-in formats, price increases would have been kind of taken place. And so to that extent, you're kind of competitively neutral?
I tend to believe that. So based on my recent checks in the industry, yes, this inflation bit is pretty much impacting everyone. And I would assume that they would have taken that -- our industry is highly unorganized, right? So what you see in 1 local trade area in say any metro markets can't be very clearly brushed up across the country. But as a brand, having presence across 82 cities, data from close to 95 restaurants, the price hike impact on volumes, we have not seen that. Plus, some of the other important metrics to track in this case is cancellations, right? So the moment you have price hikes and the customer feels that the overall cost is going to be higher, you will see a spike in cancellations, which we have not seen between pre-price hike level and the post-price hike level.
Got it. And last thing was on the March performance. So you mentioned that margins are kind of -- EBITDA level margins are kind of back to erstwhile level. And from a year-over-year basis also you spoke about 30% odd growth. I think March last year would have partly been impacted due to -- last week maybe would have been impacted due to the second wave. So of this 30-odd percent -- and then also you had incremental restaurant additions. So what would be your estimate of kind of SSSG for March?
Just for the month of March must be around upwards of 20%. So overall, top line for the month of March basically was around INR 95 crores. And I think -- I don't often remember the SSSG number for the month of March, but it should be around 20% plus.
We have the next question from the line of Avi Mehta from Macquarie.
My question was again on inflation. First was essentially which inputs have seen the most inflation? And what would be the rough quantum? If you could kind of give us a sense of where is it that we are seeing that?
So largely meat, so our meat basket is approximately 40% to 45% of our total food cost. And during the entire quarters and months, we've seen varying rates. Our -- prawns were slightly higher in the month of January. It subsided -- it actually came down a bit in subsequent months and then subsequent months chicken prices went up in early double digits, right? So it's pretty much a mix of both the commodities. Fish also is largely imported. So we have some impact due to the supply chain disruption that was -- that is actually continuing for a long period of time now, right?
So it's all put together, one advantage that we have is that given that we don't have a fixed menu and we offer all you can eat, we do also have to actually to juggle between these commodities and add extra dishes of maybe more affordable items and lesser on the high cost items, right? So that menu engineering is again a very operating call, which we will take on the ground by tracking the food cost per cover very closely. And our analysis are extremely strong. So that's why in quarter 4, despite the price hikes that we have seen and the input costs, despite not taking price hikes, we have actually managed very good gross margins.
Got it, Rahul. So essentially, about half of the input basket, which is meat, is seeing a double-digit inflation, which is what you're now going to pass to that 5% price increase? That's the correct way of...
Yes. Yes.
And last question essentially was to kind of just understand the historical context. Last time when you would have seen this food inflation, could you give us a sense on how was our brand performance because we don't have that data? But maybe you could kind of give us some understanding how was that then and how are things different versus then. Just to kind of have some context around where inflation level is. How have we responded earlier and what are the levers we have essentially?
So without talking about any specific period, but if I look at last 8-year history of Barbeque Nation's performance, the CAGR on inflation is what we know. The food cost per cover CAGR would not have been more than 2% or 3%. In fact, on a per cover basis, it would be lower because of various efficiencies that have been coming to the system as the scale has dip down, right? So if I compare a period of 2014, 2015, the gross margins would be around 61%, 62%, which has moved up to around 66% now.
So that has happened. And the price hike -- barring the current price hike, if I look at the average per check CAGR over last 5 years, it would come to around average CAGR of around 2% to 3% only, right? So I think overall margin improvement that has happened has happened both from internal efficiencies and benefits of scale and not requiring to take the price hike. I think in the current operating environment, a good thing is that in the past, we have -- we have room for -- to take these price hikes, and we have utilized that in the current quarter.
We have the next question from the line of Ashish Kanodia.
So on March, you talked about closer to INR 95 crores kind of revenue run rate. So just wanted to understand where is the restaurant...
Sorry to interrupt you, Ashish, but your voice is not very clear. Request you to go off the speaker phone.
Yes. Is it better now?
Yes. We can hear you clearly enough.
Yes. So Rahul, on [Technical Difficulty] operating margins, right, when you look at your PPT. So even for the fully operational stores, the margin was around 15.5%, and I see the disclosure that there was some restriction -- even for fully operational store, there were a few constraints, right? So is it possible to give some color on where these margins have been, say, in March or April?
So recovered in March to normalized levels. Also in quarter 4 full ops has operating restrictions like sitting restrictions and dine-in restrictions. Unfortunately, operating leverage obviously takes negatively when your base top line is not achieved, right? And as a team, we have taken a conscious call of not cutting down cost so significantly. And I'll tell you what I mean by that. In our industry and like many other industry, we are facing attrition a lot, right? We are in a phase of the company wherein we are looking to expand more restaurants. So at that point of time, managing your employee cost by reducing your manpower doesn't make any sense, right?
So we have actually carried the entire manpower and that is helping us now when we are expanding very well. And those sort of things have impacted the month of March. Rental waivers, which we used to get during previous COVID periods, have been very minimum in the third wave, largely because most of these landlords have supported us very well during the first 2 waves. And that percentage has actually come down in the third wave. So dual impact of both these high fixed costs, which is manpower and rental. The margins during the third wave were actually low. As compared to the previous COVID periods, they are far better, but as compared to a non-COVID normalized month it was low, right? But in the month of March, now we have seen store-level margins coming back to close to 20% that we used to have. And this I'm talking about the portfolio level, right?
Sure, Rahul. That's very helpful. And secondly, on the extension kitchen side, now you have around 15 extension kitchens. So what's the thought process on that maybe more from a 2-year, 3-year perspective? Do you see this 15 extension kitchens becoming, say, around 50, 55 or even higher than that in the next 2, 3 years? And where do you see -- and once you ramp up those extension kitchen, where do you see your delivery revenue kind of stacking up?
Yes. So on the extension kitchen side, one, their contribution to overall business is very low, right? We have tried those as an extension to reach to our guests to more closer to where they are. And with 15 on board, we don't expect to add more than maybe 2 to 3 in the short term. I think we'll wait for the revenues to also start tracking up in a manner that these extension kitchens reach to a 15% at least store level margins. Right now, we are not -- they are at early single-digit in EBITDA margins. They do give us kitchen infrastructure which can be actually utilized to further leverage your delivery portfolio. And that's the thought process there. I would say it's still a work-in-progress strategy.
It's very difficult to give a firm number or number of extension kitchens. It's a small capital outlay. We're very nimble in terms of deciding that. If we find that some of our nearby Barbeque Nation outlets have been very good on delivery, they are actually also leading to some metrics not being at par with where it should be because of huge volumes pre-COVID in open extension kitchen, right? So I would say, wait for maybe 2 more quarters to see how this unfolds. We're also not in a hurry to prove that. We'll just take it very cautiously.
We have the next question from the line of Prateek Poddar from Nippon India Mutual Fund.
Just one question. I heard you talked about 50% Y-o-Y growth in the month of March. Just a bit puzzled when you said that margins would have normalized in the month of March, with 30% growth on a Y-o-Y basis and last year March was fairly normalized, if I'm not wrong, your ROM should have gone up, right?
So if you look at INR 95 crores, quarter 3, also we did approximately similar numbers, right. We did around INR 285 crores, which is the average of INR 95 crores. We did pretty much similar numbers in the month of March. And in the month of -- in quarter 3, also our restaurant operating margins were around 21%. So it's pretty much at the same level, Prateek.
Okay. And second question is -- was just if you could talk a bit about your delivery business. Since you've not taken any price hike, I'm assuming that the sequential decline is all volume decline. Anything to read into this because we had the wave. So I would have thought this should have gone up. Or was it that this time the wave had a negative impact on delivery business, because most of the guys had COVID, right, so?
No. So I think -- I didn't notice any significant increase in the delivery volumes because of the third wave, not for our business also. In the third wave, what has actually happened is that the volume has gone up -- overall transaction volumes. The average price check has come down. And this is -- in our case, it's actually more because the -- there is shift between -- shifts from more items in per order or earlier the consumption per order was maybe done by groups of between 2 to 4. And now, that has gone to single consumption orders, right? So even though the order book -- the order volumes have gone up, because of the decline in the average per volume, overall sales volume has come down. Also, quarter 3 was a seasonally better quarter right? So on a like-for-like basis sales are well maintained.
And given that we have had some experience around delivery now, what's the repeat percentage? Like how many customers are repeat on the delivery business?
We don't have all the data because a large portion of our business comes through aggregators.
And on your app, so I remember in your PPT you've talked about 25% of the business, but I'm assuming that would be also on the dine-in side where people will be reserving online on the app? But just on your app anecdotally, if you were to see, is there a decent repeat customer base who's coming and having frequent usage of...
Yes, a large portion. Also a large portion of our delivery orders on app have the Barbeque loyalty points applied, which is a smile points. And we are slowly and steadily seeing very good adoption of the Barbeque loyalty points also. So the repeat business on our app is very high, which is driven by the mix of both loyalty points and number of repeat customers on the platform.
And lastly, I just wanted to check. At least when I was doing this anecdotally, I see a pricing difference between aggregators and your own app for UBQ or Barbeque-in-a-Box, right, those formats. Any specific reason? Or how should I think about that?
No, there should not be on the MRP side, but maybe because of some promotions being running on different platforms, some from our side, some from aggregator side, you might see a price difference. But otherwise, on MRP level, both are same.
We have the next question from the line of Manish Poddar from Motilal Oswal Asset Management.
Just 2 questions. First one is, would you be able to help me understand the new stores which you're signing, what is the rent as a percentage of sales?
Look, the sales ramp up has to happen, right? So if you look at the new stores, they're not in -- last quarter would not have run for more than 3 months, right? So as the sales normalize based on our projections, these won't go beyond 10%, say, by year -- in the year 2 sales.
Okay. Because when I look at other expenses, let's say, divided by the store, just accrued, we are not taking average, when I compare to the base quarter versus this quarter, there hasn't been any inflation as such. This was number of roughly about INR 4 million odd other expenses per store. So what are the savings which you're getting here? Or is it largely due to the Jan month being not there?
No, it's largely Jan month. But otherwise, on the rental side, are the new leases better than the averages? No, but one different from the new lease also is that it's most due to our metro markets. So technically they may have higher rentals. But despite that, our rentals on the new leases would be at pretty much same level of around 10% to 10.5%.
Okay. And just one thing. So we haven't seen a normal quarter for quite some time and we don't have the trading history. So is there any seasonality in the business as such, let's say? Should one look at numbers sequentially or do you all look at numbers Y-o-Y generally?
Yes. There is -- so typically, in the entire year, quarter 3 is pretty much the best because of the festive season, right, followed by quarter 4 because of a good January that you'd normally see. The initial days of January also helps you a lot. Then quarter 1, some school holidays that you see. Quarter 2 is typically the worst because of rains, because of Shradh, because of Shravan. Some of these impact non-veg consumptions, right? So that's the way it is. But broadly, your H1 should give you approximately 45% to 47% top line and H2 gives us around 53-odd percentage top line.
We have the next question from the line of Varun Singh from IDBI Capital.
Sir, my question is on Toscano, La Terrace and Collage. Sir, how is the business over here? Because now it's been close to 2-odd years since we acquired Red Apple. And so now just wanted to understand how the business is tracking. How the health of the business is? And how we are thinking about expansion in these 3 franchisees in future?
Yes. So just one clarification. Toscano, Collage and La Terrace -- both La Terrace and Collage are actually sub brands of Toscano only. So all 3 are part of the same Toscano brands. Those 2 are not different franchisees. We have taken a swift call to move to a multi-cuisine in one restaurant only by the name of Collage. Rather we're doing Toscano. So as a strategy in the long term the only brand that we want to grow is Toscano and not spend bandwidth on multiple brands, right? So that's Toscano. It has grown extremely well. Between last year and this year, the revenues have actually doubled.
And despite in FY '22, there was impact of obviously 2 waves, which also impacted Toscano, it's stepping up pretty well. The margins are very strong there. We have closed 1 restaurant this year on -- in Toscano and we've opened 1 more restaurant this year, so the net number didn't change from 11. But subsequently, we have opened one in the month of April. One more is opening up in the month of May. And the plan is to take the store count from 11 to approximately 16 to 17 by end of this financial year, so almost 50% addition on the existing base.
Run rate revenue-wise it is doing extremely well. And in fact, both Toscano and international business, both of these businesses has moved to a current monthly run rate of upwards of INR 6 crore per month, each individually, right? So I think both of these are very strong, profitable franchises and in a good path to grow. Our long term on Toscano is that we want to take it to 100 outlets. And if I look at Barbeque Nation in 2013 also was around 18 outlets, and now we are close to 168 outlets in Barbeque Nation. That's the growth story, which I believe Toscano should also take. The brands have all the attributes to reach the same story.
Understood. Understood. And sir, my second question is on the delivery business. Sir, what are the metrics that we are tracking to understand the robustness of the -- like I understand one of the participant has asked about the repeat customers' data in case if we are tracking to that category. But if not repeat customers, sir, how we are kind of making a measurement of how strongly we are able to drive growth? Not just growth in numeric terms, but the quality of the delivery business. And so if you can share some view over there, sir, that will be very helpful.
So we don't keep customer data, but there's a lot of operating data that flows on each side, right? We obviously track daily ADS on delivery by store. We track the KPT which is kitchen prep time by store. There is something called MFR, which is mark food ready by our guests, timing between mark food ready and the actually order being picked up. So there are a lot of operating metrics, the overall delivery time to the guests. There are also data on how many customers were at say different side with your food, right? So there's something called IGCC for Swiggy and [ ORX ] for Zomato. So these data flow to almost all the brands, and we have organized this in our own internal MIS platform. And we track it across all our restaurants.
So these are on the operating side. Obviously ratings, which has -- like I said earlier, has improved significantly. So those are all working extremely fine. A lot of data on menu, so which product is working, which is not working, what needs to be done or what can you add to the basket, how many customers order the box and then also order additional breads. So these data are all available, and there are a lot of data crunching that has been happening at the back end on all of these metrics. And that's why we see the delivery business reaching where it is today. So there's a focus team who look after delivery business in our company and is growing that.
We have the next question from the line of Riken Gopani from Capri Global.
I have 2 questions. Firstly, on the expansion of stores. You now target about 35 stores to be opened. If you could share some color in terms of have you accelerated this expansion plan? And if so, what are the kind of geographies that you intend to expand this in terms of tiers or Tier 1 or Tier 2? How do you intend to accelerate this?
So we would like to maintain the current mix we have, around 70% in metro in Tier 1 and around 30% in Tier 2, Tier 3. If you look at this year, we have more skewed towards metro and Tier 1 markets. I think the rentals in some of these markets are also sensible. And we actually don't just look at this geography we have to go. We are very conscious about what kind of sites we sign. So at any point of time, we would have a pipeline of almost 2x of the number of stores that we want to do. And one thing that we have learned over last so many years in this business is that you cannot overpay on your rental commitments. Otherwise, your economics will just get distorted. And having put in that CapEx to grow that store, it's very difficult to actually come back to the profit margin. So my broader sense is that we will maintain pretty much the same ratio that we have today.
Right. Just one follow-up there. So if I've seen sort of some of your communications in the last 2, 3 quarters, it was about 20 stores is what you were sort of guiding and this sort of now is getting accelerated to about 35 stores. So any color in terms of what's driving the acceleration of store count here -- addition?
So the 20-store guidance that was given for FY '20 was keeping in mind extremely well that quarter 1 and quarter 2 will not see more stores. Because of the fact that the fundraise was complete, I also mentioned it just before this call, just before your question, that the time line for pipeline to mature is slightly larger, right? And we knew that our pipeline in quarter 3 and quarter 4 as in the stores hitting the ground in quarter 3 and quarter 4 will be higher. And today, we have built capability inside the system to open anywhere between 3 to 5 outlets every month. We have that capability. IF we find good sites, can we cross more than 40 in the year? Yes, we can.
All right. Understood. And the second question that I have is on the delivery again, one of the metrics. I wanted to understand is incrementally the stores that you're opening, what are the ADS levels for delivery that you are seeing in the newer stores? Are they sort of matching what you were seeing in the stores which were there for more than 1 year? Incrementally, are the newer store also seeing traction on delivery is what I wanted to understand.
Yes. They are. Barring the fact that some of these stores, which are new on the platform also, take more time for discoverability, this is not a Barbeque Nation phenomenon. This is general industry phenomenon. So as and when more customers hit that store, it gets disclosed more and more. So barring that, I think, we are launching at a pretty decent ADS and then the growth in the initial months is also very good. So we have not noticed any special or any different dynamics of new store on delivery side.
The next question is from the line of Trilok from Dymon Asia.
I just wanted to check on, again, going back to delivery questions with a couple of participants already asking that. So are we trying to -- I mean, I'm sure you must have thought about sustaining the momentum. Is there meaningful innovation or thought process going on, on how to build that business going forward? Because that is, a, obviously, higher margin business and b, obviously gives the higher throughput and extension kitchen can also be a medium-term opportunity. Could you just help us understand on that part, please?
So yes, thought process, yes, no doubt about it. I'm not sure about the higher margin business. Because the food cost, packaging cost, aggregator commission, put together make it a slightly lower contribution margin business. And if you keep on adding more and more distinct kitchens, you'll have other operating costs like rents and manpower operating cost, right? So beyond a particular ADS level, yes, it will do that. Since we do it -- so, for example, in our case, what we do from our own Barbeque Nation setup are higher margins. What we do from extension kitchens, even at same ADS level are lower margins, right?
But having said that -- and that's why we are very conscious about the extension kitchen. We track margin by unit by month, right. So that is there. But having said that, yes, new product innovations are being thought of. There are some in pipeline also. Early to talk about it right now. We don't know when this will hit the ground. But by and large, delivery is a focus area. Delivery is also a growing market. We want to capitalize on the kitchen infrastructure we've already built in this country and use that for delivery. So that's what I can say, Trilok.
Okay. And when you initially commented about INR 7 crore restaurant business, that's excluding delivery? Or is it including delivery?
No. That's including delivery.
We have the next question from the line of Faisal Hawa from H.G. Hawa and Company.
Yes. So how much is the contribution of top 20 restaurants to our revenue and this is for Barbeque Nation alone? And secondly, how are we leveraging the various social media platforms that are available to us as an advertising and particularly when most of our customers do come there for birthdays and anniversaries?
Right. So contribution of top 20 restaurants, which is approximately 12% of our total restaurant network, would be anywhere between 18% and 20% of the entire revenue. So not that there is no concentration towards top 20. In terms of social media, digital media, we have a very in-house strong marketing team. The gentleman who joined us almost 4 -- 6 months back, our Chief Marketing Officer, a lot of performance marketing initiatives have been taken. We do some spend on digital media on Facebook and Instagram. We have a lot of broader activities that keep happening on YouTube and Instagram.
So the data that we get, our data collection of dine-in guests is approximately 98%, which means that we get 98% of customers' mobile number for a table, obviously. For a group one of the numbers. We obviously call back them for feedback. We also send them sometimes promotional vouchers in case the repeat customers are not coming in. We also work with few of the external agencies to help us in these programs. So it's pretty, I would say, well-oiled department who have been doing it now for a few years.
Just like delivery came in as a huge revenue contributor to us, is there any thought process within the team to develop more such revenue contributors, some different formats or -- which could emerge as big revenue contributors in the future?
So yes, Faisal, we can, right? So there are 2, 3 points. So one is capability. It's there in the system. It's about bandwidth and focus, right? So over the last 2 years, we obviously had a tough period because of COVID. There was -- it's very erratic, right? And over the 2 years, what we have done is stabilized our dine-in business in a very, I would say, commendable manner. There is also a pretty much playbook for any subsequent waves that come in. We have built a very strong delivery business, which is approximately 20% of our -- 18%, 20% of top our line. We have stabilized our international business in a manner that today it's one of the best margin business for us. Three years back, you would remember that our international business was dragging. And today it's contributing very handsomely to our return on capital side also.
And Toscano, we acquired 2 years back. The journey with Toscano has been along with COVID. So the integration and the growth that Toscano -- that could happen with Toscano has been slightly delayed, but that have also now integrated very well, right? So in terms of diversified revenue stream, the company has already created, just before COVID, which is now, we have got 4 revenue stream. One is core India Barbeque Nation, we have Barbeque International, we have a delivery business and we have Toscano business, right? I think all of these are in a very strong footing today. And this year, if it's a normalized year, I would see the benefit of all of these. That's my expectation. Adding something more would be in a very methodical and thoughtful manner. We're not in a hurry to do it, but if good opportunity comes in, we also have both bandwidth and resources to take it.
So how has our equity participation from Jubilant helped us in terms of best practices exchange with them? That's one. And secondly, would it be a right statement to make if I say that [Foreign Language] we would definitely grow around 15% in same-store as well as new store terms for the next 4 years?
So Jubilant, obviously they are great partner, one of the very well-run food services company. And there has been no operating level interferences or discussions between both the companies. But at a strategic level, we obviously talk and we sort them off, right? Apart from that, I think, they are one of the great partners and a lot to learn from them. In terms of your second question on 15% growth, we should do that. So if you look at our current base, we are at around 185 restaurants today, and we are expecting to add another 35 to 40 restaurants.
So while the number is around 20% growth on the existing base, at least even though you assume 5 to 6 months of operation for the full month for all these stores, at least 10% should come from these and another 5% to 7% should come from SSSG. The other impact that you'll see at least in FY '23 is the impact of normalized months. So quarter 1 in this financial year and quarter 4 in this financial year was slightly impacted by COVID. As we move into a normalized month, the net SSSGs obviously will be far higher, right? So over a period of next 4 to 5 years, CAGRs of upwards of 15%, I think, we should be able to do, right? And if we don't do that, I think, we have not done a good job. I think the country provide that opportunity. There is no doubt about that.
Correct. And this would be mainly Tier 2 towns, Tier 3 or that is -- you're agnostic to that?
No, no, no. So it's not Tier 2, Tier 3 town. It is also metro and Tier 1 markets, right? So I think [ very end up criteria ] in metro and Tier 1, in Bombay itself, including the Greater Mumbai region, Thane region, all put together, we only have, I think, 18, 20 outlets. I think the city has much more potential. Same for both for Delhi. Delhi also -- NCR put together, we have around 23 outlets. Just for Delhi, without NCR, we only have, I guess, 11 odd outlets. Delhi itself has potential to take far higher than that. So the growth will be driven both by metro Tier 1 and Tier 2, Tier 3.
Thank you. Due to time constraint, that was the last question. I now hand it over to the management for closing comments.
Thank you, all. Thanks for joining to this call. We look forward to a good year in a certainty now. And hopefully, we'll connect in the next quarter with further updates. Thank you.
Thank you. On behalf of AMBIT Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.