Jubilant Foodworks Ltd
NSE:JUBLFOOD
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Jubilant Foodworks Ltd
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Ladies and gentlemen, good day, and welcome to the Jubilant FoodWorks Q1 FY '19 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.
Thank you, and welcome to Jubilant FoodWorks' Quarter One FY '19 Conference Call for Investors and Analysts. We will be joined today by Mr. Hari Bhartia, Co-Chairman of Jubilant FoodWorks; Mr. Pratik Pota, CEO; and Mr. Prakash Bisht, CFO. We propose to commence with perspectives from Mr. Bhartia. Thereafter, we shall have Mr. Pota sharing his view on the progress that we have made, operation-wise, the strategic imperatives that lie ahead for -- and the outlook for JFL. After the opening remarks from the management, the forum may be opened for the question-and-answer session. A cautionary note, certain statements that we may make on today's call could be forward-looking statements, and actual results may vary significantly from those statements. A detailed statement in this regard is available on JFL's Quarter 1 FY '19 Results release and presentation, which are both available on the company's website under the Investors section. I would now like to invite Mr. Bhartia to share his perspectives with you. Thank you, and over to you, sir.
Thank you. I welcome you all to the Jubilant FoodWorks Quarter 1 FY '19 Earnings Conference Call. I'm glad to share that we have started the year on a strong note with encouraging top line growth of 26%, powered by same-store sales growth of 25.9%. More importantly, I'm pleased that we have carried forward the momentum from the previous financial year to deliver robust performance in the first quarter of this year. Our strong performance was driven by several initiatives that we rolled out during the quarter. As you may be aware, our Every Day Value offer was a transformational change at Domino's last year, and we had extended the EDV on regular pizzas starting at INR 99 in the quarter 4 to target smaller groups. [ Good finish to EDV ] helped us to drive entry of new customers into the Domino's franchise and also helped increase frequency. We also continued our focus on driving digital revenues, with online sales now contributing to 65% of delivery sales. Our new, significantly improved app was rolled out in June, and we expect that it will further strengthen and accelerate our digital revenue stream. With healthy progress in almost all areas, we have also started to put a lot of focus on -- towards opening of new stores. While we almost doubled our store openings from last quarter, we feel we need to accelerate new setting-up of stores in new locations. We may also need to split some of our stores in the existing markets. I must tell you that management is working hard to increase the funnel of new locations so that we can increase our openings in the coming quarters.Coming to Dunkin' Donuts. We are doing all the right things to achieve breakeven towards the end of the current financial year from focus on simple foods, like donuts and beverages, to shutdown of unprofitable stores and control on costs with focus on smaller format stores. The result of all these actions are playing out as expected, and I'm very pleased with the progress. So our industry perspective, we believe the food service industry landscape is looks -- is looking promising, and the lower GST of 5% on restaurants has given a positive boost to the industry. We are pleased with the start to the new year and are confident about our prospects for the future. I would now like to call upon our CEO, Pratik Pota, to cover the operational highlights during the quarter.
Thank you, Mr. Bhartia, and good afternoon to all of you on the call today. Let me cover the highlights of the quarter 1 performance. We have commenced the new fiscal year on a strong note. Revenue has improved by 26%, driven by a solid 25.9% same-store sales growth in Domino's Pizza. EBITDA for quarter 1 was INR 1,421 million, an increase of 78.5% over last year and at 16.6% of net revenue. Profit after tax during the period stood at INR 747 million, an increase of 213.2% and at 8.7% of net revenue. Mr. Prakash Bisht will share details with you shortly. During the quarter, we opened 13 Domino's restaurants and closed 3, thereby taking our restaurant count to 1,144 in 268 cities. We expect to accelerate our restaurant expansion in the balance of the year. In Dunkin' Donuts, we opened 1 store and closed 1, thereby taking the count to 37 restaurants across 10 cities.Let me now briefly share some of the quarter's key initiatives and the results. The Every Day Value offer on regular pizzas, as Mr. Bhartia mentioned, is working well for us, and it helped drive the quarter 1 growth. This was supported aggressively through our advertising revenues on IPL broadcast, as also through our sponsorship of Royal Challengers Bangalore. The growth was based on a strong increase in orders, especially in delivery. The quarter saw healthy improvements both in new customer acquisition as also in the -- both in frequency of existing customers. Online sales remained strong, and online now contribute 65% of delivery sales. We -- as a company, we revamped our Domino's app towards the end of the quarter. In fact, that will be visible in the periods ahead. The Dunkin' Donuts business saw strong growth in Q1 on the back of both in donuts and beverage categories, and we're on track to achieve breakeven as we exit the current financial year. Overall, we are pleased with the Q1 performance and remain confident about driving profitable growth in the future. Just to reiterate, our strategy for growth launched last year is working well and will remain unchanged. We will continue to focus on driving innovations and product quality, delivering value for money, providing the customers with our seamless experience, leveraging technology even as we maintain a tight control on costs.I would now request our CFO, Mr. Prakash Bisht, who will share with you the financial details for quarter 1. Prakash, over to you.
Thank you, Pratik. Good afternoon, everyone. I will take you through the financial performance of the company during the first quarter of fiscal year 2019. Let me share that all financial reporting and discussion has been done in accordance with the stand alone Ind AS financial statements of the company. During the Q1 FY '19, the operating revenue stood at INR 8,551 million, higher by 26% year-on-year. This was driven by robust same-store sales growth of 25.9%. Total expenditures during the quarter came in at INR 7,150 million, up 19% compared to the same period last year. The increase in expenditure was largely due to volume growth and higher marketing expense. EBITDA stood at INR 1,421 million, a growth of 78.5% year-on-year, translating into EBITDA margin of 16.6%, an increase of 490 basis points from Q1 of last year. Profit after tax was at INR 747 million as compared to INR 238 million in Q1 FY '18, representing a growth of 213.2%. Net profit margin stood at 8.7% in the previous year-end review. In Q1 FY '19, the total CapEx stood at INR 260 million, mainly towards opening of new stores, and maintenance CapEx. That concludes my remarks. As of now, I hand the call back to the moderator for question and answers.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss.
My first question is on Domino's. So last 3 quarters, very strong SSG. My question is in terms of capacity utilization. What have you done in terms of augmenting? And currently, what could be the capacity utilization in terms of how much more you can go on the existing stores? Are you hitting the ceiling? Or any timeframe that you'll start hitting until you're actively running in terms of augmenting?
Thank you, Abneesh. If I can respond to the question in 2 parts, the capacity at the back end and the capacity in the stores. As far as our back end is concerned, you're aware that we just recently commissioned a brand-new facility in Greater Noida, which has the capacity and the capability of being able to support far larger numbers of volumes and stores than what we have currently. [ As was required ] in other companies, we are doing practical CapEx to debottleneck capacity, but capacity at the back end is not a constraint. As far as the stores are concerned, seeing the growth in orders, what we did very planfully was increase the infrastructure in many of our stores by putting more ovens they require, including number of bikes. That said, there are some stores where we need to hit capacity barriers, especially in pizza. And as Mr. Bhartia said in his opening remarks, these are the stores that we will be splitting and opening more locations, and therefore, we will be able to service the same geography much more reliably and continue support growth in those markets. But there has been a large number of stores we still haven't hit those capacity barriers, so we still have headroom to drive growth in many of these stores.
Are you quantifying the number of stores where the issue has been in terms of hitting the ceiling?
No, Abneesh. We are not quantifying that. But I think it will be fair to say that wherever we are seeing those capacity restraints, there's a very, very urgent work stream on, in that expanding of both [ invent ] and splitting the store.
Sir, you said the acceleration will be there in terms of expansion. So this quarter you added 10 net and 3 closures. So what does that acceleration mean for the full year, how much you have planned? In terms of the 3 closures, could you take us which cities and what are the reasons?
Sure, Abneesh. So let me answer the first question first. We had said in the last earnings call that we were targeting to open 75 stores in this year. We are absolutely committed to that number, and we will see an acceleration in store expansion from this quarter onwards, quarter 2 onwards. That's the first part. We shut 3 stores, one store was in Delhi -- let me back up. All these stores were coming from profitability purposes reasons: one store was in Delhi, one store was in Baroda and one store was in [ Delphi ] in Pune.
The next question is from the line of Latika Chopra from JPMorgan.
My first question was on the demand environment. Here, we have seen a very healthy SSG number coming through. If you could comment on how is the demand shaping up at the industry level. And is there more confidence in a sustained recovery in demand?
Latika, we are seeing some positive demand movement from about 3 months, 4 months back, and that's coming on the back of GST [ in the news ]. We are seeing, therefore, a reasonably sustained tailwind, and that is one of the reasons why you are seeing SSG numbers being healthy. That said, we also believe very strongly that our SSG has been driven by our initiatives, not activity, specifically, Every Day Value and our acquisition of the IPL. And therefore, we believe that we have outgrown the market and added market share.
All right. And secondly, on your expense front. The other expense line has moved up sharply. Is it on account of more marketing expense you have done?
Latika, that's right. If you look at our sequential number, our marketing expense has gone up, and that's showing up in the numbers on manufacturing and other expenses.
So this will normalize as we move into subsequent quarters?
Latika, absolutely right. This was a quarter 1 investment that we made very planfully and deliberately. And it will get normalized in the remaining part of the year.
And just lastly, on raw material inflation. What is the sense you're getting now? And do you think with this Every Day Value share and your overall sales improving, does it in any way reduce the scope of price hikes for you or pricing growth for you?
As far as the inflation on raw materials is concerned, right now, we have seen a benign cost environment, especially on dairy, and we expect that to hold up in the foreseeable future. As far as pricing is concerned and -- are we limited by Every Day Value? No, there are several ways that we could still explore pricing, were it to be necessary, without vacating the platform of Every Day Value, which is very powerful, very strategic and working well for us.
[Operator Instructions] We move to the next question from the line of Arnab Mitra from Crédit Suisse.
My first question is on margins. Now in this business, you know that there is higher operating leverage. And as long as your SSG is higher, then your cost margins can continue to go up. Now your margins are already at around 16.5%, 17% levels, which is kind of getting close to where the peak margins were. So how do you look at the situation? Does margins keep going up as SSG keeps beating the cost? Or does management take an approach of reinvesting such kind of capping it at a certain range? I was just wanting to understand your thought process on that.
Well, thank you, Arnab. Let me respond to that in 2 parts. I think, our margins that you see in this quarter have come on account of 2 primary drivers. One is the strong operating leverage that we've got on account of strong volume growth, but the increase come on account of very disciplined cost management during the quarter. Your question about how far can the margins go up or not, I think to keep in mind that profitability, while it is important, there is a trade-off between increased margins and increased -- and providing customers value for money. In a category like ours, which is low penetration, which is low frequency, which is very value-conscious and value-driven, we have to continue to strive hitting value for money, and therefore, the balance has to be right. Now obviously, there's nothing to develop or [ not ] on what margins could be like, but this is a trade-off that we manage in our business on daily basis.
Right. So from what I'm hearing you say that if the growth is -- I mean, if there's a growth issue, you would reinvest in growth. But my question was more that if the growth does remain very strong, does it mean that margins keep going up sequentially as the operating leverage kicks in? Or is there a band in which you don't want to exceed or something of that sort?
If you don't have a -- there's no band that we can talk about. But the fact is that even as growth goes up and even if we try to control cost, there is always the inflationary pressures that will play out. So there'll be cost pressures, there'll be productivity, there'll be value for money needs to be driven, all of those play out and need to result to a margin. As to what that margin is going to be and in what band, I can't tell you now. But this is the trade-off that we are working with.
Sure. And just last question, on employee costs. You had a 5% increase. Sir, with this kind of a higher SSG, there is obviously some wage inflation in the economy. How long can you hold your employee cost back at this low kind of level of inflation? And what is really driving the very low inflation compared to the growth in orders?
So Arnab, yes, as compared to the Q4, you will have observed increase in the employee costs. But our last year's average employee cost was about INR 151 crores per quarter, because the overall cost for the whole year was INR 604 crores. And in this quarter, our average is INR 154 crores. So the past -- we continue to go up because there will be always inflation. But if you see, the operating leverage has started kicking in. And if you compare with Q1 last year, where the employee cost was 21.7% of turnover, it has now come down to 18.1% of turnover. Therefore, the operating leverage is almost about 3.6%. So partly, it has come because of the growth in volumes, and partly, also, it has come because of -- we have gotten the efficiencies in the manpower utilization. So we'll continue even in the -- going forward also, we will try to get the operating leverage as well as we'll also try to bring in the efficiency in the utilization of manpower.
The next question is from the line of Amit Sinha from Macquarie.
Sir, firstly, a follow-up on the earlier question. Basically, the gross margin has remained steady despite EDV in regular pizza. Now is this happening solely on account of raw material deflation, which we are observing? Or are there any other cost savings initiatives, especially in the input cost side?
So Amit, the gross margin holding up is largely driven by the commodity cost and input cost being under control. There's a minor mix impact in those, but the large reason for that is a fairly controlled inflationary environment on commodities.
Okay. And when you say of mix impact, do you mean more pizza -- core pizza rather than the other categories, right?
So Amit, yes. Given the initiatives that we have in quarter 1, core pizza is where we had growth. And therefore, in that sense, yes, you're right.
Okay. Secondly, sir, on the overall delivery growth. And you have indicated that delivery has grown faster this quarter. So if I have to take a long term, maybe next 5 years kind of a view, do you see the mix, which used to be 50-50, shifting significantly in favor of delivery, let's say, in the next 5 years?
So Amit, if I just pull back and, without talking about the mix, talk about the trends that we are seeing in the market, we are certainly seeing a far higher tailwind in delivery across the category than what we have seen in dining. That will obviously, over time, lead to a mix and the category mix and QSR mix moving in favor in bias of delivery, and that's going to happen. And of course, as you could imagine, that we will be playing to us and to Domino's, and therefore, we are really happy with that momentum and that direction.
And lastly, on the online contribution to the delivery sale. That has gone up significantly in last 1 year. Sir, do you think 65% is kind of optimum level for a country like us? Or do you see this number going up significantly from the current levels?
So Amit, given the momentum that we are seeing in the digital space, I would be extremely surprised if the number did not go up. The numbers will -- actually, clearly, the way the consumer is moving online, we expect growth in online to be significantly higher than the growth in off-line.
The next question is from the line of Vishal Gutka from PhillipCapital.
I just wanted to know on the app side. What exactly have you done? And how are you seeing the traction on the boost relaunch of your app?
Very good [indiscernible]. So we've done 3 or 4 things on the app. The first one is that we've completely rebuilt the app from scratch. The app is a much smaller app. The Android app is -- used to be much larger and much, much heavier app earlier. It's now down to about 12 GB and -- sorry, 12 MB, and that, therefore, works better on most Android smartphones. So that's the first one. The second one is we introduced some very user-friendly features about being able to customize your pizza, being able to reorder your last order, to be able to reorder your favorite pizzas, your favorite order. We've also got a very intuitive device, which is built-in to the app, and we also have built-in unique features, which you will see on the app, of [ IRPTC ] ordering or radio ordering. So it allows you to place an order while you're driving on the [ free ] from the app itself. And it's much, much faster, and it's much more optimized. So it's a presentation lead of the older app.
Okay. Sir, I have couple of more questions in regards to book to bill [ vision ], but one with regards to number of employees because [indiscernible]. And secondly, what impact Dunkin' Donuts has in terms of margins to the Domino's margins, in terms of losses.
Yes. So to answer your second question, Vishal. The Dunkin' Donuts impact on JFL EBITDA is 55 basis points for quarter 1. That's down from 106 bps in quarter 4 of last year and 143 basis points in Q1 of last year.
Okay. And the number of employees?
The number of employees that we have...
30,279.
3-0-2-7-9.
3-0-7 -- 2-7-9, right?
279, that's right.
Okay. Sir, last question on this thing. You had received a investigative report from anti-profiteering agency. So have they mentioned any kind of fine or penalty on that report? Would you like to quantify that? Although you filed an appeal against it.
So we can't release that, it's with the [ court ]. So the way the anti-profiteering investigation works out is that the director antiprofiteering has to conduct an investigation. The final anti-profiteering authority is National Anti-Profiteering Authority, or the NAA. So the director anti-profiteering has to submit their report to NAA. On receipt of a report from director anti-profiteering, the NAA has to do a hearing and finally decide whether there is an anti-profiteering or not. In our case, it is still a work in progress. There is -- the director anti-profiteering has completed the investigation. This matter is still pending before NAA. So that's where it is at this point of time.
The next question is from the line of Avi Mehta from IIFL.
Sir, just on the online [indiscernible]. I mean, I can see your clear focus on the digital side. We've seen this across the space. Just want to get your thoughts: a, how much today are online sales, how much of it is through our own channels, through our own app or through other channels? If you could give any number on that.
So Avi, I think your question was a little unclear, but I presume you asked about online sales and how much of that is through our own assets. Is that what you asked?
Yes, yes.
Yes. So Avi, I think I want to reiterate what I mentioned in my earlier answer, that we have, earlier this year or end of last quarter, we completely revamped our app and built what we believe is a great new user experience. And our strategy is going to be, as we've said several times, invest in technology and build a greater infrastructure digital asset. What [ is that ] vis-à-vis other channels, we're not going to share. But I think it's important to underline the fact that technology and bringing our own assets will be a key targeting for us as we go forward.
Well, I understand the number cannot be shared. Would you be able to say that it's majority, minority? Is that kind of number you're willing to share from your own app?
Yes. Avi, we'll be very -- I mean, the answer is very clear. The majority of the revenue is coming from our own platform. There is no ambiguity about that. And that's why we want to stay invested and keep building that superior customer experience on our platform.
Okay, okay, perfect. And the second, sir, just wanted to understand. On the delivery channel, what we understand is EDV on regular has resulted in some bit of moderation. Do you see any operating leverage deals coming in the delivery side because of EDV regular or it's largely in the dining area that's come, in the kitchen area only that the [indiscernible] come in? Just want to understand [indiscernible] of that.
Avi -- okay. Avi, sorry your question wasn't very clear to -- yes. So let me -- absolutely, I think that EDV 99 has been a big initiative growth for us in quarter 1. And the resulting operating leverage that we have seen has manifest and visible both in delivery and in dining. I mentioned earlier that the growth is more the splitting goods part of the business, but delivery has been higher and over-indexed. So...
Let me repeat. I'm sorry, I'm not being clear. You're right. Let me rephrase. You highlighted very clearly delivery has grown stronger in this quarter. You also highlighted that EDV has driven a lot of sales, especially the regular value sale traction. So I just want to reconfirm, whether that EDV 99 or the EDV regular has been decreasing for this pickup and delivery? Or has it been some other driver? And if it has, is there a margin impact that you would see because of this?
Yes. Avi, the audio of your question is not very clear. So it's not very distinct, and that's what I really meant. I mean, you're barely clear even now.
Okay. So should I repeat -- is this better now, sir?
Yes, that's better, much better. Thank you for that. Can you just back up the question please? Repeat the question.
Yes. Sir, all I meant is that EDV 99, is that the driver for the increase in delivery sales? Is that -- is it fair to link those 2 or those 2 are different tailwinds that you highlighted, they are not linked to each other? That was the only bit.
Yes. We believe that EDV 99 and our marketing activation on IPL have both led to delivering growth.
The next question is from the line of [ Raj Mohan ], an [ institutional ] investor.
In your presentation in June, Pratik, on food consumption in India and outlook for Jubilant, you had indicated to organize QSR, growing from INR 9,100 crores in 2016 to INR 24,700 crores, right, 2021. Our company had a substantial 28% share of the 2016 figures. Based on your recent understanding, do you see Jubilant running at this proportionately higher shares and this huge incremental margin that you're talking about, driven by technological efficiencies and also having a share of the pace of the market more discerningly. And could you possibly share a figure that you aspire to achieve from the [ 20,000 ] shares that you held in 2016, by 2021?
So [ Raj Mohan ], thank you for the question. Just to clarify, the numbers that we had talked about in the past have been NRAI numbers based on debt protection and [indiscernible]. As to your question about how we see our share playing out, I think it is important to note that the market, as it grows and as we have more players emerging, as more debt happens in the market, you will see a lot more fragmentation and lot more players and lot more innovation happening. Our endeavour as Domino's and as Jubilant, is going to be obviously to keep driving growth and keep driving growth higher than the market growth, and therefore, gaining market share. That will happen by doing several things: a, driving penetration; b, driving frequency of existing customers; c, driving innovation; four, driving technology; five, driving a superior customer experience. Now all of these, how does it play out and what market share does it lead to, hard to tell. But the attempt will be to drive profitable growth and that's higher than the market growth.
Yes. But for now, position of strength that you exhibited over the last 1 year, you are -- possibility of gaining incremental market share stands more, right?
That will be the attempt -- so that will be the attempt to keep gaining market share and to ensure that we continue to provide the consumers a proposition that works for them and that they like then and that has them coming back to us.
Okay, understood. Understand. In the Domino's U.S. call, they had indicated to see a potential for increasing their store count from 5,650 to 8,000 in 10 years. Considering India's demographics, population and geography, is there any internal assessment on the physical store count in, say, 10 years on a subjective basis? If you could talk in terms of store absorption capacity now and over 10 years in our country, in terms of whether there's a possibility of it growing 3x or 5x.
So Raj Mohan. We totally believe that Domino's franchise has a tremendous potential and tremendous headroom for growth in India. We believe that both in existing markets that we have a footprint, as also in markets that we have yet to make a presence, there is a lot of room for growth. We do not have a store number and a max number we want, but we are working to make the market wider and make the market deeper for Domino's.
Okay. One final question. Did the World Cup football have any [indiscernible] on our business? In this context, did the second half of the World Cup, which will fall in our third quarter, had more propensity to consume, with arguably more excitement in the [indiscernible]?
So Raj Mohan, the FIFA impact on our sales was not significant. Given the timing of most of the matches, there was a very small impact, but not significant. The only time we felt some impact was in the final. In fact, you take that aside, the impact was not significant.
[Operator Instructions] We move to the next question from the line of Manoj Menon from Deutsche Bank.
The first question is on the cost side. As I recall in April 2016, I remember the management spoke about setting up a business excellence team, essentially just to look at cost. And then in the same year, number 2016, there was an announcement about [ ADQ ] being appointed as a consultant. The question is if you could just help us understand the work, what these teams have done, possibly some examples in terms of where are we on the cost saving agenda. Essentially, how much more to come directionally? If you could give us, maybe not a quantification, even some examples and qualitatively would be extremely helpful. So that's the first question.
So Manoj, yes, we had a very disciplined effort going on inside the organization, aimed at managing costs and driving productivity. A couple of examples that I'd like to talk and talk about in my life, number one, rent. We had a very concerted effort since last year. We went back to our landlords, and we renegotiated rents in many stores. And that itself contained the rent inflation. In most cases, the rent inflation that we have as part of a contract was negated by productivity that we brought because of this work stream. That's one example. The other example that Prakash Bisht spoke about also in his earlier remarks were about manpower productivity. And again, there's a lot of work that is been there in the store to drive efficiency and productivity of manpower was fixed and variable. So those are the 2 streams that I will highlight and talk about. But there were, as you can imagine, many, many more work streams that helped control our costs.
Okay. Another question is I've also seen this in the context of the new Noida commissary, would it be fair to say that there is material cost savings potential? At least if you would quantify the Noida commissary benefits, if you may.
Yes, Manoj. We can't just quantify commissary savings, but the commissary did get operational in the preceding quarter. So the impact from the benefit that we see of the new commissary are reflecting in the last quarter, in Q1 P&L.
Okay, okay, understood. Second question is on the minimum wage increases, which the states -- some states have already done, Delhi and Karnataka. Just wanted your assessment of the context now, given that these 2 states have actually seen material increases. Actually, some internal budgeting [ strokes ] had your point of view. Over the next 6 months to 12 months, what's your assessment of probability of minimum wage hikes because -- which can be material?
So we had several states seek a hike in minimum wages, and we expect a few more to happen in the second half of the year. As we did in the first quarter, there is a very, very clear work stream, which is going on, to help mitigate the impact of this inflation through productivity and through automation and through very sharp manpower management.
Okay, okay, okay, understood. And one question, if I may. But this is addressed to Mr. Bhartia. One question, a lot of investors continuously seek a response on the comment on the promoter stake sale. While you will not be able to comment about what exactly the pipeline, but any qualitative view would be helpful.
No. But -- even last time, I was told that the -- there were rumors in the market that promoters are selling. But we made a clarification that there was no intention -- there is no immediate intention for the promoters to sell their stake. And yes, we have, I think, stated that many times that even -- we have stake in this company for almost now 10 years it is public, and 50 years, and we have a long-term interest going forward.
The next question is from the line of Aditya Soman from Goldman Sachs.
My first question is on the difference between your system sales growth and brand same-store sales growth, that's only about 10 basis points. Shouldn't that have been higher, given that you had new stores that you opened throughout the last year. as well as some this year?
So same-store growth is in respect of those stores that were operational at least for 1 year at the beginning of the year. The industry, as of 1st April, 2019, whatever stores were operational as of 1st April, 2018, will be considered for the [indiscernible] same-store growth, whereas the system growth will -- all stores taken together. [indiscernible]
No. I mean, so all stores open from 1st of April 2017, right, for this quarter or would it be...
No. For this quarter, all the stores that were open before 1st April, 2018, are included in the computation of same-store growth.
And the other reason, Aditya, is that if you look at the last year's opening result, we opened 24 stores in the full year. And therefore, the delta is only 10 basis points. You're absolutely right. We also had shut up a number of stores in Dunkin' last year, if you recall. So the delta is 10 basis points between the system growth and same-store.
Okay. I'll just take this offline to get clarity. The other question was on -- you're also -- I've increasingly seen that you're using sort of third-party Tel Aviv vendors to deliver. So where does that cost fit in? So would it been -- would it be one of the reasons why the other expense is going up and staff cost is relatively contained?
Yes. Generally, the outsourced manpower cost is in manufacturing and other expenses, so that cost has dissipated.
And any indication about how much that cost would be or how much saving conversely that has given on sort of wage cost?
Generally, we do not give the breakup of the numbers.
Aditya, let me add to that response, though the question wasn't really posed on that. I do want to sort of say that going forward, we intend to use our own delivery manpower for doing delivery and we intend to progressively cease using third-party manpower. So the impact of this will stop becoming visible as we go forward. We intend to control our delivery experience and invest in it. And we will, therefore, not be using third-party delivery providers over time.
I understand. But that will then mean -- I mean, if you see the same level of same-store sales growth, then that would also mean that your wage costs would go up.
That's right. Absolutely. And again, going back to my earlier response, we will remain very, very focused on driving efficiencies and productivity using data, using automation, using analytics, but we want to control the customer experience and make sure that the delivery experience is superlative and we remain best-in-class.
The next question is from the line of Vivek Maheshwari from CLSA.
My first question, a follow-up on this anti-profiteering issue. The -- this issue is related to which pricing? Is it from 1st July to 14 November or it is from 15 November till date?
It is from 15th November.
15 November. Okay. Second is, Pratik, the last few quarters, you have done obviously very, very well with the Every Day Value. The base was also on your side. As you look into second half of F '19, and I don't -- I am not looking for a guidance, but the comps are getting tougher. You are going to accelerate stores. You are going to split the stores. Is it that the near-term margins have peaked at this level and there may be -- may not be margin expansion as we head into the second half of this year?
I do not want to comment, Vivek, on whether the expansion or not, but let me pull back and talk about some of the things that we've done and that are working for us. Our Every Day Value proposition, both on the medium pizzas last year and the regular pizzas this year, they clearly are connecting with consumers and providing value for money and that has been to drive order growth and sales growth. All New Domino's upgrade that we did last year remains relevant and remains preferred. And again, we see that as well as a lever of growth for us. Technology and digital has worked for us last year, is working for us this year and will be a source of focus and investment going forward. Number 4, the customer experience, whether it's in delivery, whether it's in dine-in, will be an engine of growth for us. We are aware that as the growth increases and, as we spoke earlier in the call, as the pressure on some stores increases, we will have to split some stores, we'll have to open new stores and, in some cases, split some stores to service the potential in the orders appropriately. We also, Vivek, as we mentioned, that we are going to lap quarters from last year, which was stronger. Now, where those [indiscernible] will stand out, I can't say, but we are -- I think we believe very strongly that we have the right strategy for growth and the right levers for driving growth going forward. I'm unable to comment on the numbers either on growth or on EBITDA, but we believe that what we've got is the right proposition and the right strategy for consumers.
Sure. No doubt about that, but low-hanging fruit would be in the bag now. So incrementally from cost perspective, you see enough juice or it would be hard to come by. And my concern is particularly because as I do my quarterly numbers in the second half, SSG is looking for lower compared to what it has been for the last few quarters. So you would -- I mean, my only worry is that are the margins at its peak at least for some time in the context of also as you aggressively start to split the stores?
So, Vivek, let me respond to the first part of your question that you began by asking. I think it would be unfair and wrong to say that we have exploited and leveraged all avenues for driving productivity. Productivity and efficiency, obviously as you imagine, is an ongoing work stream. And we remain focused on making sure we cut down wastage and improve efficiency and that will remain going forward. We also, given the kind of growth that we have seen, we expect -- and as you can imagine, in our business, that is very important -- we expect the operating leverage to continue to play an important role. And therefore, our strategy is very clearly focused on driving profitable growth.
Sure. And any specific comments on the splitting? Would that be, like, quite aggressive? Or it will be -- of the total 75 stores, it will be marginal?
It will not be the largest number, but there will be areas where we'll be required to split to keep the customer experience going and to service the load in some of these stores. So our 75-store count will be a combination of the multi-split store, also stores in new areas in existing towns and also some stores in new markets entirely.
Vivek, Shyam Bhartia. See, whenever we have split stores in part, we have seen that both the stores are doing well and it really expands market by providing better service to our customers. And that has been our past experience in this as well. So we believe that it only increases the market through better service, through better dining facilities available and -- to the region. We only do it when there is a great opportunity to do it.
The next question is from the line of Kunal Vora from BNP Paribas.
My first question is just wanted to get some sense on how big Every Day Value offer is now from -- in terms of sales contribution? Anything that you can provide on that?
Kunal, I think we've talked about the fact that Every Day Value has been a big engine of growth for us, both the medium pizza and on regular pizzas. We won't be able to comment on how large that is and how significant that is, but you have heard us talk about how important the role it has played in driving growth for us both last year and this year -- this quarter as well.
Sure, sure. Any help in quantifying what mixture? Would it be majority of sales? Anything that you can provide on that or?
No, Kunal. I'm afraid I can't.
Sure. Okay, okay, okay. Second is the -- between new customers and increasing frequency of orders from existing customers, what's been the bigger growth driver over the last one year?
So if I talk about the last one quarter, clearly, I have mentioned in my remarks as well, the encouraging part about the contours of the growth that we delivered was that we got growth from both new customers and in acquisition -- in new customer acquisitions as also an increase in frequency of existing customers. So both paths have worked for us and helped us drive the growth in quarter 1.
Sure. So there's no noticeable difference between the 2? You are saying both have grown and both have grown probably at a similar pace. Is that a right understanding?
Both have grown handsomely. Both have grown well.
Sure. And lastly, any update on the Bangladesh joint venture?
That's right. So Bangladesh joint venture, as you're aware, we announced in the month of March. And we are, right now, in the process of finalizing the launch mix, whether it's the food, whether it's the store location, the back end. We are also in the process of getting regulatory approvals from authorities. And as soon as there is more update on the Bangladesh plan, we'll circle back with you.
The next question is from the line of Pritesh Chhedda from Lucky Investment Managers.
So 2 questions, one on the operating unit side. Why it didn't show on a Q-on-Q basis? And what resides in the other expense line? And I have a second question on new store expansion, which I will take later. So if you could just give the answer for this question first.
So perhaps, Pritesh, let me handle the first part of the question on the operating leverage. So if you would compare it from Q1 last year, the operating leverage has actually flowed in...
No. My question is what was Q4?
Well, that is Q4. So there also, if you would see that in the [ range of employees ] -- in the manufacturing and other expenses, it's not flowing because at the initial stage also, we clarified that this quarter, we did an investment in marketing expenses in IPL, which will span out throughout the year. So because of the higher investment in marketing, this quarter it's not really visible.
Can you quantify that extra investment in marketing?
When we [ realize the profits ], we do not disclose the line item-wise. But yes, it is -- as compared to the regular expense, it is higher.
No problem. My second question is about the initial comments the management made on aggressive store expansion. And there was a lot of questions. So now, how different will [ various ] store expansion drive this time around vis-a-vis last time, strategically? Because last time when we did the store expansion, it came at the cost of the overall company level margin because, obviously, new stores were open lower than system-level sales and there would be a cost upfront. And splitting of stores will also precisely do that. So how different it is vis-a-vis last time? And second question within that is, in the current time, when a new store opens, at what sales system [ level ] does it open?
Okay. So Pritesh, on your first part, we have in place a very rigorous database process that screens different store locations and different store options and uses a very, very scientific and database algorithm to weed out the unpromising stores and, to that first shortlist, the ones that are most promising. So process has become very strong and data-backed. That's my first point. The second difference that we'll bring to bear this time, also we are looking at store opening by different channels. We're looking at store opening in -- potentially in locations that are education institutions, corporate [ paths ], travel and transport locations. So we are looking at [ more ] opening of stores in addition to the high street and the mall stores that we've had in the past. So that's one thing -- your first part of your question. As to where does a new store open, typically it opens at about between 75% to 85% of an existing store when it starts off.
So when it opens at 75% of the existing store, I'm fair enough sure that it won't be generating EBITDAs?
See, typically, our store -- new store payback is now between 2.5 years to 3 years. And that payback has not changed. If anything, it's improving.
So if it is 2.5 years to 3 years, first year, cash generation will be 0 and second from -- and it's the second -- and the second and a half year which generates you the payback, that's how it should be?
Pritesh, it varies from store to store depending on the locality, depending on how ready the catchment is. So hard to give a very specific answer to that and hard to generalize, but like I said earlier, we do have a [indiscernible] between 2.5 years to 3 years, paying back in 2.5 to 3 years.
Just a follow-up within that. When you all give a 75-store new store guidance number, obviously you would have done the arithmetics. At 75 store at system-level opening of 0.8 -- or let's say 80% of the system-level opening, does this 75 store, which is 7.5% of the existing network that you have, any way impact the operating margin of the company?
Pritesh, it's hard to give a precise answer to that precise question.
[indiscernible] arithmetic?
No. Actually, what you say is right that any increase in number of stores technically gives us operating advantage in G&A and other things. It don't go up proportionately higher. So there is definitely an operating advantage, some operating advantage. You can't quantify that.
The next question is from the line of Nitin Gosar from Invesco Mutual Fund.
So this new 75 location, 75 stores that you talked about, how many of them might come into new location or new cities?
Sorry. Your question was not audible at all. Can you please repeat the question?
Of the total 75 stores that we're talking about, how many of them might come into new cities?
We don't give that breakup. And as I said earlier, it will be a combination of both existing markets carrying more stores and also a few more markets opening up with new Domino's stores.
We can't give you exactly because the feasibility is analyzed definitely on large number of stores, larger than 75. Sometimes space is not available, sometimes correct location is not available. So it keeps on changing. So any -- giving any ideas will not have any advantage because you'll not get any clue.
Fair point. Just second question is broadly trying to understand how is the split of stores right now between metro, tier 1, tier 2, tier 3?
You wanted the 4 split numbers?
Yes, a broader split of stores amongst metros, tier 1, tier 2, 3?
Yes. So even given that we are -- our network [ has evolved ], it will be fair to say that about 60% of our stores are in the tier 1 in the metro and tier 1 [ some ].
Okay. And how is the demand shaping up amongst these 4 destinations, so metro, tier 1, tier 2, 3? And where is -- which location or which cluster are you seeing [ exceptional ] growth kicking in, in last 2 years?
I think the great part of our growth in the last quarter is that we have seen strong growth across all tier fronts, all [indiscernible]. So that has been a very, very democratic growth profile in the last quarter. And I -- even the same commenced in the [indiscernible] quarter as well. So we are happy to see that our tier 3 and tier 4 towns are also doing -- performing very robustly.
Okay. No, just trying to understand and correlating it with the mobile app [ urgent back end ]. Is it seeing an incremental [ urgent back ] coming high from mobile app? And is the demand more skewed towards metro, tier 1, tier 2?
No. Like I said, the growth profile has been fairly well spread between all the [indiscernible] count. Yet, as you can imagine, our line contribution is [indiscernible] in the larger markets as compared to smaller towns. So we've had growth coming from all cost data, including on online.
The next question is from the line of Manoj Gori from Equirus Securities.
Only one thing, like, if we look at now, we have been coming up with new rates like Every Day Value offer on medium pizzas then on regular pizzas. So do you see -- like, what could be, like, the other new strategies that could be implemented and this could drive further, like, strong SSG in the coming quarters and years?
So Manoj, as we mentioned earlier, we believe that we have the right strategy for growth. That's worked for us in the last few quarters. It worked for us in the last quarter as well. And therefore, our focus will be to stick and execute that strategy in a disciplined manner. How will each of those strategic pillars play out into specific activities? We don't like to comment on it right now, but it will be fair to say that we have a very clear plan which will speak to all our key strategic pillars.
Right. So also on the product innovation side, like, now when we have already started, like, EDV on regular pizzas, a new segment has opened for you, which will be more of value-conscious consumers. So going forward, like, if we look at the product innovation and product launches, would it be more towards on the size or low-priced pizzas? Like, some sense like how the product innovation is going to pan out in next couple of years?
So, Manoj, the great part about the Domino's business and the franchise is that it's relevant to very different consumers for us. It's relevant to the entry level consumer. It's relevant to the consumer who is an evolved consumer and is able to -- on the week to spend more. So innovation will actually straddle these multiple consumers for us and different price points.
And growth on the innovation of products also. We continue to work on innovating new products, et cetera, not necessarily only on the price.
Absolutely. So our innovation plan and the roadmap in that addressing all these different consumer segments.
The next question is from the line of Abhishek Ranganathan from AMBIT Capital.
My question is on the same-store growth. So I heard you say that it's now -- same-store growth is calculated for stores older than one year. Now, one of the things I wanted to ask is, there is obviously a change in the method in which the same-store growth has been calculated. So if I'm correct, earlier stores -- older than 8 quarters -- weren't -- where there is same-store growth that should be taken into account. And now, basically, you're saying -- you're saying which is older than 4 quarters is considered in same-store sales growth. So this would basically bring a younger lot of stores into this calculation and, most likely, inflate the SSG compared to the earlier method. So why this change?
I just want to clarify that there has been absolutely no change in the way we calculate same-store growth from earlier. I think the comment put was merely to clarify, but I just want to reassert that there is 0 change in the way we compute SSG.
Okay. So let me just get this clear, how do you compute SSG? I just heard you said older than one year at -- those are the stores, right? Is that good?
So any store which was operational on -- at the beginning of the financial year -- the last financial year, sorry -- would count as a same-store. In other words, any store which was operational on 1st of April, 2017 will be counted as a same-store in a match for this year. And similarly for the quarter, next quarter, any stores which are operating from 1st of April '17, any store opened last year would be counted not as a same-store number. So the math does not change at all.
So, Abhishek, it will remain the same for the full year. So when you will actually reach at Q4, you would find that this is 8 quarters. That's why probably you are thinking because we are at the first quarter and this number will remain the same throughout the year. So it's not going to change. And we are not changing one year [indiscernible] implementing absolutely in the same fashion.
So you said your fourth quarter would be 8 quarters, but right now it would be...
Obviously, because then it will still be the stores which were operational on April 1, 2018.
And 2017.
'17.
And if by any reason, you bring younger stores, just in-store will get deflated, not inflated.
Yes.
So if you bring younger stores, your same-stores will actually get deflated. But the true thing is that there is no change in our -- the way we have been calculating over the years, the same-store growth.
So if I may just add here because if I just look at your 4Q presentation and I look at your current presentation, the language is conveying something else. It says that same-store growth -- I'm just reading it aloud here. Same-store growth refers to the year-over-year growth in sales who has trends in operation for 2 whole years. Therefore, and right now, when I read it out, it's obviously referring to something which is older than 366 days or more than 4 quarters. So it definitely conveys something else.
Okay. So that feedback is taken. We will examine that document once again. But I just want to once again say that there is no change in the math of same-store growth and the numbers are absolutely comparable from last year to this year to the years earlier. We're [ leaving it ] to the language and, certainly, it seems to have created some confusion, we'll resolve that, but the thought that I want you to have is that there is no change.
Sure. Also, if you would just help me understand the fall in rent and depreciation for this quarter over the March quarter?
Can you say it again please, your question?
Sure. The fall -- quarter-on-quarter, there's a fall in rent and the depreciation amount. So I'm talking of compared to the March quarter.
So the fall in rent is definitely operating leverage obviously. Partly, it is coming out of operating leverage and obviously because of [indiscernible] rent negotiations that we see [ pondering ]. With regard to depreciation, there is a smaller fall as compared to Q4, primarily in Q4 because whenever we close a store, we take accelerated depreciation during the quarter. As you were aware, last year, we were closing a lot of Dunkin' restaurants. So in Q4, there was accelerated depreciation in respect of the Dunkin' restaurants that we had closed during the quarter. Therefore, the rent number is slightly lower than the Q4 number.
The next question is from the line of Amit Sachdeva from HSBC.
So just to -- while my questions have been answered, just one small thing, if I may, sort of try and understand. If I look at the SSG, and you mentioned that it is driven by new customers as well as frequency of ordering has increased from the older customers. Can you give us some more -- a little bit more color into the frequency of ordering? Because if I recall, 3 years, 4 years back, we used to here that 50% of the old consumer base order only once a year. So can you give some parallel statistic now that how frequency of ordering has changed in the last one year? And also a little bit how much of that sales growth was driven by frequency?
So Amit, we are -- we haven't shared numbers on frequency in the recent past. And therefore, I'd be unable to amplify about the frequency numbers. But I just want to repeat what I said earlier that our growth was democratic in terms of coming from new customers and repeat customers' increasing frequency was democratic by [indiscernible] and by different customer classes. So I think we had a vis-à-vis robust growth profile in the last quarter.
Sure. So that I'd just, if I may, just try to understand because the reason I'm asking this is that how much really is the penetration that you reached to say your addressable market. For example, there's an addressable market of certain number of people that who could consume pizza or at least can afford a pizza of this pricing. And what is that number of unique consumers you sell to and what could be that sort of percentage of pops or something like that, just to get a sense of where we are on what could be my potential market, say, 10 years from now or 5 years from now or what is -- how many unique consumers actually I'm selling to? Can you share some sort of number? And that should help me make some sense of the size and potential of the market. That is the reason for asking. There's not -- for no reason.
Amit, let me pull back and address the finish of the question that you're asking without getting too specific of numbers. I think, and we talked about in the last call as well, the strategic rationale behind doing Every Day Value INR 99 was that we operate in a low penetration category in a low frequency category. And as market leaders, it is incumbent upon us to drive market expansion, to both increase our penetration and higher frequency. And that is the reason why we did INR 99. Again, as I said earlier, that strategy is working for us because we are getting more and more people to come in, more new customers, as also getting an increase in frequency of existing users. We believe that the potential of both getting new customer acquisitions as also an increase in frequency remains very high and we are not anywhere close to reaching a stage where we can say we have reached a penetration of pizzas even in core markets. The headroom remains large and promising, on both new customers and penetration as also on frequency.
Sure. And can you share, like, total number of customers do you serve, at least just a number?
Amit, I'm sorry. I can't share numbers. But listen to what has already been shared with you.
The next question is from the line of Nillai Shah from Morgan Stanley.
The first question is just on general consumer sentiment. Any discerning change that you are witnessing over the last quarter or just generally in recent months?
Well, we have seen some improvement in consumer sentiment ever since the 5% GST rate settled down. And we have seen that reflected in increased growth in our dining environment.
Okay, and that continues. And we see momentum has just been built on since November, December?
That's right. And that said, I said this response even earlier, that [indiscernible] sentiment improve. Our own performance in the last quarter reflects both that sentiment turnaround as also our own strategic initiative being out in the market.
Sure. And was IPL a big driver for same-store sales growth in your view for Jubilant?
We are seeing both the combination of Every Day Value as also activation on IPL being robust growth drivers for quarter 1.
Okay. Second question is on the EDV 99. As you build upon your initial success in this particular endeavour, do you think -- or would you expect the business to become less sensitive to macro changes? This is in the context of how pizza mainly has fared in the past.
I think it's hard to conjecture on that, Nillai, but if I pull back and look at our category, even as we invest in driving the fundamentals of the business that we spoke about earlier, we operate in a category that's discretionary in nature, so they'll always be some correlation between consumer sentiment and macro and the category performance. That said, within that category, Domino's has a very powerful business, a very powerful brand and we believe the right strategic levers are in place. So we hope to outperform the market as we have done in the recent past.
Okay. Noted. And just finally, Mr. Bhartia, did you mean that there's no immediate selling down of promoter shares that you're looking at when you made the earlier comment?
This is Hari Bhartia. I just commented a few minutes back that there is no...
I just know about it in context of what you released last quarter. But did you mean in that context or in the immediate future?
No. We had not released last quarter.
No, no, no. I think he's talking about the press release, the press release that we make, but we have no immediate plans to disinvest. And as we have stated over many years, promoters are here for long term in Jubilant FoodWorks. And we have -- in this quarter, we have no immediate plan to dispose of any shares.
The next question is from the line of [ Viper Coper ] from [ FBI Life ].
Sir, 2 questions for me. First of all, if I read it and heard it right, the Dunkin' Donuts loss, as you said, on EBITDA was 143 bps for the last year same quarter and 126 bps for the last quarter? Is it right or I heard something wrong?
143 bps was for Q1 FY '18 and 106 bps for Q4 FY '18.
106. Okay, okay. And second part, sir, on the employee side, for the last few quarters, we have been talking about number of employees per store coming down because of our more and more technology innovation and those things. This quarter, there is a sudden change. The number of employees has increased to recent around 3,000 employees or 2 employees per store. So even if you take commissaries or -- and everything, still that number looks higher. So anything that's changed there?
I don't call our store manpower -- it's a combination of fixed manpower and a large chunk of vehicle manpower, which is a function of the transactions and the order volume that we can take. The last quarter that has played out, we saw a very robust increase in orders and especially in delivery. And in order to service that higher order and higher transactions, we had to add manpower in our stores. So what you're seeing is a very clear correlation of that. Having said that, I want to underline the fact that we have made our manpower processes more efficient and we have got operating leverage even on the manpower line in the last quarter and [indiscernible].
Okay. Okay. And one more thing on -- again, coming back to Dunkin' part because the -- and so the quantum of losses have halved compared to last quarter on a Q-on-Q basis with only one store. And so what has been done, underlying growth or underlying numbers there apart from this EBITDA number?
So our Dunkin' progress and reduction in losses have been driven by 2 or 3 initiatives. The first one is a healthy growth in Dunkin' driven on the back of growth in the donut category and the beverage category. That's the first big driver. The second one is a very disciplined and a very systematic effort of cutting our costs in Dunkin', the store operating costs to begin with. We've tightened our manpower and our labor costs. We've reduced wastage. We've reduced and optimized our energy consumption costs. We've also, given the shrinkage in the store network, we've also optimized our overheads and our corporate G&A. And of course, we closed some unprofitable stores last -- in last quarter, specifically in one, but more in the succeeding quarters. And all of these have led to the Dunkin' losses reducing sharply and the drag on the P&L reducing sharply. And we remain focused on continuing the Dunkin' business as we exit this financial year.
The next question is from the line of Prasad Deshmukh from Bank of America.
Most of the questions are answered. Just one question remains. So is there any quantum that you can specify which is being contested in this anti-profiteering proceeding? And how has that arrived at?
So basically, as we explained earlier also, that this has not been decided because, ultimately, it is the National Anti-Profiteering Authority which has to decide whether there is a profiteering or not. So think about it as not being decided at this point of time. So really, there is no point to make at this point of time.
Okay. So at this moment, it is just qualitative that is being...
It is the process which is on, but it is yet to be decided finally.
The next question is from the line of Sahil Chotalia from M3 Investments.
Sir, my question is with regard to the [ lineal ] limitation on the price hike. You mentioned that you have a few tricks up your sleeve with regard to the maintaining the gross margin. How exactly will you do this? And I hope it's not at the cost of the quality or the quantity that we have seen -- improvements that you have seen in the last one year.
So Sahil, let me respond to the second part of your question first. There is absolutely no question of diluting product quality or compromising on product quality in our [ self ] to improve margins or to substitute for pricing. We are very conscious of the fact that All New Domino's [indiscernible] has worked for us last year. The consumer loves the product and comes back to us on account of the product. So there is -- we will not let our product standards fall. Coming back to the first part of your question about how do we report going about pricing. I don't want to preempt the pricing discussion and talk about what are the variables that we can work with, but I think I want to reassure you by saying that there are enough variables within the EDV construct and [ not ] resource driving pricing were to be required without breaking the leading construct fundamentally.
Okay. And the second question I had is that over the last 1 year, 1.5 years, we have seen Dunkin' has consistently reduced number of stores. Okay. So with all due respect to the management, can we now move back and say that, okay, Dunkin' was a mistake and that, going forward, we would wind this business down to a point where it becomes absolutely insignificant for us in the whole Jubilant portfolio.
So Sahil, I think on Dunkin', there are 2 parts that I spoke about. The fact that we have cut down our losses on account of the present cost management, but also on account of our growth in the top line. And our growth in the top line is driven by the core of donuts and beverages. Even as we speak, there are a number of initiatives going on in Dunkin' aimed at driving innovations, aimed at driving data consumer trials and aimed at creating more locations for us, both in dine-in and in delivery. The next couple of quarters will be about making some of those innovations [ lined ] and work successfully. And as we exit the year, we will breakeven, that is only our first milestone, but we would also have a line of sight to what would constitute for a profitable cleaning up model. The fundamental space of [indiscernible] product proposition. That space is very vibrant and it's growing in the market and we believe there's a space for Dunkin' in that context.
Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for their closing comments. Over to you, sir.
Thank you, and thank you for joining us on the call today.Before concluding, I just want to reiterate that we are happy with the quarter 1 performance and we are confident about driving profitable growth in the future. I do hope that we've been able to address your queries in the call today. And of course, should there be any additional input or clarifications, feel free to reach out to us.Thank you, once again, and have a good evening.
Ladies and gentlemen, on behalf of Jubilant FoodWorks, that concludes this conference call. Thank you for joining us and you may now disconnect your lines.