Jubilant Foodworks Ltd
NSE:JUBLFOOD
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
431
708.85
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Jubilant Foodworks Ltd
You don't have any saved screeners yet
Jubilant FoodWorks Q2 and H1 FY '19 Earnings Conference Call for analysts and investors. 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 views on the progress that we have made, operation-wise, the strategic imperatives that lie ahead and the outlook for JFL. After the opening remarks from the management, the forum will be opened for question-and-answer session.A cautionary note, certain statements that may be made on today's conference call would be forward-looking statements, and the actual results may vary significantly from those statements. A detailed statement in this regard is available in Jubilant FoodWorks' Q2 FY '19 results release and presentation, which are both available on the company 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 Quarter 2 and H1 FY '19 Earnings Conference Call of Jubilant FoodWorks Limited.I'm pleased to share that we have, once again, demonstrated robust performance during the quarter, supported by healthy same-store sales growth of 20.5% for Domino's Pizza, translating into strong improvement in both EBITDA and PAT. This achievement is executed through our persistent focus on executing the growth strategy outlined at the beginning of the financial year 2018.Our strategic initiatives like all-round product upgrade and Every Day Value continue to deliver strong results. Customers have liked these initiatives and have driven tremendous response, which is reflecting in higher number of orders and increased frequency of ordering. Investment in technology and digital space remains a high priority for us. Digital sales is a significant part of our top line. We remained focused on increasing the digital revenues, and we accelerated. We have already launched the All New Domino's app in quarter 1 FY '19.Features of new app like Easy Location Selection, easy order tracking, Automatic Re-ordering, Train Ordering, Advance Ordering and hassle-free quick payments among others have been well received.They're also strengthening our data analysis to enhance the overall customer interaction and brand experience.We have maintained also margins in quarter 2 '19. We have used our operating leverage and efficiency gain to continue to provide value to our customers and absorb increase RevPAR costs. We have maintained our prices for last many quarters, while improving quality of food through All New Domino's. This strategy has continuously improved our value for money scores and order counts. This had also resulted in creation of more opportunities to open new stores in the existing cities. In the previous call, we have spoken about further accelerating our new store count. With respect of -- to this, I'm glad to highlight that we have opened 24 new stores during the quarter, added one new city for Domino's Pizza, and we hope to maintain this pace in the coming quarters.Moving to Dunkin' Donuts. I'm pleased to say that we have made continuous progress for our stated objective of cutting losses. As guided earlier, we are on track to break even Dunkin' Donuts towards the end of the current financial year.From an industry perspective, we believe the food service industry landscape is promising, and I am confident about our prospects for the future.I would 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 Q2 performance. We have, once again, delivered a strong quarter.Q2 revenues improved to INR 8,814 million, up by 21.3% driven by a strong 20.5% same-store sales growth in Domino's Pizza.EBITDA for Q2 was INR 1,475 million, an increase of 44.4% over the same time last year and at 16.7% of net revenue.Profit after tax during the period stood at INR 777 million, an increase of 62 -- 60.2% and at 8.8% of net revenue.During the quarter, we opened 24 Domino’s restaurants and closed 1, thereby taking our restaurant count to 1,167 in 269 cities.Store expansion is picking up momentum now and as stated earlier, we are well on track to open around 75 restaurants by the end of FY '19.In Dunkin' Donuts, we closed 5 stores, thereby taking the store count to 32 restaurants across 10 cities.Let me now talk about some of the highlights of the quarter's performance. We continue to see good traction on our Every Day Value proposition. This helps drive a significant increase in order growth, especially in delivery. We also saw a sustained increase in new customers coming into the brand.Our sharp focus on and investment in digital are working well. The new Domino's app we launched in Q1 has received very positive feedback and has been rated well by users.It has a number of unique customer-friendly features, 2 of which are Train Ordering and Advance Ordering, was supported through a television campaign. Online sales are now 68% of total delivery sales.One significant feature of the quarter just gone by was the increase in competitive intensity and the surge in demand for delivery man power driven by food aggregators and e-commerce players.We did well to deal with this challenge by setting up both our retention and, indeed, our hiring efforts. This, however, resulted in some cost pressures during the quarter. We expect this pressure to continue in the near term and are hopeful of mitigating it through various other cost-saving initiatives.We were also very happy with the performance in Dunkin' Donuts. We saw a robust overall growth owing to a very strong growth in Donuts and Beverages in line with our stated strategy.The business remains on track to attain breakeven as we exit the present financial year. We do not expect the recent repositioning of the present brand in the U.S. to have any material impact in India with respect to either the business model or our own plan.Overall, we are satisfied with the Q2 performance and remain confident about driving profitable growth in the future.With that, I would like to conclude my opening remarks and I call upon the moderator to open the floor for questions.
[Operator Instructions] We would take the first question from the line of Arnab Mitra from Crédit Suisse.
Congratulations on sustaining a very good SSG performance. Comment -- your first comment on competitive intensity, I just wanted to dwell a little on this. You spoke about the competition on man power. What does it mean from a consumer lens? Are you seeing more of this pressure on discounting from the aggregators? And if that is the case, what is the response that you are thinking from a consumer lens -- consumer standpoint to continue not losing share to aggregators?
Oh, thank you, Arnab. The reference to the increased competitive intensity was primarily -- with respect to increased promotional efforts and increased visibility from food aggregators. And also, as I mentioned in my opening remarks, the war for delivery talent and delivery man power. From a consumer point of view, the strategy that we've got in deployment, which is the focus on product and All New Domino’s, very, very persistent focus on Every Day Value and value for money for customers. Investments behind strengthening our digital arm and platform, and even as we drive productivity, our strategic pillars remain relevant, and we do not expect these to be called upon to question even as we combat the increased competitive intensity.
Sure -- so -- you do -- is promotional intensity a major element? Or is it more of advertising campaign and talent, which is what is the bigger element? That's what I was trying to understand.
I think from a consumer point of view, it'd be fair to say, it is more of the former. But from a business impact point of view, we are seeing the impact on the delivery man power and the pressure on sourcing man power and the cost of sourcing man power.
Sure, and just a second question on the cost side. So -- actually your employee cost inflation is still very reasonable. It's other expenses where there had been a much sharper spike, actually much higher than even your sales growth. So what is driving this increase in other expenses at such a fast state?
Other expenses, as you compare sequentially, they are in line. So last quarter we had INR 54 crores and this quarter, it is INR 256 crores, if you're comparing it with the last year, our publicity expenses have gone up substantially, that is the main reason of the increase.
And why is the man power cost not reflecting the talent competition that you were saying? That is my last question.
So if you would see, again, the man power cost line item in this quarter, we see a substantial increase. It has gone up [ 100 ] basis points. So partly, it is coming, because this is the quarter when we do our annual increments. And partly, it is due to the pressures that we are [indiscernible] agree.
We would take the next question from the line of Abneesh Roy from Edelweiss.
Sir, my question is on Dunkin' Donuts. From a peak of 77 stores, you're down to 32 stores. So I'm seeing QSR across the board last 1 year seen improvement. So has Dunkin’ seen some improvements in terms of SSG et cetera because of the overall macro improving? In that context, why have you still shut down 5 stores in this quarter? And last quarter it was 55 bps impact on margins, so how much is the impact this quarter?
So first to response to your first question, Abneesh. I think I reported in my opening remarks, Dunkin' Donuts is seeing robust same-store sales growth on the back of very strong momentum in the core categories of donuts and of beverages. And therefore, the strategy that we have outlined earlier for Dunkin' Donuts, which is getting back on these 2 categories to drive growth that is beginning to work for the brand. The specific 5 stores that we shut were stores, where we did not see line of sight to profitability. And it was a very -- decision, a very objective call we took to shut these stores. The third part of your question about the impact in terms of Dunkin’ losses on overall P&L compared to 55 basis points last quarter, they impacted 50 basis points this quarter.
But now the loss percentage is stabilizing. So when do we see profitability coming because one quarter only 5 bps movement?
Right. So we see -- oh, yes, Abneesh, if you recall our serious intent is to have Dunkin' Donuts as a business breakeven as we exit this financial year and we remain committed to that and we are confident of delivering breakeven as we exit this year.
I think my second question was on the Domino’s store openings would pick up that 24 stores but only 1 city added. So one is -- can there be cannibalization? In the past we have seen when too many stores get added in the same cities, there could be cannibalization. And I'm seeing same-store sales growth slow down from 25%, 26% last 2 quarters to 20.5%, still a very good number, but 5% is also a relatively large number. And is most of the openings happening in educational campus and corporate locations, which means it is largely in the top 10 cities?
So Abneesh, if I look at our store opening in the last quarter, yes, we've added only one new town and that town incidentally is Ambaji in Gujarat. Our focus right now is on delivering and supporting the strong growth we are seeing led by order growth. Therefore, there are many stores in our large towns from a capacity and infrastructure point of view, which are feeling the pressure and the load. And in many cases, the store splits are required to continue to support the growth and to continue to deliver customer service level. We have seen the stores that we've opened hit the projected numbers, as per plan, very quickly post-opening. And we don't expect to see these have a material impact on same-store growth going forward. However, the important thing is to make sure that we have the right store network in large towns, in all the towns for that matter, to support our growth and to deliver service levels to customers.
So how much stores would have been added in the top 10 cities out of this 24?
In fact, I think other than one store, they were all in the top 10 towns.
Okay. And then lastly, you mentioned on the...
I'm sorry, Abneesh, just on your earlier question, the stores are not predominantly in educational colleges and campuses, they are also the more conventional high-street stores that we had.
Right. And then lastly, on the food aggregator thing, 2, 3 sub-questions. One, could you still look at outsourcing delivery because now, these 2, 3 apps have become much, much larger delivery team so they have the capability? Or is it complete? Second, a lot of the other listed players on these aggregators have been -- which have been -- which are unlicensed, those have been removed. So which don't have license have been removed. So does it lower the competitive intensity, and thereby, actually helping you once the promotional intensity comes down?
So on your first question, Abneesh, you will recall that we were using outsourced delivery man power in the preceding quarter. Our experience from that was mixed, and therefore, we have very consciously chosen to disengage from third-party man power, and we believe that we are best served by controlling the end-to-end delivery experience and providing a great quality of experience to our customer. So going forward, we will not have any third-party man power being used for doing Domino’s delivery. That's the first question. In answer to your second question, I think we fully endorsed and are supportive of the move by FSSAI to ensure that noncompliant and unlisted eateries are delisted from these aggregator platforms. It is too soon to say, how does it play out in terms of impact on our business, but it will help make our industry much more aggregated, much more consolidated and drive quality of food to customers across.
And so one follow-up on Domino’s. So petrol prices are up sharply, so that does impact your delivery costs. In last quarter, you have said if required. If inflation is there, you will hike prices. So one is, how is the delivery costs getting impacted because of petrol? And second, are you looking at price hike? Because for a long time you haven't really taken a big price hike.
So on the first one, yes, this is true that when the diesel prices increase or the petrol prices increase, it affects our logistics costs. So partly, it has gone up because of this reason. On the second part, I'll let Pratik answer.
Yes. So, Abneesh, as we've said earlier, our strategy has been, and that's worked for us is, to provide value for money to our customers. If you look at the last 3 years and effective price paid by our customer for a pizza, today compared to 3 years back, our customer pays the same amount for the pizza or be a little less what she paid or should have paid 3 years ago. And that focus on value for money is working for us. Even as we deliver value for money, you have seen our margin strengthen and our bottom line performance improved. So while pricing always remains a valid lever for us and we will evaluate that from time to time, we will evaluate that, keeping in mind, the predominant need for us to provide value for money. That vector and that option is always open to us, and we keep an eye on it. And if inflationary trends get both either on fuel or on man power, then that's an option we have before us. But right now, our first focus is on delivering value for money.
But then Q3 could see margin compression, right, that is the case?
We do not comment on margin quota, [ particularly ], Abneesh, but you can be sure that our focus remains on driving profitable growth. And we will do whatever it takes to deliver that to the business.
No. But as we grow our sales, we do better operating leverage, which we -- part of it, we just do passes on. If there is an inflation or there is an increase in labor costs we absorb that. So to that extent, hopefully, the idea is to sustain the margin.
We will take the next question from the line of Aditya Soman from Goldman Sachs.
So the first question actually on employee numbers. What was the total number of employees at the end of the quarter?
So Aditya, we have not reported, and we do not report employee numbers.
Okay. You did that until -- I mean, even last quarter, you gave it on the call and until very recently used to...
That's right, that's right. We were reporting earlier, but we do not report employee numbers anymore.
All right. And secondly, I see the rentals Q-Q have also come down, and this is despite your overall store count going up. So what's the main reason behind this?
Aditya, in the rental line items, there is a one-off item. So because of which partly this quarter's number is down, but that's not as sustainable. So the normal number is what does -- we have reported in the Q1. So this 1 crore decrease that you are seeing is coming partly because of a one-off line item.
Yes. And just as a follow-up on that. So -- I mean -- but we should have still seen an increase, right, in the absolute number, given that you hired new sort of additions in this quarter. And I'm assuming you have a few more new sort of additions in the next quarter as well so.
Aditya, we also have had some savings flow to the P&L from a rent productivity measure that we have rolled out, both in the preceding quarters and the prior period. So that was also reflecting in the P&L. We're offsetting -- we're starting to offset the increased rentals on account of new store.
Okay. And lastly, in terms of -- if you're not giving the overall employee number, can you just give a split of what proportion of your employees are doing deliveries?
Aditya, we haven't done that in the past, and we wouldn't like to comment on that and share that number now. But I guess, the number of stores, so it will be fair to say that we have a significant quantum of our workforce employed in delivery. The combination of delivery for us full time, who do part time and who are working for us on a more day-by-day delivery basis.
We will take the next question from the line of Prasad Deshmukh from Bank of America.
A couple of questions. Firstly, was there any disruption from -- disruption in supply from Coke in the quarter? And if so, how much of impact would it have had on the sales?
So Prasad, there was no disruption in supply from Coca-Cola and there was no impact on business.
Okay. Okay, fine. So secondly, these 24 new stores that we have opened, are these all regular high-street stores? Are some of these just pure delivery centers where there is no dine-in kind of option?
So our stores -- I think the strength of our model is that we have a combination of delivery and dine-in and takeaway. So all these stores have been stores that we opened have been largely stores that have been a similar format, with the combination of delivery, takeaway and dine-in. The dine-in [indiscernible] is very distinct on locations, but the format hasn't changed fundamentally.
So these are all mostly like ground floor kind of stores not like just pure delivery. Okay, fine.
Not necessarily ground floor but at the right locations, yes.
Okay, right. Yes, got it. Third is, you mentioned that delivery you have moved in-house and there is no third party, which is happening. So I just wanted to confirm that the association that you had with a couple of vendors, including like ShadowFax, so you're saying it's all completely gone now?
Yes. During the quarter, quarter is what's playing out. As we enter this quarter, it is not -- no longer valid, and we are in our own deliveries. So we review the quarter, we review the portion of outsourced delivery and now it is reduced to 0.
Our next question is from the line of Amit Sachdeva from HSBC.
So one small question on the employee cost. As Pratik mentioned that you and typically this quarter, you do annual increases as well. And given there is a competition for this employee -- from the delivery for the hiring talent and delivery guys. So what was the usual basically employee cost increase you do in a normal cycle? And what sort of increase that you have sort of seen because of this factor? And how do you sort of see the employee cost increase going forward, should -- we should just model?
So on the first part, we would not be able to share with you exact numbers on how much is on the account increasing. But to give you, if you would see the last year also, you would see a similar kind of increase between Q1 and Q2. So the personnel cost -- because last year also, it has gone up in the Q2. So this year also, the split between the normal increase and the aggregator increases in the similar lines.
Okay. Sir, if just -- I'm just roughly guessing, because it's obviously -- you obviously know your numbers better than we do because we see only little. But my only observation from this street is and the way these delivery guys are working, typically they're offered salaries as high as, say, INR 25,000 and many of them are offering little bit more, but maybe it is a short-term phenomenon not a long term one, but at least the payoff there is quite generous. And if I look at the employee cost numbers, perhaps I would see at least at the marginal push, that's my rough guess, but at the marginal push, at least 10% expansion of employee salary 10% to 15% is perhaps imminently due. Would that be a reasonable number to assume that, that kind of inflation you should be seeing?
So, Amit, without commenting on the specific numbers, let me say a few points and to an update on how we're dealing with this very real challenge. I think the first point is that yes, we are seeing -- or there is an increased demand for delivery man power and that's leading to cost pressure, driven by many of these aggregators and e-commerce players, number one. Number two, to deal with this, we have opened multiple streams. First one is in terms of sourcing man power going to Tier 2 and Tier 3 towns to increase the supply of man power, to make sure that we're able to have man power in our stores, number one. Number two, I think a unique strength of the Domino’s and the Jubilant model is that our delivery man power and delivery people and their colleagues have the opportunity of growing within the system going from being delivery boys to coming inside the store, to becoming store managers, to going even higher. And many of our current leaders in operations right up all the way to circle head began their careers as delivery boys. So we are using their stories and their example to highlight our Domino’s and Jubilant EVPs to get to all our delivery boys. And that works very well because there are stations beyond just being delivery boys. Number three, I think we have a very strong culture in our stores of reward and recognition of fun at work of camaraderie. We provide a much more comfortable environment for delivery people inside the store as opposed to aggregators who are outside and on the road. So a combination of these factors, we are seeing is working for us to retain man power and to attract man power. It is not just about the financial impact, it's not just about the money being paid out. And from a demand aspect point of view, we're also working and using technology to improve the efficiencies of delivery, and therefore, have the same delivery man power work longer and work harder in doing more deliveries.
Got it. That's very, very helpful, Pratik. And I logically see there is a more appeal to work in an organization like Jubilant versus being a self-employed owning a bike and roaming around here and there for short-term assignments, which delivery boys make and offer them. I completely get it. But I also see, Pratik, that the issue is that I also see that the SSG base from next quarter is now going to be very adverse for the first time at 17% and then going to 25%, 26%. And then you have this cost sort of also going up in some sense. So how are you like thinking about remaining part of -- I'm not asking for any guidance but as you see, do you think the price increases will be imminent for you that you can't do without? And -- or everyday value proposition might be less. Or the revenue obviously, the priority but how are you going to be dealing with this large base? This employee cost expanding, maybe, rent can offer some more cushion of optimizing and some cost cut but are you not seeing that next few quarters are going to be little bit more challenging than they have been benign in the past?
I think Amit, it would be fair to say that according to the past you've called us benign with benefit of hindsight, they weren't benign when they were playing out. So on a more serious note, I think the fact is the learnings on the last few quarters is that our strategy in place is indeed working for us. Our very sharp focus on correct improvement, on value for money, on technology, on customer experience, these strategic levers are working for us. And we will double down behind these levers as we look at a more stronger quarters from the past include the end Q4, number one. Number two, your question about pricing and illusion to it, I've addressed in detail in my earlier answer. Pricing is a practical lever, and we will deploy if and when required, but the strategic focus, again, value for money will not change. And Every Day Value is a manifestation of that and that will not change. Your point about cost increases, yes, we've talked about man power cost increasing. We've talked about the, there was a question earlier about fuel costs increasing. But those cost increases are very real, however, there are 2 points that I want to make here, one is that there is also a fairly soft commodity cost environment right now that's playing out and that's helping us, especially in dairy and cheese, number one. Number two, we have very concerted productivity program that's in place to make sure that we extract efficiencies and make every rupee of cost go harder. So hopefully with all of these playing out, we will continue to drive profitable growth and like you said, we don't give a prognosis and a forecast, but we do expect that these, all put together, will help us sustain profitable growth going forward.
That's very good to hear that, Pratik. But can you share some October experience, if you can? That while these things are at play, how are October fared -- how's October fared for you in these parameters? Are you seeing double-digit over some sort of SSG growth is faring out very well, I don't need a specific number but if you could give some sort of comfort here that how on that base of SSG? How October has panned out for you?
Amit, we do not comment, as you're aware, on intra-quarter. So you have to reserve this question for the next quarter's earnings call.
[Operator Instructions] Next question is from the line of [ Kunal Shah ] from [ My Asset ].
I just have 2 questions. One was essentially, while you have just reported a very healthy SSG growth, I see a moderation from the 2Q levels, and just wanted to understand is that a sense on the underlying demand environment? Or would you believe that there are more seasonal factors at play? Is there a concern that you -- we should be -- worrying about on the demand environment, because of which there is a moderation that we see on the Q-Q basis? Because finally, you will appreciate the base has not changed and hence I was -- I wanted to kind of get your thought on that.
Sure. I think it would be fair to say that we do not see any change in the demand environment in the last 2 or 3 quarters. It remains robust as I mentioned in my opening remarks. Our SSG has been driven by a strong growth in orders and a strong growth in delivery. And both of these, as you imagine, are very fundamental enablers for a profitable QSR business. So we do not see that changing and that's certainly not changed in the last quarter. I think the numeric value of SSG also has a base, in fact, I think beneath it. So I think there would be that delta also that we need to keep in mind. But a larger point about demand, I think the fact is, for a variety of reasons, we see demand continue to be robust.
The base is the same is what I thought, that's why I was little confused. Is there more a timing thing, quarterly, so it's just seasonal or something of that sort?
Exactly. There is the impact of various festival and events et cetera between last year and this year. But -- and that, of course, plays out month-to-month and quarter-to-quarter. But the larger question about demand moderation and the change in demand, I think, that I regret.
Okay, perfect. That helps. The second thing, sir, was on the delivery side. Now I can you hear very loud and clear that you want to move into your own delivery even when you are kind of going through aggregators. In that context, could you share any investments that you're making to upgrade the experience? Because finally, I'm assuming that this changes with the thought of providing the differentiated experience to the customer, not just that your delivery person goes, but improving the existing experience as well. Would that be a fair understanding? And if you could kind of share any kind of initiative that you've done over there or -- that's it.
Absolutely right. And regardless of whether the aggregator point, I think the fact is as India's largest delivery brand and a pioneer in the space, we have to continue to give a superlative experience to our customers. So you can be sure that there is a lot of effort going -- and focus going behind this. This is something that we do well, but we're doubling down on this as well to make sure that -- even with the much greater load that we have seen through the order count, we deliver within 30 minutes in all -- across all our stores. And the point I made earlier about, the need to split some stores came from exactly this point, that we have to make sure that we track delivery KPIs very, very maniacally and make sure that we give the same experience to our customers we've been giving in the past.
Okay. The whole experience that you're trying to bring in, are there any examples that you could share? That will be it.
Sure. So just 2 examples to illustrate how to kind of differentiate our delivery. One of them I talked about earlier, which is advanced ordering, where customers are able place an order up to a month in advance, which is again something that is a delight factor, number one. Number two, on the app, we've got a one click reorder functionality, which again is something that delights customers. Outside of home, as I mentioned, we've got the railway ordering functionality also that we've launched. So all of these are features, which collectively strengthen our credentials as India's delivery expert.
But that does not change the delivery experience. I was hoping for something on the delivery experience changing. But any case, and I hope -- I think, maybe it's a work in progress and is that something that you could share?
The physical delivery experience -- I think there is a very -- I think the very clear correlation between the speed of delivery and the perceived quality of experience, and therefore, within that our focus is very, very sharp on ensuring that we deliver consistently within 30 minutes and much faster whenever possible.
Okay. And sir with your permission just one last question. Any plans for the promoter to trim down the stages at all if you could share? That's all from my side.
This is Hari Bhartia. And as we have always maintained that we are here to stay for long term. And we don't really advise The Street on when we are going to trim if we decide to trim also. But I can say that as a promoter, we are here to stay for the long term.
Our next question is from the line of Amit Sinha from Macquarie.
My first question is on the food inflation, which you have been seeing in your overall portfolio. And basically what has been the reason for the gross margin expansion? Is it on account of continued benign food inflation? Or there is significant improvement in the product mix?
Amit, if you see our raw material cost, it has remained almost at the same level or in fact a bit lower. As compared to last year also it has come down so there is a deflation actually. Primarily, it is driven by the -- dairy products because -- which is a commodity, and we have seen a favorable cycle. So as a result of that, there is as deflation in the food costs.
So if I can just add to that, Amit, the food cost number that you see there, and therefore, the gross margin is a function of 3 things playing out: The first one is a incremental cost on account of increased volume compared to last year. The impact of the removal of input tax credit on various elements of the food and, of course, compensated by as, Prakash, he just mentioned, deflation in a key ingredient, which is cheese. The net impact is that our raw material costs have gone from 25.9% to 25.4% as you see on the P&L.
And even on a sequential basis, you are seeing the overall portfolio food inflation coming down? I mean -- or basically, the deflation continuing?
Yes. It is a marginal decline as you see, [ 25.9 ] over 25.4. But yes, there is some impact even sequentially on account of commodity prices softening.
Sure. Last quarter you indicated that you are also seeing upgrade in the overall product mix. I mean -- and then you indicated that the core pizza mix has been improving. Just wanted some commentary on that.
Absolutely, Amit. And the great news is that just like we commented last quarter and what we saw last quarter, our core pizza continues to be the engine of growth for us this -- in quarter 2 as well. If I put the 3 pieces together. #1, core pizzas, #2, delivery growth, #3, order net growth. These are the strong fundamental enablers of growth for Domino's, which has worked well for us both in Q1 and Q2.
Sir, any chance you would want to share the core pizza number for the overall portfolio.
No, Amit, I'm sorry, we can't do that.
We take the next question from the line of Vivek Maheshwari with CLSA.
I have a question on the competition or aggregator. Your comments are -- it looks like specific -- specifically related to staff costs. But whatever we are hearing or seeing in media about the amount of money that the food aggregators are raising, the amount of promotion that they are doing, doesn't that worry you from a competition perspective? I understand your point that your value for money 3 years back, all the prices are same today. But when you compare it on a relative basis maybe the value for money cushion itself is going down with the level of discounting that aggregators are doing. So what is your thought on competition from a top line perspective?
So Vivek, yes. The aggregators are promoting and discounting aggressively and also spending on visibility. I think as a result of that, there are 2 things that are happening. The first and the most important thing is, the market for home delivery is expanding and the overall size of the pie is increasing. So it is not just a replacement of demand, it is the addition of demand. And the conversion of occasion led consumption to more frequent habit led consumption. That trend, Vivek, is good for the category, more importantly, it's good for Domino's, because we are essentially, a delivery-based brand, and of course, the delivery pioneers in this country. So more the medium and longer term, this trend will play to our advantage. In the short term, we are mitigating this challenge through focus on all of our strategic platforms and getting these participants, the rest of these aggregators as well, always having delivery controlled by us. So we participate the aggregators and in their growth, especially as they source new customers, number one. Number two, we continue to strengthen our own delivery platform, and we've talked about extensively. And you've seen the new app play out well. And number three, of course, we know that we have a business that's a combination of both delivery and dine in, and we have to make sure we drive growth behind both.
A follow-up to that, you have mentioned this last quarter, and again, a few times on this call. When you say you want to control the entire experience. If I'm ordering on, let's say, an aggregator app, why should you -- so your promises on the product based promises on the delivery, why should you control the entire experience and then thereby increasing the cost. I don't know the economics if there is something behind, which I don't know of, but why should you worry about the delivery part? Because if I am on Zomato, I mean, it's Zomato's responsibility to deliver. So your promise is only on the product. Is that unfair?
Vivek, I think we are recognized as a delivery brand, as a strong -- the largest food delivery brand. But there is value in owning the end-to-end customer experience. There is the food that we make and the product that we give, therefore, the way the consumer interacts with the brand in order placement. And very importantly, the experience that she has when she gets pizza then food delivered at home. We have seen time and time again that delivering this experience well require us to have expertise on both the order part of it and the delivery part of it. So we believe actually that there is significant value add that we can deliver to customers through consistent, reliable fast delivery, which will help us retain our edge and indeed strengthen our edge over competitors, both conventional competitors and these aggregators.
Okay, okay, 2 quick questions. On the staff costs, all this pressure related to aggregator, has it fully played out through the quarter? As in -- were the hikes at the beginning of the quarter? Or was it at the back end, which means that we should be modeling that for third quarter a further higher number?
Vivek, I mean, there are various degrees of pressure in different markets at different points of time, from different aggregators as they enter the market or as they increase the play in those markets. So hard for us to generalize and say that I think it's fully baked in or not. But it would be fair to say that we expect this pressure to continue in the quarter going forward, at least in the next few quarters.
Sure. No, my point only, sir, is INR 170 crores what you have reported represents whatever you had to do for the entire quarter? Or it will be for a month or 1.5 months, half the quarter? Because you would have given absolute increase in salaries so that is where I'm coming from.
I think the point that we're making is that those selective increases have been, again, in selective markets at different points of time. So it's hard to aggregate and give a consolidated view what has been fully priced in, fully costed in or not.
I see, okay. And anyone of -- other income -- or is that a run rate that we should be taking for the rest of the year?
So at least the other income that we have shown, because as you are aware that we are generating cost and so cash. As a result of that, we have more investable points this quarter and other income has gone up. So at least it's going to be at this level or at least increase from here.
[Operator Instructions] Next question is from the line of Abhishek Ranganathan with AMBIT Capital.
Two questions here. One is on the margins, and if we take one-off on the rent and possibly -- and the impact of Dunkin’, both possibly accounting for maybe close to 100 bps or more. We see the effective gain, the effective gain on margins will be close to what about 100 basis points, 130 basis points. Now I just wanted to understand that for a 20% like-for-like growth, the margin increase seems to be in -- compensated. I'm tipping it of the one-off of the rent and Dunkin’ debt.
So we actually explained it many times during the call. So have you -- you see what has happened in this quarter is, on one hand, we had increase in our sales, which has contributed to our overall profitability and leverage. But at the same time, if you see that there is a price, these -- there is an inflation in personnel costs, which has played out in the margins. So the margins are there. So we have maintained the margin, despite so much of increase in the personnel costs.
Sir, I meant year-on-year, your personnel costs also as a percentage of sales has come down. I'm referring to all Y-on-Y numbers. So that's come off from 2l.5% to 19.3%, rent is down almost 60 basis points.
Year-on-year, we have improved the margins. So last year -- for the same period, our margins were 14.1%. We've just come up to 16.7%.
Exactly. So my point is with Dunkin’ and the one-off on the rent, it implies almost about 150 basis points for the 20.5% SSG. So what I'm trying to understand is that, is that the leverage that you're capturing is at -- is about for the 20% of SSG is 150 basis points is what we should be looking at? Or is there something how -- is there another element to this number.
So Abhishek, I think the one delta that you need to keep in mind from same time last year is the significant adverse impact of the removal of input tax credit, which has hit the P&L. So that -- sitting in those lines -- each of those lines whether it is food costs, whether it is rent costs, whether it is manufacturing expenses, each of those lines has an impact of -- in full credit withdrawal that is covering the number.
Sure. And you could also help us understand what is the one-off on the rent actually?
It just a one-off entry, which was there in Q1 and then, there was...
Okay. But you said that Q1 is the run rate to look at, INR 84 crores or net is what I need to look at.
That's a reasonable number. So we can't really tell you the exact number as we speak in detail. So -- but that's the normalized numbers. The rent should be around there.
Okay. And it -- and that is despite adding those 24 new stores and those possibly 124 you like, so on a per store basis, if I have to look at it, is that 84 or thereabouts should be the number to go about on a quarterly basis?
Yes. Again, it will increase. We see new addition of the store in the next quarter.
And Abhishek, many of these stores, as you would imagine, depending on where they will open and when the contract of renewal will come in place, they'll be contracted renewals and be coming in. So it would be hard to linearly separate and say that the rent will be exactly X rupees because depending on the tenure and the lifetime, the -- increments will come. And of course, we'll be opening more stores going forward as well. So a precise number of the rent, I think it will be hard for us to estimate right now, but at least the one-off impact will not be there obviously.
Yes. I just wanted direction. I really appreciate that clarification. And lastly, when you mentioned profitable growth, I think here is that, because profitable growth could be -- even if you grow your business and do 15.5, come out to 16.5. I'm just throwing numbers. But would that be falling under the definition of profitable growth for you?
So are you asking me to, therefore, speculate of what -- where the margins are going to be? And what...
No, I'm not asking about margins.
To your question, I don't want to define of benefits to what I mean by profitable growth, but I think it would be fair to say that we are confident about delivering a good, healthy same-store growth and a good healthy margin profile going forward with the strategy that we have in place. As to what those precise numbers will be, time will tell.
I wasn't looking for numbers. What I meant is you have number lower than the margin, which is reported right now. It will be profitable at the end of the days, that's what I'm trying to say. So -- that wouldn't bother you as much even you...
I appreciate the question. I would not able to comment on the specific and the precise question beyond what I have just said.
Our next question is from the line of Vishal Gutka from PhillipCapital.
So my question is on pizza slice market. If you see in South India, they are called Oyalo Pizza, basically [indiscernible]. They are really expanding, very aggressive on the pizza slice market. And I believe that we are growing much slower on the pizza slice. So can you just tell us what are the challenges related to the pizza slice market?
Vishal, thank you. Yes, we are aware of the competition growing in some parts and the options delivered to customers by slice. We do offer that option in some of our metro stores. However, the larger experience we've had with pizza slices is the difficulty of controlling product quality and giving that consistently-fresh product to the customer. And in the longer run, it has not worked for us. So we do not expect this to be a significant part of our strategy going forward and that's something that globally has not worked with Domino’s very well.
Next question is from the line of Manoj Gori from Equirus Securities.
So couple of questions. First, you just feel like you have made some -- you have taken some initiatives in some of this space. So earlier in the past whenever you come up with a new strategy was largely implemented on a pan-India basis. But right now what we are seeing is you are going region to region. So we just want to understand like what are the initiatives that you are -- that you have taken over in the quarter. So yes, some light on that.
One second, Manoj, you are very clear on the question, let me just get clarity, just one minute. If I gather, the question was our initiatives will be national or will they be regional?
[indiscernible] which we believe like with my view would be like some more positive thing that the company is doing at this moment. So for instance, in Gujarat, we have gone for all veg from October to -- that would be on permanent basis. So just trying to understand the rationale behind this initiative and what other initiatives that you are taking in other places?
Okay. So I did hear the question about Gujarat so I'll respond to that specifically and your other question wasn't very clear. So specifically on Gujarat, Manoj, all our data showed that and we were aware that the market in Gujarat was and is very vegetarian focused. Our own contribution from nonvegetarian was marginal in the state of Gujarat. Number three, all the research with consumers also showed that having a nonvegetarian in the stores was a significant barrier for vegetarians to come and try, again, specifically in Gujarat. As you have just mentioned, we have, therefore, moved to a vegetarian menu recently in Gujarat. It's early days yet, but we are seeing -- we have not been getting a diverse impact, if anything, we have seen early positive trends of that move. That specific context is specific to Gujarat, and therefore, we don't expect to see this roll out anywhere else.
So therefore, I'm coming at -- actually coming at. So are there any other initiatives like this one you highlighted about Gujarat. So some other initiatives for some other regions that you have taken because this will be actually fueling growth for your company.
So Manoj, it would be fair to say that given the diversity of food and cuisines across the country and preferences. As we innovate and go forward, we will evaluate customizing propositions for different markets and trying them specifically in those markets. As and when that plays out, we will keep you informed. However, in the last one year what we have done is we've launched specialty chicken on which we've focused much more in the core chicken market of the South and the Tamil Nadu and Andhra, and Bengal and the east. So the focus has been the stores in these markets, but yet, going forward, we will evaluate innovations specific to regional markets.
Just one question. I was not clear with the question, you said there is some one-off in your rental expenses, so just can you please reiterate what kind of one-off.
There's a small one-off item sitting in the rent in quarter 2 numbers, which obviously, will not continue in the quarters going forward.
So suppose it will take the same rent in Q3, this could be lower? Just hypothetically.
No, no. There is a one-off saving sitting in the rent line, which would not continue in Q3.
Next question is from the line of Latika Chopra with JPMorgan.
My first question was there were some -- certain media reports a few weeks ago talking about a shift in your beverage choice from Coke to Pepsi. Is there any update on that?
Latika, we are in the process of evaluating our future beverage partner and that process is not complete yet. So we do not have an update on that. And we do not, obviously, comment on media speculation.
And the second, but I know a lot has been discussed around margin. So I just wanted to check, this margin expansion is an objective for the management? Or -- I understand the focus on topline growth, but we have seen a substantial margin improvement over the recent years, thanks to various initiatives. But is that important KRE for the team?
Latika, I think it's important to keep in mind that we have to maintain a healthy balance between driving topline growth and reporting back to our customers and delivering a sustainable and healthy margin. That is a dynamic balance and we wish that we -- we need to test and balance every quarter going forward. There are some very clear requirements from a strategic point of view that I have talked about, which is, of course, value for money, ensuring a better customer experience, investing and putting money behind technology. At the same time, there are inflationary headwinds that we're experiencing. I talked about a couple of them in my remarks. There is also a very concerted productivity report that goes at the end of the business to try and extract waste and any inefficiencies and drive productivity, therefore. So how does it play out, it remains to be seen. But this is an ongoing balance between driving top line growth and bring value for money and ensuring that we have margins visible.
Are you facing incremental challenges on the promotion part from the other players, particularly food aggregators to probably this will keep your pricing potential in check? Even if your commodity deflation environment has reversed for you in the coming quarters.
I think the promotions being delivered by aggregators, they are very specific discounts and strictly driven for the first few orders and for the new customer. That will continue in different ways. I know -- as that canvas plays out. From our own customers and our own value for money proposition and perception, I think we have delivered over the last 3 years a very strong VFM. We haven't as you reminded us not -- it's -- we've not taken pricing. So pricing remains a lever that is relevant for us and we don't see the aggregator promotions, cramping our ability in taking that pricing. That's the lever that we had before us and we can exercise should we want to.
All right. And lastly, any update on this anti-profiteering bit?
Sure. So on the anti-profiteering, it's being heard by National Anti-Profiteering Authority. So we have made our submissions and National Anti-Profiteering Authority has yet to pass an order.
If I may -- if I just may add to that, Latika, I just want to reiterate that all the data points that we have, our own internal conviction is that we have not profiteered. In fact, the impact that we had on account of import credit going away, we have not taken pricing as we mentioned on a couple of earnings call back, they have only taken partial pricing to cover for that input credit withdrawal. So we remain confident that the NAA will hear and appreciate our point of view and that our point of view will eventually prevail.
We will take the next question from the line of [ Raj Mohan ], individual investor.
As we enter the store expansion phase after having rapidly developed frequencies over the last year, how are the next 2 years seen in terms of proportion of contribution to growth from increased frequencies and increased store count?
So Raj, thank you for the wishes and thank you for your question. It will be fair to say that even as we expand our store network to service the growing demand and the potential of the market, we will remain focused on driving same-store growth as well through those strategic levers that we've talked about extensively. So it will not be one or the other or one being predominantly rather than the other, they both will have to go hand in glove. We believe that we have the right strategy in place to drive same-store growth. We also remain confident about the very large potential of the pizza category and the Domino’s brand out there in the market, which we'll continue to tap into and leverage.
Okay. I was just looking at whether you're hitting any headroom in terms of frequency expansion of existing stores and that's why you're concentrating more on increased store count as a strategy over the next 2 years. But based on your answer I can probably take it that it will be a 50-50 in cost -- you're only able to put in a number but roughly it will be both of them contributing is what you're saying in terms of the...
Raj, I will not be able to put the numbers like you said, and you can draw conclusions, but I think it's -- just to add to my earlier answer, I think it's fair to say that India is a very exciting market that we see room -- headroom for driving increased penetration and headroom for increased consumption frequencies. Apart from geographical expansion that we talked about and that you're aware of. So there are 3 vectors, in fact, 4 vectors: driving penetration; driving higher frequency; driving greater ticket size per order; and fourth is geographical expansion to new markets.
Okay. Again, further into this from your strategic words of observing maturity and aspiration towards pizza products. As you look down at store expansion, do you see opportunities far outweighing -- you obviously mentioned you see opportunities far outweighing the challenges and that way. Have you gained greater confidence in throttling up store expansion? In this context, do the existing locations offer greater expansion potential, that maybe the next 2 years would go in harnessing these? Or does the company plan to aggressively get into newer locations?
I think the -- a really encouraging trend and data point that we have seen, [ Raj Mohan ], is that we see opportunities in increasing our store network, both in existing markets to deliver to the increased demand and also in opening up new markets. So we see both of them being very important areas for us to drive store expansion in.
We take the next question from the line of Varun Singh from Antique Stock Broking.
Sir, can you please share what are the new developments that's happening at product level, sir, other than the specialized chicken focus that you spoke about?
Sure, Varun. So I think -- before I answer your specific question let me just address the larger point about innovations in our business, which is I think where you're coming from. So I think it's important to recognize that before we drive innovation in the portfolio, it's critical that we strengthen and buttress the core of the business. And that's what we're doing the last one year. I think our last one year's play has been about strengthening the core to better product, not only on Domino’s, but a value for money for technology and customer experience. So that was the first milestone that we had to cross before we went ahead with innovations. Number one. Number two, our innovations and how we provide differentiation is not just in products in a business like ours, it's also through technology and through differentiated service. So what you are seeing right now, for example, railway ordering, or advance ordering or one click ordering, are all examples of innovative service offering and experienced offering based on technology, and that's already in-market as you're aware. The third vector, which is product innovation also remains very relevant for us and you can be sure that we are studying very, very vigorously all emerging consumer trends and opportunity for riding on those and we will innovate in the product space both on pizzas and on price over time to harness those opportunities.
Any new development happening like on your core product pizza.
Also Varun, I want to take you back to sometime earlier when we launched 2 new innovations in our core pizza range. We launched the paneer makhni pizza and the chicken tikka pizza and that has gained and spawned a lot of positive consumer acceptance and that is now a significant part of our pizza mix. So that is an illustration of the kind of work we've done. And that we continue to do as we go forward both on pizzas and on the sides.
Sure. And sir, can you please share the number on like a total retail area for Domino’s and Dunkin' Donuts.
So Varun, we don't share the physical area, we only share the store count, the numbers of which are there before you.
So sir, what would be your guidance on store additions and margins going forward, is my last question.
So Varun, on the store addition, you will recall on the last earnings call, we had given an estimate of opening 75 stores in this financial year, we remain committed to that number.
And margin, sir?
Margin we do not give an estimate on guidance.
We take the next question from the line of Kunal Vora with BNP Paribas.
On Dunkin' Donuts, are we done with the shutdown of all the loss making stores, or there are more left? And now that it's become a very marginal part of the portfolio, would you look to shut it down, that's question number one.
On your first question, I think, before we talk about closure of stores going forward, I think it's important to people that we brought strong and robust growth back into Dunkin' Donuts' portfolio, driven by the core of Donuts and Beverages. That's the first piece of good news and that is what has driven reduction in losses, almost 75% for the same time last year, reduction of, in fact, to 50 basis points. So that's the first point. I think whether we -- how we look at store shut downs in future will be a function of individual stores and their P&L. We don't expect to shut down a significantly more number of stores in Dunkin’ anymore. I think we've got a large number of stores which are profitable and making money at the store level. So we don't expect this number to be significantly more in the future. I think our first priority on Dunkin’ is to make sure we reach breakeven, which we will do by end of this financial year, as we exit this year. And even as we do that we'd be putting in place the contour of what will define and what will make for a profitable and scalable business in Dunkin' Donuts going forward.
But can we have a -- can you have an economical scale with 32 stores? Is that something which you think needs to be scaled up? Or you are okay with this kind of a number?
It would be I think -- I think it will be fair to say that our end goal is not to just merely breakeven, it is to build a profitable and a viable and a growing business with Dunkin' Donuts. The first milestone in that was to halve our losses last year, which we did. And the second quarter milestone is to breakeven as we exit this year. By doing that and it's not just cost cutting that we need as you can imagine, it's driving growth and driving growth through a core portfolio, which is what is restored in the recent past. So as we get growth back, growth is a measure of consumer acceptance, is a measure of the right proposition and the right value. So as we get that back we can then start looking ahead to driving the more sustainable and more profitable growth with Dunkin’ in the future.
Sure. My second question, like are the new stores which you're adding in top cities, are they expanding your reach to new customers? Or they are mostly taking the load off your existing stores?
It's a combination of both, Kunal. There are some suburbs and areas -- unserved areas in metros where because of growth of new open urban clusters, we are beginning to increase our reach. But there are right now to begin with in the last quarter, there will be much larger share of stores where we split existing stores to be able to service to the increased demand through just new stores and a better infrastructure.
But these stores will not really contribute much to incremental revenues, right? That revenue could have any way come but -- is that understanding right?
I'm sorry, say it again.
So these stores will not contribute much to incremental revenue. These stores are in areas in which you're already servicing customers.
No, Kunal. That's not correct. The split store and the old store -- the split store rather, with the new store, we add significantly more revenue compared to the old model store. So there is a very clear revenue upside as well. Apart, of course, from the improvements in delivery and service KPI.
Sure, sure. And last question, like everyday value offer has been around for, let's say, 18 months in the case of medium size and now about 6 months for the regular size. Are you seeing some fatigue maybe coming in especially in the medium size, like if you compare growth between medium size and regular size, is medium size still growing at the same pace as regular size, in which you've just introduced the everyday value.
Kunal, I think everyday value is a very fundamental platform for delivering sustained value to customers and for helping drive and build frequency of consumption. You are aware of the fact that this was a replacement to our earlier deep discounts, which were done occasionally. So this platform we see continue going forward. We do not see any fatigue because this is a highly relevant platform for a market like ours, the frequency remains low and the category building task is to grow frequency. So this is by no means reaching anywhere close to fatigue and we intend doubling down this platform going forward as well.
Our next question is from the line of Nillai Shah from MS.
Just 2 questions from my side. First is on the everyday value of -- just to understand on the INR 99 pizza, could you give us some details on how that is helping grow new customer acquisitions, maybe bringing new customers into your fold, et cetera. Whatever details you can provide to understand the long-term opportunities out there would be helpful.
So everyday value expansion to the regular pizza segment has helped drive growth both in quarter 1 of this year and quarter 2 as well. One big element of that is to have recruited new customers. So EDV 99 is helping get us a whole new set of customers who were not trying pizzas earlier and are finding the everyday value platform a much more affordable way of entering the pizza category. So we are seeing a very healthy increase in new customer acquisitions in the last 2 quarters. There has also been some upgrade from the old -- from the value pizza menu platform that we have in play that customers move up and trade up and experience the core pizza, which now going to EDV 99 is more affordable. It would be fair to say that there is a large buyer -- of growth coming from new customers.
And the second question is, again, it's been discussed at some length in this call but the other expenditure part, in 1Q it was INR 257 Crores, 2Q a similar number. Last quarter you had mentioned that part of the increase was on account of the IPL spend, et cetera. And it sustained into this quarter 2, so what's the reason for that, advertisement, publicity. Is this going back to your opening remarks on the increased competition?
So let me give you the cause of change, if you will, vis-à-vis quarter 1, the sequential quarter change. There were 2 or 3 trends which played out and the first one as you can imagine is the increase on account of the volume increase, the number of orders, the number of pies that we delivered incrementally versus same time versus quarter 1. Whether it was in terms of particular expenses or packaging or upgrade or indeed our outsourced man power, there was reason to deploy more man power, there was volume impact which played out, number one. Number two, there's been a significant inflation impact vis-à-vis last quarter. Again on -- specifically on power and fuel, or freight, or packaging and some investment -- some expenditures on repairs and maintenance. That was compensated, however, partially by reduction as we mentioned, in advertising and marketing costs. And as you recall, we had IPL last quarter in Q1 which caused the event in Q2, so there's been some compensating impact of that downward on account of reduction in advertising, marketing costs. Net net what you see is the increase of roughly about 2 Crores or 0.2% or 20 basis points compared to what we had in Q1.
[Operator Instructions] I'd now like to hand the conference over to management for their closing comments.
Thank everyone for joining us on the call today. I hope that we've been able to address your queries on the call and of course, should there be any additional input or clarification, please do feel free to reach out to us. Before concluding, I want to reiterate that notwithstanding the greater competitive intensity and cost pressures, we have delivered a strong performance in quarter 2 and remain confident about driving profitable growth in the future. Thank you once again, and have a good evening.
Thank you very much.