Westlife Development Ltd

NSE:WESTLIFE

Earnings Call Analysis

Westlife Development Q1 FY25 Highlights: Operational and Financial Overview

In Q1 FY25, Westlife Development opened 6 new McDonald's restaurants, bringing the total to 403 across 66 cities. Despite challenges, including a heatwave affecting footfall, the company saw a sequential sales increase of 10% at quarter-end. Revenue reached INR 66.13 billion, and gross margins improved to 70.8%. The company continues to drive performance through menu innovation and digital engagement, maintaining a target to open 45-50 new stores in FY25. While profitability was subdued due to higher operational expenses and royalties, there are emerging signs of demand recovery, with optimism for stronger performance in the second half of the year.

Aiming Higher: A Promising Q1 FY '25

Westlife Development Limited is gearing up for growth, achieving a significant milestone with the opening of its 400th McDonald’s restaurant in India during Q1 of FY '25. This quarter, the company opened six new locations, continuing its commitment to expand its reach in smaller towns and focusing primarily on drive-thru services as it looks to meet its ambitious target of establishing 450 to 500 new outlets by FY '25.

Navigating Challenges: Demand Recovery and Strategy

Despite facing a challenging market, Westlife reported a top-line revenue of INR 66.13 billion, reflecting a year-over-year increase. In-store sales showed a decline of 6.7%, contrasting a 7.4% gain during the previous year. However, the off-premise sales have remained stable, indicating a shift in consumer preferences, especially towards digital ordering, which constitutes 69% of total sales. The company's plan includes leveraging its marketing platforms to enhance guest counts and emphasize value offerings. A sense of optimism surrounds their strategic initiatives aimed at innovation, having recently launched several new products.

Growing Through Innovation: Menu Development and Consumer Engagement

In an effort to maintain consumer interest, Westlife has actively refreshed its menu, introducing popular items such as a new chicken burger and unique desserts that have already seen positive customer feedback. Their digital platform is expanding, with over 3 million active monthly users on the mobile app and increasing engagement through the My McDonald's rewards program, which is expected to boost frequent visits. The company is optimistic about achieving a 15% to 18% contribution from McCafe by 2027.

Challenges in Profitability: Analyzing Margins

Notably, while the gross margin improved to 70.8%, profitability pressures were evident due to elevated operating expenses and royalties, which contributed to subdued profit margins. The management predicts flattish margins for FY '25, primarily influenced by the ongoing costs associated with these strategic expansions and marketing efforts. However, they are committed to a longer-term roadmap that includes improving operating leverage and enhancing margins through strategic pricing and operational efficiency, targeting a target of 7.5% margins by FY '27.

Looking Ahead: Growth Projections and Market Expectations

As the company eyes the second half of FY '25, expectations are high for improved same-store sales growth (SSSG). Acceleration is anticipated in consumer frequency as inflation moderates and higher income levels become prevalent. Executives emphasized their confidence in recovering customer min-consumption patterns and anticipatory improvements from their ongoing value platform, fueling the optimism for higher average unit volumes in the upcoming months. The management remains steadfast in their commitment to the Vision 2027 roadmap, signaling robust confidence in long-term sustainable growth.

Earnings Call Transcript 2025-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the Westlife Development Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Chintan Jajal. Thank you, and over to you, sir.

[Chintan Jajal, executive]

Thanks, [indiscernible]. Welcome, everyone, and thank you for joining us on [indiscernible] earnings conference call for the first quarter ended 30th June 2024.

I am Chintan Jajaol, Lead IRS Westlife. From the management team, I have with you Mr. Amit Jatia, [indiscernible] [indiscernible], [indiscernible] Mr. Saurab Kalra, Managing Director; Mr. Akshay Jatra, Executive [indiscernible]; and Mr. [indiscernible] Shah, Chief Financial Officer. We will kick off today's conversation with [indiscernible] on overall business progress and outlook. This will be followed by Saurabh taking us through operational, financial and had highlights or that we can open the forum for question and answer. We will be referring to earnings presentation and financial releases available on the [indiscernible]

[Audio Gap]

[Unknown Executive]

[Audio Gap]

Today, we have the performance of Westlife Foodworld for the first quarter of FY '25. I'm very pleased to announce that our company has crossed a significant milestone of opening 400 McDonald restaurants this quarter. We now [indiscernible] showed customers across 66 cities and to further expand our market presence, we successfully opened 6 new restaurants this quarter. Aligned to our resin 2027, we are [indiscernible] ordering to open 450 to 500 -- to open 45 to 50 new stores in FY '25 with a focus on South smaller towns and drive through.

In response to the challenging current environment, a sustained focus on driving guest counts by leveraging the means platform and value remain the cornerstone of our strategy, ensuring that our customers continue to see McDonald as I go to [indiscernible]. By continuously replacing our menu and introducing new offerings, we kept our customers engaged and excited about our brand.

So since we launched the next year [indiscernible] range, which 5-star our iconic core burger with [indiscernible] chicken for the quarter. We also launched Mango flavor desert, which received good customer response.

Mid-capital food items like cookies and Brownies, which were pilots over the past few quarters are now being extended across our entire network. We aim to achieve a 15% to 18% contribution of [indiscernible] cafe to serve AUV by 2027. Additionally, to connect with our [indiscernible] customers, we brought the anmie world to life at McDonald. The initiative embodies our dedication to integrating our brand with popular culture offering unique experiences that resonate with the relevant audiences.

Consistent efforts towards strengthening our brand have yielded positive results. Our Real Food, real good platform which was further go with the launch of a have [indiscernible] McDonald campaign, where we collaborated with the celebrity Sanjive Kapoor. In this initiative, Shahid Kapoor champions our commitment to maintaining impactable food quality, hygiene and safety standards in our restaurant. Our digital [indiscernible] continues to gain factor, driven by the increase in present for our convenience amongst our customers. As said [indiscernible] organization, we are continuously refining our operational efficiency and focusing on improving our financial performance to further improve operating levels. As we navigate, we are not nearly reacting but proactively shaping our future by being committed to the strategic focus we laid down in Vision 2027 which remains firmly intact. Thank you once again for your trust and commitment to our journey. I will now pass on to Saurabh to share the operational and financial specifics of the past quarter. Thank you. .

[Saurabh Kalra, executive]

Thank you, Akshay. Good evening, everyone. Thank you for joining us to discuss our Q1 results. Last quarter, we highlighted that after several consecutive quarters of declining out of food consumption. The March quarter was relatively stable on a sequential basis but lower compared to the same period last year. I'm pleased to share that we are seeing further improvements in the underlying demand trend, [indiscernible] was higher sequentially and close to last year's level. As retail level inflation continues to moderate, [indiscernible] higher income in savings, we believe the frequent consumption will improve gradually. Having said that, we will continue to monitor the market trends and drive marketing [indiscernible] initiated accordingly. Now turning to our performance in quarter 1. Our top line at INR 66.13 billion was a [indiscernible] higher on a year-on-year basis. In-store sales stood at negative 6.7% on a base of plus 7.4% of last year.

If we [indiscernible] the cost -- the off-premise business at the same-store sales has been stable which is a good sign of momentum. But that also suggests that there has been some pressure on on-premise business. It is further [indiscernible] we observed that the [indiscernible] of stores that are impacted by external community leading issue continues to drag the overall momentum. These external issues are slightly belong compared to our initial expectations and estimates.

However, we are still confident that we [indiscernible]. If we shift our perspective, the quarter saw continual improvement with exit month being better. On a sequential basis, sales was about 10% higher [indiscernible] in line with the [indiscernible] and some contribution from these [indiscernible].

During the quarter, we continue to build on our value platform to drive incremental performance. Product innovation continued with the launch of new entry level [indiscernible], which we believe in an open area for us. We believe that this will help but accelerate and differentiate the value platform and our value offering in the coming quarters. Moving on to business channels. Our [indiscernible] business grew by 6% year-on-year, continuing 42% of the overall sales. On-premise business, however, declined by 3%.

Our average sales per store on a trailing 12-month basis was at $61.3 million. Digital sales stood at 69% with over 3 factors -- with over 3 million monthly active users on a mobile app. My McDonald's reward continues to gain traction and we expect this program to further accelerate our consumer [ base ] and our consumer frequencies. Profitability during the quarter was subdued, largely on the account of unfavorable operating PMA and higher royalty. Having said that, gross margin in quarter 1 at 70.8% continued its upward previously.

This slide, our value-platform play. This underscores the robustness of our business model in driving various value segment as well as our supply chain issue. Restaurant operating margin and operating EBITDA were lower by around 400 bps Y-o-Y Other operating expenses were higher on account of elevated marketing spend, which will continue for next 1 or 2 more quarters. Depreciation normalized to 7.9% is likely to go down further with better volume, [indiscernible] tax stood at INR 463 million or 7.5% of sales.

On network expansion, we added 6 new restaurants in Q1. As of June 2024, the total restaurant count stood at 403 restaurants across 66 cities. 92% of the restaurants [indiscernible] and 6% [indiscernible] restaurant and 20% have drive through. Our [indiscernible] expansion plan remains unchanged. We will add 45 to 50 restaurant in FY '25, reflecting our confidence in the structural growth and opportunities deploy ahead. Finally, while the business environment remains tough, demand green shoots are emerging, while robust product platform strategy and a pipeline of innovative products, we are optimistic of higher average unit volumes in the second half of the year. We remain committed to our 2027 target. Thank you for your time. I now hand over the call to the moderator and open the forum for your question.

[Operator]

[Operator Instructions] The first question is from the line of Shirish Pardeshi from Centrum Broking.

[Shirish Pardeshi, analyst]

I have 3 sets of questions. starting from the negative SSG and now we have launched the entry-level burger, do you think this is enough for us to arrest the decline in SSG or we need to do more activities in terms of the localized promotions and there is a need for further improvement in new products?

[Saurabh Kalra, executive]

[indiscernible] the fourth point is, as you would know, and we would look at our -- we always believe that we want platforms to work. And I think we have launched our value [indiscernible] platform last year in June and further strengthen it October of last year. For that, when we look at our situation, we saw that there was an opportunity for our value platform to enough for [indiscernible] and the same plug platform, 69 degrees for 1 plus 1 is an endeavor redundancies. And we believe that these platforms, along with our existing platform are good enough to drive a lot of the short term but long term sales. That's how we've been looking at it. And we believe that is a part of the play, which we've already committed to in within 2027, This includes being a leader in me [indiscernible] to coffee, burgers and chicken.

[Shirish Pardeshi, analyst]

Yes. So that's helpful, Saurabh. A follow-up to that. I think our margin has been at the lowest. Now if the value layer picks up, for example, you will be positive, say, LFL or your same-store sales growth will improve. But does that mean that the margin -- there are very limited levers at this point of time to improve from here? .

[Akshay Jatia, executive]

So Shirish, this is Akshay here. So from our point of view, as you've seen it consistently delivers an increase in both gross margin and EBITDA margin over the year. And the current drag on margin has typically come from operating deleverage, obviously because of negative same-store sales. From our point of view, as we see average unit volumes picking up, you will not only see margin grow and you will see grow exponentially because of the operating leverage as we comment. And as we demonstrated, even if we deploy value platform, we continue to increased margin by doing a few things. One of them being removing cost from the system. The second one being used in product mix effectively. For example, McCafe will only accelerate the momentum further as the coffee market is growing in our country, and we are very well positioned both some of quality as well as a value point of view. And number 3, in terms of taking pricing were required strategically. So I think that we are more concerned with driving average unit volumes, which will increase operating leverage and margins will only follow.

[Shirish Pardeshi, analyst]

And my last question on 403 stores, what we have now. And the 2 patch, one is that out of the 6, how many drive-throughs we have opened? And out of 403, what percentage of stores are now drive thru?

[Akshay Jatia, executive]

Around 20% are drive thru. [indiscernible] around 400 -- a around 82 drive-thru in total, and we've opened 1 drive-thru in the last quarter.

[Shirish Pardeshi, analyst]

Okay. The reason why I'm asking, if the overall SSG decline, I'm sure you would be tracking the SSG in the right through. Is the out-of-home consumption, which was challenged, is drive-thru is also seeing that similar trend? .

[Akshay Jatia, executive]

Now right actually got a small portion by 20% drive-thrus are there. The second [indiscernible] in will not be a substantial part. And therefore, we never reported it separately. However, to just let you know, we haven't seen any negative growth on drive-thru.

[Operator]

[Operator Instructions] The next question is from the line of Percy from IFL.

[Percy Panthaki, analyst]

I'm just trying to understand the operating leverage in your business. So since this is Q1, I'm looking for another normal Q1 where you were operating. So basically, FY '24, Q1, we saw things going up, but now things have sort of moderated either because there was some amount of event spending which has come down or there is a general demand status, et cetera. So I'm just dialing back to your Q1 FY '20, okay? Now on a per-store basis, your sales is 20% higher than Q1 FY '20. But your margins is still the same, exactly the same as Q1 FY '20 currently. So why is it that we are not getting any operating leverage in this business. The other way I can look at it is if you want to look at something more recent then we can look at Q3 FY '22, where the sales force store is actually a tad lower than what we have done this quarter, but we had a margin of 16.6%, and now we have a margin of about 1%. So why is it? I can understand that negative same-store sales growth, et cetera. But ultimately, the sales per store should correlate to what kind of margins you are able to deliver.

[Akshay Jatia, executive]

[indiscernible], when we talked about it, [indiscernible], that standpoint because inflation always step up. 1,3,5 years then will increase, every year will be 2% to 3% inflation [indiscernible] that people [indiscernible]. So to me, 2021, 2022 will be the best representation. However, if you look at it, we've got 40 extra restaurant with 40 extra fixed cost. So if you want to reduce that fixed cost, you will see that our limited economics has relatively been stable for the last 2 to 3 years. if not more. So that's why we did the operating leverage or the [indiscernible] in this average volume or the quarter we will see it coming down. It is coming up dramatically or profitability and multi [indiscernible]

[Percy Panthaki, analyst]

Yes. So I understand that point that there will be some inflation on a per store basis, but also, you have many cost saving programs being run. You have seen gross margins also go up in that period. So all these should more or less, if not completely offset the inflation in the per store costs? Because see, versus Q1 FY '20, it's 20% higher. So that's a 4% CAGR on a 5-year basis in your sales per store. So your costs, including your margin expansion on gross plus your cost saving initiatives have also grown at 4% on a CAGR basis over the last 5 years. That is what it means.

[Saurabh Kalra, executive]

So I think I [indiscernible] the numbers which you are looking at right now. maybe we can look at it and come back to you because the standpoint, except the forward year, a couple of years, we have cut down on costs dramatically. We went back to our normal operating standard because [indiscernible] [ 2019 ] and 2022 and they obviously commensurate along with it. We haven't changed our [indiscernible] So the numbers [indiscernible] we can double click on it and come back to you.

[Percy Panthaki, analyst]

Sure, sure. So if I just forget about the past and look ahead, let's say you are at $61 million right now. In the past, you have done $66 million, $67 million also. Let us say, by FY '27, you go to a $65 million to $67 million kind of number. but you also have another 50 basis points increase in your royalty in FY '27. So this 8% margin on a pre-Ind basis, which you have done, how much can it go up to with -- so let us say it 7.5% with that 50% deducted from FY '27 to make it comparable. So the 7.5% can go up by how much 200, 300 basis points if the sales goes up by, let's say, 10% on a sales per store?

[Akshay Jatia, executive]

So Percy, I will answer this in a very simple format. Obviously, you know is to have this number at 70% to [ 53% ] EBITDA margin. And then we are going to go towards towards 20 -- '19 and '20 is what we've spoken about in begin 2027. I don't think structurally anything has changed for us where we are not committed to that number. We are committed to that number. We see a very clear road map to it also. So maybe if we launch the connection, we intel help you a little bit more if you want to have a deep dive business .

[Percy Panthaki, analyst]

Okay. Okay. So basically, you are saying you can see about 6 to 7 percentage points margin expansion on account of leverage from the top line. just I'll just connect offline on this because in the past, we have not seen that leverage coming through to this extent. So anyways, I'll take this offline. .

[Operator]

Next question is from the line of Devanshu Bansal from Emkay Global.

[Devanshu Bansal, analyst]

My question was we have seen a sequential moderation in our SSG. So I wanted to check if this quarter per se, there was incremental impact of heatwave, et cetera. And going into Q2, we should see relatively better sequential improvement? .

[Unknown Executive]

Yes. So thanks for the question. What we maintained is that we expect H2 to be better and [indiscernible] we do progressively get better as the [indiscernible] could buy. Like Saurabh mentioned at the beginning of the call, we've further [indiscernible] our value platform. We're continuing to grow our outline business, and we are very confident that with this strategy and business model it certainly progressively better.

[Devanshu Bansal, analyst]

Got it. But are you sort of satisfied with the footfall at our stores in Q1? Or there was some impact due to extra heatwave this time around?

[Unknown Executive]

So obviously, we are absolutely not satisfied. We wouldn't call this our best performance for sure. There were significant amount of pressures on line while there was pressure in terms of consumption, [indiscernible], or whatever you want to call it. I can't quantify it. We have spoken about that there is also a [indiscernible] sale, which was impacted and hasn't shown progress which we expected to show progress by now. [indiscernible] I would summarize it. And we are here to see big momentum coming back on that cohort of space [indiscernible] this for value platform [indiscernible]. And we believe we are setting up ARPUs for the [indiscernible] of this year to come back from.

[Devanshu Bansal, analyst]

Got it. Saurabh, you also made a comment that you're eating out frequency is now back to last year level. How should we read this come in? Does this in any way suggest that at least in volume terms, we should see a sort of flattish kind of SSD? Is this right way to read this statement?

[Saurabh Kalra, executive]

If you look at last year, last year, we did hit that prices. And our October, November, December average 1 [indiscernible] was actually quite low. From that, normally, October, November, December is a best month in [indiscernible]. So what we have been able to get is we are far better than October, November, December, even now. So we believe that we will be able to be setting ourselves up to recover quite strongly in the H2, and you will see sequential improvement for sure. So what does it mean necessarily that I can't comment right now because the last week 1 week has also seeing pointed most of the part of our operations. So we cannot comment on the SSC.But what I can tell you is we believe that we are putting a very small foundation [indiscernible].

[Devanshu Bansal, analyst]

Got it. Last question from my end. Gross margins have improved sequentially. So I wanted to understand what are the drivers for this improvement as we also launched the value chicken burger during the quarter. So if it will be helpful if you could sort of call out the drivers of this improvement?

[Saurabh Kalra, executive]

[indiscernible] form the question to the [indiscernible].

[Unknown Executive]

So gross margin, predominantly there is a strong governance work that we have been able to establish [indiscernible] that is valuing what we have been able to establish. In terms of mitigating the entire inflation, what it also does is it is the stands in terms of supporting the initiatives and the [indiscernible] level initiatives that we have initiatives that we are launching, right? So all I's can say there's a strong governance [indiscernible] which has been putting less the supply is we on supply chain mechanism which is running and which is competing to the [indiscernible]

[Devanshu Bansal, analyst]

Okay. Just a follow-up then, if you can call out the date of this launch during Q1 when was this product specifically launched? .

[Akshay Jatia, executive]

We launched our value platform at the end of June, beginning of July. It's called a mix [indiscernible] 1 plus 1. And like we mentioned in the commentary, we launched our entry level chicken burger and [indiscernible].

[Devanshu Bansal, analyst]

Okay. So this happened towards the quarter end you are saying?

[Akshay Jatia, executive]

Correct.

[Operator]

[Operator Instructions] The next question is from the line of Avi Mehta from Macquarie.

[Bhavesh Shah, analyst]

I just have two questions. First SSG growth. If you could just give us a sense of what was the [indiscernible] if you were to remain the [indiscernible] or very [indiscernible]

[Akshay Jatia, executive]

[indiscernible] we can't hear you.

[Avi Mehta, analyst]

Sorry, is this better? Am I audible is this better now, Saurabh?

[Saurabh Kalra, executive]

Yes. Better.

[Avi Mehta, analyst]

Yes. I just wanted to check if you were to remove the impact of these external issues, is there any sense on where the -- what is the SSS growth momentum like?

[Saurabh Kalra, executive]

While I will not break it for you, Avi. All I can tell you is if I remove that, there is definitely green shoots, both in terms of sequential and in terms of [indiscernible]

[Avi Mehta, analyst]

Okay. Okay. Let me rephrase it. Is there a way for us to get some sense on June because you alluded towards a pickup. So what the SSS would be like in June I'm just trying to get a better appreciation of what makes us optimistic about the green shoot and quantify to some extent?

[Saurabh Kalra, executive]

We can't do the breakup in the call. Maybe we can be, and you can speak to [indiscernible]

[Avi Mehta, analyst]

Okay. Okay. Just the second bit then on the margin side, sort of would you believe now this weakness has been slightly longer than what we had estimated. And while we have our FY '27 or Vision 2021 targets, FY '25 could see flattish margins. Is that how I should see given the first quarter commentary and given the weakness or the pickup being more second half driven? Or how do you look at it? How do you believe we should look at this from a margin perspective?

[Saurabh Kalra, executive]

So it will be around similar. It's not my guess is, but Avi what is most important for us is I remember a similar time, it was COVID and we had given the Vision 2022. We bounced back and then we delivered the Vision 2022. So to me, there is a [indiscernible] stuff which is already in place and the platforms are already there. I think we had to add a snacking managing platform, which we have just added. So I don't see a big problem as far as the sales and profits from a long-term view as far as the long-term view is concerned. This year, we will have to manage as a come and expect the [indiscernible] is how we will use it.

[Operator]

The next question is from the line of Priyank [indiscernible] from Valim Capital.

[Unknown Analyst]

Sorry to hop again, there are 2 remarks that are made in the opening comments. One is the sequential recovery. While what we can sense is there is a negative [indiscernible], the decline has further worsened. The sales per unit for store has also declined. So if you can just help us, what was the sequential recovery terminology related to when you alluded to. That is question number one. And the external issues which you alluded to, right, which is hurting you [indiscernible] demand, while it's not hurting of [indiscernible] demand. While the product [indiscernible] same, how would you -- I mean how do we understand the 2 different behavior on the 2 different channels for the same product, it will be [indiscernible]

[Akshay Jatia, executive]

So I'll take the first question. I'll ask Saurabh to take the second one. On the first one, what we clearly mentioned was that we so the exit of the quarter being better in the first 2 months. And as Saurabh also mentioned in terms of the steep decline we saw last October onwards, we're already doing better from a week on week perspective, and that's what we mean by sequential improvement. .

[Unknown Analyst]

The second leg to look at it also is while we report the trailing 12 months, the trailing 12 months is not actually a reflection of sequential growth because when you are in crisis [indiscernible] we can fall to a certain level. [indiscernible] and there is a recovery in April. It is what we are calling sequential growth in that sense.

Now typically, when I look at it, there is always range of recovery in post COVID [indiscernible] before COVID input delivery, which used to do more than [indiscernible], I think this is a time there's a first time of recovery as far as we are concerned because we've seen a healthy pickup in terms of the units sold in the restaurant. Right now, which is driven by delivery. We foresee that [indiscernible] [indiscernible]

[Operator]

The next question is from the line of Krishnan Sambamoorthy from Nirmal Institutional Equities.

[Krishnan Sambamoorthy, analyst]

While there's been some stability in material costs, there's also been a sharp increase in vegetable costs, particularly onion and tomato in the last few months. Is this likely to hit your material cost line over the next couple of quarters? And if so, then is there a possibility of price increases going ahead?

[Akshay Jatia, executive]

Quick comment on material cost, it there is seasonality on some of the vegetables, which is every year. I don't think anything out of normal has happened this year. There was a little bit of crisis in terms of meters, which we manage quite well. We do not see any pressure as far as inflation is concerned, it was more around a little bit in the last quarter, but this scrape-through I think our supply chain stood up quite strongly to us. And we do not foresee any major changes on account of vegetable costs within the P&L beyond what we have already done.

[Krishnan Sambamoorthy, analyst]

Okay. On AOV growth, you mentioned price growth as the third lever that you would like to use, right? Under what sort of scenario would you be looking at a price possibility for price increase in the current year? .

[Akshay Jatia, executive]

So on that one, what we've always maintained is we do scientific price increases. We're required to ensure that we sustain the cost of doing business. without impacting customer inflow into our teen. So currently, as we always maintain, we take around 3% to 5% price increase. And usually, we stay at the lower end. So that what we anticipate in the coming year as well.

[Operator]

The next question is from the line of Harit Kapoor from Investec.

[Harit Kapoor, analyst]

My first question is just a clarification. When you mentioned June has been better. Are you also talking about that cohort where which was impacted by externality, or is it only on the other cohort, which has been largely demand-led?

[Akshay Jatia, executive]

That cohort for us as expected that it has become better. We haven't seen any much [indiscernible] on that cohort of stores. However, on the back of a said, value and snacking, we did see some growth through too much in the other quarter.

[Harit Kapoor, analyst]

Got it. Got it. Okay. Understood. And the second part was on on the value offering side, do we assume that this is the first of a few things that you're going to do in this space? You obviously did the chipping burger, you have the 69 value offer as well. Is it the first of you? Or is it -- this is probably what it's going to be for the near term -- the reason I ask is there is obviously a twofold impact 1 on gross margins as well as on -- probably on marketing spend as you push this -- as you push these offers forward? And so just wanted to get a sense of how you're thinking about it on a slightly medium-term perspective.

[Akshay Jatia, executive]

Yes. [indiscernible], the question. As we maintained, as oral mentioned earlier on the call, we have always been a leader in value and what we wanted to do currently with further strengthen our [indiscernible] platform. So we started with the extra value means which we launched last year, we produced and then at the end of last year with a stronger proposition. And we more recently like out wanted to strengthen our proposition and snacking as leaders in the category.

So we launched entry level chicken burger as well as 1 plus 1 mix [indiscernible] snacking combo, which is not new for us, in fact, we're kind of beating a similar concept that we've done in the past. And this will always tend in our platform -- so in that sense, we feel the platform for value is already very strong, and we offer value across multiple categories, whether it's coffee, whether it's in the combination. And as we also maintain, we do a lot to ensure that our gross margin allows us to improve operating margins through operating leverage as well as through removing costs as laying the product mix. So that's how we look at the current situation.

[Operator]

The next question is from the line of Gaurav Jogani from Axis Capital.

[Gaurav Jogani, analyst]

Question with regards to if you dissect the growth between the ticket size or the consumer put fall, which one you think has quoted more. And in terms of the average ticket size, if you can give us a sense whether it's flat, it's grown or how things have moved over the past quarter?

[Akshay Jatia, executive]

The Gaurav, as we've maintained, we don't break out the numbers, but as you can see from our results, has obviously been better in terms of customers entering our response to the multiple reasons that we've spoken about already. And we continue to work on both bringing end customers as well as trading them up to improve our average average order value story. And that's how we look at dining same-store sales [indiscernible]

[Gaurav Jogani, analyst]

And just a follow-up to this. The question was in context, if you look at the pizza category as such, that has kind of seen a sequential improvement on a [indiscernible] Q-o-Q basis. So is it because of the abilities that is impacting you more? Or is there some loss of the competition in terms of the category? What would be your sense on this?

[Saurabh Kalra, executive]

If look at our tracks, I don't think we've lost market share among that we [indiscernible]. In fact, if anything we've been strong and we've been making share within the category. Obviously, the results everybody is seeing and some of the figures have done them, but we do not look at it for that standpoint. We would like to look at it is that from our standpoint, our AOV has to improve is almost double than any other competitor. We need to continue moving the momentum on what are [indiscernible]

[Gaurav Jogani, analyst]

Okay. And the second question is with regards to the margins, I guess. I do really say the fact that the negative leverage is kind of in the margins for you. Otherwise, on the gross front, we have done a really good job. If you can also break out what is the elevated market spend impact during the quarter because we have been maybe approval in terms of the cost in other line items.

[Akshay Jatia, executive]

And [indiscernible] has been always maintained is roughly around 5% for the year, and we don't break it up quarter-on-quarter. But that is where we you really guide towards. But in this last quarter, there was an incremental marketing spend roughly close to around 1%.

[Operator]

The next question is from the line of [indiscernible] from Motilal Oswal. .

[Unknown Analyst]

So my question is regarding our top line. So since our SSSG is negative, our sales growth seems to be buoyed by new stores, which have been opened in the last 12 months. As a result of which revenue per store of the new stores in the last 12 months exceeds what exceeds the revenue per store of stores opened, which have a vintage more than a year. This has happened for the first and the last 2 years. Can you tell us the reasons for the same? And are they still in the same cluster, which are these on-premise stores that is contributing to our growth.

[Akshay Jatia, executive]

If I understand your question, right, if you are asking me, whether our average volume of the new store is better than existing store.

[Unknown Analyst]

Yes.

[Akshay Jatia, executive]

No, it is similar to [indiscernible] little lower, which has always been the case. So there is no difference. But obviously, we opened 40 [indiscernible], that was a little bit of growth, which has happened. The same store sale growth be negative. So at the growth level, some of the podium would have partly covered for that. But are [indiscernible] that's not the right assumption. .

[Operator]

The next question comes from the line of Nihal Mahesh Jham from Ambit.

[Nihal Jham, analyst]

Sir, two questions from my side. The first was on a chicken finger. Is it that we've taken the product, the chicken now beyond South or it still remains mainly towards the subregion? And what are the plans ahead on that?

[Akshay Jatia, executive]

So it remains in the South, like we've always said, the reason for the launch was that in the South customer and the customer proposition of price chicken was essential to win the deal day part, and we've done it very successfully. And as a result, we've continued to keep in this out, and we're kind of forest and winning the proposition. .

And we had it in select stores in the West where we felt it was relevant, but the proposition is primarily for the South. You will shortly also see, like I said, a strengthening of the platform, we have the mix pie price tick in. We will be over the next quarter or 2 launching a new platform called [indiscernible] crispy chicken as well, and that's going to make the platform of kicking a list out even better.

[Nihal Jham, analyst]

Understood. So the plan is just to keep it to South and some select West stores not to take it to the entire 400 store on at this point in time. .

[Akshay Jatia, executive]

Correct.

[Nihal Jham, analyst]

Got that. The second question was, if I look at the last 3 years, the effort on the Gourmet launches 2 years plus the OTA. I thought it was in a way an effort to premiumize the brand as such. Now when I look at these value launches, is this an effort just to stimulate current demand given how the situation is? Or are these permanent launches and you're going to see more value offerings coming ahead? .

[Akshay Jatia, executive]

No, no, we look at it as a brand as a brand as a leader in this space, we need to lead across the pricing ladder as well as the category lane, which is why we've done burger, chicken, coffee. We've done premium stuff like [indiscernible] and also value is what we stand for. So it's actually all about value for money, which is not only about price. It's about the price that you get about the product quality that we deliver as well as the experience. So all of them come together and they offer the customer the best value for money. So how we looked at our premium launches, whether it be the mix in the past other [indiscernible] launch or EOS as a platform, is to ensure that we're giving the best quality product and experience to the customer the right right. And similarly, we look at the value platform and giving the customer the right value for the right product at the right price and that value, obviously, from a price point of view is lower, but it still view value for money.

[Operator]

[Operator Instructions] The next question is from the line of [indiscernible] Bansal from Credit [indiscernible]

[Unknown Analyst]

The next question is from the line of Saurabh Kundan from Goldman Sachs.

[Saurabh Kundan, analyst]

I just wanted to ask you if internally you track your affordability, affordability of your menu versus QSR in general or like-to-like competition? And where are you now versus, let's say, your back when you start toning value? And yes, so that's the first question. .

[Saurabh Kalra, executive]

Yes. Saurabh, this is Saurabh. So as far as we are [indiscernible] extreme that our real competition is actually us because our [indiscernible] volume is almost double of the competitors. So what we have to look at is, are our platforms build up to attract consumers to our [indiscernible] and good enough to retain them for a long time. So when you look at that we see that we had to do a job as far as the value main proposition was concerned in which we launched extranet platform, which was a 149 platform. And now we believe that nothing is was a price point, we needed to have to get more consumers in for atlas. And therefore, [indiscernible] is our platform as far as the lacking big part of concern. So really not bothered about what competitive does, what it doesn't. We would really look at saying what is really value from a consumer standpoint and can we sustain. I don't think we have never claimed that game because somebody does x price under [indiscernible]. I think it was long-term sustainability. One of the consideration goes in your platform come from us. And for us, both [indiscernible] plus and EM platform, which we are committed to in order to make sure it price value to consumer.

[Saurabh Kundan, analyst]

Right. And my second question is actually around some announcements made in the budget. I just wanted to see with the announcements around the employment change incentives, some something that the government will help companies with on the ETF side. Does it impact -- I mean, does it positively impact you at all? Or it's not relevant.

[Saurabh Kalra, executive]

So we have a -- we are in the process of night. But preliminary our assessment is we don't see a major impact flowing in from this budget into the financials.

[Operator]

The next question is from the line of Abisha Kumar from [indiscernible] Wealth.

[Unknown Analyst]

I have a question related to the general demand scenario. I just wanted to add [indiscernible].

[Akshay Jatia, executive]

[indiscernible] you are not audible.

[Unknown Analyst]

Am I audible now?

[Akshay Jatia, executive]

Yes. Better.

[Operator]

Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing comments.

[Amit Jatia, executive]

Thank you, everyone, for joining, and we look forward to seeing you next quarter. .

[Operator]

On behalf of Westlife Development Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.