United Foodbrands Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

5 Kayum Dhanani (Managing Director), Rahul Aggarwal (CEO and Wholetime Director), Amit Betala (CFO), Bijoy Sharma (Head of Investor Relations), Omkar Bagwe (Investor Relations Advisor, MUFG Intime)

Analysts

11 Aman Vich (Astute Investment Management), Ankit Gupta (Bamboo Capital), Dhwanil Desai (Turtle Capital), Disha Chambria (Three Mitra Asset Managers), Keval Shah (IIFL Capital), Manjeet Guwaria (Saamya Advisors LLP), Palak Shah (Entrust Family Office), Pooja Sanghavi (Incred Finance), Shweta (iThought PMS), Subhanu Bangal (3 Head Capital), Viraj Mehta (Enigma Small Opportunities Fund)

Financials & KPIs

Geographic & Segment Commentary

• Barbeque Nation India: Delivered exceptional quarter with SSSG of 33.5%, revenue growth of 43.4%, and dine-in transaction growth of 68.6%. Value-led campaigns, big buffet format in tier 1/2 markets, and sustained captive digital engagement are scaling. Average revenue per mature restaurant now ~₹7 crores; gross margin improved ~130 bps QoQ reflecting recovery from value-led investments combined with procurement and scale benefits.

• Barbeque Nation International: Revenue grew 46.6% YoY with SSSG of 8.5% and dine-in volumes +45.2%. Restaurant operating margins of 18.7% (pre-Ind AS) - best unit economics in portfolio - though slightly softer than typical levels due to Middle East geopolitical crisis-linked food inflation (commodity prices up 30-40% in some cases). Added 1 new restaurant in UAE during the quarter.

• Premium CDR (Casual Dining Restaurant): Revenue growth of ~36% with SSSG of 13.6% and dine-in volume growth of ~40%. Mature restaurants delivering ROM of upwards of 20%. Added 1 and closed 1 restaurant during the quarter, ending at same network count. Q4 FY26 cohort of new restaurants progressively maturing through FY27 and expected to lift segment margins as the year progresses. Restaurant maturity horizon is 18-24 months; newer territories like Mumbai and Delhi take longer than established South markets.

Company-Specific & Strategic Commentary

• Big Buffet / TAM Expansion: The Big Buffet operating model has opened up tier 2/3 markets previously not addressable at the regular price point. Management estimates Barbeque Nation India TAM at ~600 restaurants (up from earlier ~400-450 estimate), across ~700 districts. Big Buffet has been deployed in markets with populations as low as 3 lakh. Deepening penetration in state capitals (e.g., Visakhapatnam now 4 restaurants, 5th under discussion) shows multi-store opportunity is expanding.

• Captive Digital Ecosystem: MAU on digital platform grown to ~1.4 million (+60% YoY); 65% of Barbeque India dine-in transactions now flow through captive digital sources (up from 61% Q4 FY26); ~90% of dine-in volumes from own app, website, call center, and walk-ins. This structural architecture reduces dependence on third-party aggregators and drives repeat customer engagement.

• Back-end Capability Investments: Investments in culinary team (new chief culinary officer, ~4 senior hires from five-star hotels with ~20 years experience), marketing/brand/digital teams, and tech infrastructure. These investments are now showing leverage - back-end cost as % of sales reduced from 7.1% (Q4 FY26) to 6.5% (Q1 FY27). Management believes this is a normalized level going forward.

• Network Expansion: 266 restaurants at quarter-end (+5 net); 15 under construction for Q2/Q3 FY27 operationalization. Committed to reaching 300 restaurants by FY27 (~40 additions vs ~35 last year). Expansion funded largely from internal accruals; FY27 capex guided at ~₹140 crores (₹120 crores new outlets, ₹20 crores maintenance/brand).

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Big Buffet / Market Expansion

• Question: How much new market does the Big Buffet open up, particularly tier 2/3/4 markets not addressable at earlier price points? (Viraj Mehta, Enigma)
• Answer: Big Buffet tested over six quarters with exclusive and mixed formats; deployed in markets with populations as low as 3 lakh. Barbeque Nation India can now scale to ~600 restaurants (vs earlier 400-450 estimate). Multi-store penetration deepening - Visakhapatnam now supports 4 restaurants with a 5th under discussion. Given only 210 BBQ India restaurants, no concern on availability of trade areas. (Rahul Aggarwal)

SSG Growth Drivers

• Question: What drove the best-ever SSSG across segments? (Pooja Sanghavi, Incred)
• Answer: Strategy is value-driven volume growth, starting in BBQ India and replicated in International and PMCDR. Marketing spend raised ~1 percentage point from 1-2% baseline; strong digital assets converting inquiries into transactions. Momentum built from Q2 FY26 (September-October), strengthened through Q3, Q4, and now Q1. Average revenue per mature restaurant now ~₹7 crores; focus is on driving transactions and letting other parts settle. (Rahul Aggarwal)

Mature Portfolio Margins

• Question: At what level do mature restaurant margins cap? (Palak Shah, Entrust Family Office)
• Answer: Reported 16.2% vs an ideal ~20% flow-through. ~5% drag from four factors: (1) gross margin ~200 bps YoY impact, (2) marketing spend ~100 bps higher, (3) delivery mix shift ~60 bps, (4) energy and manpower inflation ~140-150 bps. Management does not view 18% as a cap - businesses cycle, and gross margin recovery is already helping sequentially; some inflation items are being worked on. (Rahul Aggarwal)

Revenue per Store Levers (₹7 to ₹8 crores)

• Question: What are the levers to move from ₹7 to ₹8 crores per mature store? (Dhwanil Desai, Turtle Capital)
• Answer: Levers are simple - focused day-part/session volume building with data insights per restaurant; reservation/call center inbound conversion optimization; selective price hikes only where volumes have stabilized and won't hurt momentum; delivery continues to grow as incremental absolute EBITDA. Average performance in Q1 remains below last two weeks of December peak - seen as a demand opportunity, not a capacity ceiling. (Rahul Aggarwal)

Margin Targets / Guidance Discipline

• Question: Is double-digit pre-Ind AS EBITDA margin achievable this year? (Dhwanil Desai, Turtle Capital)
• Answer: Management prefers tracking lever-by-lever rather than a single number: gross margin recovery (seen this quarter), mature portfolio ROM expansion, new store cohort maturation (accelerated by BBQ Nation-driven expansion), and back-end cost operating leverage. All levers moving in right direction; margin is an outcome that follows. (Rahul Aggarwal)

Delivery Business Strategy

• Question: Are there specific initiatives driving delivery growth? (Keval Shah, IIFL Capital)
• Answer: Three brands (Barbeque Nation starters/platters, GBK meals/daily bowls, Dum Safar biryani) with value SKUs at prices from ₹129 (veg) to ₹250 (non-veg); campaigns for weak day-parts (e.g., Bakery Biryani for weekday lunch); increased platform marketing spend. A mix of all three has driven results. (Rahul Aggarwal)

Gross Margin Outlook

• Question: Where should normalized gross margins settle given Big Buffet mix, day-part pricing, and inflation? (Ankit Gupta, Bamboo Capital)
• Answer: Current 66-67% band is a good operating base. Reflects: (1) deliberate value investments to drive volume - acceptable while SSG compounds, (2) segment mix - BBQ India (lower gross margin) growing faster than International and PMCDR, a good problem, (3) international inflation impact expected to taper sequentially. India gross margin will directionally improve; business mix shift may structurally keep consolidated gross margin slightly lower, but management prioritizes ROM and EBITDA flow-through over the headline gross margin number. (Rahul Aggarwal)

Repeat Customer Rates

• Question: What is the repeat rate on value-driven customers? (Shweta, iThought PMS)
• Answer: Repeat business is approximately 45-47% of transactions; new customer share slightly shifted up during exploration phase - positive for pipeline. Repeat interval is shrinking. Measured via mobile number on ~4.3 pax per bill. Repeat business growth rate has been handsome on a like-to-like basis. (Rahul Aggarwal)

New Store ROM Sustainability

• Question: What drove the highest new store ROM in several quarters, and will it sustain? (Shweta, iThought PMS)
• Answer: Driven largely by BBQ Nation expansion (India and International) where payback is faster and brand recall drives early transaction spikes. Initial 2-3 month surge, then taper, then recovery; initial cost eventually normalizes. New stores mix shifts toward BBQ Nation, which matures faster than PMCDR entering newer territories, supporting improving ROM trajectory. (Rahul Aggarwal)

Revenue Composition - Volume vs Price

• Question: How much of the revenue growth was footfall vs average order value, and what is sustainable? (Disha Chambria, Three Mitra)
• Answer: All growth is volume-led; average price point has actually declined due to value initiatives, and has now stabilized. No price hikes taken despite inflation. Selective, unit-level price decisions possible where volumes have stabilized, but never at the cost of volume momentum. Dine-in remains core and captive (90% own channels); delivery accepted while incrementally accretive on contribution margin. (Rahul Aggarwal)

SSG Outlook / Capacity Constraints

• Question: What SSSG is practically possible for BBQ India assuming steady consumption, on a higher base? (Manjeet Guwaria, Saamya Advisors)
• Answer: Revenue per average BBQ India restaurant is around ₹6.5 crores (mature ~₹7.1 crores) with significant headroom - weekday vs weekend, lunch vs dinner sessions remain unevenly utilized. Restaurant sizes optimized (4,500 to 3,000 sq ft), slotting improved, demand shifted via value. Capacity is not a constraint; if demand exceeds capacity, adjacent opportunities for new restaurants will be pursued. (Rahul Aggarwal)

Back-end Investments & Capex

• Question: Are backend investments for growth support or gross margin improvement, and what is FY27 capex? (Manjeet Guwaria, Saamya Advisors)
• Answer: Backend investments span culinary (product improvement, chef-led menu activities), sourcing (leveraging doubled volume for better quality/pricing/gross margin), marketing, tech/digital, and AI-assisted reservation conversion. These support both growth and efficiency. FY27 capex guided at ~₹140 crores - ₹120 crores new outlets and ₹20 crores maintenance/brand. (Rahul Aggarwal, Amit Betala)

Service Quality & Reputational Concerns

• Question: Given footfall surge, are service quality issues emerging, and can you comment on the food blogger video? (Aman Vich, Astute Investment)
• Answer: Service is built on 20 years of training; GSI system calls back 20% of guests. April saw manpower blip due to election-related migration to East India; since then guest scores improving over last three months. Food blogger video - management cannot verify their lab claims; processes follow FSSAI guidelines with NABL-accredited lab testing twice a year (ahead of annual requirement); internal audit team of ~30 people audits monthly; engagement with blogger was attempted without resolution. (Rahul Aggarwal)

International Business - Inflation & SSG Sustainability

• Question: Is UAE seeing similar inflation pressure, and was Q1 SSG one-off? (Subhanu Bangal, 3 Head Capital)
• Answer: UAE inflation is real - gross margin lower by ~3 percentage points with some commodity prices up 30-40%. SSG trajectory: negative in Q1 FY26, ~8% in Q3, ~40.5% in Q4, ~28% in Q1 FY27 - momentum continuing. At current operating scale, business is compounding; absolute EBITDA margin improvement more than offsets gross margin compression. (Rahul Aggarwal)

Key Takeaway

United Foodbrands delivered its strongest operating quarter in recent years with consolidated revenue of ₹426 crores (+43.4% YoY), consolidated SSSG of 28.7%, and dine-in transaction growth of 63.5% - all entirely volume-led with no price increases. Growth was broad-based across all three engines: Barbeque Nation India SSSG of 33.5%, International revenue growth of 46.6% (despite Middle East inflation), and Premium CDR revenue growth of 36%. Pre-Ind AS operating EBITDA margin expanded 350 bps YoY to 8.1%, with mature portfolio ROM at 16.2% and new store ROM at 6% (highest in several quarters), driven by gross margin recovery in India, operating leverage in back-end costs, and faster-maturing new stores. The captive digital ecosystem deepened further with ~1.4 million MAUs and 65% of dine-in transactions flowing through captive channels. Management raised the Barbeque Nation India TAM estimate to ~600 restaurants, guiding toward 300 total restaurants by FY27 with ~₹140 crores capex funded largely from internal accruals. Guidance emphasizes that reported SSSG will moderate on a higher base through Q3/Q4 FY27, while margins are expected to improve directionally across four levers. Key watch points include Middle East geopolitical-driven food inflation impacting international gross margins, service quality under high footfall, and the outcome of the food blogger quality controversy.