Full transcript - Americana Restaurants International PLC (AMR) Q2 2025:

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Good evening everyone and thank you for joining us for Americana Restaurants H1 2025 earnings call. I am Pujeet Parekh, Head of Investor Relations and Business Development, and it is my pleasure to welcome you on behalf of the entire management team. The first half of 2025 has been a period of meaningful progress for Americana, marked by resilient growth, disciplined execution, and continued investment in our brands, our people, and our platform. Today we will walk you through how these efforts are translating into strong financial performance and supporting our continued expansion and market leadership. Joining me are Amarpal Sandhu, our Chief Executive Officer, and Harsh Bansal, our Chief Financial Officer and Chief Growth Officer. Amar will begin by sharing an overview of our business performance and key strategic milestones. Harsh will then take you through the financial results in more detail.

Before we begin, I would like to remind you that today's presentation may include forward-looking statements based on current expectations and assumptions. With that, let me hand it over to Amar.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Thank you. Good day everyone and thanks for joining us today. As Pujeet Parekh mentioned, the first half of 2025 has delivered solid performance for Americana Restaurants. We had double-digit growth across all key financial metrics, and this reflects the strength of our portfolio, disciplined execution, and the continued trust of the customers we serve every single day in our restaurants. A key driver of this performance was our ability to balance value with purposeful premium innovation across our portfolio. Across all our brands, we launched initiatives that deepened engagement, attracted new customers, and unlocked incremental growth in both transactions as well as average check. If you look at this slide, this illustrates a lot of the innovation and the different promotions we conducted to create, crave, and drive new customers to our restaurants.

KFC delivered strong results through its Festive Dipping Box and Cheesy Lava value platforms, complemented by innovation-led launches such as the Nacho Queso Boxmaster and the successful relaunch of the Mighty Cruncher, one of the most impactful comeback products in the UAE. Hardee's reinforced its premium positioning with the Frisco Philly Steak and also introduced bold new burger builds such as the Superstar and Santa Fe Towers. Pizza Hut continued to build excitement with value-driven deals like the Twin Box and Pairs Deal aimed at families and groups. Further, they combined creativity and indulgence with the launch of the Super Limo with a Toblerone Oven Baked Cookie, a bold collaboration that sparked buzz across every market.

Krispy Kreme, Americana's favorite sweet treat brand, capitalized on seasonal and gifting occasions with Chocolate Week and Mother's Day Bundles while expanding its experiential appeal through new platforms like Ice Cream Your Way and fun innovations such as Frutellas. Our growth brands also continue to strengthen their presence and customer relevance. Our newest brand, Peet's Coffee, introduced handcrafted beverages like Affogato and Tiramisu Latte while also expanding its breakfast menu. Wimpy engaged customers with community sharing formats such as Grand Feast and the all-new Rapido Wrap, and Chicken Tikka enhanced its family meal proposition, bringing people together over signature char-grilled flavors. Through these initiatives, we are building a stronger, more agile portfolio, one that drives relevance today and positions all our brands for the opportunities of tomorrow. Beyond product innovation, we continue to strengthen our long-term growth enablers, focusing on digital leadership, portfolio diversification, and inclusion.

On the digital front, we accelerated transformation with the launch of our Customer Data Platform, or CDP as we call it, which now unifies data from millions of active customer records into single identifiable profiles. This enables advanced segmentation and highly personalized engagement across marketing platforms. Early results demonstrate the power of this platform with a 10% uplift in KFC UAE's first order journey and an 8% lower cost per install in KFC Saudi Arabia. Beyond immediate results, CDP unlocks significant future potential from building lookalike audiences for acquisition campaigns to delivering tailored offers through channels such as WhatsApp, email, and app notifications. Over time, this capability will enhance customer lifetime value and optimize marketing efficiency, reinforcing Americana's position as a digital leader globally. We also executed strategic expansion into premium retail through an exclusive franchise agreement with Carpo.

This is a Greece-based lifestyle brand known for its luxurious selection of nuts, artisanal chocolates, and premium coffee. Finally, our commitment to inclusion continues to translate into tangible progress. Through partnerships such as with Sharjah City for Humanitarian Services and Yum! Brands' Opportunity for All program, we are creating meaningful employment opportunities for people of determination, including individuals with hearing and speech impairments and autism. Across the UAE, KSA, Egypt, and Bahrain, we continue to expand inclusive hiring initiatives from welcoming team members with hearing impairments and autism at Peet's Coffee UAE to opening dedicated restaurants in Saudi Arabia, Bahrain, and Egypt operated by people of determination. In Egypt, we have now launched our seventh store fully run by individuals with hearing challenges, reinforcing our commitment to accessibility and empowerment.

Additionally, our dual education program in Egypt has empowered more than 10,000 youth since its launch, from school students to university graduates, equipping them with vocational skills and clear pathways to employment. These milestones reflect our unwavering belief in building inclusive communities and opening doors to opportunity for all, and this demonstrates our commitment to Americana's purpose of building communities around the joy of food. Together, these initiatives reinforce our strategic priorities as we remain focused on delivering sustainable growth and long-term value for our shareholders. Now moving on to the performance dashboard of the first half of 2025, we continue to see strong, sustained momentum. Our footprint grew to 2,638 restaurants. We opened 214 gross new restaurants over the last 12 months and we have an additional 53 sites currently under construction, reinforcing our growth pipeline.

In the first half of 2025, revenues reached $1.2 billion, up 15.6% year on year, driven by 12.4% like-for-like sales growth as customers engage more frequently and increase their spend. EBITDA grew 17.9% to $274.9 million, demonstrating continued operating efficiency. Net profit rose 15.7% to $92.5 million, maintaining a steady 7.6% margin in line with last year, and this despite absorbing $8.2 million in additional new tax regulations during the period. Additional details on financials will be provided by Harsh in the Financials section shortly. This performance reflects the resilience of our portfolio led by KFC, Hardee's, Pizza Hut, and Krispy Kreme, supported by innovation, operational rigor, and expansion. Now let's take a closer look at the evolution of our restaurant network.

As you can see on the left, over the last 12 months we have added 214 restaurants, majority of which were for the power brands with 137 openings as well as 31 for our growth brands. In addition, we strengthened our presence with the integration of Pizza Hut Oman, adding 46 new restaurants to our portfolio. On the right-hand side of the slide, you'll observe our development pipeline remains robust. During the first half of 2025, we opened 36 new stores and integrated 46 Pizza Hut Oman locations, bringing our total store count to 2,638 across our 12 countries of operations. In addition, we have 53 locations currently under construction, as I mentioned earlier, and another 72 sites that are already secured or approved. We do recognize we have an ambitious target in the second half of this year.

However, our team is focused on delivering the committed net new store openings for 2025. With that, I will now hand over to Harsh for the financial deep dive.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Amar. Good day, everyone. Let's first focus on the top end performance of the business. As Amar highlighted in the previous slides, revenue in the first half of this year has increased by 15.6% year on year. This increase is primarily driven by strong 12.4% like-for-like growth reflecting continued transaction recovery and the resilience of our power brands, which account for 94% of our total revenue. This growth has been further supported by an incremental $77 million contribution from the stores we have opened in the last 12 months. The revenue was negatively impacted by adverse FX movements of $20 million and revenue decline due to the store closures impacting by $14 million. Our revenue mix remains stable with 84% of the sales coming from markets with PEG currencies to the dollar, largely shielding us from any major FX movements.

On the channel side, home delivery continues to grow and is at 47% share for H1 2025. Focus on kiosks and having cashierless restaurants is showing results, and we have increased the share of kiosks from 5.3% in H1 2024 to around 14% in H1 2025. Here we break down the revenue between our power brands. For KFC, LFL growth stands at 11.8% reflecting a robust recovery. Country mix and penetration of KFC brand impact the overall brand revenue growth. Hardee's continues to deliver strong LFL of 17.2% on the back of successful campaigns like Superstar Towers and the Tornado Sandwich. Pizza Hut has also witnessed robust recovery with LFL growth of 16.3% and total sales growth of almost 25%. UAE and Egypt specifically have shown very encouraging like-for-like performance for Pizza Hut.

Krispy Kreme continues to face headwinds in KSA given competitive landscape, while performance in other markets have shown improvement. We continue to expand our product range, and as Amar highlighted, focus on innovation to drive top line recovery as well as to add new retail channels to reach more customers. From top line, we move to the P&L. On the four level EBITDA, we grew by 12.3% while maintaining a margin of 28.7%. On overall EBITDA, we grew by 17.9% and improved the margin from 22.1% to 22.6% in H1 2025. This is despite increased cost headwinds due to rising share of home delivery and ongoing focus on value to drive transactions. We have been able to improve margins compared to last year, demonstrating robust operating leverage and the ongoing focus on cost to ensure we have a good flow through from revenue to bottom line.

Net profit of the company grew by 15.7% while maintaining the margin at 7.6% and as Amar mentioned, this is after absorbing $8.2 million of incremental tax impact due to implementation of pillar 2 related regulations in key markets. On the next slide we will see a detailed bridge on the net profit which explains the movement. Our reported net profit for H1 2025 stands at $92.5 million with a steady margin of 7.6%. If you look at the two gray bars in the center of the chart, it shows the adjusted net profit in H1 compared to H2 after removing the one offs and the tax impact. The adjusted net profit in H1 2024 was $72.8 million reflecting a 6.9% margin adjusting for the marketing release and the Egypt FX devaluation impact in H1 2024.

Against this normalized base, we have delivered a growth of 38% in net profit and a 1.4% improvement in margin without accounting for the incremental tax impact. Overall, we have been able to maintain our margins showcasing the robustness of our business model and the effectiveness of cost management and operating leverage on the business. Looking at the cost of inventory we have maintained a stable cost of inventory of 29.2% in Q2 2025 and this is broadly in line with H1 2024. We remain focused on delivering value to our customers while maintaining a strong gross margin discipline as we navigate through these evolving market conditions. Moving on to working capital and CapEx deployment, the net working capital as a percentage of revenue has improved to minus 9.2% as of 30 June 2025 compared to minus 8.9% at the end of 2024.

This has been driven by strong receivable discipline as well as payment term optimizations with the supplier. Our inventory levels on a gross basis have gone up by $17 million, but if you account for the increase in sales, our DIO has actually improved. The chart on the right hand provides a color on our capital expenditure. Our gross CapEx stood at $50 million which is around 4.1% of revenue, primarily driven by our ongoing investments on new store expansion, our technology initiatives including digital as well as select store remodels. Here we outline our paybacks in line with full year 2024. The average payback period at the portfolio level remains at 3.1 years, reflecting a disciplined capital allocation as well as industry-leading paybacks. Our overall paybacks remain healthy despite impact of geopolitical crisis on the sales.

KFC has been leading the pack in terms of paybacks with 162 openings and a payback of 2.3 years, reinforcing its strength as a high return growth engine. The payback for Hardee's has slightly improved, driven by strong like-for-like sales recovery. On the Pizza Hut side, the paybacks have been longer if you compare to KFC and Hardee's, and this is primarily because a lot of openings of Pizza Hut have been in the Kingdom of Saudi Arabia, which has been lagging in terms of overall performance compared to other countries. On that note, I will hand it over to Amarpal to wrap up and conclude.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Thank you, Harsh, and before we open the floor for Q&A, I'd like to briefly reaffirm our 2025 guidance. Our strategy remains focused on balanced growth, firmly aligned with our strategic pillars. First and foremost, LFL growth remains paramount. We will continue to drive transaction growth and higher average check through culturally relevant campaigns, trend-led menu expansions, and collaborations with leading entertainment and gaming platforms to capture emerging occasions. Our guidance of 150 to 160 net new store openings, while ambitious, remains unchanged at this point. On the topic of profitability, strong operating leverage is expected to offset incremental home delivery costs. Gross margins are projected to remain in line with 2024. Our Center of Excellence for IT in India is now live, driving scalability and cost optimization.

On the growth front, our newly signed franchise agreement with Carpo marks a strategic entry into premium retail, complementing our efforts to explore potential inorganic opportunities to strengthen our platform. Innovation remains a key strategic priority. We will continue to lead with product innovation, meaningful limited time offerings, and unique collaborations like the recent Squid Games by Hardee's, reinforcing relevance and engagement across markets. Finally, in digital leadership, with the rollout of the Americana loyalty program and activation of our Customer Data Platform, we are advancing personalization at scale to drive deeper engagement and lifetime value with our customers across all our brands. As we conclude, our message is clear. Americana Restaurants remains steadfast in its commitment to sustainable growth and long-term value creation for our shareholders. Our focus on revenue recovery, disciplined expansion, and operational excellence continues to generate strong results even as market dynamics continue to evolve.

We are leveraging innovation, digital transformation, and deeper customer engagement to unlock new opportunities and strengthen the resilience of our platform. Above all, it is our team's grit, resilience, and agility, combined with the relentless focus on execution, that gives us confidence in our ability to continue to lead, create value, and thrive in an evolving market. We understand it's a street fight. We believe at this point we are ahead on the score, and we have every intention to stay ahead in this fight. Thank you for joining us today. We now welcome your questions.

Moderator: Thank you. We will now move to the question and answer section.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: If you would like to ask a question.

Moderator: Question, please press Star two on your phone and wait to be prompted. If you're dialed in by the web, you can also request to ask a voice question. We'll just wait a moment or two for the questions to come in. Okay, we have our first voice question coming from Sid Larby from Epicure. Please go ahead. Your line is now open. Hello Sid. Please go ahead. Your line is open. If you can check if your microphone is also on your device, unmute it. Perhaps we'll come back later to Sid in that case. We'll move to our next question from Taher from JP Morgan. Please go ahead. Your line is now open.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Yes, sir. Good afternoon, Jan. Thank you very much for taking my question. This is Tahir from JP Morgan. Maybe just a few questions from my side. The first one is just looking at the slide with the revenue growth and the buildup of the revenue bridge. The way we see it now, we are sitting at around 11% lower on LFL sales versus H1, 2023 and 2% of total sales. How should we think about this trending into the second half? Maybe should we expect to close that gap on LFL by the end of the year? I mean, if there's any color you can share. Because clearly now the, you know, the boycott or the majority of the boycotts are hopefully, you know, behind us. How should we think about, you know, closing that gap to that pre, pre-boycott level when it comes to the top line?

I think really the following question is do you see any challenges to closing the gap on the profitability given that the home delivery has been stubbornly maybe moving higher than expectations and that comes in with higher costs. Maybe if you can also, you know, help us just understand maybe the trend lines when it comes to EBITDA and net profit in terms of again closing that gap with that, with the pre-boycott level. Thank you.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Good to hear your voice, my friend. It's always a pleasure getting questions from you. Now, first half of 2023, as you may recall, was a super strong period for us and you're right, we're in the 10, 11% delta on LFL and of course we are working diligently and that's why we spend more time talking about our strategies in terms of how we are driving transactions and innovation and check in order to close the gap. Clearly, not only do we want to close the gap, but we want to get beyond that. It's difficult to put. Will we bridge some of that delta? Absolutely. We want to bridge all of it before the end of the year. We are working. We believe we have the right strategies in place and we believe we have the execution machine in place. That is the intent. That is the target.

Now, Harsh, you want to take the.

Moderator: Yeah.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: I would tackle EBITDA and net profit differently. For EBITDA, if you look at it, there are three key levers which are coming in from a margin perspective. One is gross margin, which is cost of goods sold. We expect that to be better compared to 2023 because we were kind of going through the commodity cycle at that point. Having said that, as Amar earlier mentioned, we are very much focused on value. Part of it should also come back to the P&L. Home delivery continues to be a headwind from a P&L perspective, and there has been a dilution of almost 1% compared to last year. We also have enough operating leverage on the other lines to deliver close to 2023 EBITDA margins as we continue to do our recovery at a net profit level.

There have been impacts because of the new tax jurisdiction changes in tax regulations. That would have an impact while the intention is to also bridge the gap on net profit. That is a significant impact given Kuwait, UAE, as well as some other markets like Qatar and Bahrain, which have been impacted from a tax perspective. Okay, very clear. Maybe if I just made one small follow-up. Just talking specifically about Q2 in terms of revenue by segment, we can see that Egypt is back quite aggressively, up around 31%, UAE up 15%, Saudi, Kuwait running at around 10%. I just want to maybe get your thoughts. Clearly now Egypt is maybe beyond the deval from a comps perspective. Should we expect that performance to continue in dollar terms? I think the second part of the question is what you alluded to. Still a challenging backdrop in Saudi Arabia.

If you can actually maybe elaborate more, is it still a weaker consumer or higher competition from maybe local and other international brands? If you can just share some color about the dynamics in Saudi Arabia.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Tahir, Egypt, we are quite pleased with the progress we are seeing month over month. It's quite encouraging across all the brands and we also have a very strong team there. Now we have a seasoned operator who's leading, who's the GM of Egypt, Hisham Talat. He's really driving the performance hard. We are optimistic that we are going to continue to see growth in Egypt. That's very encouraging. If you compare that to last year, it was not so good. KSA challenges are there, but we are also spending a lot more time there to understand what's happening and we have actions to drive the performance now as you know what the challenges are. The consumer is under pressure. A lot of build, it's hyper competitive.

Anecdotally, I'll share with you, I was having a conversation with one of the major aggregators in KSA and they shared that the listings on their platform have grown by two and a half times since 2022 or 2023. That just shows how much new growth has emerged in KSA. Hyper competitive, lot of value stress, consumer bloodbath amongst the aggregators, a lot of free delivery. All those factors are coming into play. At the same time, the consumer reacts whenever you give them a great product at a good price, you give them good service, the consumer reacts to that. We are noticing that Hardee's performance recently has been very strong. We've done a new promotion with KFC and we are seeing very positive results. Whenever you do something, a good product at the right price and it's locally relevant, we see a big spike in KSA.

We have plans in place to continue to drive performance in KSA. All right, very clear.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: I'll come back in the queue at a later time. Thank you.

Moderator: Okay, thank you. Thank you very much. We'll now move to the next question that comes from Nishit from SECO Securities. Please go ahead. Your line is now open.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Yes, hi. Thank you for this opportunity. I have perhaps two questions. One on the home delivery segment, like it was discussed, is growing and that's hurting your margins. How do you see this segment? The breakdown of your channel further now, movement. Do you think that this is the trend, the market, that it will continue to grow from this 47% currently to maybe beyond 50%, 55%? How do you look at this in the coming quarters, and does that change the way your store rollout and all? Also, in terms of your strategy of expansion, given that you are getting a lot of your customers through delivery now.

Second question is more from the growth margins and the profitability, would it be right to assume that now the growth year-on-year growth from here for the next two quarters are going to be much stronger, given that you had a much tougher second half last year. This is where you are in a sweet spot in terms of pivoting into a much better earnings growth from a year-on-year perspective in the second half. Should we expect that from Americana?

Moderator: Thank you.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Nishit. The first question on home delivery, you asked a few things. One is yes, the share has been growing and our focus for now is to get back full LFL recovery to pre-September or to September 2023 levels. For now, we are prioritizing that over everything else. We do have a plan in place which includes various levels, pricing, product, how we can drive other channels. For now, as we speak, the focus is to bring the transaction back. It is difficult to predict, but we don't expect the same level of growth in home delivery. What has happened in the last 18 months to happen in the future. We expect while it may increase, not at the same pace of what it has been doing in the last 18 months.

On your question on whether that has an impact on store openings, for sure, when we do store openings we look at overall viability of that store from all channel perspective, which includes home delivery as well. Especially for cannibalization, home delivery is one of the key factors we consider when we do new store opening feasibility studies. On your second question, which is H2, I just want to make sure we articulate it clearly from a revenue perspective. H2 last year was actually built up compared to H1 of last year. We continue to have recovery quarter on quarter last year.

While the base would be higher for H2 of last year when we comp against that in H2 of this year, from a profitability perspective, we expect to continue to build on that in H2 as well and deliver growth on what we have delivered in H1 in H2 as well compared to last year. Okay, thank you and all the best. Thank you.

Moderator: Thank you. Thank you very much. We'll now try again with Sid from Epicure. Please go ahead. Your line is now open. Please go ahead. Sorry Sid, unfortunately we cannot hear you. We will move to the next question. Before that, just a quick reminder. If you would like to ask a voice question, please press Star 2 on your phone keypad. If you are connected via the web, you can also request to ask a question via the user interface. Our next question comes from Harsh Kadam from Abi. Please go ahead, Harsh. Your line is now open.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Hi. Hello.

Moderator: Yes, yes, we can hear you. Please go ahead.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you for the call. I have a couple of questions. Could you please elaborate on the key drivers behind strong LFL growth in the first half of 2025, and has this growth been adjusted for the timing impact of Ramadan and Eid Al Adha holidays? Additionally, which core franchisees contributed most significantly to the performance? This is my first question. Regarding the second question, it's about the store expansion. Does the current guidance include store additions from Carpo in Kuwait and Qatar? What level of sales per store is anticipated from Carpo, and what amount of stores are you expected to open in 2025 or in 2026? The last question from my end is, is the operating leverage the primary driver behind gross margins in 2Q25, given the food inflation remains relatively stable during the period? Is there any other contributing factors to say? Thank you.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Hi, Harsh. I'll answer one or two questions and then your namesake will take another one as well. First of all, on store expansion, as we stated earlier, guidance remains in place. We know we have an ambitious target, but we also have visibility to the pipeline. It's not going to be easy to hit the 150 to 160 because we are slightly behind our plan.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: For the first half.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: We also have a team that is very focused on execution. Carpo is not really material for this year because we just signed the deal, and it's more about launching it in one country, whether it's Kuwait or Qatar, either before the end of the year or potentially it could move into Q1 of next year. As far as operating leverage.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: There'S.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: No connection between that and gross margin. Operating leverage is more driven by LFL. That is why we are very focused on driving LFL. That's the best source of profitability for us.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Amar. So, Harsh, on your first three questions or three sub questions, one is, on the three drivers of LFL, there are multiple drivers. I would say first is product innovation. As Amar mentioned in his opening, we are very focused on product innovation. That continues to be one of the key drivers. The second is the focus on value, and we are focused on value across countries and brands. That is the second key lever. The third is our investments in digital technology, which includes CDP, personalization, and some of the other investments we have made. That is the third key lever for LFL. Fourth, goes without saying, operations focusing on customer experience, which always plays a role to drive LFL. That is one. Second is on Ramadan seasonality. The numbers we are seeing or reporting are for H1, and there is no seasonality for H1.

Both Eids and Ramadan are very much factored in for both last year as well as this year. I think those are the two questions which you had. If there's anything, please let us. Thank you. Thank you so much.

Moderator: Okay, thank you. Thank you very much. We are now moving to the next question that comes from Muhammad from Sika Bank. Please go ahead. Your line is now open.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Hello, am I audible?

Moderator: Yes, please go ahead.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Yeah, so I have two questions. First one is on basically the promotions or the value deals that you introduced last year. How is the contribution coming in? I mean, how is the contribution reduced from those value deals? If you look at the overall revenue point of view, are you continuing with the same strategy this year as well? This is the first one. My second question is really on Pizza Hut Oman. I think I saw they contributed around $5.8 million, just 31 stores. If I calculate the revenue per store, they are like 30-40% lower than what the average Pizza Hut generates. I just wanted to understand, is the Oman less revenue per store for other brands also similarly lower, or is it just Pizza Hut? Is it just a short-term thing that you will build up, or maybe even build up the gap moving forward?

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: On value. We started pushing value aggressively last year around May, June, where it was price point value to get people back into our restaurants. It was also outdoor promotion in store. It was extremely visible. The mix was much higher, I would say, during the last two quarters of last year and also moving into the first quarter of this year. However, starting April, April, May, we started leading.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Our customers offer value.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: It's not being aggressively promoted. Price points on. We still have value offerings, value platforms for every brand, but we've tweaked the construct, we've tweaked the pricing, and it's not as visible as before because we wanted to drive check and gross margin and operating profit, right? That has been the strategy. You drive the customer and then you start trading them up and you don't make price point value as visible. The second point on Pizza Hut at Oman, we acquired the business in late January. Yes, the revenue in the first half is modest, but that's related to the recovery, right? KFC started recovering much earlier because we were already operating the business. Obviously, those same strategies now we have deployed on Pizza Hut and we see continued recovery. In fact, it's quite significant compared to where it was when we acquired the business.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: All right, and just a follow-up, I mean last 12 months you have also opened up stores outside your core geographies like Kazakhstan and Iraq. Can you comment on how the financial metrics are different from your core geography in terms of revenue or profitability per store?

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Kazakhstan and Iraq are very strong markets for us both in terms of revenue as well as profitability. They're at portfolio level or if not higher.

Moderator: Okay.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you.

Moderator: Okay, thank you. Thank you very much. We are now moving to the next question that comes from Maxim from Citi. Please go ahead. Your line is now open.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Yes, hello.

Moderator: Thank you for the opportunity to ask questions.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: I have a few questions. First is just a follow-up on like-for-like sales, right. As I understand, like-for-like sales in the second quarter were slightly.

Moderator: Lower compared to the first one.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: About 2% as I understand. We saw a little bit.

Moderator: Wider gap versus 2023 levels compared to first quarter 2025.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: What is the big driver of that, and what is the impact of boycotts? Do you see them in a bit.

Moderator: Higher in the second quarter compared to the first one?

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: What is the current situation?

Moderator: The second topic I wanted to.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Ask you is about your M&A.

Moderator: A pipeline and M&A outlook.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Whether you.

Moderator: We saw the reports in the press, right.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Whether you plan to be more.

Moderator: Active in that area and what could be the priorities. Right.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: What could be maybe the size in terms of the stores of potential?

Moderator: Targets if you are considering.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Maxim, for your questions. The first on LFL, your observation on Q2 versus Q1. Q2 LFL has been slightly lower than Q1. There are multiple factors to that. One is if you compare to 2023, Q2, our base was a bit higher. Q2 2023 was actually one of the very strong quarters we had. Q1 to Q2 of this year, there has been some slowdown, but only in a few markets which had some impact, especially in Saudi Arabia. They were slightly lower than where we were in Q1. There was also some seasonality impact in Q1 and Q2 compared to Q1 and Q2 of last year given the Eid movement and the number of weekends.

Overall, while the base will continue to go higher compared to last year, we continue to focus on LFL recovery and as Amar said, to get to full recovery during the course of the year. If you compare average daily sales, which is a key metric which we track, we have not seen a slip up in Q2 if you compare to Q1 and also as we speak in Q3. We continue to build on our average daily sales, which is a key metric which we track. On the M&A, while we would refrain from commenting on the speculations, I would say yes, we have a strong balance sheet. We continue to look at opportunities which are a strategic fit for us. One of the areas which is of focus is entering into Arabic segment, which we have also mentioned earlier.

While there are very limited scale opportunities, we continue to look at the right brand and at the right time would come back to the investors and the shareholders on any opportunity. We are close to finalization. Thank you so much. Can I follow up on M&A because we saw some slowdown in net openings in the first half and I was wondering whether it's related to potentially a bit more aggressive M&A.

Moderator: Opportunities right in the M&A expansion or.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: It has nothing to do with that maxim.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: There's no connection. It all has to do with the pipeline, and there's no correlation. We want to continue to make sure we maintain the trust of our shareholders. Capital deployment has to be responsible. We purposefully realigned some of our NSOs across countries, and that was all part of that exercise.

Moderator: Understood? Yeah.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you so much, Omar and Harsh.

Moderator: Okay, thank you. Thank you very much. We'll be now moving to the next question from Ahmed from Azimut Group. Please go ahead. Your line is now open.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Hello. Thanks for taking my question. I have three questions. First, on the cash flow front, any color? Where should we see the net working capital as a % of sales during the coming quarters? We have seen an improvement during the first half. Where should we see this figure? Second, can you provide some color on the efficiency measures you are taking to offset the increase in the home delivery contribution? Finally, on store openings, any color on the geographical mix and the brand mix for the new stores? I'll answer.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: The store openings. On the store opening, it's a balance between UAE, Kuwait, Iraq, and Saudi Arabia. The UAE is leading. We want to open more in Kuwait. It's a little bit of a supply challenge. We pulled back a bit in Saudi, taking a cautious approach in Iraq. These are the four primary markets. We are also opening stores in Morocco as well as in Kazakhstan.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Amar. On Ahmed, on the two other questions. One is on working capital. I would say we expect to be around the same level, which is between -8.8% to -9% as percentage of revenue. As and when the revenue grows, that should help us from an absolute perspective given we are in the negative of -8.8% to -9%. That is one. Second is on efficiency. If your LFL growth continues to be double digit, you see operating leverage across the lines below gross profit, which includes labor cost, rent, other operating expenses. You see that across the line. In addition to that, we also have various cost initiatives. For example, I mentioned about kiosk or cashierless stores, which is a key initiative which Amar is personally involved in driving.

Our vision is to actually have only kiosks as order takers or customers doing the orders rather than having human beings in the front of the counter. On the back office, we have several AI initiatives where we are trying to automate or use agentic AIs to reduce our headcount on various transactional activities. There are various initiatives in place and we continue to optimize and focus on cost while we also grow our top line. Thank you. Just a follow up question on the aggregators. We are expecting an entry from Meituan CETA into Kuwait, Qatar, and the UAE. What should be the impact on Americana from their entrance in these markets?

Moderator: Thank you.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: We welcome competition in the aggregator space. They grow the share, they create competition, and they make their category more competitive. It's a positive impact.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Okay, great. Thank you so much.

Moderator: Thank you. Thank you very much. Just a final reminder, if you want to ask a question, please press Star two on your phone keypad or you can raise your hand if you're connected via the web through the interface. Our next question comes from Abdulaziz from Riyadh Capital. Please go ahead. Your line is now open.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you. Thank you, management, for the opportunity and congratulations for the results. My question is regarding, firstly, the cost. We've seen the company is maintaining a solid gross margin, and I believe, most recently, that's supported by lower material cost, especially in the poultry side.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: However.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: The recent quarter we've seen a spike in cheese and butter. I want to understand how could that affect the company's gross margin going forward and how the company is planning to increase, let's say, the EBITDA per store and not benefiting from the lower material cost at the moment. Going forward, if the cycle ends and we get back to previous prices in terms of material, what are your plans in terms of, let's say, increasing the EBITDA per store? That's the first question. Secondly, I know that you give guidance on a number of stores during 2025, but in the longer term, is there any sort of view for 2030, like how much you want to reach or are you going to view each year by itself?

Moderator: Thank you.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Abdulaziz, for your questions. The first one on the commodities, which includes protein and dairy, we have visibility pretty much till end of the year and we have locked in prices. We don't see any significant variations, which, while there are some commodities which have slightly gone up, some have gone down, but overall we feel we are in a good position to deliver on our guidance of margins. Gross margins to be in line with last year, that is one. The second is the commodities in 2022 and 2023 were abnormally higher. Keeping that aside, we continue to look at as and when we do revenue recovery, whether they are pricing initiatives, differential pricing.

We're also investing a lot of money, as Amar said, onto technology, which includes Customer Data Platform and personalization, which will also make us more effective on discounts, on differential pricing, which will also help us to drive margins. Now, from an EBITDA perspective, our business, as we said earlier, has a lot of operating leverage which goes both ways on positive and negative. The number one focus continues to be growing the LFL. As and when the like-for-like grows, that also flows through to the EBIT margin. In addition, as I mentioned, there are several other initiatives which include optimization of labor using kiosks, looking at how we can be more efficient on our rentals from a footprint perspective as well as our operating cost. We look at opportunities to make sure we can deliver on EBIT margin. That's one.

The second on your question on the 2030 number of openings, I would say we want to take at least for now. The view is let's go year by year and then see how 2026 looks like. For now, the guidance remains 150 to 160, which Amar mentioned earlier. While it is ambitious, we will continue to work on it and want to get closer to the guidance by end of the year.

Moderator: That's clear.

Pujeet Parekh/Harsh Bansal, Head of Investor Relations/Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you.

Moderator: Okay, thank you. Thank you very much. At this point in time, we are seeing no further questions. We would like to thank all the participants for the time today and for all of your questions. We hope to see you again on our next earnings call. Thank you, everyone. This concludes today's call. Thank you and goodbye.

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