Earnings call transcript: Americana Restaurants sees strong Q2 2025 growth, led by innovation and expansion

Americana Restaurants International PLC (AMR), a $1.59 billion market cap restaurant operator, reported solid financial results for Q2 2025, with revenue climbing to $1.2 billion, marking a 15.6% increase year-over-year. The company’s net profit also rose by 15.7% to $92.5 million, maintaining a steady net profit margin of 7.6%. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation. Despite absorbing $8.2 million in new tax regulations, the company showcased robust growth in like-for-like sales and EBITDA. The stock price saw a modest increase of 1.84%, closing at $2.09, reflecting investor confidence in the company’s strategic direction and market performance.

Key Takeaways

• Revenue increased by 15.6% year-on-year, reaching $1.2 billion.
• Net profit rose by 15.7% to $92.5 million, with a stable net profit margin of 7.6%.
• The company expanded its restaurant count to 2,638, with 214 new openings in the past year.
• Home delivery sales now constitute 47% of total sales.
• Strong growth reported in UAE and Egypt, while Saudi Arabia remains challenging.

Company Performance

Americana Restaurants demonstrated strong performance in Q2 2025, driven by strategic expansions and innovative product offerings. The company has effectively managed to increase its restaurant footprint, adding 214 new locations over the past year, and is currently constructing 53 more sites. This expansion, coupled with a 12.4% rise in like-for-like sales, underscores the company’s robust growth trajectory. The competitive landscape in Saudi Arabia poses challenges, but the company continues to focus on value and innovation to maintain its market position.

Financial Highlights

• Revenue: $1.2 billion, up 15.6% year-on-year
• Net profit: $92.5 million, up 15.7% year-on-year
• EBITDA: $274.9 million, up 17.9% year-on-year
• Net profit margin: 7.6%
• Like-for-like sales growth: 12.4%

Outlook & Guidance

Looking ahead, Americana Restaurants plans to open 150-160 net new stores in 2025, with a continued focus on like-for-like growth and transaction recovery. The company maintains a strong financial health score of GOOD according to InvestingPro analysis, with its next earnings report scheduled for August 8, 2025. The company aims to close the performance gap with 2023 levels by investing in digital technology and personalization. Additionally, Americana is exploring potential inorganic growth opportunities to further strengthen its market position.

Executive Commentary

CEO Amarpal Sandhu expressed confidence in the company’s strategic direction, stating, "We understand it’s a street fight. We believe at this point we are head on the score, and we have every intention to stay ahead in this fight." CFO Harsh Bansal emphasized the importance of like-for-like growth, noting, "Our focus continues to be growing the like-for-like as when the like-for-like grows, that also flows through to the EBIT margin."

Risks and Challenges

• The hypercompetitive market in Saudi Arabia could impact future growth.
• New tax regulations have already added $8.2 million in costs.
• Consumer pressure and increased restaurant listings may affect profitability.
• Commodity price volatility could impact cost management efforts.
• Economic conditions in emerging markets like Kazakhstan and Iraq may pose risks.

Q&A

During the earnings call, analysts raised questions about the challenges in the Saudi Arabian market and the company’s strategy for home delivery growth. Executives also addressed potential M&A opportunities and discussed initiatives for cost optimization and efficiency improvements.

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

Poojit Parekh, Head of Investor Relations and Business Development, Americana Restaurants: Good evening, everyone, and thank you for joining us for Americana Restaurants h one twenty twenty five earnings call. I’m Poojit Parekh, head of investor relations and business development, and it is my pleasure to welcome you on behalf of the entire management team. The 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. Thank

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: you, Pajit. Good day, everyone, and thanks for joining us today. As Pajit mentioned, the 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, attract new customers, and unlock 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 continue 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. Finished 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, Pete’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 chargrilled 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.

And finally, our commitment to inclusion continues to translate into tangible progress. Through partnerships such as with Sharjah City for humanitarian services and YUM’s 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 now Bahrain, we continue to expand inclusive hiring initiatives from welcoming team members with hearing impairments and autism at Pete’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 2025, we continue to see strong sustained momentum. Our footprint grew to 2,638 restaurants. We opened 214 gross new restaurants over the last twelve months, and we have an additional 53 sites currently under construction reinforcing our growth pipeline.

In the 2025, revenues reached $1,200,000,000, 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 $274,900,000, demonstrating continued operating efficiency. Net profit rose 15.7% to $92,500,000, maintaining a steady 7.6% margin in line with last year. And this despite absorbing $8,200,000 in additional new tax regulations during the period. Additional details on financials will be provided by Harsh in the financial 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 twelve months, we have added 240 restaurants, majority of which were for the power brands with 137 openings 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 2025, we opened 36 new stores and rated 46 Pizza Hut Oman locations, bringing our total store count to two thousand six thirty eight 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 25. With that, I will now hand over to Harsh for the financial deep dive.

Harsh Bansal, 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 Ammar 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 77,000,000 contribution from the stores we have opened in the last twelve months. The revenue was negatively impacted by adverse FX movements of $20,000,000 and revenue decline due to the store closures, impacting by $14,000,000. Our revenue mix remained stable with 84% of the sales coming from markets with big 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 h one twenty twenty five. Focus on kiosks and having cashier less restaurants is showing results, and we have increased the share of kiosks from 5.3 in h one twenty twenty four to around 14% in h one twenty twenty five.

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 impacts 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 Ammar 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 we move to the p and l. On the four level EBITDA, we grew by 12.3% while maintaining a margin of 20 28.7.

On overall EBITDA, we grew by 17.9% and improved the margin from 22.1% to 22.6% in 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 $8,200,000 of incremental tax impact due to implementation of pillar two 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 h one twenty twenty five stands at $92,500,000 with a steady margin of 7.6%. If you look at the two grey 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 h one twenty twenty four was 72,800,000.0, reflecting a 6.9% margin adjusting for the marketing relief and the Egypt effective valuation impact in h one twenty twenty four. 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 showing showcasing the robustness of our business model and the effectiveness of our cost management and operating leverage on the business. Looking at our cost of inventory, we have maintained a stable cost of inventory of 29.2% in q two twenty twenty five, and this is broadly in line with H1 twenty twenty four. 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 thirtieth June twenty twenty five compared to minus 8.9% at the 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 17,000,000, 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 $50,000,000, around 4.1% of revenue, primarily driven by our ongoing investments on new store expansion and 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 three point one 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. KSP has been leading the pack in terms of paybacks with 162 openings and a payback of two point three 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 lot of openings of Pizza Hut have been in 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 Ammar to wrap up and conclude.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Thank you, Harsh. And before we open the floor for q and 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. And finally, in digital leadership, with the rollout of the Americana loyalty program and activation of our customer data platform, we’re 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, discipline 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 a 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 head 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. So we will now move to the question and answer section. If you would like to ask a 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 come from Sid Larbi 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 unmuted. Perhaps we’ll come back later to sit in that case, And we’ll move to our next question from Tahir from JPMorgan. Please go ahead.

Your line is now open.

Tahir, Analyst, JPMorgan: Yes. Hi. Good afternoon, Jan. Thank you very much for for taking my question. This is Tahir from JPMorgan.

Maybe just a few questions from from my side. The first one is just looking at, you know, 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 h one twenty twenty three and two percentages of total sales. How should we think about this trending into the second half maybe, Amar and Harsh? Should we expect to close that gap on LSL 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. So how should we think about, you know, closing that gap to to that pre, pre boycott levels when it comes to the top line? And 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 with higher costs. So 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 prevork up level?

Thank you.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Ahir, good to hear your voice, my friend. The it’s always a pleasure getting questions from you. Now 2023, as you may recall, was a super strong period for us. And you’re right. We’re in the 11%, you know, delta on LFL.

And, of course, we are, you know, working diligently. And, you know, that’s why we spend more time talking about our strategies in terms of how we are driving transactions and innovation and check order to close the gap. You know? I mean, clearly, not only do we wanna close the gap, but we wanna, you know, get beyond that. So it’s difficult to put with, but, you know, will be will we bridge some of that delta?

Absolutely. We wanna bridge all of it, you know, before the end of the year. The and we are working we believe we have the right strategies in place, and we believe, you know, we have the execution machine in place. So that is the intent. That is the target.

Now secondly, Harsh, you wanna take the Yeah.

Harsh Bansal, Chief Financial Officer and Chief Growth Officer, Americana Restaurants: So so, Tyrone, I would I would tackle EBITDA and net profit differently. So for EBITDA, if you look at, there are three key levers which are coming in from from a margin perspective. One is gross margin, which is cost of wood sold. So 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, Amar already mentioned, we are very much focused on value, but part of it should also come back to the PNL.

Home delivery continues to be a headwind from a p and perspective, and the of almost 1% compared to last year. But we also have enough operating leverage on the other lines to to deliver close to twenty twenty three better margins as we as we do as we continue to do our recovery. At a net profit level, there have been impacts because of new tax changes in tax relations. So that would have an impact while the intention is to also bridge the gap on net profit, but but that is a significant impact given Kuwait, UAE, as well as some other markets like Qatar and Bahrain, which have been which have been impacted from a tax perspective.

Tahir, Analyst, JPMorgan: Okay. Very clear. Maybe if I just may one one small follow-up. Just talking specifically about q two in terms of revenue by segment, we can see that Egypt is back quite aggressively up around 31%, UAE up 15, Saudi quits running at around 10%. I just wanna maybe get your thoughts.

Clearly, now Egypt is maybe beyond the devals from a comps perspective. So should we expect that performance to continue in in dollar terms? And 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: So Tahir Egypt, we are quite pleased with the progress we are seeing month over month. It’s it’s quite encouraging across all the brands, and we also have very strong team there now. We have a seasoned operator who’s leading, who’s the GM of Egypt, Hisham Talat, and he’s really driving the performance hard. So we are optimistic that we are gonna continue to see growth in Egypt. So that’s very encouraging.

You know, if you compare that to last year, you know, it was it was not, you know, so good. KSA challenges are there, but, you know, we 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 you know what the challenges are. You know? The consumer is under pressure.

A lot of build. You know, there’s it’s hypercompetitive. I mean, just anecdotally, I’ll share with you. I was having a conversation with one of the major aggregators in KSA, and, you know, they shared that the listings on their platform have grown by two and a half times since 2023 or 2022 or 2023. So that just shows how much new growth has emerged in KSA.

So hypercompetitive, lot of value, stress consumer, you know, bloodbath amongst the aggregators, lot of free delivery. So all those factors are coming into play. But 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. And we are noticing that Adi’s performance recently has been very strong.

We’ve done a new promotion with KFC, and we are seeing very positive results. You know, this is whenever you do something, a good good product at the right price and it’s locally relevant, we see a big spike in KSA. So we have plans in place to continue to drive performance in KSA.

Tahir, Analyst, JPMorgan: Alright. Very clear. 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 Anishit from Seco Securities. Please go ahead.

Your line is now open.

Anishit, Analyst, Seco Securities: Yes. Hi. Thank you for this, opportunity. I have, perhaps two questions. One, on the home delivery segment, like you discussed, it’s growing, and that’s hurting your margins.

How do you see this segment, the breakdown of your channel for the movement? Do you think that this is the trend, the market, that it will continue to grow from this 47 odd percent currently to maybe beyond fifty, fifty five? 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? And second question is more from the growth point of 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 gonna be much stronger given that you had a much tougher second half last year.

So 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 should we expect that from American? Thank you.

Harsh Bansal, Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Nishith. So the first question on home delivery. So you asked few few things. One is, yes, the share has been growing, and our focus for now is to to get back full LFL recovery to pre September or or to September 2023 levels. So for now, we are we are that over everything else.

We do have a plan in place where which includes various levers, pricing, product, how we can drive other channels. But for now, as we speak, the focus is to 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 eighteen months to happen in the future. We expect while it may increase, but not at the same pace of what it has it has been doing in the last eighteen odd months. Second, 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.

And especially for cannibalization, home deliveries are the key factors we consider when we do user opening feasibility studies. On your second question, which is which is h two, I just wanna make sure we we articulated clearly. From a revenue perspective, h two h two last year was actually built up compared to h one of last year. So we we continue to have recovery quarter on quarter last year, while the base would be higher for h two of last year when we comp against that in h two of this year. But, yes, from a profitability perspective, we expect to continue to build on that in h two as well and deliver growth on what we have delivered in h one in h two as well compared to last year.

Anishit, Analyst, Seco Securities: Okay. Thank you, and all the best. Thank you.

Moderator: Thank you. Thank you very much. So, we’ll now try again with with Sid from, Epicure. Please please go ahead. Your line is now open.

Please please go ahead. Sorry, Sid. We unfortunately, we cannot we cannot hear you. So, yeah, we will we’ll move to the next question. But before that, just a quick reminder.

If you would like to ask a voice question, please press star two 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 Gadam from ABI. Please please go ahead, Harsh. Your line is now open.

Harsh Gadam, Analyst, ABI: Hi. Hi. I’m Farno.

Moderator: Hello? Yes. Yes. We can hear you. Please go ahead.

Harsh Gadam, Analyst, ABI: Yeah. Yeah. Yeah. So thank you for the call. I have a couple of questions.

So could you please elaborate on the key drivers behind strong elephant growth in ’25? And has this growth been adjusted for the timing impact of Ramadan and Eid Ada Eid and Ada holidays? Additionally, which core franchisees contributed most significantly to the performance? So this is my first question. Regarding the second question, it’s about the store expansion.

Does the current guidance include store additions from Carpool in Kuwait and Qatar? Like, what level of sales per store is anticipated from Carpool, and what amount of stores are you expected to open in 2025 or in in 2026? And the last question from my end is is the operating leverage the primary driver behind gross margins in twenty two to twenty five? And given the food inflation remain relatively stable during the period, I mean, are there is there any other contributing factors to say? Thank you.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Hi, Harsh. So I’ll answer, you know, one or two questions, and then your namesake will will take another one as well. So first of all, on on store expansion, The you know, 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 gonna be easy to hit the one fifty to one sixty because we are, you know, slightly behind our plan for the first half.

But we also have a, you know, team that is very focused on execution. Carpool is not really material for this year because, you know, this is 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, you know, potentially, it could move into q one of next year. And as far as operating leverage, you know, the there’s no connection between that and gross margin. Right? You know, operating leverage is more driven by LFL, and that is why we are very focused on driving LFL.

That’s the best source of profitability for us.

Harsh Bansal, Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Omar. So, Harshan, your first three questions are three sub questions of course. One is on the key drivers of LFL. K. 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 has is the focus on value, and we are also we are focused on value across countries and brands. That that is the second key lever. The third is our investments in digital technology, which includes CDP, personalization, and and some of the other investments we have made.

That is the third key lever for for LFL. And fourth goes without saying, operations, focusing on customer experience, which always plays a role to drive LFL. That is one. Second is on number one seasonality. The numbers we are saying are reporting are for h one, and there is no seasonality for h one.

So both East and Amadan 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.

Harsh Gadam, Analyst, ABI: 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 Citibank. Please go ahead.

Your line is now open.

Harsh Gadam, Analyst, ABI: Hello. Am I audible?

Moderator: Yes. Please go ahead.

Harsh Gadam, Analyst, ABI: Yeah. So I have two questions.

Muhammad, Analyst, Citibank: First one is on, basically, the promotions or the value deals that you introduced last year. How how is the contribution coming in? I mean, has the contribution reduced from those value deals if you look at the overall revenue point of view, or you are continuing with the same strategy this year as well? This is the first one. And my second question is really on Pizza Hut Oman.

I think I’m so, like, they contributed around 5,800,000.0, just 31 stores. So if I calculate the revenue per store, they are, like, thirty, forty percent lower than what the average Pizza Hut generates. So just wanted to understand, is the Oman revenue per store for other brands also similarly lower, or is it just Pizza Hut and and it is 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: Mohammed, on on value, so we started pushing value aggressively last year around May, June, where it was price point value to get people back into our restaurants, and it was also outdoor promotion in store. It It was extremely visible. So the mix, you know, 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 our customers off of value. So 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? So so that has been the strategy. You drive the customers, and then you start trading them up, and you don’t make price point value as visible. The second point on Pizza Hut Oman, we acquired the business in late January.

So, yes, the the revenue in the first half is modest, but that’s related to the recovery. Right? So KFC started recovering much earlier because we were already operating the business. So, obviously, those same strategies now we have deployed on Pizza Hut, and we see continued recovery. In fact, it’s it’s quite significant compared to where it was when we acquired the business.

Muhammad, Analyst, Citibank: Alright. And just a follow-up. I mean, last twelve months, you have also opened up stores outside your core geographies like Kazakhstan and Iraq. So can you comment on how the financial metrics are different from your core geographies 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.

Tahir, Analyst, JPMorgan: Okay.

Ahmed, Analyst, Azimut Group: 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.

Maxim, Analyst, Citi: Yes. Hello. Thank you for the opportunity to ask questions. I have a few questions. First is just a follow-up on like for like sales.

Right? And as I understand, like for like sales in the second quarter were slightly lower compared to the first one by about two percentage point then as I understand. And, also, we saw a little bit wider gap versus 2023 levels compared to first quarter twenty five. So I wonder what the what what’s the bigger driver of that and whether what is the impact of VoIP was? Do do you see them kinda bit higher in the second quarter compared to the first one, and what’s the current situation?

And the second topic I wanted to ask you is about your your m and a pipeline and m and a outlook. So whether you you you you know, we we saw the reports in the press. Right? So whether you plan to be more active in that area, and what could be the priorities. Right?

And what could be maybe the size in terms of the stores of of potential targets if you are considering?

Harsh Bansal, Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you thank you, Maxim, for your questions. The first one, LFL, your observation on q two versus q one is is right. So q two LFL has been slightly lower than q one. There are multiple factors to that. One is if you compare to twenty twenty three q two, our base was a bit higher.

So q two twenty twenty three was actually one of the very strong quarters we had. Now q one to q two of this year, there has been some slowdown, but only in few markets which had some impact, especially in Saudi. It was slightly lower than what where we were in q one. And there was also some seasonality impact in q one and q two compared to q one and q two of last year, even the improvement and the number of weekends. But 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 by by during some course of during the course of the year. If you compare ADS, average daily sales, which is a key metric which we track, we have not seen a slip up in q two if you compare to q one and also as we speak in q three. So we continue to build on our average daily sales, which is a key metric which we track. On the m and a, while we we would refrain from commenting on the on the speculations, but I would say, yes, we have a strong balance sheet. We continue to look at opportunities which are a strategic fit for us.

And one of the areas which is our focus is entering into Arabic segment, which we have also mentioned earlier. While there are very limited skilled opportunities, we continue to look at the right brand and at the right time would come back to to the investors and the shareholders on on any any opportunities, and we are close to finalization.

Maxim, Analyst, Citi: Thank you so much. Can I follow-up on on on m and 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 and a opportunities, right, in the m and a expansion, or it has nothing to do with that.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: Maxim, there’s no no connection. It all has to do with the pipeline, you know, the and there’s no correlation. And, also, we wanna continue to, you know, make sure we maintain the trust of our shareholders, so capital deployment has to be responsible. So we purposefully realigned some of our NSOs across countries, and so that was all part of that exercise.

Harsh Gadam, Analyst, ABI: Understood.

Maxim, Analyst, Citi: Yep. Thank you so much, Omar and Harsh.

Harsh Gadam, Analyst, ABI: Yep.

Moderator: Okay. Thank you. Thank you very much. We’ll be now moving to the next question from Ahmed from Azimut Group. I

Ahmed, Analyst, Azimut Group: have three questions. First, on the cash flow front, any color where should we see the net working capital as a percentage of sales during the coming quarters? We have seen an improvement during the first half. So where should we see this figure? Second, on the can you provide some color on the efficiency measures you are taking to offset the increase in the home delivery contribution?

And finally, on store openings, any color on the geographical mix and the brand mix for the new stores?

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: So, Azul, Aziz, I’ll answer the store openings. Sorry. Ahmed. Ahmed. Okay.

Sorry. My apologies. On the store opening, it’s a balance between UAE, Kuwait, Iraq, and Saudi Arabia. We The UAE is leading. We wanna open more in Kuwait.

You know, it’s a it’s a little bit of a supply challenge. We pulled back a bit in Saudi, taking cautious approach in in Iraq. But, I mean, these are the four primary markets, but we’re also opening stores in Morocco and as well as in Kazakhstan as well.

Harsh Bansal, Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Omar. So on Amazon, on the two other questions, one is on networking capital. I would say we we expect to be around the same level, which is between minus 8.8 to minus 9% as percentage of revenue. As in when the revenue grows, that should help us from a absolute perspective given we are in the negative of minus 8.8 to minus nine. That is one.

Second is on efficiencies. See, if you look at if your LFL grows growth continues to be double digit, you see operating leverage across the lines below gross profit, which includes labor cost, renters, other operating expenses. So so that you see across the line. But in addition to that, we also have various cost initiatives. For example, I mentioned about kiosk or or cashier less stores, which is a key initiative which Amar is personally involved in in driving.

And 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. Second is on the back office, we have several AI initiatives where we are trying to automate or or use agentic AIs to to reduce our headcount on various transactional activities. So there are various initiatives in place, and we continue to optimize and focus on cost while we also grow our top line.

Ahmed, Analyst, Azimut Group: Thank you. Just a follow-up question on the aggregators. We are we are expecting an entry from Mitwanita into Kuwait, Qatar and The UAE. So what should be the impact on Americana from their entrance in the in this market? Thank you.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants: See, we we we welcome competition in the aggregator space. So, I mean, they grow the share. They create competition. They make everybody their, you know, category more competitive. So it’s a positive impact.

Ahmed, Analyst, Azimut Group: Okay. Great. Thank you so much.

Moderator: Okay. Thank you. Thank you very much. So 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.

Amarpal Sandhu, Chief Executive Officer, Americana Restaurants0: Thank you, and thank you management for the opportunity, and congratulations for the results. So my question is regarding firstly about the cost. So we’ve seen the company is maintaining a solid gross margin, and I believe recently most recently, that’s supported by lower material costs, especially in especially in the poultry side. However, in in in in recent in the recent quarter, we’ve seen a spike in cheese and and butter. So, like, I I wonder I wanna understand, like, how could that affect the company’s gross margin going forward?

And how is the company is planning to increase, let’s say, the EBIT per store and not benefiting from the lower material cost at the moment? Like, going forward, if the cycle ends and we get back to previous prices in terms of material, like, how how how we what what are your your plans in terms of, let’s say, increasing the EBIT per store? That’s the first question. And secondly, I know that you gave guidance on a number of stores during 2025. But in the longer term, is there any sort of view, like, for 2030, like, how much you wanna reach, or you’re gonna view each year by itself?

Thank you.

Harsh Bansal, Chief Financial Officer and Chief Growth Officer, Americana Restaurants: Thank you, Abdulaziz, for your questions. The first one on on the commodities, which includes protein and dairy. We have visibility till pretty much till end of the year, and we have locked in prices. We don’t see any significant variations. 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 a guidance of margins or gross margins to be in line with with last year. That is one. The second is the quantities in ’22 and ’23 were abnormally higher. Keeping that aside, we 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 a EBIT perspective, our business, as we have said earlier, has a lot of operating leverage, which goes both ways on positive and negative. So the number one focus continues to be growing the LFL as in when the like for like grows, that also flows through to to the EBIT margin. In addition, as I mentioned, there are several other initiatives which includes optimization of labor using kiosks, looking at how we can be more efficient on on our rentals from a footprint perspective as well as our operating cost. We we we look at opportunities to make sure we can deliver on EBIT margins. So that’s fine.

The second on your question on the twenty thirty number of openings, I would say we wanna take at least for now, the the view is let’s go year by year and and then see how how 2026 looks like. But for now, the guidance remains one fifty to one sixty, which 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.

Ahmed, Analyst, Azimut Group: That’s clear. Thank you.

Moderator: Okay. Thank you. Thank you very much. At this point in time, we are seeing no further questions. So we would like to thank all the participants for the time today and for all 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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