Restaurant Brands Asia Limited — Q1 FY26 earnings call

Call held 31 Jul 2025

Management summary

Restaurant Brands Asia reported a strong Q1 FY26, primarily driven by robust performance in its India operations with double-digit revenue growth and improved profitability, supported by a successful barbell strategy and digital transformation. The Indonesia business showed encouraging signs of turnaround for Burger King, achieving positive store-level EBITDA and ADS growth, while Popeyes continues to be a work in progress with reduced losses but ongoing challenges. The company remains focused on strategic expansion and cost efficiencies across both geographies.

Highlights

  • India revenue grew 12.6% YoY to INR 552 crores.

  • India Same-Store Sales Growth (SSSG) was 2.6%, driven by dine-in traffic.

  • India Restaurant EBITDA increased 23% YoY to INR 53.6 crores, with margins improving by 0.8% to 9.7%.

  • India Company EBITDA rose 28.6% YoY to INR 22.5 crores.

  • 93% of India restaurants now have self-ordering kiosks (SOKs), with 90% of sales from digital platforms.

  • Indonesia Burger King ADS grew 5% YoY (Nov 2024-July 2025) and achieved positive store-level EBITDA of INR 6.4 billion (IDR).

  • Indonesia corporate overheads reduced by 25% (INR 15 crores), with a target for a further 10% reduction (INR 4.5 crores).

  • Popeyes Indonesia saw its loss reduced by INR 2.2 billion (IDR) QoQ, though store-level losses remain at INR 6 billion (IDR) for the quarter.

Concerns

  • Competitive intensity in Indonesia's fried chicken market (Popeyes)

  • Popeyes Indonesia continued losses

Key financials

  1. India Revenue ₹552 Cr +12.6%YoY
  2. India SSSG 2.6%
  3. India Restaurant EBITDA ₹53.6 Cr +23%YoY
  4. India Restaurant EBITDA Margin 9.7% +0.8%YoY
  5. India Company EBITDA ₹22.5 Cr +28.6%YoY

What they filed

Q1 FY27: revenue up 17.9%, net profit up 26.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue632 639 633 698 703 +11%715 +12%707 +12%823 +18%
EBITDA63 70 73 73 71 +13%90 +29%95 +30%100 +37%
Net profit-65 -55 -60 -45 -63 +3%-48 +13%-47 +22%-33 +27%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Indonesia Operations
    280 Bn Overall Revenue159 stores Burger King Store Count5% Burger King ADS Growth (Nov-Jul)6.4 Bn Burger King Store-Level EBITDA25 stores Popeyes Store Count2.2 Bn Popeyes Loss Reduction6 Bn Popeyes Quarterly Loss

Guidance & targets

Store Expansion

  • New restaurants added annually (India) Store Expansion · annually · High confidence 60 to 80
    We've always been saying that we would add around 60 to 80 restaurants on an annual basis. We remain focused on that growth journey, and you will see us growing at that pace as we progress further into the later part of the year.

    — Sumit Zaveri

  • Total restaurants (India) Store Expansion · by FY '29 · High confidence approximately 800
    We will continue to add 60 to 80 restaurants every year to reach approximately 800 by FY '29.

    — Gaurav Ajjan

Profitability

  • Gross Profit margin (India) Profitability · by FY '29 · High confidence 70%
    Our GP guidance is the same as we target a 70% margin by FY '29. Please note that we will not see a linear increase every quarter as we aim to strike the right balance between sales growth and margin increase. However, we are confident that we will continue our margin growth trajectory seen over the past several years that will take us to about 70% by FY '29.

    — Gaurav Ajjan

Cost Reduction

  • Corporate overheads reduction (Indonesia) Cost Reduction · this year · High confidence further 10% (INR 4.5 crores to INR 5 crores)
    This reduction will continue as we are looking at this year to reduce that by a further 10%, which is another INR 4.5 crores. So overall, when we started this journey, I shared with you that we will remove 1/3 of the corporate overheads.

    — Rajeev Varman

Cost Efficiency

  • Labor cost as % of sales (India) Cost Efficiency · in future · Medium confidence between 9.5% to 10%
    But that line in future as the top line increases, will go down to between 9.5%, 10% kind of a range. So that room is available to us. We just don't want to avail it now. We want to avail it in the future.

    — Rajeev Varman

Risks & concerns

  • Competitive intensity in Indonesia's fried chicken market (Popeyes)

    high

    The market is tough with strong competition from global and local QSR players, requiring substantial investment in scale and brand awareness.

    Management acknowledged

  • Popeyes Indonesia continued losses

    high

    Popeyes' loss for the quarter was INR 6 billion (IDR), primarily due to lower ADS, despite some gross margin improvement.

    Management acknowledged

  • Demand softness in the premium segment (India)

    medium

    The premium layer has seen a 'shrink or tighter' demand, reflected in the 2.6% SSSG.

    Management acknowledged

Q&A highlights

3 direct
One-off corporate overheads in India Direct
So one is because of the G-SEC rate reductions, we saw some actual valuation liability increases, which was to the tune of INR 1 crore and then there was some ESOP grants that we did during the quarter. So that's really the line, which was higher than what you would see it on a recurring basis.

Clarifies non-recurring expenses impacting reported EBITDA, providing a clearer view of underlying operational performance.

Asked by Pranay Chatterjee

Overall demand environment and softness Direct
Yes. I think, Pranay, we basically are seeing very similar trends. It's -- there is some limited demand and it's a tighter market than usually we see at this time of year. But the demand on the lower end of the menu at the value layer continues to be strong. So we don't see very big there. It's on the premium layer where we have seen a little bit of a shrink or tighter, and that's reflective in our SSSG, which is only 2.6%.

Provides insight into current market conditions, highlighting demand shift towards value and softness in the premium segment, which impacts SSSG.

Asked by Pranay Chatterjee

Increase in other expenses QoQ Direct
So other expenses, we have as I was explaining even earlier as well, there is certain reversal. There is certain onetime cost in the other expense line that we have to the tune of around INR7-odd crores on account of some of the lease closures that we did. That is really the big impact that we've kind of seen.

Explains a significant increase in other expenses as primarily due to one-time costs related to lease closures, separating it from recurring operational costs.

Asked by Amnish Aggarwal

2 min read 6 chapters

Detailed narrative

India Business Performance & Profitability

India operations demonstrated strong growth in Q1 FY26, with revenues increasing by 12.6% to INR 552 crores. Same-Store Sales Growth (SSSG) stood at 2.6%, primarily driven by dine-in traffic. Restaurant EBITDA grew 23% YoY to INR 53.6 crores, improving margins by 0.8% to 9.7%. Company EBITDA also saw a significant rise of 28.6% YoY to INR 22.5 crores. Gross profit trajectory was maintained at a tight range of 67.6%.

India Barbell Strategy & Digital Transformation

The company's barbell strategy, focusing on both value and premium offerings, continues to drive traffic. Value promotions like '2 for 79' and '2 for 99' are consistent drivers, while the premium 'Kings Collection 2.0' and limited-time Korean range have been well-received. Digital transformation is nearly complete, with 93% of restaurants equipped with self-ordering kiosks (SOKs) and 90% of total sales originating from digital platforms, including the Burger King app.

India Cafe & Innovation

The cafe portfolio has expanded significantly, with 480 cafes now operational. A successful INR 99 cafe promotion drove trials and uptake of coffee and shakes. New product innovations include the co-branded Kit Kat BK Fusion and the Whopper Deluxe range, featuring new proteins like Paneer and fried chicken, starting from INR 139. Older cafes (2+ years) are performing strongly with average daily sales (ADS) of INR 20,000-22,000, while newer ones are at INR 6,000-7,000.

Indonesia Burger King Turnaround

The Indonesia Burger King business is showing positive momentum, with Average Daily Sales (ADS) growing 5% year-over-year from November 2024 to July 2025. The brand achieved positive store-level EBITDA of INR 6.4 billion (IDR 6.4 billion) for the quarter, a significant improvement from previous losses. Strategic menu fixes, new product introductions focusing on spicy and cheesy flavors, and whole chicken meals (Ayam Nusantara) are driving volumes and customer re-engagement. The company has rationalized its portfolio by closing an additional 4 restaurants, bringing the total to 159 Burger King stores.

Indonesia Popeyes Challenges & Strategy

Popeyes Indonesia, with 25 stores, remains a challenging segment. While the overall revenue stands at INR 280 billion (IDR 280 billion) and losses were reduced by INR 2.2 billion (IDR) quarter-on-quarter, the store-level loss for the quarter was still INR 6 billion (IDR 6 billion). ADS for Popeyes declined from 14.6 to 13.2. The company has pivoted its strategy to lean into its strength as a chicken destination, providing an elevated fast-casual dining experience, with early positive signs from pilot stores.

Cost Efficiencies & Future Outlook

Restaurant Brands Asia is actively pursuing cost efficiencies. Utility costs have been optimized, contributing to improved Restaurant EBITDA margins. Corporate overheads in Indonesia have been reduced by 25% (INR 15 crores), with a further 10% (INR 4.5-5 crores) reduction targeted for this year. The company aims to add 60-80 restaurants annually in India, reaching approximately 800 stores by FY29, and targets a gross profit margin of 70% by FY29. Labor costs are expected to optimize to 9.5%-10% in the future as top-line grows.

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