Restaurant Brands Asia Limited — Q2 FY26 earnings call

Call held 4 Nov 2025

Management summary

Restaurant Brands Asia reported a strong Q2 FY26, driven by robust revenue growth and consistent positive traffic in India's dine-in segment. The company demonstrated significant progress in gross margin expansion and digital adoption, with 91% of transactions now digital. While Indonesia operations, particularly Popeyes, remain a challenge, management is focused on cost optimization and strategic initiatives to drive long-term profitability and store expansion across both geographies.

Highlights

  • Revenue grew by 15.6% YoY to ₹568 crores, with 2.8% coming from same-store sales growth.

  • Gross margin improved by 60 basis points QoQ, reaching 68.3% in Q2 FY26 from 67.7% in Q1 FY26.

  • Restaurant EBITDA stood at 10.4% for the quarter, slightly down from 10.6% last year due to strategic investments in staff.

  • Company EBITDA (cash basis on pre-IndAS) was ₹28.4 crores, representing a 5% margin, ₹4 crores higher YoY and ₹6 crores higher QoQ.

  • Achieved 10 consecutive quarters of consistent positive traffic SSSG in dine-in for India operations.

  • 91% of transactions are now digital, supported by a 70% YoY growth in monthly app activity/downloads.

  • Corporate overheads reduced by approximately ₹20 crores in G&A savings.

  • Opened 14 new restaurants, bringing the total to 533, with a target to reach 580 by year-end.

Concerns

  • Popeyes Business Performance in Indonesia

Key financials

  1. Revenue ₹568 Cr +15.6%YoY
  2. Gross Margin 68.3% +0.6%QoQ
  3. Restaurant EBITDA 10.4%
  4. Company EBITDA (pre-IndAS) ₹28.4 Cr
  5. Same-Store Sales Growth 2.8%
  6. Average Daily Sales (India) ₹1,20,000

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 Burger King
    18 billion idr Average Daily Sales25 billion idr Translation Revenue56.8% Gross Profit-3% Store EBITDA
  • Indonesia Consolidated
    33 billion idr Company EBITDA Loss

Guidance & targets

Store Expansion

  • New Restaurants Annually Store Expansion · annual basis till FY29 · High confidence 60 to 80
    Our target, we have always mentioned that we would grow at a pace of 60 to 80 restaurants on annual basis.

    — Rajeev Varman

  • Total Restaurants Store Expansion · by year-end · High confidence 580
    We expect the year to end at 580 restaurants as we spend.

    — Sumit Zaveri

Gross Margin

  • Overall Gross Margin Gross Margin · by FY29 · Medium confidence 70%
    We have always been saying that we would want to take the overall gross margin journey to 70%.

    — Sumit Zaveri

Utility Cost

  • Utility Cost Reduction Utility Cost · next year · High confidence 1 percentage point
    all these efforts that we are putting in, we expect a 1 point reduction in our utility cost. We are starting to see that now as we have rolled this out in several restaurants, but you will see the major impact of this next year as all the restaurants are done.

    — Rajeev Varman

Equipment

  • Broiler Initiative Completion Equipment · March or early April · High confidence by March or early April
    you will find by, I think, March or early April, we should have finished the initiative on the broilers.

    — Rajeev Varman

Average Daily Sales (ADS)

  • ADS Target Average Daily Sales (ADS) · near-term goal · Medium confidence ₹125,000 to ₹135,000
    the leverage of going beyond the Rs. 120,000 towards Rs. 125,000 and then ultimately Rs. 135,000, which is our near-term goal of taking this business

    — Rajeev Varman

Restaurant EBITDA

  • Restaurant-level EBITDA Restaurant EBITDA · at current volumes · Medium confidence 13-14%
    They are saying that can we deliver 13%, 14% restaurant-level EBITDA at current volumes.

    — Rajeev Varman

EBITDA Margins

  • Company EBITDA Margins EBITDA Margins · FY27 · Low confidence big jump
    FY '27 can be a year where we should see a big jump in our EBITDA margins, with SSSG of course coming back. That's an assumption.

    — Ankit Gupta (confirmed by Rajeev Varman)

Risks & concerns

  • Popeyes Business Performance in Indonesia

    high

    Popeyes business has been a challenge, with 25 restaurants, and the company is laser-focused on eliminating losses and bringing it to neutral.

    Management acknowledged

  • Impact of Local Activity on Indonesia Sales

    medium

    September saw some country activity that penalized a few days of sales for Burger King in Indonesia, though October is back on track.

    Management acknowledged

  • Industry-wide SSSG Strain

    medium

    The industry has seen strain with tough SSSG numbers over the last six to seven quarters, indicating a challenging demand environment.

    Management acknowledged

Q&A highlights

2 direct
Future of Indonesia Business Partial
Right now, we are pretty excited about the Burger King part of the business over there because we can see, evidently, recovery on the dine-in side of the business where people are coming in and traffic is in the positive... But our efforts, like I shared on the last call and even the call before, is two prong, is to continue improving the business but also look at alternative solutions in terms of potential exits from that market.

Reveals ongoing strategic review for Indonesia, with Burger King showing recovery but Popeyes remaining a challenge and potential for market exit still on the table.

Asked by Kiran Gadge

Increase in Employee Costs despite SOKs Direct
We have taken 0.9% of that EBITDA and put it in terms of additional people in the lobby because we started table service, we started the SOKs. So, we wanted to make sure that there is ample amount of training and customer awareness of these two initiatives... But as we go into this quarter number three and four, you will find that kind of going back to its normal numbers.

Explains the temporary dip in Restaurant EBITDA margin due to a conscious investment in customer experience and training for new digital initiatives, with an expectation of normalization.

Asked by Kiran Gadge

Consumer Sentiment vs. Competitive Landscape in India Direct
Look, when you are sitting on the top of, almost 10 quarters now of positive traffic into our business, I think I would say that the traffic in the business is there. What we have seen in the last several quarters is the shift is more from the premium towards value... We think that consumer sentiments, especially with this GST, have started to improve. And it's a cyclical business...

Provides management's perspective on the underlying demand drivers in the Indian market, attributing challenges to a shift towards value and expressing optimism for improving consumer sentiment.

Asked by Tejas Shah

3 min read 6 chapters

Detailed narrative

India Business Performance and Dine-in Traffic Growth

Restaurant Brands Asia's India operations demonstrated strong performance with 10 consecutive quarters of consistent positive traffic SSSG in dine-in. This strategy, driven by a barbell approach combining value offerings (two for ₹79/₹99) and premium launches (Korean Fest, King's Collection, Whopper Deluxe at ₹140-₹150), continues to yield results. The company reported an overall revenue growth of 15.6% to ₹568 crores, with 2.8% attributed to same-store sales growth, indicating healthy organic expansion.

Profitability and Margin Improvement Initiatives

The company achieved a gross margin of 68.3% in Q2 FY26, a 0.6% improvement from 67.7% in Q1 FY26, driven by supply chain efficiencies and improved profitability on the delivery side. Delivery margins specifically improved by 1 percentage point. Restaurant EBITDA for the quarter was 10.4%, slightly lower than 10.6% last year, a conscious decision to invest 0.9% of EBITDA into additional staff for enhanced customer experience with new digital initiatives. Management aims to reach an overall gross margin of 70% by FY29.

Digital Transformation and Customer Engagement

RBA is rapidly advancing its 'Digital-First' strategy, with 91% of all transactions now digital. The company's app downloads and monthly activity have seen a significant 70% growth over the previous year. The BK app now accounts for approximately 35% of dine-in traffic, offering great value and driving customer frequency. A CRM team and partners are in place to further build frequency among existing customers in the coming quarters.

Indonesia Operations: Burger King and Popeyes

Indonesia operations present a mixed picture. The Burger King business is showing signs of recovery, with average daily sales (ADS) being higher in 12 out of the last 13 months, reaching around IDR 18 billion in local currency. Gross profit for Burger King Indonesia stands at 56.8%. However, the Popeyes business, with 25 restaurants, remains a significant challenge, contributing to a consolidated Indonesia EBITDA loss of IDR 33 billion for the quarter (compared to IDR 21 billion last year). Management is actively working on strategies to eliminate Popeyes' losses and is exploring alternative solutions for the market.

Store Expansion and Growth Outlook

The company is on track with its expansion plans, having opened 14 new restaurants this year, bringing the total count to 533. The target is to open 60 to 80 restaurants annually until FY29, aiming for approximately 800 stores. For the current fiscal year, RBA expects to add another 45 to 50 stores, reaching a total of 580 restaurants by year-end. This growth is supported by efforts to optimize distribution costs and bring in local suppliers as density increases.

Cost Optimization and Efficiency Drives

RBA has made substantial progress in reducing corporate overheads, achieving approximately ₹20 crores in G&A savings. Further efficiency initiatives include the rollout of a new broiler system across all restaurants by March or early April next year, expected to reduce utility costs by 1 percentage point. The company is also implementing e-coolers to pre-cool air for AC systems. These efforts are designed to improve the P&L structure independently of volume growth, ensuring a leaner and more efficient operation.

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