Restaurant Brand

Restaurant Brands Asia reported a strong Q3 FY25 for its India operations, reaching 510 restaurants with 46 new additions in the quarter and 69 year-over-year. Revenue grew to INR 494 crores, marking a 0.7% quarter-over-quarter and 11.2% year-over-year increase. Despite a flat Same-Store Sales Growth (SSSG) at -0.5%, the company emphasized positive dine-in traffic growth, driven by value offerings like 'two for 79, 99' and new product innovations such as chicken puff.

The company is rapidly advancing its digital-first strategy in India, with 90% of in-restaurant sales now digital, facilitated by Self-Ordering Kiosks (SOKs) and table ordering via QR codes. 437 restaurants currently have SOKs, with a target to reach nearly 100% in the next quarter. The BK app has achieved 13 million cumulative installs, growing 30% year-over-year, enabling exclusive deals and building a foundation for future CRM and loyalty programs.

RBA demonstrated improved profitability in India, with gross margin reaching 67.8% (up 0.3% QoQ and 0.7% YoY) and restaurant-level EBITDA at INR 59 crores (up 14.5% QoQ and 9.7% YoY). Company-level EBITDA also improved to INR 30.9 crores, a 26.7% QoQ and 2% YoY increase. Management highlighted ongoing efforts to optimize delivery business profitability (up 70 bps in Q3), reduce G&A expenses (maintained at INR 27-28 crores), and lower utility costs through engineering modifications across restaurants by the end of next year.

Indonesia operations continue to be a focus for turnaround, with revenue at INR 143 crores (IDR 269 billion), a 9.5% year-over-year drop, and a pre-Ind AS EBITDA loss of IDR 39.5 billion. SSSG improved to -4.1% from a 'deeply red' previous quarter, showing 'green shoots' of recovery in dine-in traffic following a halt in geopolitical tensions. The strategy involves no new store additions for the next couple of years, aggressive G&A reduction (from INR 65 crores to INR 10 crores this quarter), rent renegotiations, and strategic marketing investments to drive sales and achieve positive cash flow quickly.

The company successfully reached its target of 510 stores in India for the year, with a commitment to continue store expansion, finalizing a new agreement with RBI for the next 4-5 years until FY29. Alongside this, the cafe footprint has expanded to 433 restaurants, with plans to add cafes to the remaining portfolio as opportunities arise. The focus for cafe is on driving awareness and connecting with Gen Z and millennials through social media campaigns.

Management emphasized a continuous focus on G&A optimization across both India and Indonesia. In India, G&A is being maintained around INR 27-28 crores and is targeted to decrease as a percentage of total sales (currently 5.5%). For Indonesia, corporate overheads have been significantly reduced from INR 65 crores to INR 10 crores this quarter, with further optimization planned. This ongoing exercise involves reviewing all departments and contracts to improve efficiencies and ensure prudent spending.