Restaurant Brand

Restaurant Brands Asia reported a robust Q4 FY25 with India revenue growing 11.5% YoY to ₹489 crores and SSSG at 5.1%. For the full year FY25, India revenue increased by 11.8% YoY to ₹1,968 crores, with a positive SSSG of 1.1%. Company-level EBITDA for India saw significant growth, reaching ₹26.6 crores in Q4 (2.5x YoY increase) and ₹99.4 crores for the full year (32% YoY increase).

Gross margins in India improved to 67.7% for FY25, a 0.7% increase YoY, with management targeting a further annual increase of 0.5%-0.7% to reach approximately 70% by FY29. Restaurant-level EBITDA for India grew 21.2% YoY to ₹206.8 crores, driven by initiatives focused on delivery profitability (up 1% over FY24) and overall P&L efficiency (1.7% improvement for older restaurants).

The company's strategy continues to focus on driving traffic, with dine-in traffic growing 9% in FY25, building on a 5.2% increase in FY24. The 'Digital First Brand' pillar saw 90% of restaurants equipped with self-ordering kiosks and table ordering, and app transactions grew 3x YoY. Innovation is a key focus, highlighted by the recent launch of a Korean product range, and the cafe pillar now covers 90% of the store base (464 cafes).

Restaurant Brands Asia has revised its India store expansion guidance, now aiming to open 60-80 new restaurants annually for the next four years, targeting a total of approximately 800 restaurants by FY29. This is a revision from the previous target of 700 restaurants by FY27, reflecting a rearranged agreement with the franchisor due to COVID.

The Indonesia business showed early signs of recovery, with Burger King reporting a positive SSSG of 2% for FY25, and recent trends (Nov-Apr) showing overall SSSG at 5% and dine-in SSSG at 10%. The company rationalized its portfolio by closing 36 non-performing restaurants and reduced corporate overheads from ₹65 crores to ₹40 crores, with a further ₹4-5 crores reduction targeted.

Despite gross margin expansion in Indonesia, restaurant-level EBITDA margins declined in Q4 FY25 due to beef inflation and currency depreciation. Management indicated that increased marketing spend (around 8% of sales in recent quarters, up from a typical 5%) was front-ended to recover sales to pre-boycott levels, and this spend is expected to normalize over the next couple of quarters.

New store CAPEX in India remains consistent at approximately ₹3 crores per store (including deposit), maintained through cost efficiencies despite adding cafes and digital kiosks. The large incremental CAPEX cycle for cafes and digital investments has largely concluded, with only ₹10-15 crores expected for incremental digital CAPEX in the coming financial year beyond new store additions.