United Foodbrands Limited

Barbeque-Nation Hospitality Limited reported consolidated revenues of ₹297 crores in Q1 FY26, marking a 2.8% year-on-year decline, primarily due to a negative Same-Store Sales Growth (SSSG) of 3.4%. The consolidated gross margin stood at 67.7%, a 40 basis points decrease compared to Q1 FY25. Reported operating EBITDA was ₹46 crores (15.5% margin), while adjusted operating EBITDA was ₹13.6 crores (4.6% margin), reflecting temporary impacts from marketing spend and new restaurant ramp-up.

The core Barbeque Nation India segment faced significant headwinds, with revenues declining 7% year-on-year to ₹229 crores and a negative SSSG of 5.2%. Management attributed this to a softer dine-out cycle and specific regional pressures in the South, including high competition and pricing pressure in Bangalore and Chennai, and reduced corporate demand. To counter this, the company is focusing on enhancing guest experience through culinary innovations like 'Kukkad Carnival' and value offers, while also right-sizing new restaurant prototypes to be 20-25% smaller to improve unit economics.

In contrast to the India business, the International segment demonstrated strong performance, with revenues growing 10% year-on-year to ₹26.3 crores and an SSSG of 8.5%. This segment achieved a Pre-Ind AS restaurant operating margin of 23% and plans to open 4-6 new restaurants this year, maintaining a 30%+ network expansion growth rate. The Premium CDR segment also showed robust growth, with revenues increasing 19% year-on-year to ₹43.1 crores, and mature network operating margins of 20%. The company aims for 30% network expansion and 12-15 new restaurant openings in this segment for FY26.

The company reported a net debt of ₹50 crores as of Q1 FY26, with a projection to reach ₹80-90 crores by the end of the year. Management emphasized a disciplined approach to capital allocation, investing in areas with proven unit economics and strong paybacks. This includes funding expansion in the International and Premium CDR segments, which are generating operating cash flows, and making prudent investment calls for both Capex and Opex.

The ban on the 5% service charge, which the company previously collected, had a negative impact of 0.5% on overall sales for the quarter. While the company implemented price hikes of approximately 4.5-5% after removing the service charge, the net realization on an average basis was still lower by about 0.5% compared to the previous year. This regulatory change contributed to the pressure on gross margins and overall sales numbers.