United Foodbrands Limited

United Foodbrands reported consolidated revenue of INR 305 crores for Q2 FY26, marking a 2.6% sequential increase over Q1, despite it being a seasonally softer period. The company achieved a positive Same Store Sales Growth (SSSG) of 0.8% excluding Navratri days, and 0.3% for the 4-month period from July to October 2025, entirely driven by transaction growth. Consolidated reported EBITDA stood at INR 37.7 crores with a 12.4% margin, while adjusted operating EBITDA was INR 3.3 crores at a 1.1% margin.

Gross margins for the quarter stood at 66.2%, a sequential decline of approximately 150 basis points. This was primarily attributed to lower realization from value-based group offers and higher food costs due to the month-long Khau Galli Food Festival. Management expects consolidated gross margins to stabilize between 67%-68% going forward^⏳. Despite these pressures, the company maintained strong cost discipline, achieving a 1.3% year-on-year reduction in overhead costs across its consolidated business.

The international business demonstrated robust performance, recording approximately INR 28 crores in revenue, a 27% year-on-year growth, supported by an 8.4% SSSG. This segment achieved a gross margin of 72% and a pre Ind AS restaurant operating margin of approximately 18%, with mature restaurants exceeding 20%. The Premium Casual Dining (PCD) segment also grew significantly, with revenue of INR 47.3 crores, up 17% year-on-year, and maintained a gross margin of 73%.

The core Barbeque Nation India business reported revenue of INR 230 crores, a modest 0.5% quarter-on-quarter increase. This segment experienced negative SSSG of -1.1% (excluding Navratri) and -1.6% for the 4-month period, although transaction volume grew by approximately 3.7%. To counter subdued demand, the company increased marketing investments by about 1.2% of sales, primarily focused on digital platforms and local trade areas, and introduced value-led campaigns like 'Sizzling 7' and 'Big Buffets' to drive footfalls.

United Foodbrands added 6 new restaurants during the quarter, bringing the total network to 241 outlets, comprising 195 Barbeque Nation India, 12 International, and 34 Premium CDR outlets. The company remains on track to open 35 new restaurants in FY26 and aims for a total of 300+ restaurants by FY27. The planned CAPEX for FY26 is approximately INR 125 crores, covering new store openings, maintenance, renovation, and corporate expenditures.

The company's net debt stood at approximately INR 90 crores as of September end, with an additional INR 40 crores borrowed in H1 due to lower cash flow generation. Management indicated that the gap between cash flow generation and CAPEX for H2 should not exceed INR 15 odd crores. They expressed confidence in achieving an approximate 8% corporate-level EBITDA margin (pre Ind AS) in H2, which is typically a stronger quarter for the business.

Addressing concerns about the long-term viability of the buffet model in India, management asserted that the INR 800 price point with unlimited offerings provides great value to consumers and is not broken. They highlighted that the model's success in overseas markets, despite higher per capita incomes, indicates its strength. The company noted an increasing trend of a-la-carte restaurants reverting to buffet offerings during lunch, reinforcing the enduring appeal of this model in the Indian market.