Detailed Narrative
Overall Performance and Revenue Trends
Barbeque-Nation Hospitality Limited reported a total revenue of ₹1,233 crores for FY25, a marginal decline of 1.7% compared to the previous year. The fourth quarter of FY25 saw revenues of ₹293 crores, down 1.8% YoY. Despite these top-line challenges, the company maintained its profitability with a reported EBITDA of ₹211 crores (17.1% margin) for FY25, which remained relatively flat year-on-year. The adjusted pre-IND AS EBITDA for the year stood at ₹91 crores with a margin of 7.4%.
Segmental Performance Highlights
The company's three business segments showed varied performance. Barbeque Nation India recorded ₹981 crores in revenue for FY25, a 6% decline YoY, but improved its pre-IND AS restaurant operating margin by 70 basis points to 12%. The international business demonstrated robust growth, with revenues increasing 8% YoY to ₹97 crores, supported by positive SSSG and strong pre-IND AS operating margins exceeding 25%. The premium CDR segment (Toscano and Salt) grew over 30% YoY to ₹160 crores, primarily driven by network expansion, though its operating margin was impacted by new, less mature stores.
Same-Store Sales Growth (SSSG) Challenges
SSSG remained a key challenge, with a negative 2% in Q4 FY25, consistent with the previous quarter. For the full year, SSSG was also negative, contributing to the overall revenue decline. Management noted that the recovery in SSSG is slow and gradual, attributing it to various factors including new competition, the need for asset upgrades, and price point sensitivity in different markets. The UBQ delivery business, after repositioning, experienced a significant 30% negative SSSG, although other delivery brands (Barbeque Nation and Dum Safar) showed positive SSSG.
Expansion Strategy and Store Footprint
The company added 18 new restaurants and closed 5 during FY25, resulting in a net addition of 13 restaurants and a year-end count of 230. For FY26, the company plans to open 35-40 new restaurants, with a breakdown of approximately 20 in Barbeque India, 4-5 international, and 12-15 premium CDR. The long-term target is to operate 300-325 restaurants by FY27. This expansion will be supported by new store formats and smaller sizes (around 3,200 sq ft compared to previous 4,200 sq ft) to improve unit economics.
Profitability and Margin Management
Gross margin for FY25 improved by 160 basis points to 68.2%, primarily due to better realization and efficient input cost management. While new store openings impacted overall segment margins, mature restaurants in Barbeque India (around 16% ROM) and Premium CDR (21.3% ROM) continue to perform strongly. Management aims for a blended 16% restaurant operating margin for Barbeque India and 23-25% for international business in the long term, driven by SSSG improvement and efficient cost management.
Capital Expenditure and Funding
The company projects a CAPEX outlay of ₹130-140 crores over the next two years (FY26-FY27). This includes ₹100-110 crores for new restaurants, ₹20 crores for maintenance/refurbishment, and additional amounts for new sites and corporate IT. Funding will primarily come from internal accruals. However, if internal accruals fall short, the company may raise ₹30-35 crores in external debt. The current net debt stands at ₹50 crores against a net worth of ₹400 crores.
Delivery Business and Willow Gourmet Acquisition
The overall delivery business recorded positive SSSG for the quarter. The acquisition of Willow Gourmet, currently at a 42% stake, is expected to reach 51% for consolidation in the next financial year. This acquisition is accretive to profitability and has expanded the company's cloud kitchen footprint from 3 to 6 outlets, with plans for further growth in production capability and new cloud kitchen openings.