United Foodbrands Ltd (UFBL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator (Nuvama Institutional): Ladies and gentlemen, you are connected for United Brands Limited Foodbrands Limited conference call. Please stay connected, the call will begin shortly. Please note, you have been connected for United Foodbrands Limited conference call. Please stay connected, the call will begin shortly. Thank you.
Moderator (Nuvama Institutional): Ladies and gentlemen, good day and welcome to the United Foodbrands Limited Q2 and H1 FY '27 earnings conference call, hosted by Nuvama Institutional. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Sharma from United Foodbrands Limited. Thank you and over to you, Mr. Sharma.
Vijay Sharma (United Foodbrands Limited): Thank you. Welcome, everyone, to United Foodbrands Limited Q2 FY '27 earnings conference call. For today's call, I have with me Mr. Qayum Dhanani, Managing Director; Mr. Rahul Agarwal, CEO and Whole-Time Director; and Mr. Amit Betala, CFO. Before we begin, I would like to remind that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to our earnings presentation for a detailed disclaimer. The results and earnings presentations have already been uploaded on the website and stock exchanges for anyone to access. We will begin the call with Mr. Dhanani sharing his perspective on the quarter, followed by a detailed discussion on operating and financial performance by Mr. Agarwal. We will then open the forum for questions. I'll now hand over the call to Mr. Qayum Dhanani. Thank you.
Vijay Sharma (United Foodbrands Limited): over to you, sir.
Qayum Dhanani (United Foodbrands Limited): Thank you very much. Good evening, ladies and gentlemen, and thank you for joining us on our Q2 FY27 earnings conference call. Q2 FY27 has been another strong quarter for United Foodbrands. The momentum we have built over the past several quarters has continued and the broad-based nature of our growth has deepened further. We are now in our fourth consecutive quarter of strong, broad-based performance and the business trajectory is looking very strong. I want to bring out four important points on how we think about this quarter and our performance. First, the business continues to operate at a new scale with structurally healthier unit economics. Our underlying operating model is working as anticipated. Our customer acquisition engine continues to deepen and our restaurant level operating performance continues to strengthen. The strength we are seeing is not a function of any single quarter, but a cumulative outcome of multi-year journey that is now visibly delivering. Our mature portfolio continues to operate at a healthy restaurant operating margin, meaningfully above where we were a year ago. Second, the multi-engine portfolio continues to work as designed. Barbeque Nation India remains our anchor engine and continues to compound strongly. Our international business has demonstrated a meaningful growth this quarter, validating both the strength of our format and the operational discipline of our team on the ground. Premium CDR continues to deliver healthy growth. With mature store unit economics holding strong, the portfolio diversification we have built over the last several years is now showing its value to consistency of performance across markets. Third, our captive demand architecture continues to deepen. Approximately 91% of our dine-in volumes continue to come from our own channels, that is, our own app, our website and our reservation call center, and walk-ins to our restaurants. This is a structural feature of our business, and it is a feature that is growing. The customer relationship we own directly, the engagement data we build on our own platform and the brand affinity we create with our guests are growing stronger every quarter and are the foundation of our business. Fourth, we are investing through this growth phase and continuing to build for the future. We opened nine new restaurants during the quarter, which reflects both on conviction in the business and the strength of our pipeline. We continue to fund our expansion primarily from our internal accruals and we remain disciplined on site selection and underwriting standards. Our focus is on building a business that compounds from the long-term, not optimizing for any single quarter. I will end with a note on our teams. The performance we are presenting today reflects consistent execution across our restaurants and our central functions. Our people have continued to deliver through a period of meaningful business transformation and this performance is a reflection of the culture and the discipline of our teams bringing to this organization every day. I will now hand over to Rahul, who will walk you through the operational performance in detail. Thank you.
Rahul Agarwal (United Foodbrands Limited): Thank you, Kayum. Good evening, everyone, and thank you for joining today. I will walk you through the operating performance for the quarter, our financial performance, and then our outlook for the year ahead. Q2 FY27 has been another strong quarter across every part of our business. Consolidated revenue for the quarter was 429 crores, growing 40.9% year-on-year. Consolidated same-store sales growth came in at impressive 24.5%. Our growth continues to be entirely volume led. Consolidated dine-in transaction volumes grew around 56% year-on-year and our delivery business grew 47% year-on-year. Let me walk you through each of the segments of our business. Barbeque Nation India delivered another strong quarter. Same-store sales growth was 27.8%, revenue growth was 41.4%, and dining transaction volume grew 60.8%. More importantly, the brand has now firmly established itself on three positioning anchors that is strong value for our guests,
Rahul Agarwal (United Foodbrands Limited): the last four quarters is a reflection of this new operating identity and our focus is on building further from this base. Our digital investments continue to meaningfully deepen the quality and ownership of our demand. Approximately 85% of our business comes from dine-in, which continues to operate with strong unit economics. Within our dine-in business, more than 80% of our customers are now pre-reserving their visits compared to around 70% a year ago. This reaffirms the brand's ability to attract demand on its own strength rather than being dependent on high footfall catchments for walk-in traffic. Across our across our total dine-in business, approximately 90% is being driven through our captive channels that is our app, website, our reservation center, and walk-in to our restaurants. The deeper penetration of our digital assets has also translated into approximately 3x growth in our loyalty program adoption, which in turn is driving higher share of repeat business. Moving to Barbeque Nation International, Barbeque Nation International delivered another strong quarter with same-store sales growth of 26.5%, year-on-year revenue growth of 59%, and dine-in transactions volume growth of 64%. Delivering this performance against the continuing geopolitical backdrop in the region is an extremely strong outcome and reflects the operational discipline and execution quality of our teams on the ground. During the quarter, we launched value-added marketing initiatives across our international business and specifically rolled out various digital initiatives in our Middle East markets. We have also implemented session-wise, day-wise analytics, which is enabling us to dynamically optimize pricing and demand across restaurants. Combined with our increased marketing investments, these initiatives are driving higher conversions and continued momentum across the segment. Premium CDR delivered 28.5% revenue growth with 7.8% same-store sales growth and dine-in volume growth of approximately 25%. The segment continues to perform well in established markets while the FY26 cohort of new restaurants, particularly in Mumbai and Delhi, is progressively building customer base and brand familiarity. We closed the quarter with 224 restaurants in our network with nine restaurants additions during quarter two. We currently have 19 restaurants under construction, which will open through quarter three and quarter four of this financial year. Our new store pipeline remains healthy and the trajectory of our FY27 expansion is on track. Beyond this year, our medium term plan is to add 40 to 50 restaurants annually across our portfolio, largely funded from internal accruals and with the same discipline on site selection and underwriting standard that will continue to guide us so far. Moving on to financials. Our gross profit grew 39.3% year-on-year during the quarter with gross margin of 65.5%. On a sequential basis, gross margin was lower by approximately 30 basis points, reflecting the current inflationary environment that we are navigating across input categories. Our pre-IndAS restaurant operating margin came in at 13.2%, representing a year-on-year expansion of approximately 520 basis points driven by the operating leverage that we have built across the business. On an absolute basis, our restaurant operating margin grew by 130% year-on-year. Our mature portfolio pre-IndAS operating margin was 14.7% for quarter two and 15.5% for first half, reflecting the underlying strength of our unit economics. The margin profile of our new store cohort has also continued to improve, which is accelerating our overall payback period. Our new restaurant portfolio reported pre-IndAS restaurant operating margin of 7.4% in quarter two, which is the highest level we have reported in several quarters. This is the improvement from 6.1% we reported in quarter one FY27. As the FY26 cohort continues to mature and our quarter one and quarter two cohort progress through ramp up, the drag from new restaurants and our consolidated margin will continue to narrow. We delivered pre-IndAS adjusted operating margin of 6.1%, which is again around 500 basis point expansion over previous year. The margin expansion is the result of operating leverage, which is now consistently following through the flowing through the business. On balance sheet, our net debt position remains marginally higher during the quarter. The capex that we deployed for ongoing expansion, which are largely offset by operating cash flows that we generated during the quarter. We will continue to fund our expansion primarily from internal accruals, and we operate on prudent leverage limits relative to our underlying business. As we move into quarter three and quarter four, I think we will begin to lapse stronger quarters of FY26 and the reported SSG print will naturally reflect that comparable base. However, we are focused on building the underlying volume momentum that we are seeing across every segment. Our approach on margin remains unchanged. We continue to focus on the directional levers that margin that drive margin expansion, that is gross margin recovery, mature portfolio restaurant operating margin expansion, maturation of our new store cohorts, and operating leverage of our corporate overhead.
Rahul Agarwal (United Foodbrands Limited): on track to cross 300 restaurants by end of FY27 and we plan to add 40 to 50 restaurants annually every year. Our focus remains on value-led growth, deepening our captive demand architecture, and building out more restaurants from our own portfolio. This is operating discipline that has guided us to deliver in last five quarters and the same discipline will continue for the rest of the year. Thank you. We can now open the lines for Q&A.
Moderator (Nuvama Institutional): Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question, they press "*" and "1" on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press "*" and "2". Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Dhwanil Desai from Turtle Capital. Please go ahead.
Dhwanil Desai (Turtle Capital): Hi, good evening Rahul and team. Congratulations for excellent set of numbers.
Rahul Agarwal (United Foodbrands Limited): Thank you.
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