Devyani International had a strong debut on the bourses today, what are the key value propositions of Devyani the product and the IPO? Also, what is the plan ahead for your company now?
The key brands clearly are KFC, Pizza Hut, Costa Coffee and our home grown brand which is Vaango and Food Street. A slew of our own brands are doing extremely well as well as the top international brands which we are carrying. There is a huge headroom for us to grow. We are in the fast food market and there is no reason why the growth should not come for these brands.
The fund that has been raised via IPO is going to be used for repayment or rather prepayment of all or certain borrowings as well as general corporate purposes. Does this include your expansion plans as well?
The funds are mainly going to be used for repaying debt. The company will practically become debt free after this and the company will generate enough cash for the growth it needs. So, the company will not need to further dilute or borrow for expansion plans.
The company has been making losses for the last few years. I am sure Covid has further added to the pain as well. When do you actually see a turnaround coming in?
We believe it could happen this year subject to the pandemic not reoccurring and if we can get a normal year, there is no reason why we should not be profitable and hope this can happen this year.
What is the revenue mix that we can expect for your company in the delivery and the dine in segments?
If you look at KFC, our deliveries had gone to 60% and dine-in had come down to close to 40%. Now, as the markets are opening, the trend is reversing. We believe our dine-in is going to become 60% and our deliveries will come down to 40%. In Pizza Hut, we were a delivery company. So, we still expect 90% of our business to be delivery led and that is not going to change much further.
Give us a sense of the digital orders? Is digital really going to take the front foot or are you banking on the brick and mortar stores?
We have reduced our store sizes from 2,500 to 3,000 square feet to 1500-2000 square feet. Even in Pizza Hut, we have brought them down from 1,500 to a 1,000 square feet. Most of our store sizes have come down.
As the delivery business is taking a bigger shape and we do not need that kind of space availability, both our capex and opex have come down drastically.
Give us an outlook on demand. Are you seeing more footfalls coming in going forward? Of course, various states are opening up restrictions in a significant way?
As I said, dining in is coming back. We are trying to grow it from 40% to 60%. We are already back to about 50% and I think in the next couple of weeks, we expect it to come back to normalcy.
Depending on how restricted each state is and what restrictions they are putting up, we expect the business to be back to normal which is about 60% dine in and 40% delivery for our KFC stores.
Your same store sales growth took a huge hit in FY20 and FY21 as well due to Covid-19. Things are easing, at least in India. What is your expectations for FY22?
The stores are doing well and it is too early to say anything till the pandemic finishes and we have a normal year. We definitely expect organic growth to come back to normal but then we have to wait for the pandemic to retreat.
