INDUSTRY HIGHLIGHTS

• Food Services industry is booming in India

• Total size – 3375 INR billion (FY17) – share of organized segment –> 1055 INR billion (31%)
• Chain market size 235 INR billion (FY17) projected to grow at a CAGR of 21% till FY22,higher than food
services (10%)
• Organized segment projected to grow at 16% CAGR (FY17-22), increasing its share to 40% of total market
(excluding hotel restaurants)
• Tier I and Tier II cities provide the biggest opportunities for expansion- Top eight cities already have a
high concentration of organized players Table 1
• Growth drivers -- > Urbanisation, Nuclearisation and experimentation
Market Share
QSR
Year FY13 FY17 FY22
Unorganized Market 70% 66% 57%
Unorganized CDR
Food Services Organized standalone 22% 24% 29%
Industry Chain Format
Organized and FDR Chain Market 6% 7% 11%
standalone Restaurants in hotels 2% 3% 3%
Organized Market
Cafe
(standalone+chain+hotels) 30% 34% 43%
Source: DRHP Report, US
PBCL
FAS Report
 COMPANY HIGHLIGHTS

• Launched in 2005 by Sayaji Hotels, one of the promoters of the company

• Part of CDR segment, works on owned and operated model
•Two major brands – Barbeque Nation and Johnny Rockets
• Total 81 restaurants in 42 cities, one in Dubai (till June 2017) of Barbeque Nation,5 of Johnny Rockets
• CX partners acquired a stake in 2013, further acquisition in 2015. Alchemy Capital acquired a 3.5% stake
for 90 Crores (as of July 25, 2018) Table 2
Number of owned and operated Barbeque Nation Restaurants in India
• Key Financial Numbers (FY17) :
Revenue- INR 5034.85 Mn, EBITDA –INR 668.88 Mn, FY 2018 (till June
Net Profit – INR 102.41 Mn City type FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 30,2017)

No of restaurants added and total Metro cities 26 28 34 44 46 46

Tier-I cities 4 5 6 10 13 13
restaurants per year
Tier-II cities 0 1 1 6 14 16
100 25
80 21 20
60
18
15
Tier-III cities 2 3 4 6 6 6
14 13
40 8 10
20 5 5 Total 32 37 45 66 79 81
0 2 0
Pre FY FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Number of
2012 (till June states 11 12 13 15 18 19
2017)
Source: DRHP Report , ICRA
Total restaurants Restaurants added Report, Economic Times
 BUSINESS ANALYSIS
• Revenue from operations for FY 17 – INR 5034.85 MN – grew at a CAGR of 30 % for the period FY11-17
Other-0.4%
Revenue Barbeque Nation – 97.2%

6000 million Revenue Johnny Rockets – 1.4%

5034.85 million
5000 million Dubai restaurant – 1%
4030.51 million
4000 million
3000 million
3040.96 million
Revenue per restaurant (INR Million) Table 3
Revenue
2000 million No of restaurants
1000 million added Particulars FY 13 FY 14 FY 15 FY 16 FY 17
0 million 13 Pre FY 13 89.88 94.8 97.42 97.71 96.4
FY 15 FY 16 FY 17 FY 13
• Revenue from older restaurants higher than 14 restaurants 22.34 62.51 67.87 72.97 74.67
FY 14
new restaurants 5 restaurants 0 27.27 57.92 65.99 70.31
• Newer restaurants experience lower sales FY 15
initially – lower footfall as customers take time 9 restaurants 0 0 15.31 53.74 57.21
FY 16
to shift to new places 21 restaurants 0 0 0 24.29 54.24
• Also, older restaurants have high negotiating FY 17
13 restaurants 0 0 0 0 17.96
power with landlords which decreases rentals 1 Closed 70.02 71.58 17.86 0 0
and increases margins 4 Relocated 71.67 78.46 84.44 85.51 77.31
Source: DRHP Report
 BUSINESS ANALYSIS

• Total expenses incurred by the company during FY 17 – INR 4365.97 Million (88% of revenue)
Total expense Inferences:
5000 million
4365.97 million • Cost of F&B consumed as a % of total expense has
4500 million
4000 million 3541.51 million
reduced. Company is able to negotiate discounts
3500 million with suppliers as it is a key CDR player, which has
3000 million 2565.98 million
2500 million
reduced average cost of F&B per customer
2000 million
Total expense
• More than one supplier which allows the company
1500 million
to beat price volatility
1000 million
500 million • Employee costs have increased from 16% to 21%,
0 million mainly due to increase in base salaries and advance
FY 15 FY 16 FY 17
salaries paid to new employees
Average cost of F&B consumed • Occupancy costs have stayed at a constant level,
per customer indicating that operating expenses have increased in
280
Average cost of food
proportion to revenue increase
260
and beverages
240
consumed per
220 Source: DRHP
customer
FY 2015 FY 2016 FY 2017 report
 BUSINESS ANALYSIS

• EBITDA for FY 17 – INR 688.88 Million EBITDA Margin per Barbeque Nation Restaurant Table 4

Particular FY 2013 FY2014 FY 2015 FY 2016 FY 2017

EBITDA and NET PROFIT
Pre FY 2013 restaurants 24% 26% 25% 26% 27%

800 million 150 million FY 2013 restaurant 6% 13% 18% 19% 23%

600 million FY 2014 restaurants NA 10% 17% 22% 24%

100 million
400 million FY 2015 restaurants NA NA 14% 15% 21%
50 million
200 million
FY 2016 restaurants NA NA NA 4% 17%
0 million 0 million
FY 15 FY 16 FY 17 FY 2017 restaurants NA NA NA NA 5%

EBITDA Net profit EBITDA margin 14.51% 16.27% 15.62% 12.13% 13.29%

Inferences:
• EBITDA margin has fallen from a high of 16.27% to 13.29% for the period FY13-17
• The underlying reason being addition of new restaurants (capital expenditure) which further incur high
operating costs in the beginning (Refer Table 4- New restaurants have low margin)
• This has a trickle down affect and has affected net profit
SOURCE:DRHP
REPORT
 FINANCIAL ANLYSIS AND PEER COMPARISON

Revenue Comparison:
Revenue Growth of key players (INR '00 Crore) Table 5
• From the data, it can be
Company/Brand FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 CAGR(2013-16)
QSR:
Jubilant Food Works/Domino's 14.15 17.35 20.95 24.4 19.35 20% seen that Dominos is the
Westlife/McDonald's 6.8 7.4 7.65 8.35 9.3 7%
Conaught Plaza Restaurants/ McDonald's 7.45 7.4 7.25 7.3 NA -1%
biggest player in the market
KFC 12.5 12.85 12.5 12.25 NA -1% • Subway, Dominos and
Subway 3.55 4.35 5.6 6.8 NA 24% Mainland China are the
CDR:
Pizza Hut 6 6.5 6.9 6.25 NA 1% major competitors of
Speciality Restaurants 2.25 2.6 3 3.21 2.37 13% Barbeque Nation
Barbeque Nation 2.75 3.6 4.4 3.95 NA 13%
Café:
Café Coffee Day 10.75 11.85 11.25 12.45 9.32 5%
KEY RATIOS: (Peers- Dominos, Mainland China, Café Coffee Day)
Debt to Equity Ratio
Net Margin Ratio Total expense as a % of 2.00

5.00% revenue 1.50

100.00%
1.00
90.00%
0.00% 0.50
FY 15 FY 16 FY 17 80.00% 0.00
FY 15 FY 16 FY 17 FY 15 FY 16 FY 17
-5.00% Source: FICCI Report, DRHP report,
Company Annual Report
Barbeque Nation Peer Average Barbeque Nation Peer Average Barbeque Nation Peer Average
 FINANCIAL ANLYSIS AND PEER COMPARISON
Working Capital to Revenue Ratio Free Cash Flow to Revenue Current Ratio
0.00% 1.50
10.00%
FY 15 FY 16 FY 17
1.00
0.00% -2.00%
0.50
FY 15 FY 16 FY 17
-10.00% -4.00% 0.00
FY 15 FY 16 FY 17
-20.00% -6.00%
Barbeque Nation Peer Average
Barbeque Nation Peer Average Barbeque Nation Peer Average

INFERENCES:
• Barbeque Nation has a lower total expense to revenue ratio than the peer average, which indicates
better operational efficiency and greater bargaining power over suppliers (vendors are centrally located
and barbeque nation is a key customer; hence vendors provide discounts
• Net Margin Ratio is also higher than the peer average because the company is able to negotiate better
deals for its leases than its peers and thus it incurs less operating expenses
• Barbeque Nation has a negative free cash flow for FY 15-17. This is mainly attributed to the heavy
expansion it has done in this period. Capex has averaged 40% of cash flow from operations, rationalising
the debt taken as cash generated from business isn’t enough for growth needs
• Current ratio is lower than peer average, because of maturity of long term Source: DRHP Report,
borrowings (increased from INR 89 mn in FY15 to 253 mn in INR FY17) Company Annual Report
 FUTURE OUTLOOK
• It is expected that the company will use the proceeds from the IPO to expand its Johnny Rockets brand in
Tier I cities and Barbeque Nation in tier II cities
• The funds are also to be used to pay off debt and for other corporate purposes
• It is expected that the company will be able to monetise the benefit of expansion in recent fiscals
• This should help it in increasing cash flow from operations and using retained earnings for further
expansion
• The new restaurants will be able to attract more footfall because of a strong brand image of Barbeque
Nation (number of covers in FY 2017 around 6.86 million, grew at a CAGR of 23% in FY13-17)
• Hence, it can be concluded that barbeque Nation can provide returns in line with the expected returns in
the restaurant sector

Return on Investment in Restaurant Sector

Particulars Early Growth Late Stage/Mature

Return expectations 40-50% p.a 25-30 % p.a 18-25% p.a

Source: DRHP Report