Barbeque Nation plans to open 20 new stores in the middle of a pandemic hoping for a bargain
Barbeque Nation’s share price is up by over 20% after it reported strong earnings for the quarter ending on 31 March 2021.
- The casual restaurant dining chain plans to open 20 new outlets and double down on its delivery business despite the uncertainty of the pandemic.
- “Out of the 20 stores we’re looking to open, at least 15 to 16 of these will come in metro cities. And the balance will come in tier-I and tier-II markets,” said Rahul Agrawal, CEO of Barbeque Nation, during the earnings call.
AdvertisementBarbeque Nation is among the slew of companies that went public during the initial public offering (IPO) gold rush of 2021. And after its first earnings announcement since the launch of its IPO in April, the stock price has jumped more than 20% as of 12:20 p.m on May 25.
Despite the uncertainty caused by the pandemic and the management’s own admission that business has taken a hit during the second wave of COVID-19 in India, the restaurant franchise has plans to open up 20 new outlets pan-India.
Out of the 20 stores we’re looking to open, at least 15 to 16 of these will come in metro cities. And the balance will come in tier-I and tier-II markets.
Betting on the lockdown to end sooner than later
When Barbeque Nation launched its IPO on March 24, the company allocated ₹55 crore out of its ₹180 crore issue of fresh shares towards expansion. According to the management, the short term outlook is challenging but, at the same time, vendor deals are softening.
“Given that the restaurant industry in particular has suffered a lot, many landlords are also reasonable in their expectations, which help us look at these markets [metros],” said Rahul Agrawal, the chief executive officer (CEO) of Barbeque Nation during the earnings call on May 24.
He is hoping that cases will come down by June-end, states will start coming out of their respective lockdowns and give the company permission to open their dining business.
Meanwhile, to weather the immediate storm, Barbeque Nation is confident that its push towards the delivery side of the business will cushion any uncertainties. Launched in June 2020, the company’s home-delivery service ‘Barbeque in a Box’ has seen massive popularity. It currently accounts for 20% of the revenue from the delivery business.
Barbeque Nation comes out of the red
The company went from making losses over the last five quarters to finally reporting a profit for the three months from January to March. It logged a profit of ₹6.4 crore as compared to a loss of ₹27.9 crore during the same time last year, and a loss of ₹1.35 crore in the previous quarter.
A lot of this had to do with its earnings before interest, taxes, depreciation, and amortisation (EBITDA) and restaurant operation margins improving by over 20% on a yearly basis. Margins indicate the ratio of profit to revenue.
AdvertisementThe larger the margins, the more profit the company can earn as revenue increases. And, in the fourth quarter, Barbeque Nation’s revenue from operations is up 18.5% for the March quarter as compared to the same period last year.
“The improvement is on account of strong sales recovery, higher gross margins, and various other cost optimisations and measures undertaken by the company,” explained Agrawal. The impact of the second wave of COVID-19 has not been as severe as the first wave and there is still a lot of uncertainty that lies, but according to him, the company is optimistic about its outlook.
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