Ambit - Barbeque Nation Hospitality - Iniltiation - Nation Will Soon Queue To Eat Out - 31may2021

Barbeque Nation Hospitality
BUY
INITIATING COVERAGE BARBEQUE IN EQUITY May 31, 2021
Nation will soon queue to eat out Consumer Discretionary
Better store economics (higher RoCE, faster payback) and differentiated Recommendation
offering in dine-in format helped Barbeque Nation become India’s
Mcap (bn): `33/US$0.5
leading CDR chain player (~6% market share in FY20; 147 restaurants
in 77 cities). Higher share of mature stores and incremental revenue CMP: `850
from delivery will drive margin expansion of ~500bps over FY20-24E. TP (24 mths): `1,200
Stock trades at ~50% discount to Westlife and Burger King, which will Upside (%): 43%
narrow as it turns profitable (PAT) and revenue growth trajectory
continues. Near-term profitability may be volatile due to Covid but we Flags
are positive in the long term it will build a scalable chain restaurant
Accounting: GREEN
brand. 2-year fair valuation of `1,200 for this small-but-scalable
Predictability: RED
franchise implies 327 stores by FY30 but at 8% CAGR for next decade.
Risk: Incremental capital allocation in new ventures/format. Earnings Momentum: AMBER
Competitive position: STRONG Changes to this position: STABLE

Catalysts
Good P&L structure despite subpar scale
 14%/21% revenue/EBITDA CAGR
Despite subpar revenue/stores vs peers, BNHL’s profitability is behind only JUBI over FY20-24E led by increase in
(due to 900bps difference in GM) and ahead of Westlife and Burger King India share of revenue from delivery
due to structural advantage of zero royalty and low ad spends (2% vs 5% for  Turning profitable at PAT level in
peers). This is due to micro-market marketing vs pan-India by QSR players. FY23 (`630mn) vs loss during FY19-
Lower capex per store and superior EBITDA margin drive faster payback (3.5 22
years vs 5-7 years for peers), hence faster scalability with low cash burn.
Food delivery – Complimentary and not substitute Performance (%)
Delivery cannot replace experience of “DIY over the table barbeque”. But
BARBEQUE SENSEX
delivery does provide opportunity to cater to new value conscious customers
200
looking for large full course meal (2-3 persons) but affordable (`800). Delivery 180
constituted ~15% of FY21 revenue vs 3% in FY20 led by launch of “Barbeque 160
in a box” in June’20. Post Covid this will be margin and RoCE-accretive. 140
120
Capital allocation has been the key mistake 100
BNHL has invested ~`1.8bn in newer formats and ventures (vs `3.6bn in core 80
60
business) and has written off `1.1bn with no material success in any format.
Apr-21
Apr-21
Apr-21
Apr-21
May-21
May-21
May-21
May-21
Recent acquisition of Toscano seems promising from profitability perspective
but lacks ability to scale substantially beyond top8 cities given premium
format/high average spend per head. We build in incremental PAT loss of
`193mn in FY22 (vs `216mn in FY21) from subsidiaries. Source: Bloomberg, Ambit Capital Research
Attractive valuations and low expectation - Poised for a re-rating

We expect BNHL to post 14%/21% revenue/EBITDA CAGR over FY20-24E and
scale up its delivery business. Store-level EBITDA margin is already ahead of
peers; with scale corporate EBITBA margin will converge towards store level.
While lower scalability vs QSR does imply a discount to QSR players, discount
of 50% to WLDL and BK India is unwarranted due to better track record of
profitability and potential to improve PAT margin led by de-leveraging of
balance sheet due to recent fund raise and curtailment in subsidiary loss.
Key financials (consolidated)
Year to March FY20 FY21 FY22E FY23E FY24E
Net Revenues (` mn) 8,470 5,071 6,807 11,911 14,343
EBITDA (` mn) 1,642 464 1,191 2,894 3,571
EPS (`) (11.8) (31.1) (9.8) 16.7 26.9
Net debt: equity (x) 32.4 (0.5) (0.3) (0.3) (0.6) Research Analyst
RoCE (pre-tax) 4% -10% -1% 18% 22% Ashish Kanodia, CFA
EV/EBITDA 22.2x 78.6x 30.6x 12.6x 10.2x ashish.kanodia@ambit.co
EV/Sales 4.3x 7.2x 5.4x 3.1x 2.5x Tel: +91 22 6623 3264
Source: Company, Ambit Capital research
research@varaniumgroup.com
Ambit Capital and/or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, investors should be aware that Ambit Capital may
have a conflict of interest that could affect the objectivity of this report. All Investors including US Investors should not consider this report as the only factor in making their investment decision.
Please refer to the Disclaimers and Disclosures at the end of this Report.
Narrative in charts
Barbeque Nation has consistently generated >15% pre-tax RoCE in its standalone business (ex FY20-22E due to Covid-19);
however, led by losses in international business, consolidated RoCE has been lagging standalone RoCE
Barbeque Nation India Toscano Barbeque Nation International

Standalone RoCE (Pre-tax) Consolidated RoCE (Pre-tax)
Focus on building
300 Exited Johnny Rockets, 50%
Expansion into delivery business and
consolidated store expansion in India
international market 40%
250 international presence
and Johnny Rockets
and acquired Toscano
30%
200
20%
Stores
150 Invested in building internal ERP

system, guest satisfaction index 10%
and supply chain for next leg of
100 growth
0%
50 -10%
- -20%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY24E
Source: Ambit Capital research, Company
BNHL currently operates 2 dine-in formats and 2 delivery only formats in India
First restaurant opened in Mumbai First restaurant opened in

Foundation Launched in 2018 Launched in June 2020
in 2006 Bengaluru in 2008
One of India’s leading casual

dining restaurant chains. Italian chain offering Dine-in &
delivery
Provide a la carte Indian cuisine in
the value segment Offers specially curated meal box
Offer differentiated experience of
Details ‘DIY over the table barbeque’ BNHL acquired 61.35% stake (for with wide variety of starters, main
concept `675mn in 2019) in Red Apple, course and dessert
Operates through Barbeque
which operates Italian restaurants
Nation restaurants
under the brand name “Toscano”,
“La Terrace” and "Collage"
Fixed price ‘all you can eat’ format
147 restaurants across 77 Indian 11 restaurants across 3 Indian

Served through 147 Barbeque Served through 147 Barbeque
Footprint cities. 4 in UAE, and 1 each in cities (Bengaluru, Chennai and
Nation restaurant across 77 cities Nation restaurant across 77 cities
Oman and Malaysia Pune)
Wide variety of food including Meal in the form of Barbeque in a

Product Italian, Continental, Pizza, Salad, North Indian, BBQ, Beverages,
North Indian, Mughlai, Seafood, box, Biryani & Kebab Box and
categories Desserts, Beverages Desserts
Biryani, Desserts, Kebabs, etc Meals & Grills Box
Format Casual dining restaurant Fine dining restaurant Online delivery only - A La carte Online delivery only - Meal/ Box
Cost for two

`1,600-2,000 `2,400-3,000 `400-500 `800-1,000
(`)
Competition
Source: Ambit Capital research, Company; Note: - High; - Moderate; - Average; - Low
May 31, 2021 Ambit Capital Pvt. Ltd. Page 2

Exhibit 1: BNHL funded its core growth capex through cash Exhibit 2: …however, it raised capital through borrowings
flow from operations… and equity dilution to fund investment in subsidiaries
Investment
in
funds: FY16-20
Source of funds:
Application of
subsidiary,
Issue of 30%
FY16-20
equity Interest
CFO, 62% shares, 13% expense,
7%
Borrowing, Capex, 61%

Dividend
25% paid, 2%
Source: Ambit Capital research, Company, Standalone for BNHL Source: Ambit Capital research, Company, Standalone for BNHL
Exhibit 3: Higher spending per head, larger group size and lower capex drive better store-level economics for Barbeque
Nation
Per store Barbeque The Great
Chilli’s Domino’s McDonald’s Burger King KFC Pizza Hut
financial matrix Nation Kebab Factory
Outlet Count 147 21 23 1,354 311 261 454 431
Avg store size (sq ft) 5,100 4,000 4,750 1,500 2,800 1,350 2,750 2,900
Capex (` mn) 27.5 32.5 45.0 17.5 37.5 22.5 35.0 22.5
Revenue (` mn) 56.6 52.9 73.0 28.3 45.6 42.0 45.6 27.4
Gross margin 65.5% 71% 69% 78% 65% 65% 65% 75%
EBITDA margin 20.5% 20.5% 17.0% 22.0% 14.0% 13.0% 15.0% 18.0%
EBIT margin 17.3% 16.4% 12.9% 17.9% 8.5% 9.4% 9.9% 12.5%
Asset turn (x) 2.1 1.6 1.6 1.6 1.2 1.9 1.3 1.2
Pre-Tax RoCE 36% 27% 21% 29% 10% 18% 13% 15%
Payback period
3.5 4.2 4.9 3.2 6.9 5.5 6.2 5.7
(years)
Avg spend per
788 650 1,375 213 238 213 213 425
customer (`)
Avg bill size (`) 3,625 2,875 6,250 525 575 525 525 1,500
Avg group size 4.6 4.4 4.5 2.5 2.4 2.5 2.5 3.5
No of bills per year 15,607 18,409 11,680 53,881 79,348 79,952 86,905 18,250
No of customers per
71,841 81,423 53,091 133,118 192,105 197,529 214,706 64,412
year
Share of Dine-in
Source: Ambit Capital research, Company, Burger King RHP Note: The above is for a mature store; Note: - High; - Moderate; - Average; - Low
Exhibit 4: Barbeque Nation became profitable at the store level in its first year of
operation itself; store matures by the 3rd year
Store level economics Year 1 Year 2 Year 3 Year 4 Year 5
Revenue (` mn) 27.3 52.1 59.4 61.2 63.0
Gross margin 65.5% 65.5% 65.5% 65.5% 65.5%
EBITDA margin 9.0% 15.3% 19.8% 21.6% 23.0%
EBIT margin 2.3% 11.8% 16.7% 18.6% 20.1%
Asset turn 1.0 1.9 2.2 2.2 2.3
Pre-Tax RoCE 2% 22% 36% 41% 46%

Exhibit 5: BNHL outpaced other chain restaurant players Exhibit 6: …and on revenue growth over FY15-20
on store growth…
FY15 FY20 FY15-20 CAGR FY15 FY20 FY15-20 CAGR

1,600 30% 45 25%
1,400 40
25% 20%
35
Revenue (Rs bn)

1,200
20% 30
1,000 15%
Outlets
25
800 15%
20
600 10%
10% 15
400 10 5%
5%
200 5
- 0% - 0%
BNHL JUBI WLDL BK India BNHL JUBI WLDL BK India
Exhibit 7: BNHL’s GM is comparable to other chain Exhibit 8: However, its EBITDA margin is superior
restaurant operators compared to other chain restaurant operators
FY18-20 avg GM FY18-20 avg EBITDAM

75% 16%
65% 13%
10%
55% 7%
4%
45%
1%
35% -2%
Barbeque
Barbeque
Connaught Plaza
Connaught Plaza
Foodworks
Restaurants
Foodworks
Restaurants
Development
Development
International
International
Sapphire
Sapphire
Burger King
Burger King
Speciality
Speciality
Nation
Nation
Jubilant
Jubilant
Foods
Foods
Devyani
Devyani
Westlife
Westlife
Restaurants
Restaurants
India
India
Exhibit 9: Chain restaurant is expected to grow at 19% Exhibit 10: …driving increase in share of chain
CAGR over FY20-25 vs 9% CAGR for overall industry led restaurants to 15% in FY25 (vs 6%/9% in FY15/FY20)
by consumer shifting to well-known brands on account of
safety and hygiene concerns…
Market size (` bn) CAGR
Segment Unorganized Standalone Chain Restaurants in Hotels
FY15 FY20 FY25E FY15-20 FY20-25E
3% 3% 2%
Unorganized 1,950 2,519 3,075 5% 4%
6% 9%
Standalone 660 1,203 2,309 13% 14% 15%
23%
Chain 175 397 966 18% 19% 28%
Restaurants in 35%
80 116 156 8% 6%
Hotels
Total 2,865 4,235 6,506 8% 9%
Source: Ambit Capital research, Barbeque Nation RHP 68%
59%
47%
FY15 FY20 FY25E

Source: Ambit Capital research, Barbeque Nation RHP

Exhibit 11: Within chain restaurants, QSR has the largest Exhibit 12: However, CDR has the largest market share
market share (47%) followed by CDR (34%) amongst standalone restaurants
Pub, bar, Quick

café, lounge, service
Quick service
6% restaurant ,Pub, bar,
restaurant , café,
Standalone
13%
47% lounge,
Chain
13% Ice cream,

Café, 6% Ice cream, Café, 6% frozen
Casual
frozen desserts,
dining
desserts, 5% 2%
restaurant,
65%
Casual
dining Fine dining Fine dining
restaurant, restaurant, restaurant,
34% 2% 2%
Source: Ambit Capital research, Barbeque Nation RHP Source: Ambit Capital research, Barbeque Nation RHP
Exhibit 13: While QSR was the most preferred format in Metros and Mini Metros, CDR
was the most preferred format in Tier 1 and II cities
Avg household Preferred Avg spend per household Eating out frequency per
Type
size formats per month (`) household per month
QSR: 37%
Metros 4.09 6,500 - 6,750 7-8
CDR: 25%
QSR: 48%
Mini Metros 4.12 4,500 - 4,750 5-6
CDR: 21%
QSR: 31%
Tier I and II 4.80 2,750 - 3,000 4-5
CDR: 40%
Source: Ambit Capital research, Company, Notes: Metros: Delhi-NCR and Mumbai; Mini metros: Next 6 cities
with population >5mn (Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata & Pune); Tier I: Population 1 to
5mn; Tier II: Population 0.3 to 1mn
Exhibit 14: Tier I & II towns have grown faster (2x) than the Top 8 cities during
FY16-20, driving better growth opportunities for CDR players like Barbeque Nation
Chain Standalone Unorganised Overall

35%
Food services FY16-20 CAGR
30%
25%
20%
15%
10%
5%
0%
Mega Metros Next 6 cities Next 21 cities Rest of India
Exhibit 15: Our store potential estimate implies 1 store of Barbeque Nation for every 5 stores of Domino’s in top 8 cities
and middle 15 cities and 1 store of Barbeque Nation for every 8 Domino’s stores in the next 127 cities
Domino's Barbeque Nation Barbeque Nation potential
No of stores per mn population
(FY20) FY20 actual FY20 FY25 FY30 FY40
Top 8 cities 9.5 0.9 1.7 1.8 1.9 1.9
Middle 15 cities 6.3 0.8 1.1 1.4 1.5 1.9
Next 127 cities 4.5 0.5 0.6 0.7 0.9 1.4
Total stores (in top 150 cities) 1,297 147 220 273 333 454
Source: Ambit Capital research, Zomato

Glimpsing through its evolution

Barbeque Nation Hospitality (“BNHL”), started in 2006, is India’s leading
casual dining restaurant chain player (~6% market share in FY20; 147
restaurants in 77 cities). Barbeque Nation restaurant differentiates itself on
(a) its unique concept of ‘over the table barbeque’ and (b) fixed price ‘all you
can eat’ offering. BNHL is now evolving into a multi-format (CDR, FDR and
delivery) and multi-country (presence in India and 3 International markets)
player. Having meaningfully expanded its Barbeque Nation restaurants
footprint in India (added 105 net stores and entered 58 new cities over FY16-
20), it is now taking a calibrated approach towards capital allocation – (a)
acquired Red Apple which operates 11 Italian restaurants under 3 brands
and (b) exited loss-making business - Johnny Rockets in India and 2
international restaurants in their 1st year of operation itself.
Journey of Barbeque Nation Hospitality
Barbeque Nation Hospitality Limited (BNHL) owns and operates Barbeque Nation
Restaurants, one of India’s leading casual dining restaurant chains and international
Barbeque Nation Restaurants. The first Barbeque Nation Restaurant was launched in
2006 by Sayaji Hotels Ltd. (“SHL”), one of their promoters. Through Barbeque Nation
Restaurants, BNHL has pioneered the format of ‘over the table barbeque’ concept. Its
fixed price ‘all you can eat’ concept is popular amongst relatively larger groups and
corporates due to customers’ perception of value for money and the comfort of
certainty over the bill amount irrespective of varying individual appetites and
consumption.
Exhibit 16: BNHL has spent the last 5 years to scale and diversify its business after
investing a decade perfecting its core business
Year Key milestone and events
 Incorporated as Sanchi Hotels Private Limited on October 13, 2006
2006  BNHL’s promoter, Sayaji Hotels Limited (SHL), launched the first Barbeque Nation restaurant at Pali
Hill, Mumbai
2007
 Barbeque Nation restaurants opened in Indira Nagar and Kormangala (Bengaluru) and Banjara Hills
(Hyderabad) by SHL
Barbeque Nation has pioneered
 Name changed to Barbeque-Nation Hospitality Private Limited (BNHL)
2008  BNHL established a presence in Chennai and started the first Barbeque Nation restaurant in T Nagar,
‘DIY over the table barbeque’
Chennai concept (live grills embedded in
 Achieved revenue of over `1,000mn for FY12 dining tables allowing guests to
2012  Acquisition of five Barbeque Nation restaurants from SHL grill their own barbeques) in Indian
 BNHL opened the 25th Barbeque Nation restaurant at Times Square, Mumbai restaurants. It offers Indian cuisine
2013  Investment by CX Partners Fund I Limited through TPL and investment by AAJVIT which is a natural part of the diet
2014  Introduced the concept of ‘Kulfi Nation’ counters in Barbeque Nation restaurants and hence caters to a wide
2015  Introduced the concept of ‘Live counters’ in select restaurants customer range albeit at a
 Achieved a consolidated revenue of over `3,000mn for FY16 premium price points. Its fixed
 BNHL commenced international operations by setting up the 1st Barbeque Nation restaurant in price ‘all you can eat’ concept is
Dubai popular amongst relatively larger
2016
 BNHL opened the 75th Barbeque Nation restaurant in Korum Mall, Mumbai
 Acquired Prime Gourmet Private Limited (“PGPL”), which operated Johnny Rockets groups and corporates, due to
restaurants in India customers’ perception of value for
2017  Achieved a consolidated revenue of over `4,000mn in FY17 money and the comfort of certainty
 Investment by Alchemy India and Partner Reinsurance over the bill amount irrespective of
 Expanded its international footprint in the Asia Pacific region by setting up a Barbeque Nation varying individual appetites and
restaurant in Kuala Lumpur, Malaysia consumption.
2018  BNHL opened the 100th Barbeque Nation restaurant in Dimapur, Nagaland
 Launched UBQ by Barbeque Nation to provide a la carte Indian cuisine in the value segment
 Exited Johnny Rockets by closing all the restaurants due to commercial reasons and subsequent
termination of the International Master Development Agreement
 BNHL opened the 130th Barbeque Nation restaurant
2019
 Further expanded its international footprint by opening a restaurant in Muscat, Oman
 Acquisition of 61.35% stake (for `675mn) in Red Apple, which operates Italian restaurants under
the brand name “Toscano”, “La Terrace” and "Collage"
 Achieved a consolidated revenue of over ₹8,500 million in Fiscal 2020
2020
 Launched “Barbeque-in-a-Box”, a product offering available online
2021  Investment by Xponentia and Jubilant FoodWorks

Evolving from dine-in only casual dining restaurant to a multi-format player

BNHL also owns and operates Toscano Restaurants (Italian cuisine), You and
Barbeque (“UBQ”) and “Barbeque in a Box” by Barbeque Nation. As on Nov, 2021,
BNHL operates 147 Barbeque Nation outlets (in 77 cities) and 11 Italian restaurant
outlets (in 3 cities) in India through 2 Commissaries (in Delhi NCR and Mumbai). It
also has 4 Barbeque Nation outlets in UAE, and 1 each in Oman and Malaysia.
Exhibit 17: BNHL currently operates 2 dine-in formats and 2 delivery only formats in India
First restaurant opened in First restaurant opened in

Foundation Launched in 2018 Launched in June 2020
Mumbai in 2006 Bengaluru in 2008
One of India’s leading casual

dining restaurant chains. Italian chain offering Dine-in &
delivery
Provide a la carte Indian cuisine
Offer differentiated experience in the value segment Offers specially curated meal box
Details of ‘DIY over the table BNHL acquired 61.35% stake (for with wide variety of starters, main
barbeque’ concept `675mn in 2019) in Red Apple, course and dessert
Operates through Barbeque
which operates Italian restaurants
Nation restaurants
under the brand name “Toscano”,
Fixed price ‘all you can eat’ “La Terrace” and "Collage"
format
147 restaurants across 77 11 restaurants across 3 Indian

Served through 147 Barbeque Served through 147 Barbeque
Footprint Indian cities. 4 in UAE, and 1 cities (Bengaluru, Chennai and
Nation restaurant across 77 cities Nation restaurant across 77 cities
each in Oman and Malaysia Pune)
Wide variety of food including

Meal in the form of Barbeque in a
Product North Indian, Mughlai, Italian, Continental, Pizza, Salad, North Indian, BBQ, Beverages,
box, Biryani & Kebab Box and
categories Seafood, Biryani, Desserts, Desserts, Beverages Desserts
Meals & Grills Box
Kebabs, etc
Format Casual dining restaurant Fine dining restaurant Online delivery only - A La carte Online delivery only - Meal/ Box
Cost for two (`) `1,600-2,000 `2,400-3,000 `400-500 `800-1,000
Competition
Source: Ambit Capital research, Company Note: - High; - Moderate; - Average; - Low
Exhibit 18: Barbeque Nation’s unique offering of ‘DIY over Exhibit 19: Barbeque in a Box offers wholesome meal
the table barbeque’ concept (live grills embedded in dining (starters, main course, deserts and salad) consisting of
tables allowing guests to grill their own barbeques) 15-18 food items
Source: Ambit Capital research, Google images Source: Ambit Capital research, Google images

All set to leverage on its learning’s to drive future capital allocation decision
Riding on Barbeque Nation’s success (in terms of profitability and scale) in India,
BNHL tried too many things in the last 5 years, including (a) master franchisee of
international burger chain, Johnny Rockets (acquired in 2016 and eventually closed
in 2018); (b) international foray (started with first restaurant in 2016 and
consolidated to 6 stores as on 8MFY21); and (c) acquisition of majority stake
(61.35%) in Red Apple (operates 11 Italian restaurants under 3 different brands).
While the past decade had its fair share of mistakes and learnings, we expect BNHL
to leverage on this to drive growth in its core offering of “Barbeque Nation” (Dine-in
and delivery) along with calibrated expansion of its Italian chain “Toscano”.
Exhibit 20: Phases of evolution: While FY10-15 was spent on core, FY16-20 was spent on new formats and geographies
Description Phase 1 – Strengthening the core Phase 2 – Expansion across brands,
Phase 3 – On course correction
(Standalone) business scale and geographies
Period FY10-FY15 FY16-FY18 FY19-20
Further international expansion through
Ventured into International market with
entry into Oman
first store in Dubai and later expanded in
Introduced new concepts like ‘Kulfi Nation’
Malaysia
and ‘Live counters’ to drive differentiation Acquired Red Apple (`675mn investment
and improve customer experience for 61.35% stake) which operates 11
Acquired PGPL (Operator of Johnny
Italian restaurant chain across 3 cities in
Rockets) in 2016 and subsequently closing
Took calibrated approach of store and city India
Approach and operations in 2018; cash loss of `414mn
expansion with 45 stores across 19 cities in
initiatives
FY15 Moved to course correction on
Launched UBQ by Barbeque Nation to
international operations, closed two
provide a la carte cuisine to cater to value
Invested in building internal ERP International Barbeque Nation Restaurants
customers
system, guest satisfaction index and in UAE
supply chain for next leg of growth
Went aggressive on network expansion -
Launched ‘Barbeque in a box’ in Jun-20 to
added 57 new stores across 41 new cities
expand its delivery market
Added 24 stores each in FY19 and FY20
and closed 3 stores in 8MFY21;
Average 5 stores/year Average 19 stores/year Increased store count from 102 in FY18 to
Store expansion 150/147 in FY20/8MFY21
From 17 stores in FY10 to 45 in FY15 From 45 stores in FY15 to 102 in FY18
We expect store expansion momentum in
core business to pick up from FY22 led by
IPO proceeds
Avg revenue per
`72mn `68mn `59mn
store
Revenue CAGR 29% 23% 11%
EBITDA CAGR 49% 21% -3%
Avg EBITDA margin 14.3% 14.4% 12.0%
Avg RoCE (pre-tax) 24% 24% 18%
Capital allocation -
~`2,000mn ~`2,000mn ~`1,700mn
Capex
Capital allocation -
Investment in/ loans ~`120mn ~`500mn ~`1,300mn
to subsidiary
Consol EBITDA as %
of standalone 99% 98% 98%
EBITDA
Consol PAT as % of
96% 10% NA (loss under standalone and consol)
standalone PAT
Source: Ambit Capital research, Company, Standalone for BNHL, LTL (pre IND AS 116) numbers
Led by its unique product offering and value proposition, BNHL has expanded its
Barbeque Nation restaurants in India at 24% CAGR over FY10-20.

Exhibit 21: Barbeque Nation has consistently generated >15% pre-tax RoCE in its standalone business (barring FY20-22E
due to the impact of Covid-19); however, led by losses in international business, consolidated RoCE has been lagging
standalone RoCE
Barbeque Nation India Toscano Barbeque Nation International

Standalone RoCE (Pre-tax) Consolidated RoCE (Pre-tax)
Focus on building
300 Exited Johnny Rockets, delivery business and 50%
Expansion into
consolidated store expansion in India
international market
250 international presence 40%
and Johnny Rockets
and acquired Toscano
30%
200
20%
Stores
150 Invested in building internal ERP

system, guest satisfaction index 10%
and supply chain for next leg of
100 growth
0%
50 -10%
- -20%
FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22E FY23E FY24E
Exhibit 22: Comparison of key formats: QSR caters to wider target audience but has higher competition; CDR is highly
fragmented and offers opportunity to gain market share; FDR caters to a niche market and differentiates on service and
cuisine
Format QSR (Quick service restaurants) CDR (Casual dining restaurants) FDR (Fine dining restaurants)
Primarily offers fast food from specific Focused on quality, presentation and Specialised/ multi-cuisines offered with
Definition cuisines and is focused on convenience service focus on quality, ingredients,
and delivery presentation and service
Affordable items, speed of service, Offers a casual and fun ambience while Highly trained staff, premium interiors,
Features deliveries & take-away and minimal serving as a bridge between QS` and upscale service and offering characterise
table service FDR restaurants the format
Average Spend per
Low: `75-250 Moderate: `250-1,000 High: >`1,000
Person
Moderate: Larger Chains have stronger
High: Regional players with specialized Moderate: Limited competition owing
Competition within brand recall and quality assurance for
focus, offering similar but localized to specialized nature of customer
segment price sensitive customers willing to
products for mass market segment and price bracket
spend in this bracket
Product uniqueness Very Low Medium to low High to Medium
Target Age-Group 15-35 years 20-50 years 25-50 years
Target Group pricing Mass population (Affordable) Affordable to Premium Premium to Luxury
Malls, high streets, popular markets,
Malls, high streets, popular markets,
office complexes, airports, hospitals, Malls, high streets, popular markets,
Location scope office complexes, airports, hotels and
highways, educational campuses and office complexes and hotels
Food Hubs
multiplexes
Moderate: Moved quickly to delivery
Low: Mostly had successful deliveries, High: Pricing point left limited scope for
COVID-19 impact setup, assisted by food aggregators like
drive-through and Over the Counter demand from delivery; customers
(relative) Zomato and Swiggy; hence added
setup; Dine-in affected hesitant to visit even post opening up
additional revenue stream
Chain: `188bn Chain: `134bn Chain: `6bn
Market Size
Standalone (licensed): `348bn Standalone (licensed): `911bn Standalone (licensed): `27bn
Organised format Chain: 19% Chain: 19% Chain: 3%
CAGR (FY15-20) Standalone: 15% Standalone: 14% Standalone: 3%
CAGR (FY20-25E) Standalone: 14% Standalone: 16% Standalone: 7%
market share (FY20) Standalone: 13% Standalone: 65% Standalone: 2%
market share (FY25E) Standalone: 13% Standalone: 70% Standalone: 1%
Barbeque Nation, Copper Chimney,
Domino's, McDonald's, Burger King, Toscano, Olive Bar & Kitchen, Masala
Examples Made in Punjab, Mahabelly, Berco's, Oh!
Pizza Hut, Subway, Haldiram’s Bar, The Table, Yautcha
Calcutta

Porter and SWOT analysis

Exhibit 23: Porter’s 5 forces analysis of CDR – Competitive intensity on rise; large CDR chain players like Barbeque Nation to
benefit from better bargaining power with suppliers
Bargaining power of suppliers Bargaining power of buyers

MODERATE Low
 Key RM includes fresh vegetables, fruits and meat which are  Small size of individual purchases has insignificant influence
sourced from multiple local suppliers and are subject to high on the business
delivery frequencies. Given lack of differentiation in the
product, but constraint with regards to quality and timely  Taste/addictiveness to brands can result in consumer
delivery, switching costs is relatively moderate preferring specific brand in spite of higher prices
 Challenges could be higher for restaurants in Tier 2/3 cities,  Brands differentiating on customer experience are better
where quality of supply with respect to special meat (pork/fish placed
etc) could limit options and businesses will have to be
dependent on larger suppliers with higher bargaining power  Corporate customers are less price conscious but have
bargaining power due to large group size
 Suppliers also prefers to work with large renowned chain due
to better scale and timely payment
Competitive intensity
HIGH
 Post outbreak of pandemic, competitive intensity has decreased (expected to remain
subdued in their near term) as consumer seeks well-known brands with better hygiene and
safety measures
 Food delivery and aggregating platforms are empowering local restaurants to compete
with established fast food chains/cafes/diners, allowing customers to read reviews and
make decisions. Hence, every single encounter with customer now matters
 Entry of international players and food franchising is gaining popularity
 Food delivery companies are launching and empowering dark kitchens and creating
brands for capturing novelty demand for cuisines, reducing costs for experimentation
Barriers to entry Threat of substitution

MODERATE HIGH
 Cloud/ghost kitchen has reduced the capex requirement
 With consumers becoming more conscious about health,
significantly and are driving higher competition in the
traditional restaurants are at risk of losing customers to new
delivery space
upcoming cafes with more healthy offerings
 Brand building/mindshare takes time and hence scalability
 Customers have more alternatives and the urge to try new
for new entrants will be far and few
products/cuisines and different variety led by brand/cuisine
 Higher capex and real estate costs in established/central fatigue results in little loyalty
market places are often an entry barrier for smaller players
 Consumers today are well-informed, have plethora of choices
in the CDR industry, where focus remains on customer and can switch easily at zero cost
Improving Unchanged Deteriorating
Source: Ambit Capital research

Exhibit 24: SWOT analysis of BNHL – Operational efficiency key positive; capital misallocation biggest threat
Strengths Weaknesses
 Differentiated offering of ‘DIY over the table barbeque’ concept;  BNHL currently operates only 2 commissaries (in Delhi and Mumbai)
fixed price ‘all you can eat” drives perception of value for money and hence restaurants located at other locations prepare food at the
and comfort of certainty over the bill amount restaurant kitchen itself driving operational inefficiency and lower
 Indian cuisine (30% of the market) which is a natural part of the diet standardisation
and hence offers a much larger addressable market  Higher average spend per head (~`800 vs `250-300 for QSR players)
 Better asset utilization (2x gross block turns) due to relatively high limit the total addressable market both in terms of number of cities
proportion (45-50%) of revenue from weekday and lunch (corporate and store density within city
drives lunches during week; families during the weekends)  Capital allocation into newer ventures have historically yielded poor
 Ability to tweak menu basis local taste and preference returns - failure of Johnny Rockets (cash loss of `414mn) and losses in
overseas expansion (cumulative loss of `700mn over FY17-20)
 Better cost structure (lowest operating cost across listed chain
players) led by zero royalty and low ad spends
Opportunities Threats
 Incremental revenue from delivery can meaningfully improve store  Exhaustion of innovation and variety in family dining experience
level margins without cannibalizing dine-in sales category could gradually reduce customer interest and there is limited
 Declining revenue per store (`74mn in FY15 to `62mn in FY19) scope for introduction of newer concepts in existing format
likely to see a JUBI like turnaround as pace of new stores and city  Pandemic induced slowdown has hit the dine-in business model
expansion tapers off severely vis-à-vis QSR players driving higher cash loss
 BNHL is expected to generate meaningful FCF from FY24 led by  Johnny Rockets failure could have a snowball effect on future
higher share of matured stores (driving better operating cash flow expansion possibilities – reluctance of global brands to partner and
generation) and lower capex intensity avoidance by management given past failure
 BNHL can leverage the learnings of JUBI on the backend supply  Increasing discounting by food aggregators is benefiting local
chain (to drive better sourcing and standardization of food) along standalone outlets at the cost of chain players in the delivery space
with delivery, both of which are JUBI’s forte
 Diversification into Italian cuisines through Toscano shall aid in new
revenue streams and capabilities to cater a niche market, with
possible incremental benefits to profitability (~74% GM vs ~65% for
core business)
Source: Company, Ambit Capital research

Leading on growth, profitability to follow

BNHL’s standalone revenue/store CAGR (21%/27%) has outpaced other
leading QSR players like JUBI (13%/9%) and WLDL (15%/9%) during FY15-20
led by lower base and benign competitive intensity (vs QSR). BNHL’s
standalone operating performance ranks ahead of other listed chain players
like WLDL and Burger King led by better cost structure (no royalty, low ad
spends) and store economics. BNHL’s EBITDA margin lags only JUBI (by
~400bps due to ~900bps difference in GM). BNHL can bridge the gap
between its store level EBITDA margin (21%) and corporate EBITDA margin
(of 14-15%) led by scale and increase in share of matured stores. However,
Barbeque Nation in India is the only successful format (both profitability and
scale) for BNHL given (a) Toscano price points are higher (fine dine-in
format) which limits its scalability beyond top-8 cities; and (b) International
operations are a drag on overall profitability (`700mn loss over FY17-20).
Mapping on IBAS framework
Besides running popular food festivals, innovation in menu, and being extremely
consumer-centric (calling 20-30% of the consumers for feedback), BNHL has
successfully built brand and scale in the highly fragmented CDR industry.
Exhibit 25: Mapping Barbeque Nation on IBAS framework
Description Barbeque Nation's positioning Rank
 To drive higher frequency of repeat
visits, restaurants need to consistently  Barbeque Nation offers the flexibility and fun of mixing and matching (DIY) a
offer new food menu/items wide variety of meats, vegetables, sauces and condiments to create dishes
 Ability to offer wider range of cuisine according to each diner’s individual tastes and preferences
Innovation also drives better footfalls and caters  Barbeque Nation also runs popular food festivals celebrating one or more
to larger group size cuisines or their fusion to maintain competitiveness, drive repeat visits and
 With plethora of options to eat out,
attract new customers
consumers are always on the lookout
for new experiences and cult trends
 Restaurants ability to provide  Despite lower ad spends (both absolute and as % of sales) compared to listed
consistency in taste and experience peer QSR players, Barbeque Nations' brand recall (basis google search trend) in
across locations drives better brand top 8 cities was lagging only Domino's
loyalty  Barbeque Nation also attracts larger group size due to its fixed price which
Brand
 Word of mouth, google reviews, and provides perception of value for money and the comfort of certainty over the bill
reviews on food aggregator platforms amongst large groups
play an important role in new
 However, larger ticket size and dine-in format limit frequency of purchase
customer acquisition
 Compared to other CDR players, Barbeque Nations' capacity utilization is much
higher led by equal share of covers during weekday vs weekend and lunch vs
 People and processes of a company dinner
build architecture  It only caters to lunch and dinner vs QSR players catering to breakfast and
Architecture  Approach to new menu offering is also snacks as well
a key  Whenever BNHL open new restaurants, it generally transfers some staff from
 Ability to train and move people existing restaurants to new restaurants to ensure easier initial launch and set-up
thereby maintaining the same service quality across restaurants
 Compared to other QSR players, Barbeque Nation is rated significantly better on
Zomato across the top 8 cities
 Barbeque Nation has internally devised and managed Guest Satisfaction Index
 Being consumer centric to capture consumer feedback
Strategic
 Leveraging digital platform  In-house business intelligence software allows tracking restaurant wise data
Asset
 Destination based location (operational and financial) for Barbeque Nation Restaurants at a granular level
and it has a direct interface with the enterprise resource planning system of the
Barbeque Nation Restaurants driving better control over cost
#Innovation: Offering novelty experience
While most of the restaurants offers fixed menu with limited opportunity to customize
food, Barbeque Nation’s biggest competitive advantage lies in the DIY format giving
diners the opportunity to innovate. Barbeque Nations offers the flexibility and fun of
mixing and matching (DIY) a wide variety of meats, vegetables, sauces and
condiments to create dishes according to each diner’s individual tastes and
preferences. Apart from this, Barbeque Nation also runs popular food festivals at its
restaurants celebrating one or more cuisines or their fusion (such as Jewels of the
Sea, Barbeque Nation Festival League and Mango Mania, etc) at regular intervals to
maintain competitiveness, drive repeat visits and attract new customers.

Exhibit 26: Barbeque Nation celebrates various food festivals offering different types
of cuisines
Apart from driving repeat visits and

attracting new customers, food
festivals are also a great way to try
out new items and dishes. Any dish
that becomes a rage at a food
festival can be introduced as part
of the regular menu/offering.
#Branding: Micro market strategy drives better RoI

BNHL’s advertisement and marketing activity focus on micro market strategy to
optimize money spent on advertisement and coverage of targeted demographic
profiles. Unlike other national restaurant players, BNHL does not necessarily indulge
in large scale marketing and branding activity on TV, rather it uses billboards and
banners (over and above digital marketing) near its restaurant’s location to target the
consumers. BNHL’s success in its micro market advertisement strategy can be
corroborated from the fact that despite lower ad spends (absolute as well as % of
revenue) compared to other QSR players, across the top-8 cities in google search
trend, Barbeque Nation ranks behind only Domino’s and was ahead of McDonald’s
in 5 out the top-8 cities.
Exhibit 27: Barbeque Nation using billboards… Exhibit 28: …and vans to promote nearby restaurants
Source: Ambit Capital research, google image Source: Ambit Capital research, google image

Exhibit 29: BNHL ad spend is lowest on absolute basis… Exhibit 30: …and also as % of sales vs other chain players
FY18 FY19 FY20 16% FY18 FY19 FY20

2,500
14%
Ad spend (% of sales)
2,000 12%
Ad spend (` mn)
10%
1,500
8%
1,000 6%
4%
500
2%
- 0%
JUBI WLDL Burger King BNHL JUBI WLDL Burger King BNHL
Exhibit 31: Barbeque Nation’s brand recall (basis google search trends) was ahead
of Burger King across all the Top-8 cities and ahead of McDonalds’s in 5 cities
Domino's Barbeque Nation McDonald's Burger King

8% 7% 4% 4% 6% 6% 6% 9%
8% 11%
13% 18% 12% 16% 14%
18% 16%
11% 19% 16% 16%
16% 19% 10%
67% 71% 66% 66% 64% 65%

59% 60%
Chennai
Bengaluru
Pune
Kolkata
Hyderabad
Ahmedabad
Mumbai
Delhi NCR
Source: Ambit Capital research, Google Trends, data from Oct-15 to Sep-20
#Architecture: Most efficient casual dining restaurant player

None of the CDR restaurants in India has been able to profitably scale business due
to the inherent flaw of poor asset turn/lower utilization. The CDR industry generates
70-80% of its revenue during weekends (Fri-Sun). Similarly, between lunch and
dinner, dinner accounts for 70-80% of revenue. However, Barbeque Nation’s revenue
mix between weekday vs weekend and between lunch vs dinner is broadly same
given it is a popular choice for corporate lunches during the week and families during
the weekends. In addition, Barbeque Nation also enjoys larger group sizes due to its
fixed price ‘all you can eat’ concept which provides perception of value for money
and the comfort of certainty over the bill amount irrespective of varying individual
appetites and consumption amongst large groups.

Exhibit 32: Barbeque Nation has been able maintain its Exhibit 33: While share of lunch covers has gradually
weekday vs weekend cover at ~50:50 increased from 42% in FY15 to 46% in FY20
Weekend cover Weekday cover Dinner cover Lunch cover
48% 48% 49% 48% 49% 42% 44% 45% 45% 46% 46%
49%
52% 52% 51% 52% 51% 58% 56% 55% 55% 55% 54%
51%
FY15 FY16 FY17 FY18 FY19 FY20 FY15 FY16 FY17 FY18 FY19 FY20
Source: Ambit Capital research, Company Source: Ambit Capital research, Company
Consumers’ decision to dine-in at

#Strategic assets: Being consumer-centric and digitally advanced Barbeque Nation is not impulse but
pre-planned and hence majority of
BNHL places a strong emphasis on customer reviews and feedback (4.55 average the people dining-in reserve their
rating of Barbeque Nation restaurants on online food aggregator). Barbeque Nation table in advance. These aids in
Restaurants uses a cloud-based Central Feedback System and an in-house call centre estimating demand more
to call ~30% of the customer dining-in and obtains feedback in accordance with their accurately and improve on
internally devised and managed Guest Satisfaction Index (“GSI”). On the basis of sourcing & staffing to manage costs
qualitative feedback received from customers, its employees assign a rating to the more efficiently. It is beneficial to a
respective customer's experience. Significant part of employee incentive is linked to customer as well as reservation will
the GSI score (and not revenue/PAT) which in turns inculcates the “customer first” guarantee table at the time and
approach amongst the restaurant staff and aids in better customer satisfaction. place planned, and likely to receive
better service at the outlet as
details like time of arrival, no of
Exhibit 34: Barbeque Nation ranks way ahead of other QSR players on Zomato
persons etc. will be shared with the
across the top-8 cities
outlet in advance.
Barbeque Burger
Chain name Domino's McDonald's KFC Pizza Hut
Nation King
Bengaluru 4.4 3.3 3.5 3.6 3.3 3.9
Mumbai 4.4 3.1 3.7 3.5 3.4 3.5
Delhi 4.4 3.5 3.8 3.4 3.2 3.8
Chennai 4.4 3.5 3.8 3.7 3.3 4.0
Kolkata 4.7 3.9 4.1 3.9 3.7 4.1
Pune 4.6 3.2 3.8 3.4 3.3 3.8
Hyderabad 4.4 3.5 3.8 3.9 3.3 4.0
Ahmedabad 4.9 3.8 4.0 3.9 3.7 3.9
Average for Top 8 cities 4.5 3.5 3.8 3.7 3.4 3.9
Barbeque Nation also uses cloud-based Central Reservation System to accept

reservations for their Barbeque Nation Restaurants through various sources like ‘BBQ
App’, Facebook chat messenger, chat-bot and other reservation platforms. It has also
integrated “Business Insights”, its in-house business intelligence software, which
allows it to track restaurant-wise data (operational and financial) for Barbeque
Nation Restaurants at a granular level and has a direct interface with the enterprise
resource planning system of the Barbeque Nation Restaurants driving better control
over cost. Barbeque Nation also runs “Smiles” Loyalty program, which provide 5% of
the bill value to customers as Smiles points which can be redeemed during the
customer’s next dine-in visit or delivery order from their BBQ App or website.

Exhibit 35: Increase in loyalty point redemption implies Exhibit 36: Reservations through digital assets has
higher repeat purchases by consumers witnessed significant increase in 2020
% of transactions with SMILES redemption Reservation share from digital assets as a %

of total reservations
9.8%
47.5%
34.6%
0.8%
Feb 2020 Dec 2020 Feb 2020 Dec 2020
Better store economics offsets limitation of larger

addressable market
Compared to QSR players, while Barbeque Nation lags on total addressable market
due to higher average spend per head and larger store size (implying need for higher
footfalls and higher population density per store), it scores higher on better store
economics led by lower capex, higher asset turn and better store-level EBITDA
margin. As a result, while the store density for Barbeque Nation will be lower than
that of QSR players, payback period and RoCE are much superior and hence aid in
better cash flow generation which can subsequently be invested in opening new
stores or entering into new cities or adding new formats.
Exhibit 37: Higher spending per head, larger group size and lower capex drive better store level economics for Barbeque
Nation
Per store Barbeque The Great
Chilli’s Domino’s McDonald’s Burger King KFC Pizza Hut
financial matrix Nation Kebab Factory
Outlet Count 147 21 23 1,354 311 261 454 431
Avg store size (sq ft) 5,100 4,000 4,750 1,500 2,800 1,350 2,750 2,900
Capex (` mn) 27.5 32.5 45.0 17.5 37.5 22.5 35.0 22.5
Revenue (` mn) 56.6 52.9 73.0 28.3 45.6 42.0 45.6 27.4
Gross margin 65.5% 71% 69% 78% 65% 65% 65% 75%
EBITDA margin 20.5% 20.5% 17.0% 22.0% 14.0% 13.0% 15.0% 18.0%
EBIT margin 17.3% 16.4% 12.9% 17.9% 8.5% 9.4% 9.9% 12.5%
Asset turn 2.1 1.6 1.6 1.6 1.2 1.9 1.3 1.2
Pre-Tax RoCE 36% 27% 21% 29% 10% 18% 13% 15%
Payback period
3.5 4.2 4.9 3.2 6.9 5.5 6.2 5.7
(years)
Avg spend per
788 650 1,375 213 238 213 213 425
customer (`)
Avg bill size (`) 3,625 2,875 6,250 525 575 525 525 1,500
Avg group size 4.6 4.4 4.5 2.5 2.4 2.5 2.5 3.5
No of bills per year 15,607 18,409 11,680 53,881 79,348 79,952 86,905 18,250
No of customers per
71,841 81,423 53,091 133,118 192,105 197,529 214,706 64,412
year
Share of Dine-in
Source: Ambit Capital research, Company, Burger King RHP Note: The above is for a mature store; Note: - High; - Moderate; - Average; - Low

Exhibit 38: Barbeque Nation is profitable at the store level in its first year of
operation itself; store matures by the 3rd year
Store level economics Year 1 Year 2 Year 3 Year 4 Year 5
Revenue (` mn) 27.3 52.1 59.4 61.2 63.0
Gross margin 65.5% 65.5% 65.5% 65.5% 65.5%
EBITDA margin 9.0% 15.3% 19.8% 21.6% 23.0%
EBIT margin 2.3% 11.8% 16.7% 18.6% 20.1%
Asset turn 1.0 1.9 2.2 2.2 2.3
Pre-Tax RoCE 2% 22% 36% 41% 46%
Specialty Restaurants: Diversification recipe gone wrong?

Specialty Restaurants’ performance over the last few years has been lackluster, with
revenue CAGR of merely 8% over FY12-20 and EBITDA margin decline of 16ppt to
3% in FY20 (vs 19% in FY12). During the same period, Specialty Restaurants store
count increased from 83 in FY12 to 140 in FY20 (7% CAGR). However, increase in
store count did not translate into better revenue growth and margin given launch of
multiple new brands (number of brands increased to 22 in FY20 vs 10 in FY12) and
formats (QSR, CDR, FDR, PBCL, confectionary).
We believe such a strategy of diversifying into too many formats and brands failed to
drive operating leverage, benefit of scale, brand recall and customer loyalty for
Specialty Restaurants. BNHL on the other hand has benefited from scale and brand
recall given focus on its flagship store format “Barbeque Nation” and hence not Despite better GM, Specialty
comparable to Specialty Restaurants. Restaurants EBITDA margin is lower
vis-à-vis BNHL primarily due to
Exhibit 39: Specialty Restaurants expansion into multiple brands and formats led to higher rent (17% for Specialty vs
decline in profitability 11% for BNHL)
Details FY12 FY16 FY20
No of stores 83 123 140
No of brands 10 11 22
Revenue (` mn) 1,962 3,213 3,578
Gross margin 74.0% 67.2% 68.3%
EBITDA margin 19.1% 5.3% 2.9%
PAT margin 8.8% 0.1% -10.7%
Structurally better profitability vis-à-vis most of the chain restaurant

operators – royalty and ad spends are key
BNHL’s EBITDA margin is structurally better than most of the other organized chain
restaurant operators (despite subpar scale in terms of store and revenue) due to zero
royalty expense (vs ~4% for QSR players) and low ad spends (2% vs 5-6% for QSR
players). However, BNHL’s employee costs are higher vis-à-vis other QSR players due
to a higher number of employees per store (58 vs 24-30 for QSR players) given (a)
dine-in format requires table service; (b) larger store size (5,000 sq ft vs 1,500-2,800
for QSR players); (c) requirement of chefs and assistants in each of the restaurants to
cook food (vs QSR players receiving semi-processed food from
commissaries/vendors); and (d) addition of headcounts for cleaning crockery (QSR
players serve food in disposable boxes).

Exhibit 40: BNHL’s GM is comparable to other chain Exhibit 41: However, its EBITDA margin is superior to
restaurant operators other chain restaurant operators
FY18-20 avg GM FY18-20 avg EBITDAM

75% 16%
65% 13%
10%
55% 7%
4%
45%
1%
35% -2%
Development
Development
Sapphire
Barbeque
Barbeque
Sapphire
Burger King
Connaught Plaza
Burger King
Connaught Plaza
Foodworks
Restaurants
Foodworks
Restaurants
International
International
Speciality
Speciality
Nation
Nation
Foods
Foods
Jubilant
Jubilant
Devyani
Devyani
Westlife
Westlife
Restaurants
Restaurants
India
India
Exhibit 42: Barbeque Nation’s EBITDA margin is higher vs Westlife Development and Burger King despite similar GM
Barbeque Nation Jubilant FoodWorks Westlife Development Burger King
Company
Revenue (` mn) 5,712 7,035 7,871 29,804 35,307 38,858 11,349 14,016 15,473 3,781 6,327 8,412
No of stores 102 126 150 1,134 1,227 1,335 277 296 319 129 187 260
Indexed to revenue
Revenue 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Gross profit 66.3 66.4 65.0 74.8 75.2 75.0 62.6 63.5 65.2 62.0 63.6 64.2
Employee cost 20.7 20.6 22.6 20.3 19.0 20.2 15.1 14.1 14.2 18.6 15.3 16.2
Rent 10.3 11.2 11.7 10.6 9.7 9.8 8.9 9.2 9.2 16.6 14.7 14.8
Power & Fuel 7.7 7.8 7.8 5.3 4.7 4.4 8.7 7.8 7.8 8.6 7.5 8.4
Ad spends 1.6 2.0 2.0 4.8 4.8 6.4 5.5 4.9 4.8 14.1 8.5 5.8
Royalty - - - 3.3 3.5 3.5 4.2 4.6 4.6 3.2 3.7 4.1
Packing material consumed - - - 3.1 3.3 3.1 - - - - - -
Stores & operating supplies 1.4 1.8 2.2 0.5 0.6 0.7 1.5 1.4 1.2 1.7 1.4 1.5
Repairs & maintenance 1.0 1.0 0.8 2.6 2.6 2.5 3.2 3.1 3.3 3.2 2.5 2.8
Freight & delivery - - - 2.8 3.0 3.0 1.5 1.5 0.9 2.2 4.6 5.5
Professional and legal fees 0.8 0.6 0.5 1.2 1.3 1.1 0.8 0.8 0.9 1.3 1.0 0.8
Travelling & communication 1.1 1.0 0.9 1.4 1.4 1.4 0.9 0.8 0.8 1.4 0.9 0.9
Misc expenses 0.6 0.8 1.5 2.4 2.4 2.2 3.7 5.4 7.5 1.6 0.9 0.9
Other expenses 5.8 5.4 4.9 1.5 1.6 2.0 1.7 1.5 1.3 0.0 0.1 0.2
Total operating costs 51.1 52.3 54.9 59.8 58.0 60.2 55.7 55.0 56.3 72.6 61.3 61.8
EBITDA 15.2 14.0 10.1 15.0 17.2 14.8 6.8 8.5 8.9 (10.7) 2.4 2.4
Depreciation 5.5 5.1 6.7 5.2 4.3 4.2 5.9 5.7 5.6 8.1 6.2 7.4
EBIT 9.7 8.9 3.4 9.7 12.9 10.6 0.9 2.8 3.3 (18.8) (3.9) (5.0)
Other income 0.9 0.6 0.4 0.8 1.3 1.7 1.6 1.0 0.9 2.8 1.8 0.7
Finance cost 3.0 1.8 2.5 - - 0.0 1.3 1.3 1.0 0.1 0.0 0.8
PBT 7.6 7.7 1.3 10.5 14.2 12.4 1.1 2.5 3.2 (16.1) (2.1) (5.2)
Source: Ambit Capital research, Company, Standalone for BNHL

Revenue and store growth outpaced other chain

players
With store economics in place and having invested in backend supply chain, BNHL
ramped up its store expansion over the last 5 years and increased its store count to
more than 3x (from 45 in FY15 to 150 in FY20). However, revenue CAGR (21%) has
not been able to keep up pace with store CAGR (27%) due to (a) increase in share of
stores in tier 2/3 towns (33% stores as on FY20 vs 11% in FY15) and (b) ~50% of the
stores are less than 3 years old and hence are yet to reach full revenue potential.
Exhibit 43: BNHL outpaced other chain restaurant players Exhibit 44: …and on revenue growth over FY15-20
on store growth…
FY15 FY20 FY15-20 CAGR FY15 FY20 FY15-20 CAGR

1,600 30% 45 25%
40
1,400
25% 20%
35
Revenue (Rs bn)

1,200
20% 30
1,000 15%
Outlets
25
800 15%
20
10%
600 15
10%
400 10 5%
5%
200 5
- 0% - 0%
BNHL JUBI WLDL BK India BNHL JUBI WLDL BK India
Revenue per store to catch up…

Despite outperforming peers on various financial metrics, one of the key investor
concerns has been declining revenue per store (`74mn in FY15 to `62mn in FY19)
which led to ~200bps contraction in pre-tax RoCE (from 28% in FY15 to 26% in
FY19). We believe this is primarily attributable to BNHL’s aggression in adding stores
(from 45 in FY15 to 126 in FY19, 29% CAGR) and cities (from 19 in FY15 to 68 in
FY19, 38% CAGR). We have seen a similar trend in the case of Jubilant too. Between
FY13-17, Jubilant’s aggressive store expansion (from 576 in FY13 to 1,117 in FY17,
18% CAGR) and city penetration (576 in FY13 to 1,117 in FY17, 21% CAGR) led to
decline in average revenue per store from `27mn in FY13 to `24mn in FY17.
However, Jubilant’s revenue per store increased to `30mn in FY19 (from `24mn in
FY17) led by muted growth (5%/2% CAGR) in stores/cities. We believe BNHL’s
revenue per store will likely be on course correction too as the pace of new store and
city expansion tapers (on a high base).
Please note: FY20/FY21 financial performance was impacted adversely due to
Covid-19 and hence we are not comparing the same.

Exhibit 45: BNHL’s average revenue/store declined by 17% Exhibit 46: JUBI too witnessed similar trend of decline in
over FY15-19 led by 2.6x increase in city presence from 19 average revenue/store between FY13-17 led by doubling
in FY15 to 68 in FY19 its city presence from 123 in FY13 to 264 in FY17
Revenue per store (Rs mn - LHS) No of cities Revenue per store (Rs mn - LHS)
80 74 100 30
31 300
70 29 27
62 80 250
27
60 24
60 25 200
50 23
40 21 150
40
19
30 20 100
17
20 0 15 50
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: Ambit Capital research, Company, Standalone for BNHL Source: Ambit Capital research, Company
Exhibit 47: Between FY1519, BNHL added 49 new cities and 81 new stores; 44% of the
new store addition was in tier 2/3 cities
Stores in metro/Tier 1 cities Stores in Tier 2/3 cities

160 Share of tier 2/3 stores 35%
140 30%
120
25% In FY20, Barbeque Nation
100 Restaurants in Delhi NCR, Mumbai
20% and Bengaluru together
80 contributed 38% of revenue (vs
15%
60 30% stores).
10%
40
20 5%
0 0%
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Exhibit 48: Stores opened in FY13 and FY14 were generating >`65mn revenue in
their 3rd of operation and >`70mn revenue in their 4th year of operation
FY13 FY14 FY15 FY16 FY17

100 A new restaurant generally
Revenue per store (` mn)
experiences lower results of

80 operations due to initially lower
sales and higher start-up operating
60 costs. For eg, the daily avg revenue
per restaurant which commenced
40 operations prior to the start of
FY20 was `167,758 in FY20, while
the daily average revenue per
20
restaurant for restaurants newly
added during FY20 was `115,828
0 (~31% lower) in FY20.
Pre FY13 stores Stores opened in FY13 Stores opened in FY14

…EBITDA margins to follow

Lower revenue per store (as discussed above) also impacted EBITDA margin of BNHL EBITDA margin gets adversely
led by impact of negative operating leverage. EBITDA margin declined by 230bps impacted on new store opening as
from 16.3% in FY14 to 14% in FY19. However, lower EBITDA margin was primarily on company incur significant
account of lower share of matured stores. We believe EBITDA margin would revert to employee expenses due to
~16% post FY23 as the share of matured stores (>2 years old) increases. Matured relocation of restaurant
stores in FY18 and FY19 generated store-level EBITDA margin of ~23% vs 9-10% for management and staff to new
new stores; assuming 4-5% corporate overheads, we don’t see any reason why restaurants 30-60 days in advance
corporate-level EBITDA should not revert to 16%. of a new restaurant opening.
Exhibit 49: JUBI’s EBITDA margin improved materially as Exhibit 50: BNHL’s EBITDA margin was adversely
share of matured stores increased impacted due to decrease in share of matured stores;
expect margins to improve (as seen in JUBI)
EBITDA margin % of stores >2 yrs old (RHS) EBITDA margin % of stores >2 yrs old (RHS)
18% 75%
20% 100%
16% 70%
90% 14% 65%
15% 80% 12% 60%
70% 10% 55%
10% 8% 50%
60%
6% 45%
5% 50%
4% 40%
40% 2% 35%
0% 30% 0% 30%
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
Source: Ambit Capital research, Company Source: Ambit Capital research, Company, Standalone for BNHL
Exhibit 51: Store EBITDA margin crossed 18% in 3rd year of Exhibit 52: Mature stores (>2 years old) generated 23%
operations EBITDA margin in FY19
FY13 FY14 FY15 FY16 FY17 New stores Mature stores Overall
25% 25%
Store EBITDA margin
Store EBITDA margin
20% 20%
15% 15%
10%
10%
5%
5%
0%
Pre FY13 stores Stores opened Stores opened 0%
in FY13 in FY14 FY18 FY19 FY20

This elephant can fly

Barbeque Nation has the potential to meaningfully scale up its presence
(both stores and cities) due to (a) better store economics (faster payback
period and higher RoCE); (b) unique product offering (food and ambience);
and (c) lower competition (vis-à-vis QSR players). Ability to better sweat
assets (higher share of weekday and lunch cover vs industry) bundled with
superior EBITDA margin (due to zero royalty and low ad spends) drives one
of the best store-level RoCE levels for Barbeque Nation. Our analysis
suggests Barbeque Nation can reach 270/330/450 stores by FY25/FY30/FY40.
Recent focus and success in the delivery business drives upside risk. We
believe Barbeque Nation can also launch a few new formats (likely in Indian
cuisine) over the next 5-7 years given its experience in the dine-in and
delivery formats, understanding of micro market and lack of credible
competition in chain CDR.
Most efficient CDR player
BNHL’s ability to generate a relatively high proportion of revenue from weekday and
lunch covers arises because Barbeque Nation Restaurants are a popular choice for
corporate lunches during the week and families during the weekends. Barbeque
Nation Restaurants are located at close proximity to both commercial and residential
areas and as a result they host business lunches as well as informal get-togethers,
family celebrations and other events such as birthdays and social lunch get-togethers.
The higher weekday and lunch covers also help BNHL increase utilisation and
efficiently manage costs.
Exhibit 53: Barbeque Nation has been able maintain its Exhibit 54: Share of lunch covers has increased from 42%
weekday vs weekend cover at ~50:50 in FY15 to 46% in FY20
Weekend cover Weekday cover Dinner cover Lunch cover
48% 48% 49% 48% 49% 42% 44% 45% 45% 46% 46%
49%
52% 52% 51% 52% 51% 58% 56% 55% 55% 55% 54%
51%
Exhibit 55: APC increased by 2% CAGR over FY15-20, Exhibit 56: …partially offset by slight decrease in average
driving higher bill size… group size
Average bill size (LHS -Rs) APC (Rs)
Cover per store (LHS - in '000s) Average group size
3,250 900 120 5
800
100 4
3,000 700
600 80
3
500
2,750 60
400
2
300 40
2,500 200
20 1
100
2,250 0 0 0

We believe Barbeque Nation can further expand its reach in terms of store and city
provided it refrains from indulging into further capital misallocation decisions. Lower
capex, payback period and breakeven sales along with superior EBITDA margin for
BNHL imply a higher number of stores become profitable, which can drive its ability
to reinvest back into the business for growth.
Exhibit 57: Within CDR formats, Barbeque Nation has the lowest capex per store and
highest store level EBITDA margin…
Capex per store (Rs mn - LHS) EBITDA margin

50 25%
45
40 20%
35
30 15%
25
20 10%
15
10 5%
5
0 0%
Barbeque
Chilli’s
KFC
Kebab Factory
Burger King
Pizza Hut
Domino’s
McDonald’s
Nation
The Great
CDR QSR
Exhibit 58: …leading to faster payback period and lower breakeven sales
Payback period (Years - LHS) BE sales (Rs mn)

8 50
7 45
40
6
35
5 30
4 25
3 20
15
2
10
1 5
0 0
KFC
Barbeque
Burger King
Chilli’s
Pizza Hut
Kebab Factory
Domino’s
McDonald’s
Nation
The Great
CDR QSR
Exhibit 59: While QSR was the most preferred format in Metros and Mini Metros, CDR
was the most preferred format in Tier 1 and II cities
Avg household Preferred Avg spend per household Eating out frequency per
Type
size formats per month (`) household per month
QSR: 37%
Metros 4.09 6,500 - 6,750 7-8
CDR: 25%
QSR: 48%
Mini Metros 4.12 4,500 - 4,750 5-6
CDR: 21%
QSR: 31%
Tier I and II 4.80 2,750 - 3,000 4-5
CDR: 40%
Source: Ambit Capital research, Company, Notes: Metros: Delhi-NCR and Mumbai; Mini metros: Next 6 cities
with population >5mn (Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata & Pune); Tier I: Population 1 to
5mn; Tier II: Population 0.3 to 1mn

Exhibit 60: Tier I & II towns have grown faster (2x) than Top 8 cities during FY16-20,
driving better growth opportunities for CDR players like Barbeque Nation
Chain Standalone Unorganised Overall

35%
Food services FY16-20 CAGR
30%
25%
20%
15%
10%
5%
0%
Mega Metros Next 6 cities Next 21 cities Rest of India
Immune from the threat of online delivery; however, it can drive optionality
While most of the restaurant players (including QSR) differentiate themselves on food,
Barbeque Nation not only differentiates itself on its food but also on the dine-in
experience. Hence, we don’t see any substantial risk from food aggregators/home
delivery given the experience of “over-the-table grill barbeque” is unique and can
neither be replaced by home delivery nor home cook food.
Exhibit 61: Eating out continues to dominate over ordering-in across all city types led by limited out of home entertainment
opportunities in India
Eating-out Frequency per Average Spend Ordering-in Frequency Average Spend per Ordering-
City Type Month per Outing (`) per Month in (`)
Mega Metros 5.7 6.1 6.3 902 998 1,039 1.0 1.7 2.1 410 466 495
Mini Metros 5.0 5.3 5.5 752 829 861 0.9 1.4 1.9 360 410 433
Tier I & II 4.3 4.6 4.8 612 674 706 0.6 0.9 1.1 263 299 316
Source: Ambit Capital research, Barbeque Nation RHP
Store addition to accelerate after a lull

After adding 21 stores/year on average during FY16-20, BNHL’s store addition took
a hit during FY21 due to stretched liquidity and leveraged balance sheet. However,
led by recent fund-raise through an IPO (`3.3bn), BNHL is now a net cash company.
We expect BNHL to add 20/25/25 stores during FY22/23/24. Availability of better
rental deals and sites (led by shrinkage in incumbents due to Covid disruption) and
improving store economics (led by incremental revenue from delivery) are further
tailwinds for store expansion.
Exhibit 62: Store expansion has scope to turn more aggressive
250 Total outlets (LHS) Outlets addition (RHS) 30

25
200
20
“We are planning to expand our
150 15 network by opening 20 new stores
during FY22. With multiple
100 10
strategic initiatives and learnings
5 from the previous year, we are well
50 poised to continue our growth
-
trajectory during the coming year”
- (5)
FY2…
FY2…
FY2…
– Kayum Dhanani (MD)

FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21

Potential to open 270/330/450 stores by

FY25/FY30/FY40
One of the key scalability drivers for Barbeque Nation’s restaurant is its ability to
attract corporate customers (large as well as SMEs). Our checks suggest Barbeque
Nation gets 35-40% of its overall revenue from corporate customers (higher share in
tier 1/metro cities and lower in tier 2/3 cities).
Exhibit 63: Barbeque Nation is significantly underpenetrated in the top-8 and middle
15 cities and also in terms of overall city reach
Exhibit 64: Our store potential estimate implies 1 store of Barbeque Nation for every 5 stores of Domino’s in top 8 cities and
middle 15 cities and 1 store of Barbeque Nation for every 8 Domino’s stores in the next 127 cities
Barbeque Nation Barbeque Nation potential
No of stores per mn population Domino's (FY20)
FY20 actual FY20 FY25 FY30 FY40
Top 8 cities 9.5 0.9 1.7 1.8 1.9 1.9
Middle 15 cities 6.3 0.8 1.1 1.4 1.5 1.9
Next 127 cities 4.5 0.5 0.6 0.7 0.9 1.4

Exhibit 65: Barbeque Nation has potential for 330/450 restaurants in top 150 cities by
FY30/FY40 (vs current reach of 147 restaurants across 77 cities)
Current Restaurant potential in
City
restaurant count FY20 FY25 FY30 FY40
Mumbai 14 37 43 50 58
Delhi NCR 19 28 32 37 43
Bengaluru 13 17 20 22 26
Hyderabad 8 14 16 18 21
Ahmedabad 2 11 13 15 17
Chennai 8 10 12 13 16
Kolkata 5 9 10 12 14
Pune 6 10 11 13 15
Total for top 8 cities 75 136 157 180 210
Jaipur 2 4 5 6 9
Lucknow 3 4 5 6 8
Nagpur 1 3 4 5 7
Indore 1 3 3 4 6
Patna 1 2 3 4 5
Agra 2 2 3 3 5
Nashik 1 2 3 3 4
Varanasi 1 2 2 3 4
Ranchi 1 2 2 2 3
Raipur 1 1 2 2 3
Guwahati 1 1 2 2 3
Chandigarh 2 1 2 2 3
Bhubaneswar 1 1 1 2 3
Kochi 1 1 1 1 2
Siliguri 1 1 1 1 2
Total for middle 15 cities 20 30 39 46 67
Total for next 127 cities 52 54 77 107 177
Grand Total for 150 cities 147 220 273 333 454
Source: Ambit Capital research, Company, Zomato
Potential to surprise on store expansion

With BNHL’s increasing focus on delivery, we see upside risk to our store estimates Management is also exploring to
given delivery business is RoCE-accretive, does not cannibalize dine-in sales and aids add point of sales/separate small
in new customer acquisition. delivery only outlets which can
increase overall delivery area and
Exhibit 66: Delivery business is RoCE accretive and can further aid in driving store resultant better sales
expansion
Per store matrix Dine-in store Delivery (incremental) Dine-in + Delivery
Capex (` mn) 27.5 0.5 28.00
Revenue (` mn) 56.6 5.7 62.23
Gross margin 65.5% 65.5% 65.5%
Employee cost 21.0% 12.0% 20.2%
Rent 10.5% 0.0% 9.5%
Delivery and packing cost 0.0% 16.7% 1.5%
Other cost (power, etc) 13.5% 13.5% 13.5%
EBITDA margin 20.5% 23.3% 20.8%
EBIT margin 17.3% 22.7% 17.8%
Asset turn 2.1 11.3 2.2
Pre-Tax RoCE 36% 257% 39%

Running a differential pricing strategy to drive growth

BNHL has dynamic pricing, charging different prices across different stores across
cities (and even within cities) based on location/footfalls, competitive intensity and
presence of other CDR players, and rentals. Such a strategy helps in maintaining
store-level margins where pricing factors in throughput/footfalls, store rental, raw
material costs and supply chain overheads. Barbeque Nation restaurants also run
“Early bird” prices (12 noon for lunch and 6pm for dinner) which offer lower price
points and ensure increased table turns while catering to price-sensitive customers.
Exhibit 67: Mumbai prices vary 5-9% depending upon mall/standalone stores
Mumbai Mall Standalone Variation
In Mumbai, prices for mall outlets
Dining day Weekend Weekday Weekend Weekday Weekend Weekday
are 5-9% higher over weekend’s
Veg (both lunch and dinner) vs
Lunch 929 799 949 799 -2% 0% standalone outlets. Also, while
Dinner 1,029 1,029 949 949 8% 8% prices for weekday lunches are
Early Bird - Lunch 929 799 949 799 -2% 0%
similar, there is a 5-9% variation in
dinner prices even on weekdays.
Early Bird - Dinner 929 929 849 849 9% 9%
This shows that BNHL is able to
Non-Veg pass on additional costs (mall
Lunch 1,099 899 1,049 899 5% 0% rentals are higher) to maintain
Dinner 1,099 1,099 1,049 1,049 5% 5% margins in the longer run.
Early Bird - Lunch 1,099 899 1,049 899 5% 0%
Early Bird - Dinner 1,029 1,029 949 949 8% 8%
Source: Ambit Capital research, Company. Outlets: Atria Mall (Worli) and Bandra (Hill Road), Mumbai
Alcohol serving restaurant share is lower, but considerable mix across cities
~60% of Barbeque Nation restaurants do not serve alcohol, likely due to (a) high
liquor license price (`0.4-`1mn per restaurant including excise, subject to state-wise
regulations); (b) brand placement as ‘Family Restaurant” in Tier 2/3 cities (only 28%
Barbeque Nation outlets serve alcohol vs 44% in case of Metro and tier 1 cities); and
(c) lower demand considering buffet takers are already paying a premium and wish
to utilize on food consumption. Also, alcoholic beverages involve additional
overheads (license cost, bar inventory, bar tending staff etc.) and BNHL may only be
adding such services where demand is higher. For example, while 11 out of 13
Barbeque Nation restaurants in Bangalore serve alcohol, none of the restaurants in
Mumbai (14) currently serve alcohol. So while the metro share is high, alcohol
serving is not a metro-wide phenomenon for BNHL.
Exhibit 68: Only 39% of Barbeque Nation’s restaurants serve Exhibit 69: Larger portion of alcohol serving
alcohol restaurants lies in Metro cities
Alcohol served Alcohol not served
Alcohol not
served,
61% 54%
64%
72% 73%
Alcohol
served, 46%
39% 36%
28% 27%
Metro Tier 1 Tier 2 Tier 3

Source: Ambit Capital research, Zomato Source: Ambit Capital research, Zomato

Capital allocation - More misses than hits

While BNHL’s capital allocation in its core business (Barbeque Nation
restaurant in India) has been fruitful (~20% pre-tax RoCE between FY10-19),
investments in new venture (Johnny Rockets – cash loss of `414mn) and
overseas expansion (cumulative loss of `700mn over FY17-20) have been a
drag on overall profitability and cash flows. Toscano (acquired in FY21 for
`675mn) looks promising from a profitability perspective but scalability is
questionable due to premium offering. We expect BNHL’s FCF generation to
meaningfully pick up from FY23 (akin to JUBI’s FCF generation trend seen
during FY18), which along with the IPO proceeds will make BNHL debt-free.
Operating cash flows from core business can fund growth capex
BNHL’s standalone operation (Barbeque Nation restaurant in India) has been
consistently generating operating cash flows (average `860mn during FY18-20)
which has been reinvested back into the business in the form of capex (for new store
expansion) to drive growth. While BNHL has not generated any significant FCF over
the last 5 years as it kept reinvesting back into the business (27% store CAGR over
FY15-20), we expect FCF generation to turn meaningful from FY24 led by higher
share of matured stores (driving better operating cash flow generation) and lower
capex intensity. During high-growth years, FCF is also impacted due to investment in
setting up the supply chain and commissaries benefit which arise over a long period
of time. Case in point is JUBI which generated 86% of its last 10 years’ FCF during
FY18-20.
Exhibit 70: FCF generation for JUBI witnessed a sharp rise in FY18 led by 90% of the
stores being matured
CFO FCF % of stores >2 yrs old (RHS)

4,500 100%
3,500 90%
80%
2,500
` mn
70%
1,500
60%
500 50%
(500) 40%
FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Source: Ambit Capital research, Company, Pre-IND AS 116 cash flows
Exhibit 71: With healthy operating cash flow generation and higher number of stores
to reach maturity, FCF generation for BNHL is expected to turn substantial
CFO FCF % of stores >2 yrs old (RHS)

2,500 95%
2,000 85%
1,500
75%
1,000
` mn
65%
500
55%
-
(500) 45%
(1,000) 35%
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY22E
FY23E
FY24E
FY25E
Source: Ambit Capital research, Company, Pre-IND AS 116 cash flows


Not the wisest capital allocator

BNHL invested `3.7bn (over FY16-20) in growth capex for its core business which was
funded entirely through operating cash flow generation of `3.7bn. During the same
period, BNHL invested `1.8bn (funded through borrowings and equity dilution) in (a)
Johnny Rockets – ~`400mn; (b) international operations – ~`700mn; and (c) Toscano
- ~`700mn which led to increase in net debt:equity from 0.3x in FY16 to 2x in FY20.
Barring Toscano, none of the other venture seems to be on track to recoup loss.
BNHL has already exited Johnny Rockets and has written off the investment. It has
also provided for impairment loss of ~`400mn on its international subsidiary and
`271mmn on Toscano.
Exhibit 72: BNHL funded its capital needs through cash Exhibit 73: …which were deployed primarily towards
flow from operations, borrowings and equity fund-raise… capex and investment in subsidiaries
Investment
in
funds: FY16-20
Source of funds:
Application of
subsidiary,
Issue of 30%
FY16-20
equity Interest
CFO, 62% expense,
shares, 13%
7%
Borrowing, Capex,
Dividend
25% 61%
paid, 2%
Exhibit 74: Subsidiaries has been a drag on profitability and cash flow generation over FY18-20
Standalone Consolidated Subsidiary (implied)
Parameters
FY18 FY19 FY20 FY18 FY19 FY20 FY18 FY19 FY20
Revenue 5,712 7,035 7,871 5,863 7,390 8,470 152 356 599
LTL EBITDA 866 988 796 766 748 767 (100) (240) (29)
PAT 201 (370) (927) 68 (212) (329) (133) 158 597
LTL CFO 797 821 1,003 679 512 935 (118) (309) (68)
LTL FCF 154 (131) 207 (332) (787) 94 (486) (656) (113)
Johnny Rockets: Failed to take off

Prime Gourmet Private Limited (PGPL, erstwhile subsidiary of BNHL) obtained the
India master franchise rights of international burger chain Johnny Rockets in 2013.
PGPL operated up to 7 Johnny Rockets restaurants in India, however, all the Johnny
Rockets restaurants were eventually closed (by 2018) due to commercial reasons and
subsequent termination of the International Master Development Agreement (IMDA).
Over FY17-19, BNHL invested (in the form of equity and loans) over `330mn in PGPL
and assumed liability towards bank loan of `84mn taken by PGPL, leading to an
overall loss of `414mn on its disposal in FY19 (for `0.5mn).

Exhibit 75: PGPL incurred cumulative loss of `394mn over Exhibit 76: …which led to `414mn of loss for BNHL on
FY17-19… disposal of PGPL
Particulars (` mn) FY17 FY18 FY19 Particulars FY19 (` mn)
Revenue 70 112 40 Carrying value of investments and loans and advances 330.6
EBITDA (6) (35) (1) Less: Consideration received 0.5
Loss before exceptional items and tax (38) (107) (137) Net loss 330.1
Exceptional Items (4) (19) - Liability towards bank loan taken by PGPL assumed by
83.6
Loss on disposal - - (90) BNHL pursuant to the guarantee given by BNHL
Loss from discontinued operations
(41) (126) (227) Net loss on disposal of investments 413.6
before tax
International expansion is burning cash as well

BNHL went global in 2016 with the first Barbeque Nation restaurant in Dubai. In
2018 it expanded its international footprint in the Asia Pacific region by setting up a
Barbeque Nation restaurant in Kuala Lumpur, Malaysia. However, post the success of
2 international outlets, BNHL over-expanded in FY19, leading to loss in its
international operations. BNHL has since then course corrected and has already
closed two International Barbeque Nation restaurants in Ras al Khaima and
Jumeirah, UAE due to commercial reasons. International Barbeque Nation restaurant
owned and operated by BNHL increased from 2 in FY18 to 5, 6 and 6 in FY19, FY20
and the eight-month period until 30 November 2020, respectively
Exhibit 77: International operations - loss-making across all years and locations
International subsidiary loss (` mn) FY17 FY18 FY19 FY20*
Barbeque Nation (MENA) Holding Limited (2) (19) (48) (11)
Barbeque Nation Restaurant LLC (28) (110) (114) (293)
Barbeque Nation (Malaysia) Sdn.Bhd - (5) (33) (22)
Barbeque Holdings Pvt Ltd - (2) (1) -
Barbeque Nation Holdings Pvt Ltd - (2) (1) (1)
Barbeque Nation International LLC - - (5) (8)
Total (30) (139) (202) (336)
Source: Ambit Capital research, Company, * FY20 includes the impact of Ind AS 116
Exhibit 78: Over FY17-20, BNHL invested `700mn (including loans and advances) in
international subsidiaries and took an impairment loss of `388mn
Particulars (` mn) FY17 FY18 FY19 FY20
Investment in international subsidiaries 19 - 258 37 Company has indicated in the RHP
Loan and advances (net) given to international subsidiaries - 126 149 112 towards possibility of rolling out
restaurants in select international
Total 19 126 407 149
cities where they can leverage their
existing infrastructure and
Provision for impairment on loans and investment - - 275 113 expertise.
Toscano seems to be interesting but scalability is a challenge

In FY20, BNHL acquired 61.35% stake for `675mn in Red Apple which owns and
operates 9 restaurants under the brand name, “Toscano”, a casual dining Italian
restaurant chain and operates one restaurant each under the brand names “La
Terrace” and “Collage” respectively in 3 cities (Bengaluru, Chennai and Pune) in
India. Red Apple (Toscano) has been the only profitable investment/venture outside
the core business of BNHL in India. However, while the format is profitable with
economics better than that of Barbeque Nation, it is not scalable beyond the top 8-10
cities given its premium offering/price point.

Exhibit 79: Toscano/Red Apple accounted for only 5% of consolidated revenue in FY20
FY17-20
FY17 FY18 FY19 FY20
` mn CAGR
Pre IND-AS Pre IND-AS Post IND-AS Post IND-AS
Revenue 318 352 378 449 12.2%
Gross margin 69.0% 70.3% 73.4% 73.5% 447bps
EBITDA 31 51 95 86 40.2%
EBITDA margin 9.8% 14.4% 25.0% 19.2% 936bps
EBIT 12 34 52 24 26.4%
EBIT margin 3.7% 9.6% 13.7% 5.4% 161bps
PBT 14 45 12 7 -19.5%
Exhibit 80: BNHL provided for impairment in Red Apple in the year of acquisition itself
` mn FY20 8MFY21
Investment 675 675
Bank guarantee given by BNHL - 10
Less: provision for impairment (271) (271)
Exposure post impairment 404 414

Deleveraging of balance sheet and

earnings trajectory to drive re-rating
BNHL has been successful in driving profitable growth (in its standalone
business) in a highly competitive and dynamic market. Apart from JUBI,
BNHL is the only food services player in India with consistent RoCE and
growth over the past decade. However, compared to QSR players, Barbeque
Nation lags on (a) total addressable market due to higher average spending
per head and hence limiting overall store and city potential; (b) limited
opportunity to upsell and drive SSG beyond food inflation; and (c) lower
frequency of revisit implies it should trade at a discount to successful QSR
company like Jubilant FoodWorks despite faster growth. However, valuation
gap of 50% (on FY23 EV/EBITDA) against QSR players like WLDL and BKI is
unwarranted given better store economics (3.5yr payback period vs 5-7yrs
for peer), store level RoCE (36% vs 15-20% for peers) and lack of competent
competition compared to Burger. Initiate with a BUY with a 24M/36M TP of
`1,200/`1,380 (41%/62% upside).
DCF-based 2-year/3-year forward TP implies

`1,200/`1,380
Our 2-year/3-year target prices of `1,200/`1,380 factor 400bps EBITDA margin
expansion over FY23E-FY40E, 297/407 Barbeque Nation restaurants in India by
FY30/FY40, and CoE of 14%. Our terminal growth rate of 5% is in line with expected
growth/inflation in foods categories. Increase in revenue per store through better-
than-expected performance in online delivery can drive further upside.
Revenue/EBITDA CAGR of 11%/13% over FY20-40 implies only 6.5% market share
(vs 6% currently) in FY40 (assuming 10% CAGR for industry). Key risk: Incremental
capital allocation in international operations and foray into/acquisition of newer
formats in India.
Exhibit 81: Our DCF-based 2yr/3yr TPs of `1,200/`1,380 imply 41%/62% upside
Intrinsic value calculation (` mn, unless specified) 2yr forward 3yr forward
PV of FCF 26,311 29,837
Terminal Growth rate 5% 5%
PV of Terminal Value 23,293 26,132
Total value of firm 49,603 55,969
Less: Net debt (cash) 4,558 4,161
Total equity value 45,046 51,808
Total shares 37.54 37.54
Equity value per share (`) 1,200 1,380
CMP (`) 850 850
Upside 41% 62%

Exhibit 82: Key assumptions - Expect store addition momentum to pick up from FY22 and BNHL to turn PAT positive in
FY23E and FCF positive in FY24E
Consolidated (` mn, unless
FY20 FY21 FY22E FY23E FY24E Comments
otherwise stated)
Store additions (no.) 31 - 22 28 28
Total stores (no.) 164 164 186 214 242 We model revenue CAGR of 14% over FY20-24E led by
Revenue 8,470 5,071 6,807 11,911 14,343 10% CAGR in store count
Revenue growth 15% -40% 34% 75% 20%

Gross margin 65.5% 64.8% 66.0% 66.5% 67.0% We model 21% CAGR in EBITDA over FY2--24E. EBITDA
margin improvement is led by GM improvement, benefit
EBITDA 1,642 464 1,191 2,894 3,571
of operating leverage and curtailment in loss of
EBITDA margin 19.4% 9.1% 17.5% 24.3% 24.9% international subsidiaries
Adj PAT (165) (898) (368) 628 1,011 We model BNHL to report positive PAT led by improving
Adj PAT margin -2.0% -17.7% -5.4% 5.3% 7.0% EBITDA margin and decline in interest cost.
Cash flow parameters

CFO (pre IND AS 116) 935 138 696 730 1,822
We model cumulative FCF/CFO of `0.4bn/`3.3bn over
Capex (841) (143) (755) (1,048) (1,069) FY22E-24E. Increase in CFO is led by improvement in
profitability (EBITDA margin)
FCF 94 (6) (59) (317) 754
Balance Sheet
Net debt (excluding lease liability) 1,918 (1,245) (721) (876) (2,291)
We model net cash of `0.9bn/`2.3bn in FY23E/FY24E.
Gross block turn 1.4 0.8 0.9 1.4 1.5
RoCE to improve to 18%/22% during FY23/FY24
RoCE (pre tax) 4% -10% -1% 18% 22%
Exhibit 83: Scenario analysis of current valuation at FY23 Exhibit 84: … and on LTL
EV/EBITDA (on post IND AS 116)…
FY23 FY23 EBITDA margin FY23 EV/EBITDA FY23 LTL EBITDA margin
EV/EBITDA 22% 23% 24% 25% 26% (LTL) 13% 14% 15% 16% 17%
9% 15.1 14.5 13.9 13.3 12.8 9% 21.8 20.2 18.9 17.7 16.6
FY20-23 revenue
FY20-23 revenue
10% 14.7 14.1 13.5 12.9 12.4 10% 21.2 19.7 18.4 17.2 16.2
CAGR
CAGR
11% 14.3 13.7 13.1 12.6 12.1 11% 20.6 19.1 17.9 16.7 15.8
12% 13.9 13.3 12.8 12.3 11.8 12% 20.1 18.6 17.4 16.3 15.3
13% 13.6 13.0 12.4 11.9 11.5 13% 19.5 18.1 16.9 15.9 14.9
14% 13.2 12.6 12.1 11.6 11.2 14% 19 17.7 16.5 15.5 14.5
Source: Ambit Capital research Source: Ambit Capital research
Store expansion will taper, driving better profitability

We build in moderation in store growth to 8% CAGR over FY20-30 vs 24% CAGR
during FY10-20. We also factor in improvement in EBITDA margin led by higher
number of stores reaching maturity.

Exhibit 85: Revenue per store to increase led by Exhibit 86: EBITDA margin to inch back to its earlier peak
moderation in store expansion of 16% led by higher share of matured stores
Stores Revenue per store (RHS - Rs mn) % of stores <2 yrs old LTL EBITDAM - RHS
300 80 50% 18%
70 16%
250 40%
60 14%
200 12%
50 30%
10%
150 40
8%
30 20%
100 6%
20 4%
50 10%
10 2%
- - 0% 0%
FY15
FY16
FY17
FY18
FY19
FY20
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY22E
FY23E
FY24E
FY25E
FY21E
FY22E
FY23E
FY24E
FY25E
Exhibit 87: We expect CFO and FCF to pick up from FY23… Exhibit 88: …along with capital employed turns and RoCE
CFO FCF RoCE (pre-tax) Capital employed TO

2,500 25% 1.8
2,000 20% 1.6
15% 1.4
1,500
1.2
10%
1,000
` mn
1.0
5%
500 0.8
0%
0.6
- -5% 0.4
(500) -10% 0.2
(1,000) -15% 0.0
FY15
FY16
FY17
FY18
FY19
FY20
FY15
FY16
FY17
FY18
FY19
FY20
FY21E
FY22E
FY23E
FY24E
FY25E
FY21E
FY22E
FY23E
FY24E
FY25E
Source: Ambit Capital research, Company, LTL CFO and FCF Source: Ambit Capital research, Company
Store scalability may surprise positively

We believe out-of-home food consumption has multiple growth avenues. We don’t
expect eating out to be materially impacted at the cost of ordering in given India has
limited out of home entertainment opportunities and eating out is one of them. As
the out-of-home food market grows, it will provide many opportunities to open stores
in the same cities as well as enter new cities. Currently, Barbeque Nation is present
across only 77 cities. We note Swiggy/Zomato are present in 500+ cities. Growing
number of new residential areas and office complex will all open up significant
opportunities.
Exhibit 89: Our store potential estimate implies 1 store of Barbeque Nation for every 5 stores of Domino’s in top 8 cities
and middle 15 cities and 1 store of Barbeque Nation for every 8 Domino’s stores in the next 127 cities
Barbeque Nation Barbeque Nation potential
No of stores per mn population Domino's (FY20)
FY20 actual FY20 FY25 FY30 FY40
Top 8 cities 9.5 0.9 1.7 1.8 1.9 1.9
Middle 15 cities 6.3 0.8 1.1 1.4 1.5 1.9
Next 127 cities 4.5 0.5 0.6 0.7 0.9 1.4

Exhibit 90: Our assumptions imply extended period of growth till FY40E
DCF assumptions FY15-20 FY20-25E FY25-30E FY30-40E
Revenue CAGR 23% 14% 12% 9%
EBITDA CAGR 28% 20% 13% 10%
EBITDA margin (median) 19.6% 21.8% 25.5% 27.6%
PAT CAGR NA NA 20% 13%
FCF NA 22% 17% 10%
Exhibit 91: Of the `1,800mn of fresh fund raised, `546mn (30%) will be utilized towards funding new store expansion
Amount to be funded Estimated deployment of
Estimated
Key objective Details from the proceeds of the net proceeds (` mn)
cost (` mn)
IPO (` mn) FY22 FY23
Net Proceeds to be utilized for opening 20/6 new
Capex for expansion
restaurants in FY22/23. Cost of setting up a new BBQ
and opening of new 546 546 420 126
restaurant is ~`21mn. Plan to expand by setting-up new
restaurants
restaurants in metros, Tier I and Tier II cities.
Prepayment/ repayment To repay loans availed by BNHL and its subsidiary Barbeque
750 750 -
of borrowings Nations MENA Holdings (debt at `438mn as on 31-Jan-21)
General corporate
- 383 383 -
purposes
Total 1,679 1,553 126
Covid impact to be severe for CDR players like Barbeque Nation vis-à-vis
QSR players
Amongst various players in the food services space, QSR players and cloud kitchens
were the first to witness recovery during lockdown led by (a) higher saliency of
delivery even during pre-Covid period and (b) digital infra, product and packing
being already tuned for delivery. CDR players like Barbeque Nation soon adapted to
the new normalcy of delivery and launched product offerings like “Barbeque in a
Box”, “Grill in a Box”, etc to partially offset the impact of restrictions on dine-in.
However, with the 2nd wave of Covid driving further lockdown restrictions, we expect
restaurants with higher saliency of dine-in (like Barbeque Nation) to witness higher
impact of revenue and profitability.
Exhibit 92: BNHL saw delayed opening of stores vis-à-vis Exhibit 93: Recovery rate for Barbeque Nation has been
QSR players behind other chain/QSR players
JUBI WLDL BNHL JUBI WLDL BNHL

100%
100%
Operational stores
Revenue recovery
80%
80%
60% 60%
40% 40%
20% 20%
0% 0%
May-20
Oct-20
Jun-20
Aug-20
Apr-20
Jul-20
Sep-20
May-20
Jun-20
Aug-20
Sep-20
Oct-20
Apr-20
Jul-20

Exhibit 94: Run-rate of delivery sales of Barbeque Nation has stabilized at around
`90mn per month
Average daily
Delivery sales Delivery sales
Month Overall sales (` mn) YoY growth delivery sales per
(` mn) as % of overall
restaurants (`)
Apr-20 5.0 -99.2% 4.6 92% 2,211
May-20 17.3 -97.6% 14.2 82% 4,622
Jun-20 75.0 -90.0% 22.5 30% 6,703
Jul-20 125.2 -82.6% 30.5 24% 8,345
Aug-20 241.5 -65.0% 54.5 23% 14,060
Sep-20 389.8 -43.8% 75.3 19% 18,321
Oct-20 542.9 -23.1% 88.5 16% 18,529
Nov-20 610.8 -15.8% 88.9 15% 18,627
We expect near-term (6-12 months) revenue recovery to remain under pressure led
by intermittent lockdowns, restrictions on dine-in post lockdown and fear of a 3rd
wave of Covid. Due to high fixed cost model and impact of negative operating
leverage, we expect BNHL to make PAT loss (`544mn) in FY22 as well (vs `919mn in
FY21). Unlike QSR players which are expected to witness growth in FY22 (vs FY20;
barring WLDL), BNHL should inch back to growth (vs FY20) in FY23.
Exhibit 95: BNHL FY21 performance on EBITDA was ahead of other chain restaurant players like WLDL and Burger King
India
BNHL JUBI WLDL Burger King India
Change FY21 vs FY22 vs FY23 vs FY21 vs FY22 vs FY23 vs FY21 vs FY22 vs FY23 vs FY21 vs FY22 vs FY23 vs
Revenue -40% -20% 41% -15% 18% 38% -36% -6% 20% -41% 28% 72%
EBITDA -72% -27% 76% -13% 36% 61% -78% 0% 49% -86% 50% 131%
EBITDA margin -10.2% -1.9% 4.9% 0.7% 3.5% 3.8% -9.1% 0.9% 3.3% -9.3% 2.1% 4.3%
Source: Ambit Capital research, Company, Bloomberg
Exhibit 96: Business Framework: Jubilant FoodWorks followed by Barbeque Nations rank the highest
Barbeque Nation Jubilant FoodWorks Westlife Development Burger King India
Late entrant in the Burger

Best store-level economics in terms Most dominant and profitable Despite being present in India for
category; need to reinvest
Business of RoCE and payback period. With chain players in the chain last 25 years (same as JUBI), scale
aggressively in store expansion
Quality scale, corporate-level restaurant space. Leveraging its and profit have been lagging JUBI;
and brand implies profitability
RoCE/margins will catch up with learnings from Domino's to expand high royalty rates and low pricing
would remain under stress for the
store-level RoCE/margins into other categories power due to high competition
next few years
Right for store expansion is only in While Burger King has right for
Due to higher average spend per Already present in 280+ cities led
South and West markets while pan India, relatively larger store
Scalability head (2x-3x of QSR), larger store by highest brand recall, efficient
East and North are with a size, and lower store-level
format and higher saliency of supply chain, lower store size and
different entity/group, impacting economics imply scalability will lag
dine-in drive lower scalability attractive entry-level price points
overall scalability that of Domino's (JUBI)
Led by superior cash flow Master franchise agreement

generation, success in Domino's requires it to open at least 700
In-house developed brand, no
and well-integrated supply chain, stores by Dec 2026 (vs 265 as on
agreement with any international
JUBI is already experimenting McDonald's in India is far away FY21); hence Burger King India's
brand and highly experienced
across formats/cuisines (Chinese, from being profitable and focus will remain on scaling up its
promoter imply flexibility to try
Optionality Biryani, etc.) in India and has also scalable. With Burger King and core business. This is likely one of
new ventures. Learnings from
entered international markets. Wendy's increasing aggression in the key reason why Popeyes
Toscano (Italian restaurant) and
JUBI also recently acquired the the Burger category, Westlife is franchisee right went to JUBI
"Barbeque in a Box" (delivery
master franchisee right for likely to remain focused on its core despite both the brands (Burger
format) can be leveraged to foray
Popeyes in India and holds category (McDonald's). King and Popeyes) being owned by
into newer formats/cuisines
significant minority stake (~10%) the same company "Restaurant
in BNHL. Brands International"

Exhibit 97: Barbeque Nation is trading at 50% discount to other Indian chain restaurant players on FY23 EV/EBITDA despite
better than median RoE, and Revenue CAGR and EBITDA CAGR
EV/EBITDA (x) EV/Sales (x) RoE CAGR (FY20-23)
Mcap
Company Name FY20/ FY22/ FY23/ FY20/ FY22/ FY23/ FY20/ FY22/ FY23/
(US$ mn) Sales EBITDA PAT
CY19 CY21 CY22 CY19 CY21 CY22 CY19 CY21 CY22
Indian Chain restaurants
Barbeque Nation
453 22 30 12 4.3 5.3 3.0 (24%) (16%) 26% 12% 21% N/A
Hospitality
Burger King India 802 N/A 39 25 N/A 5.7 4.2 (29%) (4%) 1% 20% 32% N/A
Westlife Development 1,043 27 39 26 3.8 5.7 4.5 (1%) 3% 15% 6% 14% N/A
Jubilant FoodWorks 5,621 23 35 29 5.3 9.1 7.8 22% 33% 33% 11% 17% 33%
Median 23 37 26 4.3 5.7 4.3 (13%) (1%) 20% 12% 19% 33%
Other Discretionary company
Trent 4,050 34 53 32 6.0 8.5 5.9 7% 5% 11% 15% 16% 28%
Bata India 2,734 19 26 22 5.3 6.3 5.6 18% 19% 20% 6% 3% 11%
Relaxo Footwears 3,843 37 52 42 6.3 9.7 8.2 19% 19% 20% 12% 17% 21%
Avenue Supermarts 26,962 67 76 52 5.7 6.2 4.5 16% 13% 16% 20% 21% 24%
Titan 19,471 35 48 38 4.1 5.6 4.7 24% 23% 25% 14% 15% 18%
ABFRL 2,351 14 17 14 1.9 2.4 2.1 (12%) 4% 8% 6% 9% N/A
Page Industries 4,874 36 46 39 6.6 9.9 8.5 43% 50% 50% 13% 20% 22%
Median 34 47 35 5.7 6.3 5.6 17% 16% 18% 13% 16% 21%
International Chain Restaurants
McDonald's Corp 175,246 16 18 17 9.1 9.3 8.8 (85%) (137%) (61%) 4% (0%) 5%
Domino's Pizza Inc 16,462 21 23 21 4.3 4.7 4.4 (14%) (14%) (1%) 9% 9% 12%
Chipotle Mexican Grill
38,442 26 31 25 4.5 5.1 4.5 22% 28% 32% 14% 16% 38%
Inc
Yum! Brands Inc 35,775 20 20 19 7.3 7.2 6.8 (14%) (18%) (17%) 6% 5% 2%
Restaurant Brands
31,812 18 19 17 5.5 7.6 7.1 31% 31% 36% 3% 12% 31%
International Inc
Darden Restaurants Inc 18,561 19 13 12 2.0 2.1 1.9 (2%) 39% 37% 8% 26% N/A
Wendy's Co/The 5,096 18 16 15 4.9 4.1 4.0 24% 28% 38% 3% 1% 11%
Jack in the Box Inc 2,506 8 12 11 3.9 3.3 3.2 (7%) (11%) (11%) 5% (11%) 21%
Cracker Barrel Old
3,797 12 10 10 1.5 1.2 1.2 (6%) 28% 30% 10% 11% N/A
Country Store Inc
Brinker International Inc 2,840 9 8 8 1.1 1.0 1.0 (9%) (149%) (137%) 8% 9% 121%
Skylark Holdings Co Ltd 2,713 9 8 7 1.8 1.4 1.3 7% 1% 4% (5%) (5%) (14%)
Zensho Holdings Co Ltd 3,797 11 13 12 0.8 0.9 0.9 15% 13% 13% 3% 4% 0%
Collins Foods 1,137 8 11 11 1.4 1.8 1.6 9% 15% 15% 8% 1% 27%
Median 16 15 13 3.7 3.3 3.2 7% 13% 14% 8% 5% 12%
Source: Ambit Capital research, Company, Bloomberg
Exhibit 98: Despite better FY23 RoE and revenue CAGR over FY20-23, BNHL is trading
at ~50% discount to WLDL and BK India
FY23 relative valuation

35
30 JUBI
FY23 EV/EBITDA
25 BK India
20 WLDL
15
10 BNHL
5
0
0% 5% 10% 15% 20% 25%
FY20-23 Revenue CAGR
Source: Ambit Capital research, Company, Bloomberg, size of the bubble represents FY23 RoE

Catalysts & risks

Near term catalysts
 Deleveraging of balance sheet: With BNHL turning into a net cash company
(led by recent fund raised through IPO), its PAT growth will be significantly higher
vis-à-vis EBITDA growth due to financial leverage/savings in interest cost. This
would aid in improving overall balance sheet strength and profitability – a
potential trigger for re-rating of the stock.
 Improvement in performance of International subsidiary: Over FY18-20,
BNHL’s reported PAT loss of ~`1bn on account of exceptional items pertaining to
write-off of investment in subsidiaries. With BNHL exiting loss-making restaurants
and cost rationalization driving improvement in the performance of the remaining
6 international restaurants, we expect improvement in overall profitability of the
company.
Long term catalysts

 Improvement in store economics led by new revenue stream from
delivery: BNHL increased its focus on delivery during FY21 to recoup some of
the lost sales due to restrictions on dine-in. Delivery business has grown from 3-
4% of revenue in FY20 to ~15% during FY21 led by launch of “Barbeque-in-a-
Box,” in June 2020. Delivery does not meaningfully cannibalize dine-in revenue
from Barbeque Nation and hence incremental revenue from delivery will not only
drive higher revenue growth but will aid in improving profitability.
 Leveraging from learnings of Jubilant FoodWorks: With Jubilant joining
BNHL as an investor with significant minority shareholding and option to
nominate director on the Board, we believe BNHL can leverage the learnings of
Jubilant on the backend supply chain (to drive better sourcing and
standardization of food) as well as on the delivery front, both of which are
Jubilant’s forte.
 Consolidation of market: The pandemic has not only cleaned out many
unorganized players but has also created a vacuum in the organized space given
many organized restaurants players have either curtailed their business
operations or are refraining from expansion. In both these cases, Barbeque
Nation stands to win from favorable lease term and availability of better real
estate sites driving better store economics.
Risks
 Capital misallocation and delay in deleveraging: Historically, BNHL has not
fared well on its capital allocation decisions when expanding into other
brands/formats or the international market. With recent fund raised through IPO,
we expect BNHL to be a net cash company by FY23. With the standalone business
having generated average operating cash flows of `800-1,000mn in the last 3
years, if BNHL further exploits other business ventures (as seen in the past), we
see risk of capital misallocation and delay in deleveraging of the balance sheet.
 Increase in international cash burn: While management has taken corrective
actions to shut a few loss-making Barbeque Nation restaurants in the
international markets, BNHL still operates 6 international outlets all of which
were loss-making in FY20. The company has indicated in the RHP possibility of
rolling out restaurants in select international cities where they can leverage their
existing infrastructure and expertise. Any such initiative by BNHL can further
increase the loss under international operations and may also delay deleveraging
of the balance sheet.
 Stake sale or pledging of shares by promoter: Some of the promoter and
promoter group entities are under financial stress and have already pledged their
shareholding in BNHL. Promoters currently own ~36% stake and any further sale
or pledging of shares by promoter or promoter group can potentially trigger
concerns around loss of control over the company.

Accounting and governance checks

BNHL scores fairly on some accounting and governance checks like (a) high
cash conversion ratio (~110% over FY16-20); (b) reasonable managerial
remuneration (5% of PBT in FY19); (c) well-known auditors (Deloitte Haskins
& Sells) and only 5% of consolidated assets and 1% of consolidated revenue
not audited by the principal auditor; and (d) low miscellaneous expenses
(1.5% of revenue in FY20). However, high contingent liabilities (188% of
networth in FY20) and multiple criminal proceedings/litigations against
BNHL, its directors and promoters are areas of concern.
Cash conversion: BNHL’ cash conversion has been very healthy historically with
average pre-tax CFO/EBITDA of ~110% over FY16-20. However, during the same
period, cumulative FCF generation has been insignificant (`60mn) due to restaurant
expansion being undertaken – it increased restaurant count by 2.3x from 45 at the
end of FY15 to 150 at the end of FY20.
Exhibit 99: BNHL’s cash conversion ratio was ~110% Exhibit 100: …however, cumulatively over FY16-20, its FCF
during FY16-20… generation was only `60mn due to restaurant expansion
CFO (Rs mn) CFO before tax/EBITDA FCF (Rs mn) Capex as % of CFO
1,200 160% 250 140%
140% 200 120%
1,000
120% 150
100%
800 100
100%
50 80%
600 80%
- 60%
60%
400 (50)
40% 40%
(100)
200 20%
20% (150)
- 0% (200) 0%
FY16 FY17 FY18 FY19 FY20 FY16 FY17 FY18 FY19 FY20
Managerial remuneration is reasonable

BNHL has not paid any remuneration to its Managing Director (who is also the
promoter) while remuneration to its Chief Executive Officer was reasonable at 3.3%
of FY19 PBT (FY20 not comparable due to loss). Overall FY20 remuneration
(increased by 89% YoY) is not comparable to FY19 as the Chief Financial Officer and
Chief People Officer joined in FY20 and the remuneration of the Head of Projects for
FY19 was only for one month (joined on 1 March 2019).

Exhibit 101: KMP remuneration as a % of PBT was within the regulatory limit in FY19
(FY20 is not comparable due to loss at PBT level)
Remuneration to
Designation FY19 FY20
KMP (` mn)
Kayum Dhanani Managing Director - -
Rahul Agrawal Chief Executive Officer 13.4 15.2
Amit V. Betala Chief Financial Officer NA 1.8
Gulshan Chawla Chief People Officer NA 2.7
Ahmed Raza Chief Technology Officer 4.7 5.5
Mansoor Memon* Head of Projects 1.0 12.0
Nagamani CY Company Secretary and Compliance Officer 1.3 1.4
Total 20.4 38.6
Standalone PBT before extraordinary items 407 (82)
As % of standalone PBT before extraordinary items 5.0% NA
Source: Ambit Capital research, Company, * Mansoor Memon joined the company on March 1, 2019 and hence
his FY19 remuneration is not comparable to FY20. Amit V. Betala and Gulshan Chawla joined the company in
FY20
Well-known auditors, reasonable audit fees

BNHL has been audited by Deloitte Haskins & Sells since FY14. The current signing
partner for BNHL books of account has also been the signing partner of listed
companies like Timken India, Solara Active Pharma Sciences and Dynamatic
Technologies.
Exhibit 102: Auditor’s remuneration as a % of revenue Exhibit 103: Only 4.6%/1.3% of consolidated total
was ~0.07% in FY20 assets/revenues was not audited by the main auditor in FY20
Details (standalone) FY18 FY19 FY20 Not audited by principal Auditor
FY18 FY19 FY20
(as % of consolidated)
Payment to auditors (` mn) 3.25 4.48 5.81
Total assets 6.7% 1.5% 4.6%
As % of revenue 0.06% 0.06% 0.07% Total revenue 2.8% 0.8% 1.3%
Contingent liabilities and capital commitments analysis

BNHL has a contingent liabilities of `1.1bn of which 47% pertains to Letter of Credit
given to bank by BNHL on borrowings by its subsidiaries while the balance 53% is
related to indirect-tax and direct tax related disputes. Capital commitment of `51mn
was insignificant as on 8MFY21 and is the estimated amounts of contracts remaining
to be executed relating to restaurant under construction.
Exhibit 104: Contingent liabilities increased significantly Exhibit 105: Capital commitments as a % of gross block has
during FY20 decreased over FY18-20
` mn FY18 FY19 FY20 8MFY21 ` mn FY18 FY19 FY20 8MFY21
Claims against the Group not acknowledged as debts Capital Commitments 127 76 103 51
Indirect tax matters 18 19 494 169 Networth 1,810 1,710 758 5
Direct tax matters 1 1 420 420 Gross Block 2,855 3,782 4,528 4,640
Custom duties saved 1 1 - - Capital commitments as a %
7% 4% 14% NA
of net worth
Stand-by Letter of Credit given to
384 584 513 517 Capital commitments as a
bank on borrowings by subsidiaries 4.4% 2.0% 2.3% 1.1%
% of gross block
Total 404 605 1,427 1,107
As % of net worth 22% 35% 188% NA
A well represented Board

The board of BNHL consists of 9 members, of which 3 are independent directors, 2
are nominee directors (of CX Partners and Xponentia), 3 are promoter directors, and
1 is an executive director (CEO). The composition of the board appears to be in
compliance with best practices. Further, Jubilant FoodWorks also has the right to
appoint a nominee director.

Exhibit 106: BNHL’s’ board comprises experts from various industries and fields
Director on
Name of Director Designation Age Background
Board since
Promoter Directors
 He holds a diploma in sole making from the Central Leather Research Institute,
Chennai.
Kayum Dhanani Managing Director 48 Nov-12  He has been associated with Sara Suole Private Limited since 2005, which is involved in
the business of manufacturing, processing and selling leather goods including, soles,
shoes and other leather accessories.
 He has done Senior Secondary school education from Vadodara.
Non-Executive
Raoof Dhanani 57 Jul-15  He was earlier involved in the fertilizers business (divested in 2013). He is currently
Director
involved in managing the operations of SHL.
 She holds a bachelor’s degree in home science with a major in clothing and textiles
Jul-15 from the Maharaja Sayajirao University of Baroda and a master’s degree in social work
Non-Executive (Previously from the Maharaja Sayajirao University of Baroda.
Suchitra Dhanani 56
Director Nov-06 to  She was appointed as a consultant to the Company from Jan-12 to Mar-12, and later
Mar-08) as an employee until Mar-13, for interior decorating and housekeeping related
activities.
Executive Director
 He holds a bachelor’s degree in commerce (Honours’) from SRCC, University of Delhi
and a post graduate diploma in management from IIM, Bengaluru.
Executive Director
Rahul Agrawal 38 Dec-20  Previously, was associated with E&Y and Beacon BVM Advisors. He was also associated
and CEO
with CX Advisors from Oct-09 to Jul-17.
 He joined BNHL in Jul-17 as President and CFO and was promoted to CEO in Jan-20.
Nominee Directors
 He holds a bachelor’s degree in science from the University of Maryland and a master’s
degree in business administration from the University of Baltimore.
 He was previously associated with Citibank NA for a period of five years and with Yes
Tarun Khanna Nominee Director 50 Apr-13 Bank Limited for a period of over three years.
 He previously worked with GE Capital Transportation Financial Services.
 He joined CX Advisors in February 2009 in the capacity of an investment principal and
is currently a partner of CX Advisors.
 He holds a bachelor’s degree in Mathematics (honors) from the University of Delhi and
a master’s degree in business administration from the Duke University.
Devinjit Singh Nominee Director 54 Jan-20  He was previously associated with Carlyle Group for over nine years and with Citigroup
N.A. and Citigroup Global Markets India Private Limited.
 He joined Xponentia Capital Partners in 2018 as the Founder and Managing Partner.
Independent Directors
Chairman, Non-
 He holds a bachelor’s degree in commerce from Vikram University, Ujjain and a
Executive and
T Narayanan Unni 81 Feb-09 bachelor’s degree in law from University of Indore. He is a member of the Institute of
Independent
Chartered Accountants of India and he has been a practising CA since Jul-75.
Director
 He holds a master’s degree in chemistry from Nagpur University and a diploma in
business management from Nagpur University. He is a certified associate of the Indian
Institute of Bankers.
 He joined SBI in Oct-79. He was promoted to chief general manager and was deputed
Independent
Abhay Chaudhari 65 Feb-17 to SBI Capital Markets, Mumbai from SBI.
Director
 He held the position of President and COO of SBI Capital Markets, Mumbai from Oct-
13 until Jan-16. He was involved with management, merger and advisory, private
equity, equity & debt markets and credit & project advisory during his tenure in SBI
Capital Markets.
 He holds a bachelor’s degree in commerce from Madras University and is an associate
Natarajan Independent member of the Institute of Cost Accountants of India.
55 Dec-20
Ranganathan Director  He was previously associated with Helion Advisors and is currently a designated partner
at Foundation Partners and Schatz Consulting
Building management team with a credible captain

We credit BNHL for its ability to build a strong professional management team. We
note that most of the top-layer management joined the business over the past 2-3
years.

Exhibit 107: While BNHL has been able to attract talent from companies like Bikanervala and JLL, it will need to ramp up
its mid-management to manage scale
With BNHL Experience Previous
Name Designation Education
since (Years) Organisation
Bachelor’s degree in commerce (honours’) from SRCC (Delhi);
Rahul Agrawal CEO Jul-17 15+ CX Partners, E&Y
Post graduate diploma in management from IIM (Bengaluru)
Bachelor’s degree in science from the University of Madras; Post
Amit V. Betala CFO Jan-20 7+ Graduate diploma in agribusiness management from IIM Clix Capital
Lucknow; Certified FRM (GARP)
Gulshan Chief People Bachelor’s degree in commerce from SRCC (Delhi); MBA from
Dec-19 7+ HCL Technologies
Chawla Officer MDI (Gurgaon)
Bachelor’s degree in commerce from University of Mumbai;
Chief Technology
Ahmed Raza Apr-12 20+ Certificate of proficiency in pro course, oracle 8/8i and visual ShawMan Software
Officer
basic 6.0 courses from Concourse Information Technology
Jun-07 (Full
Mansoor Bachelor’s degree in mechanical engineering from MJCET
Head of Projects time: Mar- 13+ Chase Contracting
Memon Hyderabad
19)
Nishant Projects and Bachelor’s degree in Architecture from Madhav Institute of
May-19 20+ Urban Ladder, Apple
Choukiker Maintenance Head Technology and Science
Head of Strategy,
B.Com from St. Xavier’s College (Kolkata), Chartered Jupiter Capital,
Kushal Budhia IR and Business Apr-19 11+
Accountant; MBA from NMIMS (Mumbai) Goldman Sachs
Development
MS (food, Nutrition and related services) from Delhi University;
Deputy General
Veena Kumari Sep-19 10+ PHD in Nutritional Sciences from Indira Gandhi National Open Bikanervala
Manager
University
Regional Expansion
Saikat Ghosh Apr-19 13+ MBA from International School of Business and Media JLL
Manager
Source: Ambit Capital research, Company, LinkedIn
Litigations against BNHL and its directors and promoters an area of concern
BNHL has multiple cases pending against it, however, majority of them are tax and
regulatory cases. There are 3 criminal proceedings filed against BHL as well – 2 of
these pertain to customers alleging that they were served non-vegetarian food
instead of vegetarian food at the Barbeque Nation Restaurant while 1 pertains to
issue of receipt of an incorrect amount when the customer dined at the Barbeque
Nation Restaurant. There are criminal cases pending against BNHL’s promoter and
directors as well. Two of the criminal cases are against SHL, 5 against Kayum
Dhanani (Managing Director) and 1 against Raoof Dhanani. All the 5 criminal cases
against Kayum Dhanani pertain to cheques issued (4 by Sara Soule and 1 by Samar
Retail) being returned by bank.
Exhibit 108: Details of cases filed against BNHL Exhibit 109: Details of cases filed against its directors and
promoters
Number of Amount involved Number of Amount involved
Nature of Cases Nature of Cases
outstanding cases (` mn) outstanding cases (` mn)
Actions by regulatory or Actions by regulatory or
23 Not ascertainable 74 Not ascertainable
statutory authorities statutory authorities
Indirect tax matters 29 178 Indirect tax matters 19 28
Direct tax matters 7 128 Direct tax matters 21 34
Criminal proceedings 3 Not ascertainable Criminal proceedings 8 14+
Material civil cases 1 4 Material civil cases 3 5+
Related-party transactions
Income and expense-related transactions with related parties have declined YoY and
was insignificant in FY20. However, investment and loan contribution to subsidiaries
increased meaningfully during FY20 primarily due to investment of `675mn in Red
Apple (Toscano) for acquiring 61.35% stake.

Exhibit 110: Barring investments, related-party Exhibit 111: Transactions with related parties (excluding
transactions with subsidiaries were insignificant subsidiaries) were insignificant during FY18-20
Related party transaction with Related party transaction excluding
FY18 FY19 FY20 FY18 FY19 FY20
subsidiaries (` mn) subsidiaries (` mn)
Income from subsidiaries 26 50 20 Income from related parties 3 1 -
As % of revenue 0.4% 0.7% 0.2% As % of revenue 0.1% 0.0% 0.0%
Expenses paid to subsidiaries 24 38 7 Expenses paid to related parties 70 65 64
As % of revenue 0.4% 0.5% 0.1% As % of revenue 1.2% 0.9% 0.8%
Investments and loans contribution 199 457 824 Investments and loans to related parties 2 5 6
as % of CFO 25% 56% 82% Investments as % of CFO 0% 1% 1%
Exhibit 112: Miscellaneous expense increased by 111% YoY to 1.5% of revenue in

FY20
` mn FY18 FY19 FY20
Miscellaneous expenses 36 55 116
As % of revenue 0.6% 0.8% 1.5%
Exhibit 113: Explanation for our forensic accounting scores on the first page
Segment Score Comments
BNHL scores high on cash flow conversion (Pre-Tax CFO/EBTDA), auditor’s remuneration, miscellaneous
Accounting GREEN expenses as % of revenue and related party transactions. However, it scores low on contingent liabilities as % of
networth and FCF generation
Led by higher saliency of dine-in and intermittent lockdowns being implemented across various cities, earnings
Predictability RED
predictability will be low for the next 6-12 months.
While repayment of debt will aid in reducing cash burn/interest cost, near-term earnings will be volatile as
Earnings momentum AMBER revenue recovery momentum will be a function of reopening of dine-ins, recovery of consumer sentiment and
confidence to go out and eat.

Financials - Consolidated
Balance sheet
Balance sheet (` mn) FY20 FY21 FY22E FY23E FY24E
Shareholders' equity 140 170 170 170 170
Reserves & surpluses (81) 2,269 1,907 2,525 3,520
Total networth 59 2,439 2,077 2,695 3,690
Minority interest 52 38 32 42 58
Lease Liability 4,816 4,498 4,498 5,434 6,452
Debt 2,065 1,210 1,070 - -
Total liabilities 6,993 8,185 7,678 8,171 10,200
Net block (incl. lease assets) 8,127 7,316 7,466 7,970 8,437
CWIP 109 60 60 60 60
Deferred tax assets 278 472 472 472 472
Cash 147 2,455 1,791 876 2,291
Inventory 149 202 224 326 354
Loans & advances 353 318 410 522 629
Other current assets 371 529 466 392 393
Total current assets 1,041 3,530 2,924 2,181 3,745
Total current liabilities and Provisions 2,562 3,193 3,245 2,513 2,515
Net current assets (1,521) 336 (321) (331) 1,230
Total assets 6,993 8,185 7,678 8,171 10,200
Income statement
Income statement (` mn) FY20 FY21 FY22E FY23E FY24E
Revenue 8,470 5,071 6,807 11,911 14,343
Gross Profit 5,548 3,288 4,492 7,921 9,610
Employee cost 1,975 1,352 1,668 2,323 2,783
Other Operating expenses 1,930 1,473 1,634 2,704 3,256
EBITDA 1,642 464 1,191 2,894 3,571
Depreciation 1,340 1,212 1,295 1,440 1,576
EBIT 303 (748) (104) 1,454 1,995
Other income 38 460 368 107 48
Interest 756 849 755 723 692
Extraordinary Income/expense (164) (21) - - -
PBT (251) (1,115) (491) 839 1,351
Tax 78 (197) (124) 211 340
Reported PAT (329) (919) (368) 628 1,011
Basic EPS (`) (11.8) (31.1) (9.8) 16.7 26.9

Cash flow statement

Cash flow statement (` mn) FY20 FY21 FY22E FY23E FY24E
PBT (251) (1,115) (491) 839 1,351
Depreciation 1,340 1,212 1,295 1,440 1,576
(Incr) / decr in net working capital 291 244 (6) (905) (146)
Tax (79) 12 124 (211) (340)
Cash flow from operations 1,810 679 1,308 1,778 3,084
Capex (841) (143) (1,445) (1,944) (2,044)
Cash flow from investments (1,529) (72) (1,077) (1,836) (1,995)
Net borrowings 618 (730) (140) (1,070) -
Interest paid (173) (226) (755) (723) (692)
Cash flow from financing (266) 1,700 (895) (857) 326
Net change in cash 15 2,308 (664) (915) 1,415
Ratio analysis/valuation parameters

Key ratios FY20 FY21 FY22E FY23E FY24E
Gross margin 65.5% 64.8% 66.0% 66.5% 67.0%
EBITDA margin 19.4% 9.1% 17.5% 24.3% 24.9%
EBIT margin 3.6% -14.7% -1.5% 12.2% 13.9%
Net profit margin -3.9% -18.1% -5.4% 5.3% 7.0%
Net debt: equity (x) 32.4 (0.5) (0.3) (0.3) (0.6)
Cash conversion days (32) (79) (61) (23) (22)
Gross block turnover (x) 1.4 0.8 0.9 1.4 1.5
RoCE (pre tax) 4% -10% -1% 18% 22%
RoCE (post tax) 6% -8% -1% 14% 16%
RoIC (post tax) 6% -10% -1% 17% 20%
RoE -24% -72% -16% 26% 32%
P/E (x) NA NA NA 51x 32x
EV/EBITDA (x) 22.2x 78.6x 30.6x 12.6x 10.2x
EV/Sales (x) 4.3x 7.2x 5.4x 3.1x 2.5x
RoCE driver
FY20 FY21 FY22E FY23E FY24E
EBIT margin 3.6% -14.7% -1.5% 12.2% 13.9%
Capital employed turns 1.2 0.7 0.9 1.5 1.6
RoCE (pre-tax) 4% -10% -1% 18% 22%

Institutional Equities Team

Research Analysts
Name Industry Sectors Desk-Phone E-mail
Nitin Bhasin - Head of Research Strategy / Accounting / Home Building / Consumer Durables (022) 66233241 nitin.bhasin@ambit.co
Ajit Kumar, CFA, FRM Banking / Financial Services (022) 66233252 ajit.kumar@ambit.co
Alok Shah, CFA Consumer Staples (022) 66233259 alok.shah@ambit.co
Amandeep Singh Grover Mid-Caps / Hotels / Real Estate (022) 66233082 amandeep.grover@ambit.co
Ashish Kanodia, CFA Consumer Discretionary (022) 66233264 ashish.kanodia@ambit.co
Ashwin Mehta, CFA Technology (022) 6623 3295 ashwin.mehta@ambit.co
Basudeb Banerjee Automobiles / Auto Ancillaries (022) 66233141 basudeb.banerjee@ambit.co
Deep Shah, CFA Media / Telecom / Oil & Gas (022) 66233064 deep.shah@ambit.co
Devjyot Singh, FRM Healthcare (022) 66233226 devjyot.singh@ambit.co
Dhruv Jain Mid-Caps / Home Building / Consumer Durables (022) 66233177 dhruv.jain@ambit.co
Jashandeep Chadha, CFA Metals & Mining / Cement (022) 66233246 jashandeep.chadha@ambit.co
Karan Khanna, CFA Mid-Caps / Hotels / Real Estate (022) 66233251 karan.khanna@ambit.co
Karan Kokane, CFA Automobiles / Auto Ancillaries (022) 66233028 karan.kokane@ambit.co
Mitesh Gohil Banking / Financial Services (022) 66233197 mitesh.gohil@ambit.co
Nancy Gahlot Strategy / Forensic Accounting (022) 66233149 nancy.gahlot@ambit.co
Nikhil Mathur, CFA Healthcare (022) 66233220 nikhil.mathur@ambit.co
Pankaj Agarwal, CFA Banking / Financial Services (022) 66233206 pankaj.agarwal@ambit.co
Prasenjit Bhuiya Agri & Chemicals (022) 66233132 prasenjit.bhuiya@ambit.co
Satyadeep Jain, CFA Metals & Mining / Cement (022) 66233246 satyadeep.jain@ambit.co
Sumit Shekhar Economy / Strategy (022) 66233229 sumit.shekhar@ambit.co
Udit Kariwala, CFA Banking / Financial Services (022) 66233197 udit.kariwala@ambit.co
Vamshi Krishna Utterker Technology (022) 66233047 vamshikrishna.utterker@ambit.co
Varun Ginodia, CFA E&C / Infrastructure / Aviation (022) 66233174 varun.ginodia@ambit.co
Vinit Powle Strategy / Forensic Accounting (022) 66233149 vinit.powle@ambit.co
Vivekanand Subbaraman, CFA Media / Telecom / Oil & Gas (022) 66233261 vivekanand.s@ambit.co
Sales
Name Regions Desk-Phone E-mail
Dhiraj Agarwal - MD & Head of Sales India (022) 66233253 dhiraj.agarwal@ambit.co
Bhavin Shah India (022) 66233186 bhavin.shah@ambit.co
Dharmen Shah India / Asia (022) 66233289 dharmen.shah@ambit.co
Abhishek Raichura UK & Europe (022) 66233287 abhishek.raichura@ambit.co
Pranav Verma Asia (022) 66233214 pranav.verma@ambit.co
Shiva Kartik India (022) 66233299 shiva.kartik@ambit.co
USA / Canada
Hitakshi Mehra Americas +1(646) 793 6751 hitakshi.mehra@ambitamerica.co
Achint Bhagat, CFA Americas +1(646) 793 6752 achint.bhagat@ambitamerica.co
Singapore
Srinivas Radhakrishnan Singapore +65 6536 0481 srinivas.radhakrishnan@ambit.co
Sundeep Parate Singapore +65 6536 1918 sundeep.parate@ambit.co
Production
Sajid Merchant Production (022) 66233247 sajid.merchant@ambit.co
Sharoz G Hussain Production (022) 66233183 sharoz.hussain@ambit.co
Jestin George Editor (022) 66233272 jestin.george@ambit.co
Richard Mugutmal Editor (022) 66233273 richard.mugutmal@ambit.co
Nikhil Pillai Database (022) 66233265 nikhil.pillai@ambit.co

Barbeque Nation Hospitality Ltd (BARBEQUE IN, BUY)
1,000
900
800
700
600
500
400
300
Apr-21
Apr-21
Apr-21
Apr-21
Apr-21
May-21
May-21
May-21
May-21
May-21
May-21
Barbeque Nation Hospitality Ltd
Source: Bloomberg, Ambit Capital research

Explanation of Investment Rating - Our target prices are with a 12-month perspective. Returns stated are our internal benchmark
Investment Rating Expected return (over 12-month)
BUY We expect this stock to deliver more than 10% returns over the next12 month
SELL We expect this stock to deliver less than or equal to 10 % returns over the next 12 months
UNDER REVIEW We have coverage on the stock but we have suspended our estimates, TP and recommendation for the time being NOT
NOT RATED We do not have any forward-looking estimates, valuation, or recommendation for the stock.
POSITIVE We have a positive view on the sector and most of stocks under our coverage in the sector are BUYs
NEGATIVE We have a negative view on the sector and most of stocks under our coverage in the sector are SELLs
NO STANCE We have forward looking estimates for the stock but we refrain from assigning valuation and recommendation
Note: At certain times the Rating may not be in sync with the description above as the stock prices can be volatile and analysts can take time to react to development.
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Ambit - Barbeque Nation Hospitality - Iniltiation - Nation Will Soon Queue To Eat Out - 31may2021

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Ambit - Barbeque Nation Hospitality - Iniltiation - Nation Will Soon Queue To Eat Out - 31may2021

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Barbeque Nation Hospitality

Nation will soon queue to eat out Consumer Discretionary

Competitive position: STRONG Changes to this position: STABLE

Attractive valuations and low expectation - Poised for a re-rating

Barbeque Nation India Toscano Barbeque Nation International

150 Invested in building internal ERP

First restaurant opened in Mumbai First restaurant opened in

One of India’s leading casual

147 restaurants across 77 Indian 11 restaurants across 3 Indian

Wide variety of food including Meal in the form of Barbeque in a

Cost for two

May 31, 2021 Ambit Capital Pvt. Ltd. Page 2

Borrowing, Capex, 61%

May 31, 2021 Ambit Capital Pvt. Ltd. Page 3

FY15 FY20 FY15-20 CAGR FY15 FY20 FY15-20 CAGR

Revenue (Rs bn)

FY18-20 avg GM FY18-20 avg EBITDAM

FY15 FY20 FY25E

May 31, 2021 Ambit Capital Pvt. Ltd. Page 4

Pub, bar, Quick

13% Ice cream,

Chain Standalone Unorganised Overall

May 31, 2021 Ambit Capital Pvt. Ltd. Page 5

Glimpsing through its evolution

May 31, 2021 Ambit Capital Pvt. Ltd. Page 6

Evolving from dine-in only casual dining restaurant to a multi-format player

First restaurant opened in First restaurant opened in

One of India’s leading casual

147 restaurants across 77 11 restaurants across 3 Indian

Wide variety of food including

Cost for two (`) `1,600-2,000 `2,400-3,000 `400-500 `800-1,000

May 31, 2021 Ambit Capital Pvt. Ltd. Page 7

May 31, 2021 Ambit Capital Pvt. Ltd. Page 8

Barbeque Nation India Toscano Barbeque Nation International

150 Invested in building internal ERP

May 31, 2021 Ambit Capital Pvt. Ltd. Page 9

Porter and SWOT analysis

Bargaining power of suppliers Bargaining power of buyers

Barriers to entry Threat of substitution

Improving Unchanged Deteriorating

Source: Ambit Capital research

May 31, 2021 Ambit Capital Pvt. Ltd. Page 10

May 31, 2021 Ambit Capital Pvt. Ltd. Page 11

Leading on growth, profitability to follow

May 31, 2021 Ambit Capital Pvt. Ltd. Page 12

Apart from driving repeat visits and

Source: Ambit Capital research, Company

#Branding: Micro market strategy drives better RoI

May 31, 2021 Ambit Capital Pvt. Ltd. Page 13

FY18 FY19 FY20 16% FY18 FY19 FY20

Domino's Barbeque Nation McDonald's Burger King

67% 71% 66% 66% 64% 65%

#Architecture: Most efficient casual dining restaurant player

May 31, 2021 Ambit Capital Pvt. Ltd. Page 14

Weekend cover Weekday cover Dinner cover Lunch cover

Consumers’ decision to dine-in at

Barbeque Nation also uses cloud-based Central Reservation System to accept

May 31, 2021 Ambit Capital Pvt. Ltd. Page 15

% of transactions with SMILES redemption Reservation share from digital assets as a %

Feb 2020 Dec 2020 Feb 2020 Dec 2020

Better store economics offsets limitation of larger

May 31, 2021 Ambit Capital Pvt. Ltd. Page 16

Specialty Restaurants: Diversification recipe gone wrong?