Barbeque Nation has become the latest restaurant chain to report disappointing Q2 results amid rising inflation and negative customer sentiment.
Pioneers in introducing innovative ideas for dining experience such as ‘over the table barbeque’, BBQ is now reeling under a persistent decline in sales, especially on the dine-in front.
It saw a sharp quarter-on-quarter decline of 6.8% in its sales during the three months ended September. Year-on-year, it managed to maintain growth of just 2.8%. Dine-in revenue came down by 6.5% during the quarter compared to the previous quarter, while it declined by 5% year-on-year.
The significant decline in sales during the second quarter is ascribed to the number of vegetarian days which accounted for about 76% of the period while usually it only accounts for 50%, said the management in an investor presentation.
“The operating revenue declined in Q2..due to the impact of increased number of vegetarian days, this specifically impacted dine-in demand in our business as compared to previous years,” said Rahul Aggarwal, CEO, BBQ Nation.
The revenue from delivery has also seen a significant decline as compared to the previous quarter. Compared to the previous quarter, revenue from delivery came down by 7.6%. However, on a year-on-year basis, it has shown a jump of 11%.
Speaking on the divergence between dine-in sales and delivery, Rahul Aggarwal pointed out that vegetarian days are more likely to impact dine-in as BBQ depends on group customers to drive a substantial portion of its dine-in revenues.
Group bookings are more likely to be cancelled or modified by vegetarian days, thereby hurting dine-in sales.
The company has registered a decline of 4% in gross profit compared to the first quarter, while it has improved by around 2% in terms of gross margin. The sequential increase in margins, said the management is especially due to the “cost initiatives taken by the company in the frontend and backend level” along with an improvement in gross margins and shutting down of stores.
“It's a mix of all three,” said Aggarwal.
However, the company expects to see a sales recovery in the coming months, given a shift in consumer sentiments and its strategy of capacity utilization to boost same-stores sales growth working well.