Barbeque-Nation Hospitality Ltd Management Discussions

GLOBAL AND INDIAN ECONOMIC LANDSCAPE

The global economy is currently traversing a period of cautious stabilisation, with growth forecast at 2.8% for 2025 and 3.0% for 2026. This outlook reflects ongoing structural headwinds, including trade fragmentation, persistent supply chain realignments, and tighter financial conditions. Advanced economies, notably the

United States and the Eurozone, are expected to register subdued growth of 1.8% and 0.8% respectively, as they contend with elevated borrowing costs and continued geopolitical uncertainties. While global inflation is projected to moderate to 4.5% in 2025, risks remain tilted to the upside, particularly for emerging markets, due to tariff escalations and volatility in global trade flows.

Amidst these global challenges, India continues to distinguish itself as a key driver of growth. The nation has surpassed Japan and became the worlds fourth-largest economy in 2025, with a nominal GDP estimated at $4.19 trillion. The International Monetary Fund projects Indias real GDP growth at 6.2% for 2026, following an expansion of 6.5% in 2025. Although this represents a moderation, India is expected to retain its status as the fastest-growing major economy globally. This resilience is underpinned by robust domestic consumption, particularly in rural areas, and strategic fiscal interventions such as recent tax reforms, which have contributed an estimated 630 billion to household disposable incomes. The broader global economic order is undergoing a notable transformation. Indias sustained momentum stands in contrast to Japans projected stagnation at 0.6% growth in 2025 and Germanys anticipated overtaking by 2028. Advanced economies are increasingly challenged by ageing populations and concerns around debt sustainability. In contrast, India benefits from a demographic dividend, with 65% of its population under the age of 35, and continues to leverage digital transformation to enhance its competitiveness. The services sector remains a principal contributor to GDP, while manufacturing gains traction through targeted policy initiatives. Global trade growth is expected to decelerate to 1.7% in 2025, with Indias export sector facing headwinds from tariff escalations and shipping cost volatility. However, India is well-positioned to capitalise on emerging opportunities in technology and renewable energy, supported by strategic international partnerships and supply chain diversification. The Reserve Bank of India maintains a prudent approach to inflation, targeting 4.2% for FY25, thereby balancing the dual objectives of growth and price stability.

While the global economic environment remains uncertain, Indias strategic reforms, demographic strengths, and proactive policy measures provide a solid foundation for continued growth. The evolving interplay between domestic demand and external volatility will be critical in shaping outcomes, and management remains focused on agile responses to maintain Indias position as a global growth anchor.

Source: IMF World Economic Outlook (April 2025), Reserve Bank of India

GLOBAL FOOD SERVICES INDUSTRY OVERVIEW

The global Food Services Industry continues to exhibit strong and sustained growth, with the market valued at approximately US$2.9 trillion in 2021 and projected to exceed US$3.6 trillion by 2024, reaching over US$4.2 trillion by 2026. Over the long term (2016 2026), transaction volumes are anticipated to expand at a compound annual growth rate (CAGR) of 1.7%, whilst the overall industry value is expected to grow at a more robust rate of over 3%, indicative of rising average transaction values.

GLOBAL FOOD SERVICES INDUSTRY:

MARKET SIZE VALUES FOR YEARS MARKED ^* ARE PROJECTED

(IN USD BILLIONS & BILLION TRANSACTIONS)

Quick Service Restaurants (QSRs) remain the predominant format globally, commanding more than

40% of the market by value. Full-service restaurants, encompassing both fine dining and casual dining establishments, together account for nearly one-third of the industrys total size. From a geographical perspective, the Asia-Pacific region stands as the largest contributor, representing approximately 43% of the global market, whilst the United States remains the single largest country market, accounting for roughly a quarter of the industrys total value.

SPLIT OF FOOD SERVICES MARKET SIZE: 2021

VALUE-WISE; IN TERMS OF FORMATS

SPLIT OF FOOD SERVICES MARKET SIZE: 2021

VALUE-WISE; IN TERMS OF REGIONS

The sectors continued growth is underpinned by shifting consumer preferences, rapid urbanisation, and the growing influence of digital ordering and delivery platforms, all of which are reshaping the competitive landscape and driving innovation throughout the industry.

Key Trends Shaping in Global Food Services Industry

Digital Transformation and Automation

The integration of automation, artificial intelligence, and data analytics is streamlining operations and enabling highly personalised customer experiences, from tailored menus to predictive ordering.

Rapid Growth of Online Delivery

Online food delivery platforms continue to experience exponential growth, fueled by consumer demand for convenience, speed, and customisation.

Sustainability and Responsible Sourcing

There is a pronounced shift towards sustainable practices, including eco-friendly packaging, plant-based menu offerings, and zero-waste initiatives, as both consumers and regulators place greater emphasis on environmental stewardship.

Evolving Regulatory Landscape

Governments and industry bodies are increasingly focused on food safety, transparency, and traceability, prompting businesses to invest in robust compliance and quality assurance frameworks.

Regional Dynamics

North America leads in fast food innovation and digital adoption, Europe is at the forefront of fine dining and sustainable practices, while the Asia-Pacific region continues to drive overall industry growth through urbanisation and widespread adoption of food delivery applications.

INDIAN FOOD SERVICES INDUSTRY OVERVIEW

The Indian Food Services Industry has undergone a remarkable transformation in recent years, propelled by rising incomes, accelerating urbanisation, a youthful demographic, and evolving lifestyle and dietary habits. Despite being highly fragmented-with a dynamic interplay between organised chains, stand-alone restaurants, international brands, and a substantial unorganised sector-the industry has demonstrated extraordinary resilience. According to the National Restaurant Association of India (NRAI), the sector was valued at approximately 5,30,800 crore in FY23, reflecting a robust recovery downturn and outpacing revised estimates from the

NRAI COVID Impact Report 2021. The organised segment has been a key driver, growing at 10.5% and now comprising 42% of the market, while the unorganised sector, though still significant at 58%, has seen its share decline from 65% in FY19. As of FY24, the industry is estimated at 5,69,487 crore and is projected to reach 7,76,511 crore by FY28, representing an overall CAGR of 8.1%, with the organised segment expected to expand at an impressive 13.2%.

The COVID-19 pandemic posed unprecedented challenges to the Indian Food Services Industry, resulting in a contraction of nearly 60% in FY20 as the sectors value plummeted to 2,00,762 crore, far below the earlier projection of 4,95,993 crore (NRAI India Food Services

Report 2024). This dramatic downturn was driven by nationwide lockdowns, restrictions on public gatherings, and widespread consumer concerns regarding safety and hygiene. Yet, the industrys inherent resilience became evident as demand began to recover by early

FY21. Moderate growth was sustained through FY22, and by FY24, the industry had rebounded to reach a value of 5,69,487 crore. This recovery trajectory suggests that by FY27, the gap between pre-pandemic forecasts and current projections will have narrowed significantly, signalling a near-complete return to pre-crisis demand.

INDIA FOOD SERVICES INDUSTRY:

MARKET SIZE & PROJECTIONS (OVERALL)

The unorganised segment of the industry faced its own set of challenges and opportunities during this period. While the lifting of lockdowns created avenues for recovery, many smaller players were unable to withstand the financial pressures, closures. The shift in consumer preference towards branded outlets, perceived to offer better hygiene and quality standards, further intensified the challenges for unorganised operators. As a result, the share of the unorganised sector has declined, even as the overall industry continues to expand.

Growth since the decline of the pandemic has been marked by significant divergence across formats and geographies. Theme-based and delivery-focused establishments, as well as operators in cities beyond the major metros, have generally fared better, capitalising on shifting consumer trends and localised demand. On a medium-term basis, from 2019 to 2024, the industrys growth rate has averaged between 10% and 15%, though the sharp contraction during the pandemic means that recent growth rates since the crisis have been especially pronounced for adaptable formats.

THE FOLLOWING GROWTH RATES ARE ESTIMATED FOR VARIOUS FORMATS:

CAFE	15-20%
QUICK SERVICE RESTAURANTS (QSRS)	15-20%
DESSERTS, ICE-CREAM, BAKERIES	15-20%
CASUAL DINING RESTAURANTS (CDRS)	05-10%
FINE DINING RESTAURANTS (FDRS)	10-15%
PUB, BAR & LOUNGE (PBL)	0-05%
CLOUD KITCHEN	30-40%

MARKET BREAKDOWN BY FORMATS

A detailed analysis of the market breakdown by formats in FY24 indicates that Casual Dining Restaurants (CDRs) continue to represent the largest share within the organised segment at 48.6%, followed by Quick Service Restaurants (QSRs) at 27%. The sustained prominence of the CDR format reflects its ability to address evolving consumer preferences for quality, variety, and a differentiated dining environment.

CDRs have demonstrated adaptability by integrating new menu innovations, enhancing guest experiences, and leveraging digital platforms for customer engagement. While QSRs are projected to gain incremental market share by FY28, CDRs remain a critical driver of industry value and continue to attract a broad consumer base seeking both convenience and experience.

INDIA FOOD SERVICES INDUSTRY: MARKET SIZE & PROJECTIONS

(FORMAT WISE) ( IN CRORES)

YEARS	CAFE	QUICK SERVICE RESTAURANTS (QSRS)	DESSERTS, ICE-CREAM, BAKERIES	CASUAL DINING RESTAURANTS (CDRS)	FINE DINING RESTAURANTS (FDRS)	PUB, BAR & LOUNGE (PBL)	CLOUD KITCHEN	UNORGANIZED	TOTAL INDUSTRY SIZE
FY23	17,900	57,500	7,200	1,11,200	4,500	20,200	3,100	3,09,200	5,30,800
FY24	21,223	67,560	8,278	1,21,555	5,080	21,807	4,191	3,19,793	5,69,487
FY25	25,163	79,381	9,517	1,32,875	5,734	23,542	5,666	3,30,749	6,12,626
FY26	29,835	93,270	10,942	1,45,248	6,473	25,414	7,660	3,42,080	6,60,921
FY27	35,374	1,09,589	12,579	1,58,774	7,306	27,436	10,356	3,53,799	7,15,213
FY28	41,941	1,28,763	14463	1,73,559	8,247	29,618	14,000	3,65,920	7,76,511

Key Trends Shaping in the Indian Food Services Industry

Dining Out as a Social Experience

Dining out has evolved from a functional necessity to a preferred leisure activity, valued for its role in fostering social connections and shared experiences. Casual Dining and Quick Service Restaurants are increasingly seen as venues for family gatherings, celebrations, and group outings. The emphasis on ambience, service quality, and experiential elements is shaping customer expectations, with many consumers now viewing dining out as a superior alternative to other leisure pursuits such as cinema or shopping.

Cuisine Diversity and Regional Innovation

The Indian food services industry is witnessing a surge in demand for diverse and innovative cuisine offerings.

While Indian, Chinese, and Western staples remain popular, there is a marked shift towards regional Indian specialities and Asian cuisines such as Japanese and Korean. Chefs and operators are responding with fusion concepts, hyper-local menus, and reinterpretations of traditional recipes, catering to consumers growing appetite for novelty and authenticity. This trend is further fuelled by increased exposure to global food cultures and the proliferation of food delivery platforms.

Digital Discovery and Word of Mouth

Digital media has become central to restaurant discovery, with consumers relying on platforms such as Zomato, Swiggy, DineOut, and EazyDiner, as well as social media, for information and recommendations. Visual content, user reviews, and influencer endorsements play a critical role in shaping perceptions and driving trial. Despite the digital shift, word of mouth-both offline and online-remains a potent force, with personal referrals and social sharing influencing decision-making.

Alcoholic Beverages as Experience Enhancers

Alcoholic beverages are increasingly integrated into the dining experience, particularly in establishments targeting adult consumers and those seeking an upscale or experiential offering. The rise of curated cocktail menus and global spirits trends is evident, with mixology and beverage innovation contributing to higher spends and increased footfall.

Visual Appeal and Social Media Influence

The visual presentation of food and ambience has become a strategic imperative, with the "Instagram-ability" of the dining experience directly influencing consumer choice and restaurant footfall. Social media platforms, especially Instagram, now serve as powerful marketing tools, amplifying reach through user-generated content and peer recommendations.

Technology Integration and Operational Innovation

Technology continues to transform the industry, with digital ordering, online reservations, self-service kiosks, and kitchen automation enhancing efficiency and customer experience. The rise of cloud kitchens and delivery-focused models is reshaping market dynamics, enabling operators to reach new customer segments and optimise costs. Data analytics and AI-driven personalisation are increasingly leveraged to tailor offerings and improve operational agility

Health, Sustainability, and Mindful Consumption

There is a growing emphasis on health-conscious and sustainable dining, with consumers seeking protein-rich, plant-based, and eco-friendly options. Restaurants are responding by introducing healthier menus, sourcing locally, reducing food waste, and adopting sustainable packaging. The trend towards mindful consumption is expected to accelerate, with functional ingredients, clean labels, and transparent sourcing gaining prominence.

The Rise of Indias Online Food Delivery Ecosystem

Indias online food delivery market is undergoing a transformative phase, driven by rapid digitisation, urbanisation, and evolving consumer preferences. According to a 2024 report by Bain & Company and

Swiggy, the sector is projected to grow at an 18% compound annual growth rate (CAGR), reaching 2.1 lakh crore by 2030. This growth reflects a significant penetration increase, with online services expected to account for 20% of the overall food services market by 2030, up from 12% in 2023. The broader food services industry-encompassing dining out, ordering in, and non-home-cooked food segments-is poised to double from 5.2 lakh crore in 2023 to 9 10 lakh crore by 2030, growing at a 10 12% CAGR.

Market Dynamics and Growth Levers

Demand-Supply Expansion Consumer Base

The addressable customer base is projected to expand from 340 million in 2023 to 450 million by 2030, driven by urbanisation and rising affluence.

Frequency of Orders

Average eating-out occasions are expected to rise from

60 65 times annually in 2023 to 90 95 times by 2030, mirroring trends in developed markets.

Youth-Driven Demand

Gen-Z and younger cohorts constitute 40% of current consumption, with their purchasing power set to amplify growth as they age.

Average Order Value (AOV)

The AOV for food delivery and dining out stood at

220 230 in 2023, with a marginal increase to 230 250 anticipated by 2030. Notably, Indias AOV-to-GDP per capita ratio surpasses that of China, the US, and Brazil, underscoring the markets premiumisation potential.

Regional Concentration and Tier-2 Opportunities Top 50 Cities

Account for 70% of food services consumption, driven by higher disposable incomes and dense restaurant supply.

These cities will retain a 65 70% market share by 2030.

Tier-2 and Beyond

Incremental growth is expected from smaller cities, where rising incomes and improved digital infrastructure are unlocking new demand.

Challenges Facing the Indian Food Services Industry

Labour Shortages and Attrition

The sector continues to grapple with a shortage of skilled staff, especially in culinary and service roles.

The consequent rise in recruitment and training costs, coupled with the need to comply with minimum wage regulations, has added further pressure to operating margins.

Rising Input Costs

The escalation in input costs remains the most significant challenge for the sector. Operators have faced sustained increases in the prices of essential commodities such as oil, gas, vegetables, dairy, meat, and poultry, alongside higher labour and rental expenses. Delivery aggregator commissions and marketing costs have also contributed to a rise in the cost of goods sold (COGS). Many businesses have been compelled to adjust brings the menupricesto risk of dampening customer demand.

Regulatory Complexities

Operators face an evolving regulatory environment, including compliance with stringent FSSAI hygiene standards, GST input tax credit limitations, and complex licensing requirements for operating hours and alcohol service. These regulatory demands have increased operational costs, particularly for small and medium enterprises, and can delay expansion initiatives. Non-compliance exposes businesses to financial penalties and reputational risks, making proactive regulatory management essential.

Intensified Competition

The Indian food services market is marked by intense competition, with a proliferation of both organised and unorganised players. The entry of new brands, the rapid expansion of cloud kitchens, and the growing presence of international chains have heightened the competitive landscape. This environment has resulted in price wars and margin compression, particularly for smaller operators who may lack the scale to absorb cost pressures.

KEY GROWTH DRIVERS OF THE INDIAN FOOD SERVICES INDUSTRY

Rising Disposable Incomes and Urbanisation

The rapid growth of Indias middle class, coupled with increasing disposable incomes and accelerated urbanisation, is significantly enhancing the frequency of dining out. According to the National Restaurant Association of India (NRAI), the sector is projected to grow at a CAGR of 8.1% between FY24 and FY28, reaching 7.76 lakh crore. Urban lifestyle shifts and greater spending power, particularly among younger demographics, are making dining out a routine social activity rather than an occasional indulgence. In major metros such as Mumbai, residents now dine out nearly eight times a month (Times of India, July 2024).

Shift Towards Organised Dining Formats

The industry is witnessing a marked transition towards organised formats, with the organised segment now comprising close to 50% of the market and expanding at a robust CAGR of 13.2% (Times of India, July 2024). This trend is driven by the proliferation of casual dining and quick service restaurant (QSR) chains, which are valued for their consistency, safety, and convenience.

Digitisation and Expansion of Food Delivery

Online food delivery is emerging as a key growth enabler, complementing the dominance of dine-in formats. The Swiggy-Bain joint report estimates that online orders constituted 12% of total meals in 2023, a to climb to 20% by 2030 with an annual growth rate of 18%. Digital platforms such as Swiggy and Zomato have transformed access to food, particularly in Tier-II and

Tier-III cities, by offering consumers greater convenience and variety.

Favourable Demographics and Lifestyle Changes

Indias demographic advantage, with the worlds largest youth population, is a long-term catalyst for industry growth. Young consumers, exposed to global cuisine trends and empowered by higher internet penetration, are seeking diverse and experiential dining options. The USDA-FAS (December 2024) further notes that convenience and experience are increasingly prioritised in dining choices. This has led to rising demand for both casual and premium dining formats, with many emerging brands achieving 100 crore in revenue within two to three years (Redseer, Business Standard, January 2025).

Policy Support and Economic Contribution

The sectors commercial growth is matched by its growing economic significance. As per NRAI, the industry contributes approximately 1.9% to Indias GDP and is projected to generate 10.3 million jobs by FY28, up from 8.5 million currently. Government initiatives focused on improving the ease of doing business and encouraging formalisation are expected to further enhance operational efficiencies and attract investment, particularly benefiting large-scale dine-in formats and restaurant chains expanding into Tier-II and Tier-III cities.

COMPANY OVERVIEW

Barbeque-Nation Hospitality Limited is one of Indias foremost casual dining restaurant chains, renowned for pioneering the "over the table barbeque" live grill concept that has redefined experiential dining in the country. As of March 31, 2025, the Company operates 230 restaurants across 80 plus cities in India, alongside a growing international footprint with 9 outlets in the

United Arab Emirates, Oman, Malaysia, Bahrain and

Sri Lanka. The flagship "Barbeque Nation" brand is complemented by a portfolio of scalable concepts, including "Toscano," an Italian casual dining chain, and

"Salt," which offers contemporary pan-Indian a-la-carte cuisine.

In response to evolving consumer preferences and the rise of delivery-led demand, Barbeque Nation has strategically diversified its offerings with innovative delivery-centric brands. UBQ delivers a-la-carte Indian cuisine in the value segment, while "Barbeque in a Box" and "Dum Safar" extend the brands reach into affordable buffet and biriyani delivery, respectively. Also, acquired expected a majority stake in ice cream brand "Omm Nom Nomm". This multi-brand, multi-format approach has enabled the Company to capture a broad customer base and create multiple growth levers.

Barbeque Nations commitment to operational excellence, customer-centric innovation, and prudent expansion has established it as a market leader in the casual dining segment, both in India and select international markets. The Company continues to focus on enhancing guest experiences, strengthening brand equity, and driving sustainable growth through disciplined execution and strategic brand extensions.

BUSINESS AND FINANCIAL PERFORMANCE REVIEW & OUTLOOK

FY25 was a year where our resilience, agility, and strategic clarity came to the forefront. Despite a firmly demandingexternalenvironment,westayed course—driven by the strength of our business model and our unwavering focus on operational excellence. As a result, we delivered a stable and disciplined performance, while laying the groundwork for sustained long-term growth.

During the year, we added 18 new restaurants and closed 5 restaurants, resulting in a net addition of 13 restaurants in FY25. We reported a total revenue of 1,233 crores in FY25. Our top line was marginally lower by around 1.7% compared to last year, primarily led by negative SSSG. In line with our strategy to focus on profitability, we were able to maintain our profitability despite the challenging business conditions. Our reported EBITDA for the year was relatively flat at 211 crores, with a margin of 17.1%. Our adjusted pre-IND AS EBITDA for the year stood at 91 crores with the margin of 7.4%.

Our three business segments continued to perform in line with our expectation. For our Barbeque Nation India business, we remain committed to establish it as preferred celebration destination. In FY25, we rolled out a series of value-driven promotions and vibrant culinary festivals that elevated guest experiences and deepened customer engagement. In addition, we also upgraded some of our older restaurants to delight our guests with more vibrant ambience. Our India business recorded revenue of around 981 crores in FY25, a decline of 6% compared to last year. However, the pre-IND AS restaurant operating margin was 118 crores, with margin of 12%, an increase of 70 basis points compared to last year. Efficient cost management helped in improving restaurant operating margin compared to last year despite operating deleverage. This is broadly in line with our commitment to retaining our margins, despite the prevailing demand conditions. We believe these efficiency gains have created a strong launchpad for enhanced profitability as demand rebounds.

Our international segment delivered an exceptional performance, growing 8% year-on-year to 97 crores, led by robust SSSG and an impressive ramp-up of new restaurants. This business continued to shine with consistent pre-IND AS restaurant operating margins above 25%, underlining the strength and scalability of our international format. We marked our entry into Sri Lanka with a successful launch in Colombo, and were excited to expand further with 4 6 new restaurants planned in the coming year. We remain committed to unlocking growth by exploring promising trade areas and deepening our global footprint.

Our premium CDR portfolio delivered stellar growth of over 30%, reaching 160 crores in revenue driven by a focused expansion strategy. With a healthy pre-IND AS restaurant operating margin of around 18%, this segment has proven to be a strong contributor to our overall performance. We successfully launched in high-potential cities including Hyderabad, Delhi, and Mumbai. The enthusiastic customer response in these markets has been extremely encouraging, and were excited to further grow our presence across these key urban centers in the coming year.

Our strategic emphasis on maintaining leadership in casual dine-in and scaling all three business segments has positioned us to effectively navigate industry challenges and achieve sustainable network growth. We anticipate that our India business network will grow at a rate of 10% to 12% over the medium term, while other segments are expected to grow rapidly at 25%-30%. This trajectory will enable us to reach our target of operating

300 to 325 restaurants by FY27.

As we move forward, we remain energized by the opportunities ahead. Were confident that our strong foundation, passionate teams, and clear vision will drive enduring value for all stakeholders.

ADEQUACY OF INTERNAL CONTROLS

Barbeque-Nation Hospitality Limited has established a robust and comprehensive internal control framework across all key business processes, designed to ensure the integrityoffinancialreporting,effective monitoring of operational and strategic objectives, and adherence to applicable policies, procedures, and statutory requirements. The Companys internal audit function, conducted by an independent professional firm, the Board of Directors and the Audit Committee with objective assurance regarding the adequacy and operational effectiveness of internal controls. During FY25, internal audits were undertaken by Messrs. Deloitte Touche Tohmatsu India LLP. Significant corresponding remedial actions are regularly reported to the Audit Committee and are closely tracked to ensure timely and effective resolution.

The internal audit programme also includes rigorous testing of internal financial controls over financial reporting, in accordance with the requirements of the

Companies Act, 2013. The Company has implemented a comprehensive enterprise risk management framework, aligned with the Companys strategic direction, to proactively identify, assess, and mitigate material risks. The Risk Management Committee, constituted by the Board, oversees this framework and ensures that risk management policies are embedded throughout the organisation. This approach supports the development of a risk-aware culture and robust governance, enabling the Company to manage strategic, operational, and financial risks in line with its corporate objectives and risk appetite.

CAUTIONARY STATEMENT

This Management Discussion and Analysis contains forward-looking statements relating to the Companys business operations, performance, and outlook. These statements are based on current expectations and assumptions and are subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from those anticipated.

Readers are advised to exercise caution and not place undue reliance on these forward-looking statements.