Speciality Restaurants Ltd Management Discussions

# •• Restaurants offer table reservation service to their guests as well as instant confirmation to manage reservations more

efficiently

• Social media content drives exploration and loyalty, especially via visually-rich platforms.

• Instagram and influencer-driven food content drives dine-out discovery: beautifully plated food photos, Reels/TikToks, and viral dishes convert followers into customers

• User-generated content and hashtag campaigns amplify visibility and foster local loyalty.

• Customers turn to social media platforms to find new restaurants with third party reviews, opinions and vital information to its users with food discovery or restaurant search and ordering of food at just a few clicks away.

• Adoption of mobile wallets, UPI, tap-to-pay, BNPL, and integrated loyalty systems is widespread. Diners prefer digital-native payment and rewards experiences

• Loyalty platforms enable personalized reward campaigns and retention success using purchase and engagement tracking Chabots & Virtual Assistants

• AI chatbots on websites, social, and WhatsApp handle booking, menu queries, spice-level clarification, and dish recommendations in multiple Indian languages, boosting engagement and conversion

• Government-led Open Network for Digital Commerce (ONDC) integration is allowing restaurants to reach consumers via multiple buyer apps, retain customer data, and reduce aggregator commissions, giving more control over data and experience

Indias restaurant market is multi-layered, where hyperlocal tastes meet global formats. Urban centers drive premiumization and digital transformation, while Tier II/NI cities show explosive demand for QSRs and local dining chains. Success lies in balancing format efficiency, regional relevance, and tech-enabled engagement.

Young Indians are value conscious, prioritize authenticity, personalization, sustainability, instant gratification and willing to experiment different cuisines and beverages.

Indian restaurant customers·especially urban millennials and Gen Z·are increasingly adventurous with their food choices. This shift has created a powerful trend: active experimentation with cuisines. Its no longer just about eating out; its about exploring new culinary experiences that combine tradition, novelty, and storytelling.

The Indian restaurant industry has evolved into a diverse and dynamic sector, with several retail formats that cater to different customer segments, price points, and experiences.

In Indias rapidly evolving retail landscape, malls, airport lounges, and amusement parks have emerged as key destinations not just for shopping or transit, but also for experiential dining. The food and beverage (F&B) segment plays a vital role in shaping footfall, consumer dwell time, and overall satisfaction.

Restaurants and food courts in malls, airport lounges, and amusement parks are increasingly influencing consumer footfall by enhancing the overall experience. In shopping malls, fine dining and casual dining establishments in a controlled, comfortable atmosphere add diversity to the food retail space. These venues, often supported by paid parking facilities·a critical component of any successful retail environment·serve as key attractions.

Mall developers regard fine dining as a crucial part of their overall tenant and product mix. These restaurants not only contribute to an air of exclusivity but also enrich the customer experience, making visits more memorable and multifaceted. Malls, as one of the most popular retail formats, offer a comprehensive experience that caters to diverse needs under one roof. From apparel and accessories to salons, spas, cinemas, gaming zones, supermarkets, and extensive food courts, malls have evolved into destinations for all-day engagement and entertainment.

Restaurants are increasingly offering consumers the convenience of ordering food for home or office delivery. The Company continues to see encouraging growth in the share of deliveries and takeaways. To further strengthen its presence in this segment, the Company has established strategic partnerships with leading online food aggregators, enabling it to effectively capitalize on the expanding demand for food delivery services.

Cloud kitchens provide a cost-effective solution for restaurateurs to expand an existing brand or launch a virtual brand focused solely on delivery and takeaway services, without the need for a dine-in facility. These kitchens require significantly lower capital expenditure compared to traditional restaurants or cafes, making them an attractive model for boosting delivery revenues while maintaining operational efficiency.

For Quick Service Restaurant (QSR) brands, cloud kitchens often function as commissary or base kitchens, supplying raw materials, sauces, pre-prepped ingredients, and portioned food to multiple outlets within the chain. This centralized model supports the industry by reducing high rental overheads, optimizing labor costs, ensuring faster service turnaround, and achieving consistent quality across locations.

“Kitchen within Kitchen” is a virtual kitchen concept embedded within the existing kitchen infrastructure of a restaurant, enabling , the operation of multiple cuisine-based brands under one roof. This model is specifically designed to cater to the growing demand for takeaways and online food deliveries, primarily facilitated through third-party delivery platforms.

By leveraging the current kitchen setup, restaurants can launch and operate multiple virtual brands with minimal capital investment·significantly lower than what is required for a standalone cloud kitchen. This approach enhances asset utilization, drives operational efficiency, and allows restaurant operators to scale their offerings and extend their market reach without the • * need for additional physical outlets.

There is a growing global demand for Indian cuisine, driven by its unique and bold flavours that captivate a diverse range of palates. The allure of Indian food lies in its intricate and skillful use of spices, which create complex and deeply satisfying flavour profiles. As a result, Indian cuisine is reshaping the global culinary landscape with its diversity, innovation, and rich culinary traditions.

This rising popularity is not only fuelled by the Indian diaspora but also by increasing curiosity and appreciation among international consumers. Established Indian restaurant chains are capitalizing on this trend, leveraging their financial and managerial strengths to expand internationally and meet the growing demand. By harnessing this opportunity, they are successfully positioning Indian cuisine as a mainstream offering on the global stage.

Indian food and beverage operators, including your Company, have strategically expanded into key international markets such as the Middle East and the United Kingdom. These regions offer attractive growth potential, a more conducive business environment, streamlined regulatory frameworks, and the promise of higher returns on investment compared to domestic operations in India.

This international expansion is a key driver of the Companys long-term, profitable growth strategy.

The success of your Company is driven by its ability to identify and leverage core strengths and growth opportunities while effectively mitigating business risks. One of the Companys greatest strengths lies in the strong portfolio of brands built over the years, each recognized for excellence in its category. By consistently delivering delicious food, maintaining high service

standards, and creating memorable dining experiences, the Company has established a loyal customer base and a strong market presence. These elements remain central to the Companys ongoing success and competitive advantage.

Opportunities for the Company are -

• The expanding middle class and increasing urbanization across India and abroad are driving higher spending on dining out and , • premium food experiences, creating strong demand for both casual and fine dining formats.

Consumers are increasingly open to exploring regional Indian and global cuisines, offering an opportunity for Speciality Restaurants to innovate and introduce niche or themed dining concepts across its brand portfolio.

There is a growing consumer preference for immersive dining experiences. The Company can capitalize on this trend by creating unique restaurant themes, chef-curated menus, and ambiance-led experiences.

With the rise of digital ordering, aggregator platforms, and changing consumer habits, delivery and takeaway formats offer significant growth potential through cloud kitchens, virtual brands, and optimized delivery menus.

As consumers seek a balance between quality and convenience, there is an opportunity to develop scalable, fast-casual models that complement existing premium offerings.

The Companys established brands can be scaled efficiently through franchise partnerships, particularly in Tier 2 and Tier 3 cities, as well as international markets with a strong Indian diaspora.

Markets such as the Middle East, United Kingdom, North America, and Southeast Asia present high-potential opportunities due to favourable demographics, growing ethnic cuisine demand, and ease of doing business.

These markets are witnessing growing aspirations, making them ideal for premium casual and affordable fine dining concepts. Collaborations and Strategic Partnerships

Partnering with malls, airports, hotels, and corporate institutions can enhance visibility and open new high-traffic channels for growth.

Creating seasonal and regional offerings aligned with local festivals and celebrations can boost footfall and drive customer engagement across formats.

Adopting eco-friendly practices such as waste reduction, sustainable sourcing, and energy-efficient operations can strengthen the brands appeal to environmentally conscious consumers.

With increasing awareness of health and nutrition, there is scope to introduce health-conscious menus, including low-calorie, vegan, gluten-free, and functional food offerings.

Investment in technology·such as contactless dining, Al-driven analytics, CRM platforms, and loyalty apps·can drive operational efficiency, enhance customer experience, and support data-driven decision-making.

Implementing differential pricing based on location, format, and customer segments can improve accessibility and profitability, especially in price-sensitive or competitive markets.

The success of your Company is closely tied to the strength, relevance, and perceived value of its brands and offerings in the eyes of consumers. Staying competitive requires a proactive approach to innovation, agility in responding to market shifts, and a forward-thinking mind-set.

Consumer tastes, preferences, and behaviours are constantly evolving. Therefore, your Companys ability to anticipate and adapt to these changes is critical to sustaining business performance and long-term growth. To that end, the Company remains focused on developing and introducing innovative products that align with emerging consumer needs, ensuring its brands remain relevant, appealing, and differentiated in a dynamic market environment.

The Companys future prospects are influenced by a range of economic, operational, and market-driven factors. Key considerations include shifting consumer preferences, rising food costs driven by inflation, and evolving regulatory requirements that may impact business operations and compliance.

Additionally, challenges such as market saturation, increasing competition, and high real estate costs·particularly in prime locations·can affect economic viability and expansion strategies. Operational factors such as attracting and retaining skilled manpower, ensuring supply chain efficiency, integrating new technologies, and adhering to health, safety, and environmental sustainability standards are also critical to the Companys sustained performance.

Successfully navigating these complexities will be essential for maintaining growth momentum and ensuring long-term resilience in a dynamic and competitive business environment.

Your Company continues to maintain strong top-of-mind recall among consumers across the Fine Dining, Casual Dining, and Cloud Kitchen segments, holding a leadership position particularly in the Fine Dining category. Through well-defined and effectively executed strategies, the Company has strengthened its competitive edge, successfully attracted and retained a loyal customer base, and achieved sustainable growth in an ever-evolving and competitive market landscape.

This success is driven by a consistent focus on innovation, continuous improvement, and pragmatic expansion. The Company has leveraged its existing strengths·including unique and consistent quality offerings, strong brand differentiation, and operational efficiency·to deliver superior customer engagement and experiences. These pillars remain central to the Companys ongoing efforts to enhance value and remain ahead of industry trends.

During the year under review, your Company opened 7 restaurants. At the end of financial year ended March 31, 2025, your Company had 71 restaurants (including 12 franchisees), 11 Cloud Kitchens and 39 Confectionaries.

Like any enterprise with national and international operations, your Company is exposed to various business risks, including industry-specific and macroeconomic challenges. These risks encompass general economic conditions, socio-political uncertainties, and company-specific factors that may impact performance and growth.

Key risks facing the Company include:

• Prolonged delays in economic revival, which may affect consumer spending and discretionary dining.

• Persistently high inflation, leading to increased input and operating costs.

• Over-dependence on the fine dining segment, which can be vulnerable to economic downturns and shifting consumer behavior.

• Intensifying competition from global restaurant chains and emerging formats within the domestic market.

• Geopolitical tensions, particularly with neighboring countries, which may disrupt international operations or supply chains.

• Sudden or unanticipated regulatory changes impacting food safety, taxation, labor laws, or foreign investments in the hospitality sector.

The Company continuously monitors these risk factors and adopts appropriate mitigation strategies to safeguard its operations and ensure long-term resilience.

As per the provisions of Regulation 21 of SEBI (LODR) Regulations, your Company has voluntarily constituted Risk Management Committee. Your Company has Risk Management Policy to identify and evaluate risks and to effectively mitigating the various business and operational risks, through strategic actions.

Summarized below are the key risk factors that are identified as well as the proposed mitigation strategies:

Your Company has in place adequate internal controls system to ensure that all assets are protected, with documented procedures > covering all corporate functions and restaurants. System of internal controls are designed to provide reasonable assurance

• regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls and compliance with applicable laws and regulations.

The internal control systems are in the form of various policies & procedures issued by the Management covering all critical and important activities viz. Revenue Management, Restaurant Operations, Purchase, Finance, Human Resources, Safety, etc. These policies & procedures are updated from time to time and compliance is monitored and reported by the Internal Auditor of the Company. The Company continues its efforts to align all its processes and controls with best practices. The effectiveness of internal controls is reviewed through the internal audit process, which is undertaken for operational units and all major corporate •functions of the Company.

The Board of Directors have voluntarily constituted Risk Management Committee which monitors the risk management framework and also has well-defined risk management policy to identify, measure risks and concerns, mitigation strategies and reporting of , risks within the Company.

“The Company has implemented an Enterprise Resource Planning (ERP) application to record data for accounting, consolidation i and management information purposes and connects to different locations for efficient exchange of information. The Companys

• internal control systems are commensurate with the nature of its business, the size and complexity of operations.

? The Audit Committee of the Board oversees the adequacy of the internal control environment through regular reviews of the audit findings and monitoring implementations of internal audit recommendations through the compliance reports submitted to them by the internal auditor of the Company.

The Chairman & Managing Director and Executive Director-Finance & CFO of the Company have issued a certificate on the adequacy and effectiveness of internal controls system and procedures, which forms part of this annual report.

The Company has followed prescribed Accounting Standards as laid down by the Institute of Chartered Accountants of India in preparation of its financial statements.

As per the estimate of the Reserve Bank of India, the GDP growth projection of Indian economy is 6.5% in the FY 202526, underpinned by strong consumption, robust capex, favorable monsoon conditions, and resilient services·despite global uncertainties and trade-related risks.

The outlook for India economy continues to be encouraging.

The outlook for the restaurant industry in India remains positive, underpinned by evolving consumer preferences, rapid technological advancements, and continued market expansion. Increasing urbanization, rising disposable incomes, and a growing appetite for diverse dining experiences are creating significant growth opportunities across formats·from fine dining and casual eateries to delivery-first models and cloud kitchens.

However, the industry must also navigate key challenges, including regulatory compliance, economic volatility, and intensifying competition from both domestic and international players.

To achieve sustainable success in this dynamic environment, restaurants must remain agile by adapting to emerging trends, embracing digital transformation, and prioritizing exceptional customer experiences. Operators who can innovate while maintaining operational efficiency and quality will be best positioned to lead and grow in the evolving food service landscape.

Despite a challenging macroeconomic environment, the Company has delivered an encouraging performance, reflecting its operational resilience and brand strength. The Indian food and beverages industry continues to demonstrate strong potential, driven by shifting consumer preferences, increased urbanization, and a growing appetite for diverse and quality dining experiences.

Your Company is strategically positioned to capitalize on these domestic growth opportunities. With a portfolio of well-established and trusted brands, the Company is well-equipped to cater to evolving consumer tastes and deliver value across multiple dining formats. This positions the Company to sustain momentum and further strengthen its presence in the competitive and dynamic food service sector.

• Your Company firmly believes that its most valuable asset is its workforce of 2,433 dedicated employees. In a highly dynamic and competitive industry, maintaining a trained, consumer-focused, and performance-driven team is essential to sustaining operational excellence and delivering superior customer experiences.

To this end, the Company has implemented a range of policies and initiatives designed to align business objectives with individual growth and aspirations. These efforts aim to foster a positive work environment, encourage continuous learning, and support employee development at all levels.

The Company also places strong emphasis on the well-being and safety of its workforce. Proactive steps were taken to ensure physical and mental wellness, including counseling support and safety training through video modules and awareness programs, reinforcing adherence to health and safety protocols across all operations.