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Max’s eyes 1,000 branches

The country’s leading casual dining chain operator Max’s Group Inc. expects to grow its store network to at least 1,000 branches in six years—nearly double the current store count—with overseas expansion and franchising seen as crucial components of its growth story.

As of end-June this year, the Max’s Group had 525 stores, of which 27 are overseas, including those in North America, the Middle East and parts of Southeast Asia.

“Overseas expansion is going to be one of the key strategies,” Max’s chief finance officer Dave Fuentebella said in an interview with the Inquirer. He said that for Saudi Arabia, for instance, the group had signed a 10- to 15-year “development agreement” with a local partner—a big developer—to develop the Yellow Cab pizza brand. “We’re hoping we can sign more in the coming 2015,” he said.

Max’s has identified four brands that it would bring to more overseas locations—Max’s, Yellow Cab, Pancake House and Teriyaki Boy.

“For Max’s (the brand), the key is to be close to Filipino communities because we’re selling a Filipino brand and Filipino cuisine,” Fuentebella said, adding that the “mainstream” brands like Yellow Cab, Pancake House and Teriyaki Boy could be introduced in areas without a large concentration of overseas Filipinos.

Carolyn Salud, a director at Max’s, said the third Max’s store in Canada would soon open while a third store would open in Hawaii by next year.

In the Middle East, Max’s was already in the emirates of Dubai, Abu Dhabi and Sharjaj and had five more stores in the pipeline, including in Qatar and Kuwait, which should bring Max’s footprint in the Middle East to nine stores.

On the roadmap for Southeast Asian expansion, Max’s Group president Robert F. Trota said the group would scout for opportunities such as in Singapore, Indonesia and Vietnam to take advantage of a rising middle class. The group is also interested in other Asian markets like Hong Kong and India.

Meanwhile, domestic expansion will continue, with franchising a key component, especially in breaking into new areas where local players can help introduce its brands.

In terms of revenues, the group posted a compounded annual growth rate of 8-10 percent in the last three years while same-store sales growth ranged between 2.4 and 4.5 percent depending on the brand, said Cristina Garcia, Max’s Group director and treasurer.

Domestic sales from its so-called star brands—Pancake, Max’s, Yellow Cab and Krispy Krème, which account for 86 percent of total sales—were expected to reach nearly P10 billion this year compared to last year’s P8.08 billion.

Max’s Group has priced its follow-on offering at P17.75 a share, allowing the company to raise P3.5 billion from the sale of shares to the public. The IPO was priced at about 20 times the likely earnings for 2015.

The restaurant chain’s follow-on offering will begin today and will run until Dec. 5.

The new shares to be sold to the public will be listed on the Philippine Stock Exchange Inc. on Dec. 12.

BPI Capital Corp. was mandated as the bookrunner, issue manager and lead underwriter on the transaction, with BDO Capital Corp. serving as senior co-lead underwriter.

The integration of the Pancake House Group of companies with the Max’s restaurant group in June 2014 resulted in Max’s becoming the country’s largest full service restaurant group in terms of revenues and store network.

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