LEADING casual dining chain operator Max’s Group Inc. grew first semester net profit by 561 percent year-on-year to P247.74 million on higher sales volume and income margins alongside its store expansion program.
“We continue to build on the momentum gained in the first quarter and expect to sustain this growth trajectory on the back of well structured operations,” Max’s president Robert Trota said in a press statement on Friday.
Consolidated revenues increased by 166 percent year-on-year to P4.88 billion. On a pro-forma basis, topline growth was 6 percent despite the shutdown of 10 branches of Le Coeur De France, which is set to undergo a major rebranding campaign to upgrade product quality and service platform.
Planned closures form part of the company’s on-going integration program to rationalize its branch network to maximize resources and improve profitability. During this phase, Max’s aims to consolidate a larger base of operations by standardizing procedures and streamlining back-end support to capitalize on operational efficiencies.
“As we previously mentioned, we continue to evaluate operations of brands and store network and act upon closing underperformers to minimize drag on the system,” Trota said.
Store sales, which comprised bulk of revenues, rose by 5 percent year-on-year to P4.13 billion. Franchise income likewise grew by 47 percent year-on-year to P190.16 million in the same period last year while commissary sales remained relatively flat at P559.63 million year-on-year.
In a press briefing on Friday, Max’s chief finance officer Dave Fuentebella said same store sales growth in the first semester – an indicator of sales expansion excluding the impact of changes in store network – was at 4 percent year-on-year for the flagship brand Max’s and 2 percent for Pancake House.
Fuentebella added that average net income margins for the group improved to close to 5.1 percent compared to 0.8 percent year-on-year. This margin level will be the “new normal” for the company moving forward, he said.
Improved margins were achieved by better efficiencies in store operations and cost control measures alongside the reduction in Max’s interest expenses. After a leveraged buy-out of Pancake House Inc., the group has pared down its debt stock to P1 billion from P4 billion using fresh funds from a follow-on stocks offering, he said.
Max’s is hoping that the remaining debt can be covered by the group’s existing cash flow, Fuentebella said.
From April to June this year, Max’s opened 13 outlets including four international stores. The company opened its 14th Max’s Restaurant in North America located in Daly City, California. It also unveiled a new Pancake House in Damansara Jaya, Kuala Lumpur bringing its total to eight stores in Malaysia. Most of its new store rollouts traditionally occur in the latter part of the year. For the remainder of the year, 60 new stores are scheduled for opening.
As of July, Max’s Group has a total of 535 outlets.
“We remain on track with our expansion plans both domestically and overseas. In the coming months, we expect to finalize development agreements for some of our brands in new territories,” Trota said.