Max’s returns to profit, sets expansion overseas

Casual dining chain operator Max’s Group Inc. (MGI) returned to profitability in 2015 after the house-cleaning and consolidation undertaken following its acquisition of Pancake House Inc.

MGI reported a net income of P501.4 million in 2015, reversing the net loss of P66.2 million in the previous year, the company reported to the Philippine Stock Exchange yesterday. Excluding one-time gains and nonrecurring charges, core net income stood at P555 million.

“For 2016, we stay upbeat that consumption will continue to stir the local economy with some lift from election spending. We plan to put up another 60-70 stores including 15-20 international with minimal churn. By and large, we believe Max’s Group is headed toward steady, sustainable growth in the long term,” MGI president Robert Trota said.

On a pro-forma basis, revenues grew by 6 percent to P10.4 billion. Restaurant sales increased by 6 percent to P8.6 billion, driven by additional company-owned and franchised outlets in 2015.

As a result, commissary sales rose by 2 percent to P1.3 billion while franchise income increased by 37 percent to P497.5 million.

“The results validate a complete turnaround of our business. From a transformative period in 2014, we have successfully transitioned to the growth phase. We are confident with our strategies to sustain this trajectory in the coming years,” said Trota.

In 2015, Max’s Group opened 84 stores primarily across best-performing brands Max’s Restaurant, Pancake House, Yellow Cab Pizza and Krispy Kreme. The group also launched its first multi-brand shared space dining concept Burgos Eats and Eco Eats, located in Bonifacio Global City and Makati, respectively.

While the bulk of the stores were built in the last quarter, these new stores are seen to significantly contribute to revenues in 2016. As of end-2015, MGI operated a network of 588 stores, including 35 abroad.

MGI was able to sign five development agreements in 2015. More than 50 outlets overseas are targeted to open in the coming years. These will consist of 15 Yellow Cab Pizza stores in Saudi Arabia, 10 Yellow Cab Pizza stores and eight Pancake House stores in United Arab Emirates, 10 Sizzlin’ Steak stores in Vietnam and three Max’s Restaurants in San Diego.

Early this year, MGI signed a deal to establish 15 Yellow Cab Pizza stores in China and a minimum of 5 Pancake House stores in Qatar.

“We are excited about the prospects of our brands in the global stage. Our international expansion program continues to garner interest from several foreign groups. We are aiming to seal additional offshore markets in 2016,” said Peter King, chief executive of Max’s Group International.

In 2015, MGI improved management of raw material sourcing to leverage on negotiated prices and terms with suppliers, modernized commissary equipment, upgraded its enterprise resource-planning platform to streamline processes and introduced mobile ordering applications specifically for Krispy Kreme and Yellow Cab Pizza.

“We recognize the need to reinforce our support system to carry us forward. We also want to seize opportunities on the prevailing mobile and delivery trend among consumers,” Trota said.

MGI recently shut down the retail operations of its Le Coeur De France coffee shop and boulangerie. “There will be no physical operations for Le Coeur De France for now but the brand will remain and continue to serve its institutional clientele. We may revisit its business model and may consider re-launching in the future,” Trota said.