Shakey’s PH defies stock market slump
Investors snapped up shares of Shakey’s Pizza Asia Ventures Inc. (SPAVI) on Thursday, allowing the country’s leading pizza parlor chain to defy the stock market downturn on its trading debut, on upbeat prospects for rising consumer affluence, higher margins and potential to scale up the business.
SPAVI, which debuted on the PSE under the ticker “PIZZA,” gained 7.46 percent to close at P12.10 per share from its initial public offering (IPO) price of P11.26 per share even as the local stock market index fell by 1.05 percent.
In a press briefing after the listing ceremonies, SPAVI president Vicente Gregorio said with the expanding middle class in the country, the pizza parlor chain could grow its nationwide network to 250 to 300 in the next three to five years from around 180 at present.
Apart from the Philippines, SPAVI also owns perpetual rights to use the Shakey’s brand for the Middle East, Asia (excluding Japan and Malaysia), China, India, Australia and New Zealand. It recently signed a joint venture deal to bring the brand to Kuwait.
“Everyone knows that Shakey’s offers a variety of pizza flavors, but their best seller remains to be the ‘Manager’s Choice.’ However, when the company conducted its IPO last week, Shakey’s became the ‘investors’ choice’ given the very well-received IPO. Investors are not only familiar with the brand, but they have affinity for the food and service that is uniquely Shakey’s,” PSE chair Jose Pardo said in his welcome remarks during the listing ceremony.
Thursday’s closing rate gave SPAVI a market capitalization of P17.24 billion.
While Shakey’s is an American brand, SPAVI is now completely independent from its US “mother” entity. It earlier on acquired the trademark and the intellectual property and does not pay royalty or licensing fees to the US counterpart, resulting in good margins.
“We agreed to work closely (with US counterpart) to jointly develop the brand internationally but we haven’t been paying royalties since 1999,” Gregorio said.
Before such trademark right was acquired, the local restaurant chain remitted 5 percent of total sales to the US as royalties.
After the P3.96-billion IPO, SPAVI is expected to close this year with 184 stores. It aims to expand its store network by 20 next year and by 12-15 new stores starting 2018.
Established in California in 1954, Shakey’s operation in the Philippines is now bigger than in the US, where the brand has around 70 stores. The Philippine market is also Shakey’s biggest market in the world.
“Pinoys love pizza a lot,” Gregorio said.
“It’s a difficult market in the US. Somehow we’re lucky we found our niche here. Shakey’s in the Philippines is really a well-established brand, having been in the business for 41 years and continuously growing,” he said.