Max’s Group unprofitable in Q1
Leading local casual dining chain Max’s Group Inc. (MGI) turned unprofitable in the first quarter due to to disruptions caused by the coronavirus (COVID-19) pandemic, prompting the group to streamline operations and put on hold new store openings for the rest of the year.
MGI ended the quarter with a net loss of P169.28 million, a reversal of the net income of P138.57 for the same period last year. Three-month consolidated revenues declined by 18.8 percent year-on-year to P2.72 billion.
Systemwide sales, comprised of sales generated by both company-owned and franchised stores, decreased by 12.9 percent year-on-year to P3.99 billion during the first quarter.
“With the safety of all our stakeholders as a top priority, we have ensured that security and health protocols remain bolstered at every aspect of our business. The cumulative impact of temporary store closures, dine-in restrictions and various fixed costs have resulted in a swift reversal from last year’s performance. We anticipate that this trend will continue through the second quarter as well. Despite our conservative outlook, we are gradually making progress as we mindfully re-open more locations across our network,” MGI president and chief executive officer Robert Trota said on Wednesday.
Starting mid-March, in line with the government’s enhanced community quarantine (ECQ) guidelines for COVID-19, MGI was forced to cease operations in malls and operate stand-alone stores only for delivery and take-away options. To reinforce containment, sanitation and safety procedures for commissaries, stores and offices, MGI temporarily paused all operations from March 26 to April 4.
To scale down overhead costs and control working capital, MGI’s roll-out plans for new store openings are presently on hold as the group embarks on a comprehensive review of its current store network to position each location for improved organic growth and profitability.
“Our goal is to successfully execute strategic shifts to thrive within the new normal,” MGI chief operating officer Ariel Fermin said.
“We have cut the tail of margin-dilutive products, thus streamlining operations in stores and commissaries. We have also accelerated our participation in online and curbside service models to address changed consumer behavior brought about by this pandemic. We have expanded our business into lateral categories through the offering of signature ready-to-cook food items direct to consumers’ homes and communities, and agilely repurposed our team members into a highly-skilled cloud-based sales force to drive demand through non-traditional channels. Though challenges remain, we will continue to be vigilant and prudent in our decisions, building on the durability of our brands and in MGI’s capacity for renewal.”
At present, MGI has re-opened 573 stores representing 76 percent of its total store network. In the last months, MGI has rationalized menu offerings for each of its brands, while optimizing inventory, and growing its delivery and take-away channels.
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