Max’s returns to profit, sets P500M capex

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LISTED Max’s Group Inc. (MGI) has programmed P500 million for capital expenditure this year mainly for the rollout of new stores after returning to profit in 2015.

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The casual dining chain operator posted net income of P501.4 million last year, reversing the net loss of P66.2 million it incurred in 2014 when Max’s Group and Pancake House merged.

On a pro forma basis, which presupposed that the two groups have already combined their operations at the start of 2015, revenues rose 6 percent to P10.4 billion from P9.8 billion despite the measure to close down some of its non-performing stores.

At a press briefing, Dave Fuentebella, chief finance officer of the casual dining restaurant chain, told reporters that the company will spend P500 million this year for store rollouts, renovation and modernization of its commissary equipment.

The amount is lower than the P700 million capex 2015.

“The reason for the lower capex this year is that we plan to have more franchises abroad,” Fuentebella said.

He said that Max’s plans to roll out between 60 and 70 outlets across all its brands, of which about 15 to 20 stores will be overseas such as China and the Middle East.

“Generally, our outlook for the year is positive based on the number of store openings,” Fuentebella said.

MGI said restaurant sales increased 6 percent to P8.6 billion in 2015 from P8.1 billion in the previous year driven by additional company-owned and franchised outlets last year.
As a result, commissary sales and franchise income rose 2 percent to P1.3 billion and 37 percent to P497.5 million, respectively.

Excluding one-time gains and non-recurring charges, core net income, or income derived from its main operations, stood at P555 million, the company said.

“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,” Robert Trota, the company’s president and chief executive officer, said.

Last year, Max’s Group opened 84 stores mainly across brands, including its first multi-brand shared space dining concept Burgos Eats and Eco Eats, located in Bonifacio Global City and Makati, respectively.

While most of the stores were built in the last quarter, these new stores are seen to contribute to revenues in 2016.

As of end-2015, Max’s Group operated a network of 588 stores, including 35 abroad.

“There were certain delays encountered in our rollout schedule beyond our control.

Nevertheless, full revenue impact of our new stores is expected to be realized this year,” Trota said

MGI recently announced that it has signed two development agreements to bring Yellow Cab Pizza to China and Pancake House to Qatar. Last year, the casual dining restaurant chain inked five development agreements.

Fuentebella declined to disclose other agreements in progress.

A total of more than 50 outlets overseas have been earmarked to open in the coming years. These include 15 Yellow Cab Pizza stores in Saudi Arabia, 10 Yellow Cab Pizza stores and eight Pancake House stores in the United Arab Emirates, 10 Sizzlin’ Steak stores in Vietnam and three Max’s Restaurants in San Diego in the US.

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