Max’s Group sets aside P800M for expansion in 2017

Max’s Group Inc. (MGI), the country’s leading casual dining chain operator, is upbeat on growth from the rollout of more stores here and abroad alongside rising interest in franchising and the “phenomenal” expansion of its food delivery business.
This year, MGI has earmarked P800 million to fund its store pipeline and commissary upgrades as well as boost warehousing and distribution facilities and other support infrastructure, MGI chair Sharon Fuentebella said in a written report to stockholders. The capital spending budget this year is higher than the P700-million outlay in 2016.
MGI is seen on track with its five-year growth plan to expand its store network to 1,000 by 2020, of which 200 will be in overseas locations. “Definitely, I think we will get to that point, and we have a lot of interest in our franchisees at the moment,” Robert Trota, MGI president and chief executive officer, told reporters after the company’s stockholders’ meeting yesterday.

The group ended last year with 623 stores across 14 different brands under its restaurant portfolio.
Trota said cross-franchising – referring to old franchisees such as of flagship Max’s getting franchises of other brands within the group like Yellow Cab, Pancake House, Krispy Kreme and Teriyaki Boy – was accelerating the growth of MGI’s business as this was allowing new stores to be put up even within the same territory.
Last year, MGI’s revenues from franchise, royalty and continuing license fees surged by 54 percent to P766.7 million. Overall restaurant sales were up by 10 percent last year to P9.4 billion while system-wide sales increased by 12 percent to P15.3 billion. All these contributed to a 12-percent growth in net profit last year to P561.7 million.
“The results (in 2016) underpin our bold transition from a period of integration and turnaround to an active phase of growth,” Trota said.
MGI expects to continue growing its food delivery business – seen as an attractive proposition especially in urban centers where consumers are becoming more affluent while traffic gridlock making food delivery an alternative to dining out.
This year, Trota said the delivery business was likely to grow by 20-30 percent. Last year, MGI’s delivery sales grew by 24 percent to P1.08 billion, accounting for 9 percent of total revenues. “It’s a phenomenal phase,” he said.
MGI has set up a call center network with 150 agents to facilitate transactions as well as a multi-brand logistics system.
Trota said MGI could grow the delivery business without expanding its call center team, citing other ways by which customers can place orders, such as via the mobile app or the website which were likewise fast-growing segments.

“I just need to commit to deliver the right product at the right time and the right temperature,” Trota said.
“At this point in time, we have over 500 bikes and riders in different brands, but now we also have a shared group which means this shared biker can deliver for Max’s, can delivery for Pancake, can deliver for Teriyaki Boy,” Trota said.
The group now has 60 new delivery bikes and riders serving all brands, complementing the existing delivery teams of each 14 brands under the restaurant group.
Meanwhile, Trota said MGI would continue to work on more overseas deals. In the future, he said MGI would seek more expansion opportunities in Southeast Asia and enter “underserved” markets like Europe. MGI’s international team is getting more inquiries from the Middle East, North America and other parts of Asia, Trota said.
Last year, MGI signed seven development agreements summing up to 77 outlets for 2016. A total of 72 Yellow Cab Pizza stores and five Pancake House branches were committed in the following markets: China, Kuwait, Oman, Bahrain, Qatar, Jordan, Egypt and Singapore, adding to an international pipeline of more than 140 stores slated to open in the coming years. This expansion is in line with the plan to build a network of 200 overseas stores by 2020.
On MGI’s earnings outlook for this year, MGI chief finance officer David Fuentebella said: “It’s in line with our expectations, I think. Obviously there are still a lot of challenges ahead in terms of competition and pricing, but I think we’re okay.DORIS DUMLAO-ABADILLA


Tags: Max's, expansion,
Date: May 9, 2017