MAX’S Group Inc., operator of one of the country’s chain of casual-dining restaurants, said it will spend P600 million in capital expenditures this year, mainly to expand its commissaries as it shifts towards franchising.
Robert F. Trota, the firm’s president and CEO, said it spent the same amount last year, but only less will be spent on company-owned stores.
Of the 80 stores in the pipeline to open in the coming years, Trota said only 20 will be company-owned and the rest are franchise-owned.
“We are maintaining that. So that is practically a 30:70 ratio as of the moment,” he said.
Right now, 60 percent of its stores are company owned, and 40 percent are franchised, including international branches.
“I think that was the target we set a few years back, but what is more important to us today is not the quantity, but quality stores so our drive is profitable stores,” Trota said.
“As we pivoted to franchise, we are keeping the quality stores that we want, the ones with better returns on investment. That’s why if you see our growth in profitability, it was the right move and aside from interest rates have not gone down. Growing and using our capital is the proper way, moving forward,” he said.
The 80 stores will be spread across its stable of brands Max’s Restaurant, Yellow Cab Pizza, Pancake House, Krispy Kreme and Teriyaki Boy, an affordable Japanese restaurant that it is expanding to the Visayas and Mindanao where demand for such kind of restaurant is high.
Last year, it rolled out 66 new stores, including 11 international branches, bringing the total network count to 705 outlets by the end of 2018.
The company ended 2018 with a net income of P631 million, flat compared to the P627 million recorded in 2017, which included P146 million in deferred tax benefit recognized on net loss carryovers of some entities.
System-wide sales grew 8 percent to P18.8 billion from P17.34 billion in 2017, with a steady same-store sales at 4 percent.
Restaurant sales increased 8 percent to P11.3 billion from P10.46 billion, driven by the opening of 24 new company-owned branches.
Meanwhile, commissary sales rose 10 percent to P1.57 billion from P1.42 billion, driven by a rapidly growing franchising base. Franchising income also grew 6 percent to P820.4 million from P776.2 million in 2017.