By Arra B. Francia, Reporter
MAX’S Group, Inc. (MGI) will be focusing on franchising its brands to fast-track expansion until 2020, targeting to have a 65% to 35% mix of franchised versus company-owned stores.
The listed casual dining restaurant group plans to roll out 80 to 90 new stores this year. Fifty-five out of the 74 located locally is set to be franchised, according to MGI President and Chief Executive Officer Robert F. Trota.
“We have established already what we wanted, as we have a portfolio of 35% franchised to 65% company-owned. The intent is to reverse that in the next three to five years where it will have more franchise outlets in the pipeline reaching to 1,000 stores by 2020,” Mr. Trota said in a press briefing after the company’s annual shareholders’ meeting in Quezon City on Wednesday.
MGI said this will give it an active presence in key geographies in the country while generating higher fee-based contributions to revenue.
MGI operates 673 outlets across the country, North America, the Middle East, and Asia under different brands namely Max’s Restaurant, Pancake House, Yellow Cab Pizza, Krispy Kreme, Jamba Juice, Max’s Corner Bakery, Teriyaki Boy, Dencio’s, Meranti, Sizzlin’ Steak, Maple, Kabisera, Le Coeur de France, and Singkit.
With the shift to franchising, Mr. Trota said they will be open to selling existing company-owned stores to franchisees.
“There’s opportunity now to do that called area development, where you buy multiple stores. We have so many franchisees that are asking us, like they have one Max’s Restaurant for the past 15 years. Now they have the opportunity to get the Yellow Cab beside them… So that’s good, because then they will be able to manage it more,” he said.
With the focus on franchising, MGI will spend less on capital expenditures this year, allotting P600 million versus the P800 million it spent in 2017.
“Part of that capex will also be for the upgrade of our current operations. So it’s not actually related to stores but our ability to service the stores owned by the company and those franchised,” MGI Chief Finance Officer Dave T. Fuentebella said during the briefing.
Asked on the company’s prospects for 2018, Mr. Trota said they are “striving to do better than last year.”
Mr. Fuentebella noted MGI has sustained double-digit top-line growth, which it hopes to sustain this year.
“Top-line growth is in double-digit, consistent yan… We want to continue that momentum, and ensure also cost-competitiveness such that it will translate to better bottom line this year,” Mr. Fuentebella said.
The company also noted it will not be heavily affected by the increase in taxes of sugary drinks as implemented under the Tax Reform for Acceleration and Inclusion law, saying that soft drinks are not a big part of its beverage portfolio.
MGI delivered 13% increase in systemwide sales to P17.34 billion for the year, translating to a 10% increase in revenues to P12.63 billion in 2017. Net income meanwhile stood at P627 million, higher by 11% from the previous year.
Shares in MGI went down by eight centavos or 0.56% to close at P14.10 each at the stock exchange on Wednesday.
