Max’s income falls 30% to P123.7 million in Q1

MANILA, Philippines — The largest casual dining restaurant chain in the country posted lower earnings in the first quarter despite higher sales as higher raw material prices and a larger manpower component took its toll on profitability.

Max’s Group Inc. (MGI) said net income in the first quarter fell 30 percent to P123.7 million from P176 million in the same period last year despite a 13 percent increase in system-wide sales to P4.4 billion from P3.9 billion in 2017.

Total revenues likewise rose 11 percent to P3.2 billion from P2.9 billion last year.

MGI attributed the higher revenues to the robust same store sales performance and overall transaction volume.

“Our efforts to strengthen market relevance allowed us to maintain a double-digit topline growth trajectory notwithstanding the effects of heightened competition. As we continue to build on customer-oriented activities, there will be equal focus on cost stabilization by streamlining existing resources and deriving operational efficiencies across the business,” MGI president and CEO Robert Trota said.

On the cost side, however, MGI said profitability was weighed down by escalating raw material prices and a larger manpower component as it realized the impact of its move toward professionalization which began in 2017.

“This initiative was undertaken to reinforce strategic capabilities at the
management level to ensure sustainable growth. The company likewise took into account recently enacted labor policies, particularly on third-party service engagements,” MGI said.

The company has announced its strategic pivot to franchising as the preferred mode of expansion, both domestically and overseas.

The shift will leverage on the Max’s Group’s brand equity, operational expertise and scale to propel store network expansion and boost fee-based collections, which generally equate to better profit translation.

“While cost and inflationary pressures as well as prolonged currency volatility are likely to persist, we are equipped with the proper growth strategies to stay resilient under these conditions. Looking ahead, we have laid out firm plans to address controllable expenses and maximize income flow-through. This keeps us aligned with our objective of improving overall profitability in the long-run,” MGI chief operating officer Ariel Fermin said.

MGI opened a total of 11 new stores in the first quarter, including two Yellow Cab Pizza outlets in Brunei and Vietnam, bringing the company’s total store count to 679 branches, with 57 across various territories in North America, the Middle East and Asia.