MANILA, Philippines – Max’s Group, Inc. (“MGI” or the “Company,” PSE: MAXS), the Philippines’ largest casual dining restaurant group, reported today its operating results for both the third quarter and first half of 2021 for periods ended September 30.
Amidst heightened lockdowns in Metro Manila and other key Philippine geographies, MGI posted third quarter systemwide sales of PHP 2.88 billion, and revenues of PHP 1.70 billion. These reflect comparable growth of +28% and +23% respectively versus the same period in 2020.
“We committed to our stakeholders that Max’s Group would embrace transformation for the ‘next normal,’” stated freshly-minted MGI President Ariel P. Fermin. “We made strategic shifts to evolve the depth of our business through demand generation for our ‘core of core’ brands of Max’s Restaurant, Pancake House, Yellow Cab Pizza Co., and Krispy Kreme. We have unleashed the force of Dencio’s, Sizzlin’ Steak, Teriyaki Boy, and Jamba Juice as re-imagined cloud brands, effectively multiplying their reach beyond their existing brick-and-mortar networks, and liberated from major CAPEX requirements.”
“Even more excitingly, we likewise increased our breadth by re-envisioning ourselves from pure ‘restaurant operators’ into manufacturers, merchants, and distributors,” continued Fermin. “The new revenue adjacencies we identified early on are now coming to full fruition. Our new Carmona commissary allows Ready-to-Cook items from our beloved brands to be present in major supermarkets and convenience stores nationwide, while our fleet of direct-to-community distributors gives us intimate presence close to home for our fans.”
“MGI’s third quarter market performance is testament to our vision, and proves we are just as revolutionary as we are resilient,” Fermin attested.
For the first nine months of 2021, the Company recorded total SWS of PHP 8.62 billion, a 10% increase versus the PHP 7.83 billion performance of 2020, with local growth complementing healthy contribution from the international business. Revenue likewise performed at positive—though more muted—growth at 3%, despite tighter lockdowns experienced during the year as compared to 2020 which enjoyed almost three months of full business operations prior to the start of the pandemic.
YTD operating income amounted to P437 million, a swing of more than PHP 1 billion from last year’s negative PHP (654) million in spite of the aforementioned lockdowns.
“Despite the sensitivities of the industry towards changing quarantine scenarios, we are proud of our discipline in building a stronger margin,” added Fermin. “Even with revenues performing at high double-digit growth in 3Q, our cost of sales and services contracted by 12%. This affirms the acumen and rigor that locked in a model even more agile than who we were pre-pandemic, end-to-end from our supply chain to our stores to our head office. We believe this positions MGI to truly come roaring out of this global health crisis as the economy opens up.”
The Company recorded a strong YTD statutory EBITDA of PHP 1.23 billion and organic EBITDA of PHP 848 million net of one-offs despite headwinds in the third quarter brought about by increased dining restrictions, wiping out 2020’s negative EBITDA of PHP (114) million. Likewise, statutory net income posted an upward trend by P1.2 billion, ending the nine months in 2021 with PHP 235 million from last year’s negative PHP (982) million.
The aggressive business remodeling initiated by the Group in 2020 to retool for the pandemic continues to deliver enhanced margins even compared to pre-COVID periods. Year-to-date contribution margin posted growth of 450bps at 50.1% vis-à-vis the 45.6% for the first nine months of 2020. 3Q alone recorded a 2021-high of 51.0%.
“As a forward-looking organization fueled by combined decades of history across our iconic roster of brands, we are committed to actively create our future rather than merely weather present conditions,” continued Fermin. “We have remastered our fundamentals to deliver commercial efficiencies even amidst the most challenging quarter of the year. Our new sources of wealth in B2B continue to mature and create share-of-mind for our portfolio outside of our core restaurant operations. Our youth brands of Yellow Cab and Krispy Kreme in particular have led our rapid recovery and are now approaching their pre-pandemic levels. Likewise, Max’s and Pancake House are managed for profit currently, and are seen to have the highest upsides once dine-in restrictions are more relaxed.”
MGI has also over-indexed itself in omni-channels and in terms of delivery, which doubled from 2019.
Added Robert F. Trota, Chief Executive Officer of Max’s Group, “Through the global network of stores we have built in other geographies through strong franchise alliances, we have successfully tempered challenges faced in our local market. We remain fully optimistic in the ongoing renewal of Max’s Group, and believe we have a model in place to catapult us forward in the years to come.”
As of 30 September 2021, the Company’s store network totaled 14 territories, with 593 Philippine sites and 61 stores situated across various locations in North America, the Middle East, and Asia. Out of these 654 stores, 94% or 617 stores were operational.