Manila, Philippines – Max’s Group, Inc. (“MGI” or the “Group”), the largest casual dining restaurant group in the Philippines, is reporting its operating results for the first quarter of 2022.
The improved economic model of MGI amplified by an especially strong recovery in March allowed the Group to sustain profitability in Q1 2022 with margins close to pre-pandemic levels despite headwinds faced in January.
MGI posted first quarter systemwide sales (“SWS”)—comprised of sales generated by both company- owned and franchised stores—of P3.55 billion and revenues of P2.17 billion. These reflect comparable indices of 125% and 118% respectively versus the same period in 2021. Local sales were still tempered as a result of the strict lockdown in January due to the Omicron surge, while international business continues to flourish, surpassing even pre-COVID levels.
March demonstrated significant growth in sales with a 14% month-on-month increase as restrictions on dine-in were loosened further. The Group’s core brands Max’s Restaurant, Pancake House, Yellow Cab Pizza Co., and Krispy Kreme all realized upsides with the relaxed restrictions and are expected to further realize gains as dine-in continues to surge amidst heightened mobility.
The Group posted Same Store Sales Growth of 23% in 1Q 2022 and is expected to further recover the rest of the year, proving the organic strength of its deep, diverse portfolio of powerhouse brands.
Revenues, which comprise of restaurant sales, commissary sales, franchising, and other revenue, increased by 18% to P2.17 billion from P1.84 billion in 1Q 2021. Even with a tempered topline, the more efficient model that the Group established during the pandemic proved to be effective as the Group extended its profitability.
First quarter gross profit margin was at 31%, an improvement from 2021’s 26%, while operating income margin was at 6% versus core margin last year of 2% despite relatively-tempered sales and revenues for the quarter. EBITDA amounted to P359 million, 27% higher compared to core EBITDA of P282 million last year. Net income likewise improved and amounted to P42 million, nearly doubling last year’s organic net income of P22 million despite one month of strict lockdown in January.
“Our results for Q1, even more markedly so in March, are an indication of strong demand for our brands and patronage of our core of core, which are available both in traditional brick-and-mortar spaces, and expanded to business-to-business and off-premise platforms,” stated MGI Chief Executive Officer Robert Ramon F. Trota.
Given ongoing relaxation of government restrictions, dine-in, which contributes healthier margins vis-à-vis other consumption channels, contributed to the Group’s recovery, while reaping the benefits of its strengthened off-premise channels that continue to protect and provide upsides in its topline. “As planned, our dine-in brands Max’s and Pancake House, which have been managed for profitability during the pandemic, realized significant growth towards the back-end of the quarter. We are expecting that as the market continues to open up, the recovery of these brands will be even more vibrant, giving our margins a boost,” added Trota.
Over the course of the pandemic, MGI has been successful in pivoting its business model through remastered fundamentals of operations backed up by tighter, more efficient box economics that allowed the Group to benefit from both higher margins and a lower break-even point, indicative of potential in upsides as the consumer environment further normalizes.
“We are very excited with our 1Q 2022 results despite the January lockdown, as they gave us indication of the shape of what’s to come for MGI. We have not experienced a full quarter without any lockdown restrictions since the start of the pandemic, and the coming months will give us a better picture of the full realization of MGI’s business revolution over the last two years.”
“We also continue to expand our reach and market not only though brick-and-mortar stores but across all available channels, such as cloud kitchens, retail outlets, and e-commerce platforms,” added Ariel P. Fermin, MGI President. “After squeezing three years of transformation into three quarters of execution, we are confident in the momentum we’ve built and are proud to see the results of the fruits of our labor. We are cautiously optimistic in the transformative possibilities for MGI, both for the balance of this year and over our next 3–5 year runway. The execution of our strategy will have long-term benefits for the Group as we nurtured demand from our fans, while crafting an economic model surpassing the margins of our pre- pandemic levels.”
The Group has strategically created over the course of the pandemic, new revenue streams in the business- to-consumer (B2C), business-to-business (B2B), and manufacturing spaces. The year-old Carmona commissary enabled the Group to accelerate both capacity and capability to grow beyond the traditional brick-and-mortar footprint and bring its beloved brands closer to market. From having a literal zero presence at the start of last year, current and new menu items from MGI’s beloved brands are now present under the newly launched Max’s Group Kitchen imprint in over 300 retail partner stores; including both the physical and digital channels of notable players such as SM Markets, Robinsons Group, WalterMart, Shell Select, AllDay Supermarket, Puregold, Gaisano Market, Lazada, Shopee, MetroMart, and GrabMart.
As of 31 March 2022, the Company’s store network totaled 14 territories, with 603 Philippine sites and 62 stores situated across various locations in North America, the Middle East, and Asia.