Max’s Group Reports 46% Revenue Decline in 1H 2020
Max’s Group Inc. (MGI, PSE: MAXS), the country’s largest casual dining restaurant group, reported today the operating results for the quarter and six months ended 30 June 2020.
For the second quarter of 2020, systemwide sales, comprised of sales generated by both company-owned and franchised stores decreased by 68.9% to P1.6 billion compared to the same quarter last year with same store sales decline of 55.8%. Revenues for the quarter amounted to P1.1 billion, down 71.1% versus the same period last year. The drop was primarily due to the full impact of COVID-19 quarantine measures in the Philippines, as well as government restrictions in all other countries and territories where the Company operates. For most of the second quarter, local operations relied primarily on delivery and take-away channels. Mall locations in the Philippines, which comprised nearly half MGI’s local store network were also mandated to cease operations until early May in order to contain the COVID-19 pandemic.
For the first half of 2020, systemwide sales amounted to P5.6 billion, a 42.5% decline from the P9.7 billion reported in the comparable period in 2019 with same store sales decline of 26.5%. Revenues for the first six months of the year stood at 3.8 billion, a 46.2% decrease versus 2019.
“The poor performance for the second quarter of the year was, as expected, a result of the historic challenges the industry faces during this global pandemic. We have taken this opportunity to leverage our core sources of strength to underpin a strategic transformation geared towards our eventual recovery,” said Robert F. Trota, President and CEO. “During the course of this quarantine period, we have deliberately focused growth via our core brands: Max’s Restaurant, Yellow Cab Pizza Co., Krispy Kreme, and Pancake House. We have diversified our consumer services and platforms in response to ongoing behavioral shifts. We have likewise taken decisive steps to enact disciplined cost and cash management across all levels of the business from the commissaries, stores, and head office. Although the current environment remains capricious, our goal to renew the business is unwavering.”
The company ended the second quarter with a net loss of P433.6 million compared to a net income of P227.9 million for the same period last year. For the first half of the year, net loss stood at P602.9 million versus a net income of P366.4 million in the comparable period in 2019.
The Yellow Cab and Krispy Kreme brands, powered by intrinsic demand in delivery and take-away channels, have demonstrated resilience and market relevance during the quarantine period. Meanwhile, the easing of local government restrictions for dine-in operations in mid-June aided the progressive recovery of sales, particularly for the Max’s Restaurant and Pancake House brands.
“The unprecedented circumstances of this year have given us the opportunity to spark innovation through non-traditional channels and expand the flexibility of our brands offerings. It has demanded that we rethink how we can do more with less, and rebuild our foundation for sustainable growth. Thus, we have rapidly identified and scaled green shoots such as Ready-To-Cook meal formats, alternative on-the-go services (Curbside Pick-Up, Park & Dine), Work-From-Home meals for our institutional partners, and multi-brand cloud kitchens to rebalance the reach and demand of our brands, while addressing consumer concerns on safety,” said Group Chief Operating Officer Ariel P. Fermin. “From a supply chain perspective, we have recalibrated our operations to safeguard redundancies in suppliers, toll manufacturers, and hubs through technology transfer across our commissaries. We continue to consolidate logistics to reduce transportation costs and improve service levels through dynamic routing and co-loading. At store level, we aim to improve margins through a combination of optimal pricing, rationalized menus, and shared materials across brands and products to leverage on volume.”
“MGI continues to do a thorough review of its network to deepen the productivity and profitability of current operating stores in their respective trading areas. As such, it can be expected that for the remainder of 2020, we will control our roll-out of new stores in mindful adherence to our scheduled pipeline, and accelerate closure of unprofitable stores,” Trota said. “We believe we have the right strategic fundamentals in place for a robust return to profitability.”
As of 30 June 2020, the Company’s store network totaled 745 locations, with 686 Philippine sites and 59 situated across various locations in North America, the Middle East and Asia. Out of these 745 stores, 85% or 630 stores were operational.