Max’s Group in the time of food trucks

MANILA, Philippines – The 72-year-old Max’s Group Incorporated (MGI) is ramping up its capital spending budget for 2017 to P800 million. The Philippines’ largest casual dining chain operator will use this to fund efforts in staying relevant with the modern times where so-called fast-casual restaurants and food trucks are quickly growing.

From its first Max’s Restaurant in Quezon City to its diverse portfolio of 14 brands all over the world, Max’s Group has cemented its position of being a market leader in the full-service restaurant industry in the Philippines. But this is being challenged by the surge of new brands in the market, thanks to customers’ more sophisticated palate, Euromonitor International’s 2016 report showed.

The research firm said independent players in the Philippines dominated full-service restaurants, accounting for a 75% combined value share of the channel during 2015. 

Among chained players, Max’s Group remained in the lead with a value share of 5% in 2015 due to its diverse portfolio of brands such as Max’s, Pancake House, Kabisera, and Dencio’s.

“Looking ahead, we maintain an optimistic view on the inclusive health of the Philippines and cross-border economies. For 2017, we have allocated around P800 million in fresh capital to fund our store pipeline, commissary upgrades, and other support infrastructure,” Max’s chairperson Sharon Fuentebella said in a stockholders’ meeting in Quezon City on Monday, May 8.

1,000 stores by 2020 on track

Max’s Group targets to establish 1,000 stores, 200 of which will be outside the Philippines by 2020.

“We have kept ourselves within range of achieving this goal. Our measure of performance is based on a store expansion plan, which relies on a structured approach in market feasibility research and site selection,” Fuentebella said.

On the international front, Max’s Group is not slowing down in expanding its store network. 

Max’s closed 2016 with 623 stores, 49 of which are in North America, the Middle East, and Asia.

In the pipeline are 141 more international locations, Max’s Group president and chief executive officer Robert Trota told reporters on the sidelines of the stockholders’ meeting.

Trota said Max’s Group would seek more expansion opportunities in Southeast Asia and enter “underpenetrated” Europe soon. 

“Now that we are in China, Singapore, and Vietnam, those particular areas have more room for expansion. North America will always be growing. Of course, the Filipino community is there and of course Middle East,” he added.

Max’s plans to study the European market first, and ensure it can open several stores there before signing an investment deal. (READ: Max’s Group on Europe expansion: Not for now)

“Once you enter a territory like that … you have to open not only one store. There has to be multiple stores. Because, for you to service it, for you to support it, it doesn’t make sense to visit just one outlet in a particular area,” Trota explained.

Innovations, cross-franchise

Euromonitor said Max’s Group is able to maintain its leadership due to “intensified efforts to grow its existing brands and improve underperforming brands.”

Trota said his company is on track with its goals, thanks to cross-franchising, where its flagship franchisees such as Max’s Restaurant get franchises of other sister brands like Krispy Kreme. 

Max’s Group has been continuously improving its customer service, like bringing all its brands under one unified and integrated delivery system.

With Max’s Restaurant, Yellow Cab Pizza, Pancake House, Krispy Kreme, and Teriyaki Boy operating under a singular delivery system, a more convenient and seamless customer experience is put in focus, the company said.

Coupled with other initiatives such as delivery mobile apps and rewards programs, “Max’s Group continued its dominance due to its reputable track record of delivering quality food and good customer service,” Euromonitor said.

Max’s Group also set up a multi-brand logistics team with 60 new delivery bikes and riders on top of the existing brand delivery teams to ensure timely fulfillment of orders across all brands.

This move to strengthen its delivery capability proved to be effective as “delivery sales posted a 24% year-on-year sales growth in 2016, translating to P1.08 billion or 9% of the company’s revenues,” Max’s said in a separate statement.

“We continue to be positive in terms of the economic situation in the Philippines and that’s why as mentioned we want to roll out 70 new stores because we feel there’s enough room for us to expand in this current situation,” Max’s director and chief finance officer Dave Fuentebella said. – Rappler.com