Pancake House still in the red

MANILA, Philippines – Pancake House Group, a unit of restaurant chain Max’s Group Inc. posted a P31.36-million ($697,431.34*) net loss from January to September 2014.

For the same period last year, the business unit posted a P166.1-million ($3.69 million) net income.

The company is implementing a comprehensive restructuring program to rationalize its portfolio of brands and streamline operations.

For the 3^rd quarter alone, net income stood at P6.28 million ($139,679.72), down 83.4% from P37.99 million ($844,973.32) recorded in the same period last year.

Third quarter sales only grew by 0.3% to P2.70 billion ($60.05 million) from January to September 2014.

The 9-month, 3^rd quarter financial results are only for Pancake House and does not include other entities under the Max’s Group.

The Pancake House Group is a member of the Max’s Group. Brands include Pancake House, Yellow Cab, Teriyaki Boy, Dencio’s, Sizzlin’ Steak, Kabisera ni Dencio’s, Le Coeur De France, and Maple.

“The results are in line with [the] management’s deliberate thrust to first improve the brand service platform, uplift quality of product offering and store appearance, control costs and rationalize store network, in terms of location, size, and positioning for the brand,” Robert Trota, Max’s Group president said in a statement.

A blueprint for synergies with the Max’s Group’s businesses is also being finalized.

Underperforming

At present, 15 to 20 of the Pancake House Group’s 301 stores are underperforming and are being evaluated for either right-sizing, conversion to franchise, or closure.

The company hopes the evaluation process will save approximately P35 million ($778,469.75), allowing it to use its capital and other resources on other businesses.

The restructuring program, including the refinancing of debt, should be completed by the end of 2014.

Management said it hopes to enter 2015 with a clean balance sheet, a stronger portfolio of businesses, and focus on growth.

Based on the financial statement filed with the Philippine Stock Exchange, Max’s Group said the 9-month revenue of Pancake House amounted to P2.3 billion ($51.16 million), up 1.8% from last year’s P2.26 billion ($50.34 million).

Also, operating expenses for the first 9 months of 2014 accelerated at 34.4% to P525.7 million ($11.69 million) from P391.1 million ($8.70 million) posted in the same period in 2013 on higher general and administrative costs and sales and marketing expenses.

The company is also in the process of raising P4.6 billion ($102.47 million) through share sale.

Max’s Group plans to sell 300.13 million shares price at a price of up to P21.75 ($0.48) each.

Proceeds from the share sale will be used for debt repayment and store expansion.

In July, Pancake House announced that it was acquiring 20 firms under the Max’s Group of Companies through a share-swap deal worth P4.05 billion ($90.22 million) to create the country’s largest casual dining restaurant chain. – Rappler.com

*($1 = P44.89)