Pancake House rides on lifestyle malls for growth

MANILA, Philippines – Casual dining restaurant operator Pancake House, Inc. attributed its healthy financial performance to successful expansion moves. Their strategy? They closely follow trends in real estate.

According to Bernadette Lee, Pancake House’s Chief Operating Officer, the food group follows real estate developers closely in the types of retail outlets being opened.

They noticed the shift from large malls offering the same spread of brands to smaller destination, pocket malls offering a more unique mixture of high-end destination brands.

“The developers such as Ayala (Land) and Megaworld (Corp.) are now focusing on lifestyle malls. They wanted to give the consumers more options, something that is not normal and usual, so there is already demand from them. We follow these developments,” Lee shared. 

Lee said that restaurant names become associated with developments that trend and “become more like a destination brand.”

Building relationships

Lee noted that aside from following the tracks of developers, key is to stay top-of-mind when the real estate firms expand.

“The way to go is to build relationships with all these developers. We meet with them constantly and they present masterplans. We already see where we’re heading. At this point it’s really a matter of getting the offers coming in. That type of establishing a relationship with developers is a must,” she added.

This strategy allows Pancake House to thrive throughout the different business cycles. 

“In the past few years we thought that the market was already saturated. But then it’s a cycle. You hit a certain point it goes up and then goes down again. We try to go with the flow. That goes with the development. If we’re not there, it’s already a passing opportunity,” she said. 

This is behind the 47% increase in the revenues of the group’s ‘mega brands,’ Pancake House and pizza chain Yellow Cab. The two brands have zoomed past 100 stores and contributed about 60% of the group’s annual profit.

Overall, the group’s revenue reached P3.4 billion and profits hit P149 million in 2012. Pancake House hit P900 million revenues during the year while Yellow Cab’s reached P1.6 billion.

Move out of Manila

Complementing the expansion strategy in the lifestyle malls are urbanized areas outside Metro Manila and popular tourist destinations.

“There are a lot of developments coming up not just within Metro Manila but already moving towards the provincial outlets. We call them ‘new wave cities.’ These are cities that are starting to be urbanized because of the growth of BPO (business process outsourcing) offices so we see a lot of movement and development in these areas,” she explained.

She also cited the impact of affordable air travel on how markets now visited by domestic tourists have become attractive for restaurant expansion.  

Pancake House Inc. president and CEO, Martin P. Lorenzo said that from the 30 new stores expected this year, only 30% will open in Metro Manila. The bigger chunk, or 70%, will operate in ‘new wave cities’ and tourist heavy places like Palawan, Boracay and Puerto Princesa, among others.

“Key ingredients in the new cities: They should be familiar with our brands. They’ve been there and experienced the brand,” said Lee. – Rappler.com