Max's Group swings to US$12m half-year loss, cites “full impact” of COVID-19
The company is also eyeing to have cloud kitchens.
Philippine casual dining restaurant company Max’s Group suffered a net loss of PHP 602.9 million (approx. US$12 million) for the first half of the year compared to a net income of PHP 366.4 million in the comparable period.
In a disclosure in the local stock exchange, systemwide sales in the first six months amounted to PHP 5.6 billion, a 42.5% decline from the PHP 9.7 billion reported in the same period last year with same store sales decline of 26.5%.
Revenues for the first half-year stood at PHP 3.8 billion, a 46.2% decrease compared to 2019.
For the second quarter, systemwide sales declined by by 68.9% to PHP 1.6 billion compared to the same quarter last year with same store sales decline of 55.8%. Revenues for the said amounted to P1.1 billion, down 71.1% versus the same period last year.
The drop, Max’s said, 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.”
Local operations relied primarily on delivery and takeaway channels for most of the second quarter. Mall locations in the Philippines, which comprised nearly half of the group’s local store network, were mandated to cease operations until early May.
“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,” Max’s Group president and CEO Robert Trota said in a statement.
The group said it “deliberately” focused its growth via their “core brands”, such as its namesake chicken company Max’s Restaurant, Yellow Cab Pizza, Pancake House and Krispy Kreme.
Yellow Cab and Krispy Kreme, in particular, were noted for being “powered by intrinsic demand” in their delivery and takeaway channels and “have demonstrated resilience and market relevance” during the quarantine period.
The easing of local government restrictions for dine-in operations in mid-June were also noted for aiding the “progressive recovery” of sales for Max’s Restaurant and Pancake House.
“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,” Max’s group COO Ariel Fermin said.
“Thus, we have rapidly identified and scaled green shoots such as Ready-To-Cook meal formats, alternative on-the-go services, 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,” he added.
For the remainder of 2020, Max’s expects to control its roll-out of new stores and accelerate the closure of unprofitable stores.
As of 30 June, the company store network has 745 locations, 686 of which are in the Philippines whilst 59 are situated across various locations in North America, the Middle East and Asia. Out of the 745 stores, 85% or 630 stores were operational.
