MAX’S Group Inc. on Friday said it has fixed Pancake House Inc., the company it bought early this year that paved the way for the merger of two of the country’s largest casual-dining restaurant operators.
President and CEO Robert Trota said the next move for the company is to expand overseas and use the brands that it acquired from Pancake House.
“The international expansion is our biggest growth story. And I got an international team already. So they’re just going to be rolling out a portfolio of brands in any country,” Trota said in a briefing after the company’s listing of its follow-on shares offering on Friday.
Trota said the company will have a total of 20 new stores outside the Philippines, mainly in the United States and the Middle East, and about 68 new stores locally.
Overseas, it will use mainly the Max’s Restaurant brand to target the Filipino communities in North America as its gateway to the main markets, Trota explained.
He added that they would wield the Yellow Cab brand for other markets targeting other than Filipino communities, such as those in the Middle East.
“We have the machinery for the expansion. We have the space, we have the capex [capital expenditures], we know what brand [that will be established] already because we’ve fixed it already,” Trota said.
He added Max’s was able to fix Pancake House by both paying off most of its debts and rationalizing some of its operations, which include the merger of operations with those of Max’s and closing down some of the underperforming stores.
Of the P3.5-billion proceeds of its follow-on offering, some P3 billion of which will be used to pay off the bulk of the money used to buy Pancake House from the Lorenzo family. Max’s bought Pancake House from the Lorenzo family for about P3.88 billion and Trota said that amount contain debts.
Max’s reported a loss during the three quarters of the year of P31.36 million. But company officials said the loss came from Pancake House itself and not from Max’s, which still has to consolidate its own chain of restaurant’s income.
“You cannot really grow unless you fix the house. Unless you fix the foundation, service platform, product quality…that’s when you can roll out and expand. And that’s what Robert [Trota] has been actually doing,” Eduardo Francisco, BDO Capital president, said.
Analysts said earnings of Max’s may double as early as next year when the financials of all the restaurants are consolidated into the company.
Francisco said instead of Max’s amortizing Pancake House debts for several years, it decided to “take a hit” right now.
But its earnings will start doubling as early as next year, he opined.
“It’s not coming from the company itself, but analysts could be looking at the numbers trying to understand Max’s. They saw Robert and family as [restaurant] operators. They come into the stores, they know how to fix it. They’re not here just for financial gain and that’s refreshing for analysts and investors,” Francisco said.
Pancake House owns brands such as its flagship restaurant of the same name, Dencio’s, Teriyaki Boy, Yellow Cab and a vocational school called Philippine Culinary Arts and Food Services Institute.
As of the third quarter, it has a total of 301 stores, including joint venture and franchised, or just three stores more than last year.
Max’s and Pancake House combined, its number of outlets will total to 498 and 27 overseas.