Max’s Group, Inc. (MGI), the Philippines’ largest casual dining restaurant group, reported a 41 percent drop in net income to P186 million in the first nine months of the year from P314 million in the same period last year.
In a disclosure to the Philippine Stock Exchange, the firm said this is mainly due to higher cost of raw materials, one-time store closure expenses, higher consultancy and professional fees associated with process improvements and system efficiencies and increase in administrative labor costs.
MGI said it has implemented a targeted strategy to optimize its retail trade areas, focusing on high-potential locations while selectively closing suboptimal stores to strengthen its store network for future expansion. This resulted in the net closure of 31 stores as compared to 13 in the same period last year.
“These closures were deliberately executed to mitigate the challenges posed by underperforming stores and to allow the Group to focus on targeted expansion,” the firm explained.
For the first nine months of 2024, MGI achieved consolidated revenues of P8.82 billion, marking a 0.8 percent increase from the P8.75 billion in the same period last year.
MGI's system-wide sales (SWS) dipped to P13.72 billion from P13.81 billion in the first three quarters of 2023 primarily due to the structured wind down of underperforming stores.
MGI's core brands – Max’s Restaurant, Pancake House, Yellow Cab and Krispy Kreme – continued to drive growth, with international operations in Asia, North America, and the Middle East further enhancing the Group’s global footprint.
Despite the impact of geopolitical factors, inflation, and the resulting pressures on consumption in 2024, Max’s Group said it has remained committed to reinvesting in the business.
Amid external challenges, including weather disturbances that temporarily affected economic activity, MGI achieved a 1.7 percent blended same-store sales growth (SSSG) in the third quarter of 2024.
While cost pressures led to a decline in gross profit margins, Max’s Group continued to make strategic investments in enhancing operational efficiencies and upgrading facilities.
These efforts, which included system improvements and investments in logistics, resulted in higher operational expenses. As a consequence, EBITDA and Net income margins decreased from 16.4 percent to 12.3 percent and from 3.6 percent to 2.1 percent, respectively.
“We are pleased with the progress we’ve made in the first nine months of 2024, despite some external challenges. Our strategic focus on optimizing our store network, improving operational efficiencies, and investing in brand innovations will pave the way for sustained growth and consumer loyalty. We are confident that Max’s Group will continue to thrive and meet our long-term goals,” said MGI President and CEO Robert F. Trota.