Shakey’s Pizza Asia Ventures Inc. saw its first-half net income fall 33 percent to ₱232 million, dragged down by rising operating expenses and restructuring costs tied to its Peri-Peri Charcoal Chicken network.

In a disclosure to the Philippine Stock Exchange, Shakey’s reported that excluding one-off charges, core net income after tax fell 26 percent year-on-year.

Gross profit margins contracted by 100 basis points to 20 percent as network expansion costs, higher utility bills, and softer same-store sales weighed on operating leverage.

Operating expenses as a percentage of sales climbed 130 basis points to 13.9 percent as the company stepped up promotional spending and brand-building initiatives to stoke demand.

The profit squeeze comes amid volatile local operating environment. Domestic consumer discretionary spending faltered in the second quarter, hit by an inflationary spike triggered by soaring pump prices linked to conflict in the Middle East. Same-store sales drifted one percent lower during the period.

Despite macro headwinds, multi-brand system-wide sales expanded 12 percent year-on-year to ₱13.0 billion, driven by aggressive retail footprint growth.

Consolidated revenues grew 9 percent to ₱8.2 billion. Sequentially, performance picked up in the second quarter, with both revenues and system-wide sales gaining four percent over the first quarter, aided by peak holiday spending during Mother’s Day, Father’s Day, and graduation season.

The company added a net 35 units in the second quarter, bringing its first-half net additions to 104 outlets. That expanded its global network footprint to 3,074 units across brands including its flagship Shakey’s Pizza, Potato Corner, and Peri-Peri.

Vicente Gregorio, Shakey’s chief executive officer, said the company is adopting a more disciplined, measured pace for future expansion while taking steps to shore up profitability.

While established core brands like Shakey’s and Potato Corner demonstrated resilience against inflationary pressures, newer concepts like Peri-Peri proved more vulnerable, prompting management to undertake a network reset.

The group is leveraging the slowdown to optimize cash usage, reorganize store footprints, and strengthen long-term portfolio fundamentals. (James A. Loyola)