Max’s Group turns to franchising for growth

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(Photo from: pageone.ph)

(Source: BUsiness Mirror | May 9, 2018)

Casual-dining restaurant operator Max’s Group Inc. on Wednesday said it will pivot its stable of brands toward franchising to lower its capital expenditures (capex) this year.

Robert F. Trota, the company’s president and CEO, said the company known for its eponymous Max’s Restaurant brand, said for years the company-owned share remained at 69 percent of the total and franchised stores at 31 percent.

Trota said they hope to invert that ratio of company-owned and franchised stores so that more stores are owned by others in about five years. He said the company wants to focus on overseeing how the brands themselves perform rather than operating them.

“In the same way, we will continue to chase new opportunities for our loved brands,” Trota added.

The franchising strategy started out with the company’s push to export its stable of brands to overseas markets such as the Middle East. The homegrown brands it started to export cater to the broader segment of the public rather than Filipino food, which it can only sell to Filipinos living abroad. These local restaurant brands include Teriyaki Boy, Pancake House and Yellow Cab Pizza.

All of the restaurants it is establishing overseas are franchise-owned. Trota said the company has no plans of owning and operating a restaurant outside of the Philippines. As a result, the company is spending P600 million this year in capex, down from last year’s P800 million in capex, said Dave T. Fuentebella, the company’s CFO.

Fuentebella added P250 million will be spent on the expansion of its commissary lines to support such growth.

“The spending also includes renovation of some of our restaurants,” Fuentebella told reporters after the company’s annual stockholders meeting.

For the year, the company is rolling out between 80 to 90 new outlets both here and abroad. Of the store roll out, 55 of the 74 local stores rolled out will be owned by its franchisees. The remaining 10 or so stores will be for the international market.

Max’s said it is set to further accelerate international expansion activities with a target of 20 to 30 new outlets for 2018, primarily across core brands Max’s Restaurant, Pancake House and Yellow Cab Pizza.

It aims to end the year with around 75 stores to 80 stores abroad.
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