MANILA, PHILIPPINES — Max’s Group, Inc. (“MGI” or the “Group”), the largest casual dining restaurant group in the Philippines, is reporting its operating results for the full year 2022.
The Group’s strategies developed and executed during the course of the pandemic have accelerated its profit recovery posting an all-time high organic net income for 2022 surpassing pre-pandemic levels amidst COVID lockdowns, market changes and commodities risks faced throughout the year.
Full year organic net income in 2022 for MGI totaled P622 million, 38% higher than the 2021 statutory net income of P451 million which includes a P377 million gain from the sale of a subsidiary. In terms of organic profitability, the 2022 financial results reflect an 8x multiple versus 2021 and outperform pre-pandemic 2019 by 63%.
“Our commitment to our stakeholders is to not only recover during the pandemic but come out stronger,” stated MGI Chief Executive Officer Robert F. Trota. “Despite the challenges that the organization has faced since the first lockdown in 2020, our business model has been tested and proven, with consistency of executed strategies as evidenced in our recovery.”
The Group’s resurgence was strongly backed by its strong core portfolio of brands across its local and international store network. Dine-in brands Max’s Restaurant and Pancake House secured a significant boost in sales as restrictions continued to relax, while off-premise brands Yellow Cab Pizza Co. and Krispy Kreme sustained their pandemic-proofed resilience.
In addition, MGI has further strengthened its manufacturing capabilities with the commissioning of its consolidated commissary, which expanded the Group’s growth potential into manufacturing and its food retail and business to business (B2B) segments as an adjacency to its core. MGI products are already present in supermarkets and convenience stores. This segment is gaining traction as MGI aims to be a leader in the growing food retail category to supplement its core restaurant and commissary businesses.
MGI’s system wide sales (“SWS”) generated from both company-owned and franchised stores for the full year amounted to P17.60 billion, growing 41% from the same period last year with 2021 sales of P12.52 billion. Consolidated revenues of the Group for the year amounted to P10.98 billion, a 44% growth from P7.64 billion in the same period of the previous year.
Local same store sales growth (“SSSG”) soared by 43% while global SSSG increased by 36% proving opportunities were maximized as the market continues to open, bolstered by continued relaxed restrictions and holiday demand surge in the fourth quarter.
For the fourth quarter, SWS reached P5.04 billion, a 29% increase versus same period in 2021 of P3.90 billion. Revenues likewise grew by 39% for the period, up by almost a billion pesos to P3.21 billion from P2.32 billion in the same quarter of the prior year.
Local market sales jumped by 33% in 4Q 2022 versus the same period last year as consumer confidence, mobility, and economics continue to revive. Meanwhile, the international business reported a solid 15% growth despite labor challenges in the North America market, with new agreements in place to further expand global reach in other markets.
“Our business now stands on a stronger foundation. Our commitment to our shareholders was that we will be more than ready when the market is ready. The remastered fundamentals that started in 2020, coupled with our strategic pivots, are not only seen in our financial performance but on how the Group has evolved”, noted MGI President Ariel P. Fermin. “We remain focused on serving our guests in our core restaurant business, and have built key partnerships with our customers in our adjacent B2B platform. We continue to be an attractive and reliable choice for our shareholders, business partners, and our employees,” added Fermin.
As the Group strategically and proactively placed measures to counter market volatility and rising commodity prices, gross profit margin was stable at 34.5% for the quarter. Strengthened supply chain capabilities provide end-to-end upsides in procurement, manufacturing and logistics. Full year gross profit posted was at P3.8 billion, at par with 2019. In terms of margin, 2022’s gross profit was at 34.3% which is higher by nearly 700 bps from the 2019’s 27.4%.
“MGI’s re-engineered economic model has set a historic all-time high organic net income despite the pandemic. Our consistent performance quarter on quarter has proven financial viability and sustainability of the business,” noted MGI Chief Finance Officer Maria Rochelle S. Diaz. “We have outpaced ourselves versus pre-pandemic even with a tempered topline.”
Margins for full year 2022 and in the fourth quarter alone reflect historic highs as compared to pre-COVID benchmarks. Full year margins are up, with record-high earnings before interest, taxes, depreciation, and amortization (EBITDA) and net income margins at 19.8% and 5.7% as compared to the organic 2019’s 16.4% and 2.6% margins, respectively.
For the fourth quarter, the Group EBITDA margin of 22.0% and net income margin of 6.1% are up by 284 and 333 basis points, respectively versus organic margins in the comparable period in 2019.
The Group posted net income before tax (NIBT) of P855 million and a 7.8% margin in 2022 which are purely coming from operations. This surpassed 2021’s statutory NIBT by 60% at P535 million and is 5x of its organic NIBT of P158 million. Moreover, 2022 organic NIBT is 31% higher versus 2019’s.
As of 31 December 2022, the Group’s store network covers 14 territories, with 612 Philippine sites and 66 stores situated across various locations in North America, the Middle East, and Asia.