Max's Group Inc in Consumer Foodservice (Philippines)

Local Company Profile | 11 Aug 2015

STRATEGIC DIRECTION

Maxs Group Inc is set to focus on revitalising the underperforming brands which it acquired from
Pancake House Inc. This could result in the closure of some outlets, the conversion of some into franchise
outlets and downsizing. Strong brands such as Pancake House and Yellow Cab, meanwhile, will continue to be
increased through outlet expansion and improvements in menus and service. The other brands in its portfolio
are expected to benefit from various synergies which the brands acquired from Pancake House Inc will bring.
A wider brand portfolio will also enhance its expertise in food and beverage operations, which will enable it
to offer its services to other establishments such as beach resorts.

KEY FACTS
Summary 1 Maxs Group Inc: Key Facts

Full name of
company:
www:
Activities:

Maxs Group Inc

www.maxsgroupinc.com
Operator of fast food outlets and full-service
restaurants

Source: Euromonitor International from company reports, company research, trade press, trade sources

SUPPLIERS

Maxs Group Inc had four commissaries in 2014 which supply its company-owned and franchised
outlets so as to ensure product consistency. Three of these were new additions which came with the
acquisition of Pancake House Inc. One is located in Makati City, which is dedicated to the Pancake House
brand. The other is in Oranbo, Pasig City which services the needs of Dencios, Teriyaki Boy and The Sizzlin
Pepper Steak. The third one is in Kalawaan, Pasig City which provides for Le Coeur de France. Yellow Cab,
meanwhile, is supplied by a toll manufacturer. In August 2013, Pancake House Inc halted the operations of
the commissary in Kalawaan in order to consolidate its operations. Maxs Group Inc, however, is operating

with four commissaries as of 2014 and plans to consolidate this to three towards the end of 2015.
The company is able to source several of its food requirements locally. Maxs Inc originally had PepsiCola Products Philippines Inc and San Miguel Corp as suppliers for its beverages. Condiments such as
ketchup, meanwhile, are sourced from Nutri Asia Inc. Suppliers of Pancake House Inc, meanwhile, include
Coca-Cola Bottlers Philippines Inc, Nestl Philippines Inc, Unilever Philippines Inc, Fonterra Brands (Phils) Inc,
San Miguel Foods Inc, Front Royal Trading, Meatplus Trading Corp, RSRH Livestock, Alsons Aquaculture Corp
and Unilogix. With the merging of the two companies, its suppliers are likely to be streamlined for reasons of
cost efficiency.

COMPETITIVE POSITIONING

Maxs Group Inc ended 2014 with a 2% value share overall in consumer foodservice. Brands which
the company acquired from Pancake House Inc include Yellow Cab Pizza, Pancake House, Teriyaki Boy,
Dencios, Kabisera ng Dencios, The Sizzlin Pepper Steak, Le Coeur De France, The Chicken Rice Shop and
Maple. These were added to the brands originally owned by Maxs Inc which include Maxs, Krispy Kreme and

Jamba Juice.
The value sales of Maxs Group Inc when compared with the combined value sales of Pancake
HouseInc and Maxs Inc grew by 4% in 2014. This is slightly slower than the 5% current value growth
recorded in consumer foodservice overall in 2014. As such, the value share of Maxs Group Inc declined

minimally in 2014 when compared with the combined value share of Pancake House Inc and
MaxsGroup Inc in 2013. The slower value growth of the company in 2014 can be attributed to the
unfavourable performance of the brands it acquired from Pancake House Inc, with the exception of Pancake
House and Yellow Cab Pizza. Among the brands in its portfolio, Maxs and Pancake House are the strongest,
being leaders in their respective categories. Yellow Cab Pizza, meanwhile, is the second biggest brand in
pizza fast food. Teriyaki Boy is also a major contender in Asian full-service restaurants. However, it is faced
with challenges following the entry of several consumer foodservice brands which specialise in Japanese
cuisine.

The majority of the brands within the portfolio of Maxs Group undertake franchising agreements to
facilitate outlet expansion. Krispy Kreme, however, is one brand which Maxs Group had not yet begun to
franchise as of 2014. The company, meanwhile, is likely to expand the number of its franchised outlets as
some of the stores it acquired from Pancake House are likely to be converted into one as a local operator is
hoped to bring improvements in customer relations. Some outlet closures will also be undertaken, with the

space freed to be allotted to another brand.

The company caters mainly to middle-income diners with its reasonable prices. Maxs, meanwhile,
includes value meals and set meals in their menu which is appealing to price-conscious diners and those
eating out in groups. International brand Krispy Kreme, meanwhile, is a more high-end brand with its

relatively expensive doughnuts.

With the companys wide product portfolio encompassing various different categories within fullservice restaurants and fast food, it has been able to reap the benefits presented by growth opportunities
provided by more dynamic categories such as pizza fast food to compensate for slower growth prospects in
other categories such as bakery products fast food. Although Krispy Kreme may face strong competition from
other international brands such as J Co Donuts, it is looking to improve its market standing by growing its
beverage business as it expands it drinks menu.
Summary 2 Maxs Group Inc: Competitive Position 2014

Channel

Foodservice value share

Rank

Consumer foodservice
100% home delivery/takeaway
Cafs/bars
Full-service restaurants
Fast food
Self-service cafeterias
Street stalls/kiosks

1.6%
4.6%
1.6%
-

5
1
6
-

Source: Euromonitor International from company reports, company research, trade press, trade sources, trade interviews