Shakey’s Pizza says Q1 profit slips 15%, cites higher operating expenses

LISTED restaurant chain and food service group Shakey’s Pizza Asia Ventures, Inc. (SPAVI) saw a 15% decline in its first-quarter (Q1) net income to P171 million on higher operating expenses.

“In terms of profitability, first-quarter net income registered at P171 million, softening by 15% year on year, driven by higher operating expenses due to investments in the organization and in sales generating activities,” SPAVI said in a statement to the stock exchange on Wednesday.

System-wide sales rose by 15% to P4.8 billion led by the company’s network expansion program and sustained same-store sales despite the persisting inflationary environment. Net revenue surged by 6% to P3.1 billion.

Gross profit improved by 14% to P719 million while operating expenses increased by 41% to P472 million.

“While we had a challenging start, SPAVI has been reaping the benefits of a more diverse, multi-brand portfolio. As we move into the succeeding quarters, we expect our profitability to improve with tailwinds from easing commodities and improving operating expenses as a percentage of sales,” SPAVI President and Chief Executive Officer Vicente L. Gregorio said.

“Furthermore, store network expansion will be financially accretive to the group,” he added.

SPAVI is expecting an upswing in net income for the second half, with full-year profits climbing by the mid-teens.

“Overall, we are on track to deliver top line growth in the mid-teens territory, and we expect profits to grow at the same pace as sales,” Mr. Gregorio said.

“Our guests were more careful about when and how they choose to spend their money. They sought even more value. Therefore, it was crucial for us to ensure that our brands remained relevant through compelling offers and programs to sustain sales,” he added.

SPAVI added 91 units to its store network during the first quarter, putting its global network at 2,232 stores and outlets as of end-March.

Across the company’s brands, Shakey’s has 268 outlets, Potato Corner has 1,874 stores and outlets, and Peri-Peri Charcoal Chicken and Sauce Bar has 76 units.

Other incubating brands such as R&B Milk Tea and Project Pie has a total of 14 units.

“Our group remains optimistic with a healthy dose of caution when it comes to our outlook. Given that we have been operating in a strained consumer environment and are coming from a high base due to the reopening, we are grateful to be able to deliver double-digit top line growth, which we expect to be sustained for the balance of the year,” Mr. Gregorio said.

On Wednesday, SPAVI shares were unchanged at P9.75 each. — Revin Mikhael D. Ochave