Insider Spotlight
In a company disclosure on Wednesday, the operator of Shakey’s and Potato Corner reported headline net income after tax fell 27 percent year-on-year to P134 million during the January-to-March period. Excluding one-off network restructuring costs, core net income slipped 17 percent.
Why it matters
Systemwide sales, however, climbed 14 percent to P6.40 billion, while consolidated revenues increased 13 percent to P4 billion, supported mainly by the opening of new stores. Same-store sales, which measure sales performance of existing branches, were flat from a year earlier, reflecting softer consumer spending.
The company opened 69 net new units during the quarter, pushing its global network to 3,039 stores and outlets. About 16 percent of the network is now overseas.
SPAVI president and CEO Vic Gregorio said the company had anticipated a challenging operating environment entering 2026, with geopolitical tensions in the Middle East further dampening consumer sentiment.
By the numbers
While the company continued investing in expansion and promotional activities to support demand, these initiatives weighed on margins. Gross margin declined by 120 basis points to 20.1 percent as expansion-related costs offset lower input prices. Operating expenses as a percentage of sales rose by 50 basis points due largely to higher advertising and promotions spending.
Headline net profit margin narrowed by 180 basis points year-on-year to 3.3 percent, while core net profit margin dipped by 130 basis points to 3.8 percent.
Still, core earnings before interest, taxes, depreciation and amortization (Ebitda) excluding one-off items grew 7 percent, suggesting the business’ underlying operating performance remained relatively stable despite near-term pressure on profits.
What’s next
The disclosure highlighted Shakey’s and Potato Corner as key drivers of the group’s expansion initiatives during the quarter. Shakey’s opened its 3,000th store in Arca South and its 300th branch in SM Zamboanga, while Potato Corner entered Laos, its 17th international market, and expanded its experiential “XP” store format.
Gregorio said the company was becoming “more choiceful” in deploying capital, focusing on stores with stronger long-term returns while reviewing its network strategy to improve efficiency.
He added the company’s mix of casual dining and kiosk formats provides some protection during inflationary periods, as kiosks generally remain more resilient than full-service restaurants during economic slowdowns. —Princess Daisy C. Ominga | Ed: Corrie S. Narisma
