Pancake House acquires Teriyaki Boy food chain for P230 million

Pancake House Inc. has signed an agreement with the Tiu family for the acquisition of Japanese fastfood chain Teriyaki Boy for P230 million.

The deal, however, is subject to a legal, financial and operational due diligence review of the business and assets of the sellers.

Upon the execution of the MOA, Pancake House shall pay an upfront cash of P10 million to acquire 70 percent of the issued and outstanding shares of the new company to be established by the sellers. The remaining P220 million will be paid in tranches: P190 million on Oct.28 and P30 million on Dec. 15, 2005.

Pancake House said it may secure long-term borrowings and/or issue convertible notes to fund its acquisition of Teriyaki Boy, which has a total of 10 outlets.

The company’s acquisition of Teriyaki Boy is in line with its plan to further solidify its position in the casual dining industry. Last year, Pancake acquired Dencio’s, a Filipino grill and restaurant chain.

Pancake House has earmarked P130 million this year for the establishment of nine new restaurants to bring its total number of stores to 60. Some of the new stores will be put up in Subic and Sta. Rosa, Laguna.

The group also plans to open eight new Dencio‚s stores, bringing to 28 the total branch network.

With the opening of more restaurants, Pancake expects its net profit to rise by as much as 50 percent this year from P18 million in 2004. Systemwide sales are also projected to rise up to 40 percent to P1.4 billion this year.

For the first half of the year, Pancake House posted a net income of P6.98 million. Pancake House propelled profits with a healthy 28-percent increase in year-on-year net income (P17.83 million) while Dencio’s began its turnaround with second quarter net loss trimmed down to P3.34 million or a 56-percent improvement from the first quarter net loss of P7.51 million.

Consolidated revenues of the two brands were also on an upsurge, rising by 78 percent from P196.47 million last year to P350.49 million this year. Restaurant sales increased from P112.32 million to P193.36 million, commissary sales from P66.26 million to P124.44 million, and franchise revenues (continuing royalty and initial franchise fees) from P17.89 million to P32.69 million.

Pancake House has traditionally been associated with specialty pancakes and waffles and has likewise expanded to offer an array of popular international dishes such as spaghetti, tacos, and chicken.

The group also plans to invade overseas markets to further widen its reach and boost its cashflow. It intends to open branches in Malaysia, Thailand, Singapore, China and South Korea. It has received queries from interested parties and that initial discussions have been made to enter into joint venture with them to establish the food chain in the said countries.