Pancake House steps up expansion

MANILA, Philippines - Shifting its expansion drive into high gear, Lorenzo-owned Pancake House Inc. is looking to acquire restaurant brands in Indonesia and Thailand as well as a local brand in the Philippines to further strengthen its foothold in the food service industry.

On the sidelines of the company’s annual stockholders’ meeting yesterday, Pancake House chairman and president Martin Lorenzo said negotiations are ongoing for the acquisition of local brands in Indonesia and Thailand serving hot pot, which refers to several East Asian varieties of stew, consisting of a simmering metal pot of stock at the center of the dining table.

Typical hot pot dishes include thinly sliced meat, leafy vegetables, mushrooms, wonton, egg dumplings and seafood.

Lorenzo refused to identify the two brands but said the Indonesia chain has around 80 outlets while the one in Thailand has 30 branches.

“We’re hoping to acquire these brands within the year,” said Lorenzo, adding that the casual dining restaurant group has allotted P10 million to P15 million for acquisitions. The group expects international operations to account for 40 percent of total sales upon acquisition of these two brands. 

At present, international operations represent less than five percent of total groupwide sales. The company already has a presence in Malaysia through Pancake House.

Lorenzo said acquiring local brands overseas is part of the group’s strategy to enter markets outside the Philippines in a bid to boost cash flow. “We’re acquiring these brands first and hopefully we can bring our brands there,” he said.

The group comprises flagship restaurant Pancake House, Japanese restaurant Teriyaki Boy, Singkit, Sizzlin Pepper Steak, Le Coeur De France and Filipino food chains Dencio’s and Kabisera.

As for the local brand which has five branches, Lorenzo said the group has already signed a deal with the owners and expects to launch this in a month or two. The target brand serves grilled chicken and spareribs. “This is just a small acquisition but we’re very excited about this. It’s a popular roadside brand with branches in Ortigas and San Juan,” he said. 

The deal is valued at between P30 million and P40 million, Lorenzo said. The group plans to increase the brand’s network to 60 over a two-year period.

Lorenzo said the group intends to further beef up its presence in Malaysia with plans to open 10 to 15 stores. Plans are underway to open three Pancake House outlets in Kota Kinabalu in the next three years. Future expansion also includes Vietnam.

Seeing a lot of potential in the country’s booming tourism industry, Lorenzo said the group is planning to bring its Sizzling Pepper Steak brand to Boracay following the successful launch of a Pancake House store there.

Lorenzo said the group expects a very strong second quarter following a slow first quarter with systemwide sales seen growing 15 percent to 18 percent by the end of the year or from P2.2 billion to P2.5 billion to P2.6 billion.

To further expand its reach, the group ‘s game plan is to build branches in non-traditional markets like hospitals, gas stations and supermarkets as the malls have become congested.

Making its presence felt in the provinces, the group will serve as anchor tenant to the planned budget hotel chain of SM Investments Corp., the investment holding firm of the Henry Sy Group.

In the first quarter this year, Pancake House reported a net income of P8.29 million, down 18.2 percent from the previous level, on lower restaurant sales and increased operating expenses.

The group opened 19 stores in the first quarter, bringing its total branch network to 179 – Pancake House (80), Dencios (26), Teriyaki Boy (39), Sizzlin Pepper Steak (19) and Le Coeur de France (15).