Pancake House acquires Yellow Cab for P800 million

MANILA, Philippines -  Casual dining restaurant chain Pancake House has forged a deal to acquire local premium pizza brand Yellow Cab for P800 million, a move seen to propel the Lorenzo-owned group’s total system-wide sales to over P4 billion next year.

In a briefing yesterday, Pancake House chairman Martin Lorenzo said the transaction, which is expected to be completed within 30 days, will further fortify the group’s brand portfolio that includes flagship Pancake House, Teriyaki Boy, Dencios, Kabisera, Le Coeur and Sizzlin Pepper Steak.

“We’re exhilarated by this acquisition. Yellow Cab is a top quality pizza chain that perfectly complements our other brands and is aligned with our strategic direction. We view it as an established top of mind, premium pizza brand and a profitable business in its own right, yet we also see much more potential for increased synergy in the short-term and sustainable growth over the medium to long term,” he said.

Lorenzo said the group intends to further grow Yellow Cab’s existing 82-store network, with around eight to 10 new branches to be put up every year, mostly in the provinces. Of the total stores, 69 are company-owned and the rest are franchised outlets.

The purchase is expected to shore up the Pancake House group’s sales and EBITDA (earnings before interest, taxes, depreciation and amortization) to P3.7 billion and P524 million, respectively, in 2012. It is also expected to boost the group’s total branch network to 270 by next year.

Last year, Pancake House registered total system sales of P2.3 billion, sales of P1.8 billion and EBITDA margin of 17 percent equivalent to P306 million.

Yellow Cab, on the other hand, recorded system sales of P1.5 billion, sales of P1.32 billion and EBITDA of P161 million. It operates not only in the Philippines but in the United States, Guam, Malaysia and Qatar as well.

Lorenzo said funding for the purchase will come from internally generated cash and loan from Metrobank.

He said the owners of Yellow Cab approached him two years ago but serious negotiations only started in the past six months.

Lorenzo said the group would slow down in the next 18 to 24 months before making a new acquisition.

As of end-June this year, the Pancake House group had a total of 178 stores.

The group posted a net income of P21.76 million in the first half this year, slightly higher than the P21.085 million recorded in the same period a year earlier, despite the slight decrease in revenues from P905.9 million to P900.18 million.