Pancake House lifts income 22% in Q1

MANILA, Philippines - Strong food sales in both new and existing branches allowed restaurant chain Pancake House Inc. to record double-digit growth in its first quarter earnings.

In a regulatory filing, Pancake House said its net income jumped 22.2 percent to P40.6 million in the first three months compared with P33.2 million a year ago.

Consolidated revenues of the homegrown casual dining chain picked up 6.5 percent to P884.19 million from P829.94 million last year.

“The growth was attributed to a sustained growth in same base store sales and increase in store network by 7.5 percent or 20 stores to 286 stores as of March 2013 from 266 stores as of March 2012,” Pancake House said.

In the first three months, store sales rose to P744.38 million from P686.93 million while franchise revenues gained nearly 12 percent to P31.49 million but commissary sales slipped 5.7 percent to P108.32 million.

“The decrease in commissary sales was attributed to store closures of some franchise-owned stores awaiting relocation while increase in franchise revenues was brought by one-time franchise fee from new franchisees,” the company said.

Pancake House said it also benefited from supply chain efficiencies through its business synergies.

Cost of labor grew to P128.17 million from P120.63 million last year.

“As a percent of revenues, labor costs was efficiently managed at 15 percent despite government-mandated wage increases implemented during the periods covering the first quarter of 2013 and 2012,” Pancake House said.

The restaurant chain said operating expenses rose 13 percent to P266.23 million “mainly attributable to uncontrollable expenses of newly opened stores still in developmental stage and increases in occupancy costs such as utilities, rent, and electricity, among others.”

As of end-March, the listed firm had 286 co-owned and franchised stores: 104 Pancake House, 14 Dencio’s Bar and Grill, 34 Teriyaki Boy, 18 Sizzlin’ Pepper Steak, 11 Le Coeur de France, four Chicken Rice Shop and 101 Yellow Cab.

Last year, Pancake House started its five- to seven-year overseas expansion program that involves the establishment of around 300 stores mostly in the Middle East and Southeast Asia.

The original Pancake House was opened in 1970 by Milagros Basa, Leticia Zamora and Carmen Zaragosa, producing pancakes and waffles as an alternative to the rice-based restaurant market.

A group of new investors led by current CEO Martin P. Lorenzo bought the two main shareholders, Sta. Rosa Food Services Corp. and Extrovert Holdings in February 2000.