Shakey’s income falls in Q1 as lockdown hits operations

Shakey’s Pizza asia Ventures Inc., a company that owns the brand in the region and is led by the Po family, said its income fell 34 percent in the first quarter to P113.79 million, from last year’s P173.81 million.

Revenues were flat during the period ending March to P1.83 billion, as the strong performance in January to February was dampened by the sudden closure of most of its stores in mid-march due to the implementation of enhanced community quarantine (ECQ).

The company posted systemwide sales growth of 21 percent in

January and February, prior to the ECQ, driven primarily by samestore sales growth of 7 percent, the continued expansion of Shakey’s outside Metro Manila, and the consolidation of Peri-peri Charcoal Chicken in June 2019.

“The temporary closure of a significant number of our stores, combined with the impact of operating leverage and various fixed costs, dampened our bottom line during the period,” said Vicente Gregorio, company president and CEO.

“We expect the second quarter to be worse, possibly the most challenging I’ve experienced in my career, as we feel the full effects of limited operations and incremental costs due to the crisis.”

During the second half of March, the company only had 9 percent of its network operational out of a total of 280 outlets—comprised of 249 Shakey’s and 31 Peri-peri stores— servicing delivery and take-out. As a result, it ended the quarter with systemwide sales of P2.3 billion, f lat year-on-year.

About 256 Shakey’s and Peri outlets have currently re-opened, representing 91 percent of the company’s total store network. Under revised operating procedures, each unit undergoes intensified safety audits, regular sanitation, as well as temperature checks for both guests and staff. Safety signage and an assigned health and safety officer have also been put into place in each of its stores.

The company is also cutting its capital expenditures by 70 percent, while reducing unnecessary overhead costs and managing working capital spend. It will also be suspending its 2020 new store openings for now.

“Beyond the ongoing shortterm disruptions, we believe that the long-term structural story of the Philippine restaurant space remains intact. We are however taking a more prudent approach over the next few months, observing how consumer behavior and trends will evolve as various lockdowns lift, as well as what the pandemic’s effects will be on the broader economy,” said Gregorio.