DOUBLE-DIGIT growth in systemwide sales failed to translate to higher earnings for Shakey’s Pizza Asia Ventures Inc. (Spavi) in the first half as expansion costs, softer same-store sales and restructuring expenses weighed on the company’s bottom line.
The restaurant operator’s headline net income after tax fell 33 percent to P232 million from about P346 million a year earlier.
“Despite the tough environment, we continue to see bright spots across the portfolio and remain confident in the long-term growth prospects of our brands,” Spavi President and CEO Officer Vic Gregorio said on Thursday.
Systemwide sales rose 12 percent year on year to P13 billion while consolidated revenues increased nine percent to P8.2 billion, supported by continued investments in the group’s store network.
However, same-store sales declined one percent in both the second quarter and the first half as higher pump prices and weaker consumer discretionary spending weighed on demand amid the war in the Middle East.
Systemwide sales and revenues improved four percent in the second quarter from the previous quarter.
Spavi opened 104 net new stores and outlets in the first half, including 35 in the second quarter, bringing its global network to 3,074 units as of end-June.
The expansion helped cushion weaker same-store sales but also increased costs. Gross margin narrowed to 20.1 percent from 21.1 percent a year earlier while operating expenses as a percentage of sales rose to 13.9 percent from 12.6 percent.
Spavi attributed the margin pressure to expansion-related expenses, higher utility costs and weaker operating leverage resulting from softer same-store sales. The company also incurred nonrecurring costs from the restructuring of its Peri-Peri network.
Excluding the restructuring costs, core net income after tax declined 26 percent year on year.
Gregorio said Spavi was taking a more measured approach to expansion and applying higher hurdle rates to new investments.
“While expansion has near-term impacts on our bottom line, it also positions our brands for long-term value creation,” he said.
For the second half, Gregorio said the group was focused on improving execution and managing costs while continuing expansion at a measured pace.
“As we enter the second half of the year beset with headwinds, we are managing the business to deliver a soft landing for the full year and take advantage of this challenging environment to finetune business execution,” he added.
Gregorio said early third-quarter results were encouraging, with improvements across the group’s brands, although demand and cost conditions remained volatile.
“Our 2026 reset will have near-term impacts to our bottom line; nevertheless, it will position the Group to deliver a much better 2027."
Shakey's shares on Thursday slipped P0.02, or 0.34 percent, to close at P5.95 each.