Krispy Kreme franchise holder to put up 13 outlets this year

Max's Group, Inc., the local franchise holder of Krispy Kreme, said on Saturday that it will spend at least P91 million this year to put up 13 new branches of the doughnut brand nationwide.

"Each store costs P7 million to P9 million," Max's Group Compliance Manager Paul C. Cheah told BusinessWorld during Krispy Kreme's 1,000th store anniversary celebration at the Bonifacio Global City.

The new stores will bring the group's total store network to 73 by the end of the year.

Krispy Kreme will also ramp up its delivery system in central business districts and launch an online platform in April.

"We"�re really pushing for digital because it's a growing space in terms of revenue and people really want a convenient way of accessing the brand," Max's Group Chairman Sharon T. Fuentebella said in the same interview.

As of end-2013, Krispy Kreme accounted for 12.5% of the group's total revenue and is considered as one of their "star brands," according to Mr. Cheah, with the rest being Max's Restaurant, Pancake House, and Yellow Cab.

On a global scale, Krispy Kreme will start competing in the Latin American and African markets, with plans to enter six to eight new countries this year, Krispy Kreme Global President Dan Beem told BusinessWorld in the same venue.

The US-based doughnut company is now present in 25 countries and overseas operations account for one-third of total revenue, half of which comes from the Asia-Pacific region alone, he said.

Meanwhile, Mr. Cheah said this year's budget will be sourced from Max's P3.5-billion follow-on offering last December. The group also earmarked P500 million in capital expenditure this year, which will finance the opening of 60 to 80 stores across all brands, including those of Krispy Kreme.

In July last year, Max's acquired listed Pancake House, Inc., in a share swap described as creating the country's largest casual dining restaurant group. The consolidation brought together 14 brands: four from Max's -- Max's Restaurant, Max's Corner Bakery, Krispy Kreme, and Jamba Juice -- and 10 from Pancake House -- Pancake House, Yellow Cab, Le Coeur de France, Dencio's, Teriyaki Boy, Singkit, Sizzling Pepper Steak, Kabisera, the Chicken Rice Shop, and Maple.

The group has yet to release its 2014 financial report, but Mr. Cheah said this "should be not be a basis of the true health of the company." "2014 was a transformative year for Pancake House. We did a lot of housekeeping, as well as the acquisition, integration and the follow-on and there were a lot of one-time costs," he said. "2015 is the first real year." Shares in Max's Group shed 40 centavos or 1.36% to close at P29 apiece on Friday.

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