PANCAKE HOUSE INC IN CONSUMER FOODSERVICE (PHILIPPINES)

Euromonitor International October 2012

PANCAKE HOUSE INC IN CONSUMER FOODSERVICE (PHILIPPINES)

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LIST OF CONTENTS AND TABLES

Strategic Direction ........................................................................................................................ 1 Key Facts ..................................................................................................................................... 1 Summary 1 Summary 2 Pancake House Inc: Key Facts .................................................................... 1 Pancake House Inc: Operational Indicators ................................................. 1

Company Background .................................................................................................................. 1 Suppliers ...................................................................................................................................... 2 Competitive Positioning ................................................................................................................ 2 Summary 3 Pancake House Inc: Competitive Position 2011 ........................................... 3

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PANCAKE HOUSE INC IN CONSUMER FOODSERVICE (PHILIPPINES)

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PANCAKE HOUSE INC

STRATEGIC DIRECTION
Pancake House Inc is expected to continue expansion through more acquisitions of restaurants, both domestically and internationally. The company will continue to focus on the development and expansion of its core brand, Pancake House. In addition, Pancake House will also look to expand the menu offerings of the newest addition to its portfolio, Yellow Cab Pizza.

KEY FACTS
Summary 1 Pancake House Inc: Key Facts Full name of company: Pancake House Inc Address: Tel: Fax: www: Activities:
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#2259 Pancake House Inc Pasong Tamo Ext, Makati City Philippines 1622 +63 2 894 2000 +63 2 813 2628 www.pancakehouse.com.ph American full-service restaurants, Asian fullservice restaurants, pizza fast food

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Summary 2 Net sales Net profit Number of employees

Source:

Pancake House Inc: Operational Indicators 2009 2010 Ps1.4 billion Ps45.3 million n/a Ps1.4 billion Ps76.8 million n/a

2011 Ps1.8 billion Ps99.3 million 3,225

Pancake House Inc annual reports for financial year ending 31 December

COMPANY BACKGROUND
Starting out from the pancake recipes of pioneering entrepreneurs Milagros Basa, Leticia Zamora and Carmen Zaragoza in 1970, Pancake House joined the ranks of Jollibee Foods Corp to become one of the largest local players in consumer foodservice in the Philippines. Three decades after its humble beginnings, the company launched its initial public offering (IPO) and it has been active in the acquisition of high potential brands in casual dining. To date, Pancake House is a publicly-held company and its stocks are traded on the Philippine Stock Exchange. Pancake Houses brands tend to cater to upscale and middle-income customers. As a result, its outlets are located in areas where consumer disposable incomes are higher than average. Most of the companys brands are located in shopping and other retail centres while

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standalone outlets are also prevalent in high income neighbourhoods in Metro Manila. Although the company is also keen to increase its presence outside the metropolis, most provincial-based outlets are located in key cities. In 2011, Pancake House acquired the Yellow Cab Pizza chain of restaurants. The move allowed Pancake House to compete in pizza fast food in the Philippines due to Yellow Cab Pizzas strong brand equity and popularity among middle and upper income consumers. Pancake House has maintained its current strategy, outlet designs and menu offerings. Pancake House did however develop more products for the brand to offer such as solo folded pizzas and latte beverage drinks. Domestically, the company aims to expand its brand, mainly within principal cities. These include developed urban locations such as Manila, Cebu and Baguio. Pancake House tends to focus on acquiring locations in upscale locations, business districts and malls. The majority of the companys brands tend to cater to the middle and upper income segment in the Philippines. Pancake House is also looking to expand its brands outside the Philippines. Through its diversified portfolio of brands. Pancake House aims to target several market segments. For example, its Pancake House brand targets families in the upper income segment while its Dencios and Yellow Cab Pizza brands tend t o target young professionals and university students. However, Dencios aims to cater to more of the dine -in crowd while Yellow Cab Pizza tries to increase its sales through delivery and take out.

SUPPLIERS
Pancake House sources a huge proportion of its ingredients and supplies from major local companies including San Miguel Purefoods Corp, Unilever Philippines Inc, Nestl Philippines Inc, CDO-Foodsphere Inc and Swift Foods Inc. In addition, the companys beverage supplier is Coca-Cola Bottlers Philippines Inc. Pancake House Inc states that it maintains a number of suppliers for each of its items. In order to ensure the quality of the food served in its outlets, franchisees are required to purchase products only from the suppliers accredited by Pancake House. Only kitchen items are sourced from suppliers abroad. Pancake House buys these items from the multinationals accredited distributors in the country. The company imports kitchen items in order to ensure their quality and durability. Pancake House does not manufacture for third parties.

COMPETITIVE POSITIONING
Pancake House ranked sixth within consumer foodservice in the Philippines in 2011. The companys brand equity in full service restaurants and its recent expansion into pizza fast food has helped it to secure a strong position in consumer foodservice. The companys flagship Pancake House brand accounts for the majority of its revenue in full-service restaurants. Pancake House experienced strong growth in 2011, with the company rising from the 13th to 8th highest grossing consumer foodservice company in the Philippines. The companys acquisition of Yellow Cab Pizza nearly doubled its total revenue in 2011. Yellow Cab Pizzas strong brand equity gave Pancake House a foothold in pizza fast food and automatically made the company the second largest pizza fast food operator in the Philippines. Pancake House is an innovator within consumer foodservice in the Philippines. The company was the first restaurant to specialise and popularise sales of pancakes in the Philippines. After

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its acquisition of Yellow Cab Pizza in the Philippines in 2011, the company developed new product offerings for brands such as the solo folded pizza and latte beverages. The company is committed to becoming a leader in the emerging casual dining area in the Philippines. It should be noted that Pancake House is very keen on increasing its focus on more affluent and middle-income consumers and banks and its ability to create innovative brands and restaurant concepts. Pancake Houses recipe for success includes having a well defined target audience for its brands. The company tends to focus on the full service restaurants areas in the Philippines and aims to establish itself in the casual dining segment. Pancake House tends to target a market niche among upper and middle income consumers in the Philippines. The company plans to expand its brands by bringing them into fast growing cities in the southern Philippines where business process outsourcing hubs abound. In the long term, Pancake House aspires to be a globally recognised consumer foodservice operator. The companys brands are all positioned in relatively slow growing areas. It should be noted that one of the advantages of operating in full-service restaurants is the insulation from economic downturns due to the relative lack of price-sensitivity amongst clients. However, areas like full-service restaurants have fewer prospects as they cater to a small niche of customers. Whilst casual dining operations help to balance this, growth prospects in this area are also slower than those in other areas geared towards mass consumers like fast food and street stalls/kiosks. Summary 3 Product type Pancake House Inc: Competitive Position 2011 Foodservice Value share Rank 0.9% 1.8% 1.5% 7.0% 17.2% 8 3 1 2 3

Consumer Food Service Full-Service Restaurants Asian Full-Service Restaurants North American Full-Service Restaurants Pizza Fast Food
Source:

Euromonitor International from company reports, company research, trade press, trade sources, trade interviews

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