Shakey’s resorts to price hikes, store closures
Shakey’s Pizza Asia Ventures Inc. is raising prices selectively and closing underperforming stores as it navigates a challenging business environment marked by cautious consumer spending and geopolitical uncertainties.
Company executives said on Wednesday that the restaurant operator is taking a more disciplined approach to costs and expansion as consumers continue to prioritize essential spending over discretionary purchases.
“We definitely will be cutting discretionary costs, and whenever we have a chance, we carefully pass on some of the prices to the consumers,” Shakey’s president and CEO Vicente Gregorio said during the company’s annual stockholders’ meeting.
The company is also negotiating with suppliers, hedging foreign exchange exposure and cutting discretionary expenses to cushion the impact of inflation.
Gregorio said the ongoing conflict in the Middle East has weighed on consumer purchasing power and added uncertainty to the business landscape.
In response, the company has adopted a more conservative stance on expansion and cash management. Part of the strategy includes rationalizing its store network.
“We have made a very conscious decision to identify stores that we need to close,” Gregorio said, adding that the company is focusing resources on stronger-performing locations.
Shakey’s chair Christopher Po said the company was using the current slowdown as an opportunity to restructure operations and improve profitability.
“So far, we’ve closed, between 15 to 20 stores year-to-date and still observing a few more,” Po said.
The company’s restaurant brands have felt the brunt of weaker consumer sentiment.
Po said same-store sales growth turned soft in the second half of last year, with some restaurant brands posting flat or slightly negative growth as households tightened budgets.
Still, the group’s diversified portfolio helped cushion the impact. Potato Corner, its kiosk business, continued to deliver strong growth, benefiting from consumers’ preference for affordable indulgences during difficult times.
“I think in a week’s time, we’re opening our first Potato Corner in the United States,” Gregorio said.
Executives also expressed optimism that easing geopolitical tensions and lower fuel prices could support a gradual improvement in consumer spending during the second half of the year.
“If this continues, then we are more hopeful for the back half of the year,” Po said.
