Following more than two years of compressed earnings in Trinidad & Tobago and Jamaica, Prestige Holdings Limited (PHL) is planning to spend big as it seeks to open several new stores and remodel several other franchises in 2023.

The restaurant management company got a reprieve from the stringent COVID-19 measures last April which saw its five managed brands having improved customer traffic. Prestige manages the Starbucks, TGI Friday’s, KFC, Subway and Pizza Hut franchises in Trinidad & Tobago.

Even with the global supply chain disruptions and increased operating costs, Prestige was able to grow its revenue by 55 per cent to TT$1.11 billion (J$24.87 billion) and turn its loss of TT$28.30 million into a net profit of TT$35.47 million (J$798.17 million) for its 2022 financial year ending November 30.

With this relative rebound, Prestige will be going bigger on its capital expenditure (capex) spend in 2023 with five planned restaurants in Trinidad & Tobago and its first Starbucks location in Guyana. This is on top of restarting its new store and remodelling investment programme. Two Starbucks locations were opened in the first quarter, another Starbucks opened in March in O’Meara and the first Starbucks opened this month. Prestige had 131 restaurants at the end of February.

“Throughout 2022, we continued to build on the innovation and progress that has been made in our digital, delivery and drive-thru channels and expect that these platforms will continue to drive growth going forward. In 2023, we expect to build on the progress made in the last year and also restart our new store and remodelling investment programme,” said chairman Christian Mouttet in the company’s 2022 annual report.

Prestige completed the remodel of its TGI Friday’s restaurant in Kingston, Jamaica in its fourth quarter which saw the location closed for almost two months. Apart from the fanfare resulting from the reopening, the location became profitable once again after two years of losses. Prestige Restaurants Jamaica Limited recorded revenue of TT$14.12 million and earned TT$263,725 (J$5.93 million) in 2022. However, this remains below the 2019 earnings of TT$17.95 million in revenue and TT$1.31 million in profitability.

“In the final quarter of 2022, we celebrated big as we reimagined our Jamaica restaurant after several years of serving our guests in the Kingston community. This reopening was a huge success as our restaurant reviews flooded the Jamaican media publications, and our restaurant photos showcased on social media platforms with key influencers in the market,” said Prestige’s annual report.

While the report didn’t segregate the TT$17.72 million (J$398.66 million) capex spend, it did mention that majority of the spend was related to the new Starbucks at the Piarco International Airport and the enhancement of the Jamaican restaurant. The remainder was spent on improving warehouse facilities, investment in restaurant kitchens and image enhancement of existing stores.

First-quarter rebound

With the return of Carnival and no COVID-19 restrictions, Prestige’s first-quarter revenue increased 26 per cent to TT$309.50 million with gross profit coming in 23 per cent higher at TT$95.60 million. While this improvement was notable, the company’s gross margin fell from 31.61 per cent in 2022 to 30.89 per cent in 2023.

“As reported in my year end 2022 statement, our group continues to experience significant recovery across all brands, with revenue essentially returning to pre-COVID-19 pandemic levels. We continue, however, to experience persistently high food, packaging, and operating costs due to global supply chain disruptions. These costs are material to our business, and we expect that it will take time for such costs to return to levels closer to previous market averages and be reflected in operating margins,” said Mouttet on the impact of higher operating costs in the first quarter.

Even with increased operating expenses, Prestige’s net profit increased nearly tripled from TT$2.01 million to TT$7.83 million. This was marginally below the 2020 first-quarter net profit of TT$8.23 million on TT$291.26 million in revenue.

Prestige’s total assets decreased by five per cent to TT$790.46 million (J$17.79 billion) over the first three months as its current assets declined from TT$224.77 million to TT$193.05 million over the period. This was due to the company investing its net cash into TT$8.92 million of capital expenditure and a cash outflow of TT$13.49 million for financing activities.

Total liabilities ended the period at TT$495.24 million with debt reduced by TT$5.5 million in the first quarter. Shareholder’s equity closed the period at TT$295.22 million. Prestige held its first in person annual general meeting in three years at yesterday at 22 London Street.

Prestige’s stock price closed at TT$8.00 on Friday which leaves it up 27 per cent year-to-date with a market capitalisation of TT$500.10 million. Shareholders are set to receive a dividend of TT$0.20 on May 15 for those on record as of April 13.