A post shared by Max's Restaurant (@maxschicken) on Sep 7, 2017 at 3:10am PDT

MANILA - Max's Group said Thursday net income in the first 3 months of the year fell 30 percent due to higher prices of raw materials and a larger manpower component due to new labor policies.

The country's largest casual dining group posted net income of P123.7 million in the first quarter, down from P176 million during the same period in 2017.

System-wide sales during the same period rose 13 percent from the previous year to P4.4 billion. Total revenues rose 11 percent to P3.2 billion, said the company, which operates Max's Fried Chicken, Yellow Cab and Pancake House.

Consumer prices had risen steadily since higher taxes on fuel and sugar-sweetened drinks took effect last Jan. 1. In April, inflation accelerated to 4.5 percent, overshooting the top end of the government's 2 to 4 percent goal for the year.

A crackdown on labor-only contracting is also underway, with President Rodrigo Duterte warning businessmen involved in illegal contracting that their days are numbered.

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"On the cost side, MGI was weighed down by escalating raw material prices and a larger manpower component as it realized the impact of its move towards professionalization which began in 2017," Max's said.

"This initiative was undertaken to reinforce strategic capabilities at the management level to ensure sustainable growth. The Company likewise took into account recently enacted labor policies particularly on third-party service engagements," it said.

Max's Fried Chicken and Yellow Cab recently offered meals for solo diners to tap into a growing market. The group attributed the 13-percent spike in same-store sales last year, in part, to the singles segment.

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The company said it was also looking at increasing the number of franchised outlets, as expands here and abroad.

"This shift will leverage on Max’s Group’s brand equity, operational expertise, and scale to propel store network expansion and boost fee-based collections, which generally equate to better profit translation," it said.