III- Company Profile (Firm to be selected by the students)

• Firm organizational structure

The illustration below shows Shakey’s organizational structure, that follows a

functional chart which is one of the most common organizational structures wherein a
company is composed of different departments. In the case of Shakey’s it is comprised of
General Management, Corporate Planning and Business Development, Information
Technology, Finance and Human Resource. These departments are divided and grouped
based on the similarities in functions and their area of specialization in which a department
head is appointed and responsible in the performance of a specific subsection to thoroughly
disseminate and supervise the roles and tasks of the employees. This kind of hierarchical
structure will help the organization to effectively utilize the skills of the workers and
enhance production level. In this way, the operations will function accordingly and
efficiently, which will consequently be a way of means to achieve the objectives of the
company.

Photo taken from: https://www.shakeyspizza.ph/investors/corporate-information

 President/CEO
VICENTE L. GREGORIO

BOARD OF DIRECTORS

Director, Chairman of Director, Vice- Director, Vice-

the Board Chairman of the Board Chairman of the Board
CHRISTOPHER T. PO RICARDO T. PO JR. TEODORO T. PO

Director, Treasurer Independent Director Lead Independent

LEONARDO T. PO PAULO CAMPOS Director
FERNAN P. LUKBAN

President/CEO Independent Director Independent Director

VICENTE L GREGORIO EILEEN Z. ARANATE FRANCES J. YU
 MANAGEMENT TEAM

Vice-President General Manager Corporate Secretary

MANUEL T. DEL JORGE Q. CONCEPTION MARA L. YBANEZ
BARRIO

Chief Human General Manager of In- Vice President

Resource Officer house Commissary International Operations
JENNIFER V. LAPA ALOIS BRIELBECK MARVIN Q.
DA SILVA
https://pmstudycircle.com/2012/08/what-is-a-functional-organization-structure/

https://saylordotorg.github.io/text_organizational-behavior-v1.1/s18-organizational-structure-and-
c.html

https://www.shakeyspizza.ph/investors/corporate-information
• Firm size

Shakey’s is one of the leading pizza parlor in the Philippines. You would not have
a problem finding a branch because it is almost everywhere in our country and we also
have one of the fastest growing franchises out of all the other countries making it
biggest in Southeast Asia and bigger than United States, where it came from. That is
why the owners are planning to expand more branches in the Philippines; outside the
metro and putting more on provincial areas where they can see potential growth. In
line with their expansion they also plan to revamp the newer branches they planned to
build, not only the interior but also other aspects of the restaurant because despite
being old in the industry, they want to prove that they can constantly adapt to the
changes and demands of the consumers. One of the milestones of Shakey’s is their
200th store that was built in Makati last 2017. Currently, there are more than 250
branches nationwide wherein 60% are company-owned and 40% are franchised,
although they are planning to divide their branches equally making it 50% company-
owned and 50% franchised. Their target this year is to open 20 new stores to have a
total of 248 stores nationwide. In addition, they target for the next 3 and 5 years to
have a nationwide network of 300 and 500, respectively.

http://www.pfa.org.ph/tag/shakeys/

https://www.bworldonline.com/shakeys-targeting-to-open-18-to-20-new-stores-annually/

https://www.gmanetwork.com/news/money/companies/694368/shakey-s-to-open-7-
stores-by-june/story/
 • Historical sales analysis (5-year back data). Analysis includes the factors affecting
the business.

Historical Sales Analysis (5-year back data)

₱8,000,000,000

₱7,000,000,000 ₱7,003,813,081

₱6,000,000,000 ₱5,945,608,528
₱5,489,575,143
₱5,244,339,641
₱5,000,000,000
₱4,696,486,671
₱4,000,000,000

₱3,000,000,000

₱2,000,000,000

₱1,000,000,000

₱0
2014 2015 2016 2017 2018

Sales

The bar chart above represents the changes in the amount of sales of Shakey’s from
Year 2014 to 2018 (5-year back data from 2019).

From Year 2014 to 2016, there is a constant growth in terms of sales which depicts an
increase in revenue. Although if these periods were to be compared, it can be seen on the chart that
there is only a slight change in terms of sales. It might show minimal changes, but during these
years Shakey’s was a dominant player in the full-service industry, leading full-service restaurants
in the Philippines. During 2016, they garnered 40% net income increase, throughout the course of
12 months they incurred a total of P760 million including the net non-recurring income of P90.2
million as a result of changes in ownership earlier of the same year. Another factor contributed to
the increase in the sales during the year is the impact of their newly opened stores where they
added a total of 17 stores, surpassing the number of stores they added last year and ending the year
with a total of 184 outlets.
 Shakey’s continued to increase their sales even more on 2017. If you look at the trend
over time, you can clearly see a dramatic improvement on this period which follows an upward
trajectory. The sales growth and continuation of stronger performance during the period has
already been foreseen by the management because their first quarter reports revealed 26% net
income growth compared to the first quarter of 2016 wherein company-owned and franchise sales
grew by 22% to P2 billion from 1.6 billion of last year. For this reason, the company’s net revenue
as of the end of March 2017 was P1.7 billion compared to 1.3 on the first quarter of 2016. As a
result, the management remained positive that they would achieve their full year target during the
period despite having a more competitive environment because Philippines has attracted old and
new entrants in the market. Additionally, during the first quarter of the year they added five new
stores, having a total of 189 as of the beginning of the period. Their target for the year 2017 is to
add 20 new outlets to have a total of 204. Subsequently, at the end of the year they opened a total
of 24 stores, surpassing their initial target of 20. Stable commodity prices and purchasing synergies
with Century Pacific Group also ascribed the profitability of the company. Furthermore, existing
and new promotions specifically “2017 meal deal” promo contributed the most to the sales
improvement of the company on the first quarter of the year. Consequently, the sales of the
company during the period remained consistent and the gross profit grew by 16% to P7 billion for
the year compared to P6 billion last year.

The consistent upward trend ended on 2017 and suddenly dropped on Year 2018.
There may be a decline in sales, but it does not mean that Shakey’s is being incompetent. Although
there was a decrease in sales during the year, the period was their 15th year of consecutive double-
digit sales. There were a lot of circumstances that prompt to the massive drop of sales, some of it
are inclement weather rainy season that seem to be worse than last 2017; customers have difficulty
to go outside and rather choose to stay at home for their safety. Cost pressures that also affected
large fastfood operators which includes inflation that weakened consumer sentiment, increase in
the price of inputs and weaker currency. Headwinds in consumer spending and continuous entrants
of new competitors that puts a tighter competition by the same industry players. Even though the
period was a challenge for them, it did not completely impede them from being profitable. They
were able to withstand the challenges on the first and second quarter of the year they were able to
accumulate 184 million and 396 million, respectively, relative to the 173 million and 371 million
generated from the previous year. At the end of the year, Shakey’s once again achieved their target
to open 20 new stores, this helped them increase their sales despite of the challenges they
encountered during the period. Combined company-owned and franchise stores garnered total
sales of 9.3 billion. Consequently, Shakey’s reported that there were a 10% growth in the net profit
amounting to 843 million.

Overall, based on the graph showed above we can clearly see an upward trend but
because of external factors that challenged the company’s profitability there was a sudden decline
on sales. Shakey’s performance showed consistent profitability and growth in system wide sales
and store count over the last few years.

Their marketing team and strategy, product innovation, , able to get the goal/target at the end of the
year, sustainability of expansion, economic (ability to adapat to economic shtnesss) service to costumers

https://www.shakeyspizza.ph/investors/financial-reports

https://www.shakeyspizza.ph/press-release/shakeys-pizza-delivers-40-net-income-growth-2016

https://www.shakeyspizza.ph/press-release/shakeys-pizza-reports-net-income-growth-26-first-
quarter-2017

https://www.shakeyspizza.ph/press-release/shakeys-pizza-delivers-net-income-growth-10

http://www.bworldonline.com/content.php?section=Corporate&title=shakey&8217s-pizza-
sees-strong-sales-continuing-this-year&id=142842

https://businessmirror.com.ph/2018/04/10/shakeys-recurring-income-in-phl-grew-14-in-2017/

https://www.bworldonline.com/shakeys-net-profit-up-27-3-on-new-store-openings/

https://www.rappler.com/business/187602-shakeys-pizza-net-income-q3-2017

https://business.inquirer.net/226894/shakeys-2016-profit-rose-58-p760m

https://cnnphilippines.com/business/2019/11/8/shakey-s-pizza-asia-ventures-income.html

https://tribune.net.ph/index.php/2019/04/04/shakeys-revenue-up-8-in-2018/

https://business.inquirer.net/267972/shakeys-philippines-net-profit-grows-to-p843m-in-2018

https://business.inquirer.net/268011/shakeys-posted-10-profit-growth-in-2018
 https://spavi-noo-prod.s3.ap-southeast-1.amazonaws.com/s3fs-
public/documents/press_release/2018-
12/11122018%20SHAKEY%E2%80%99S%20PIZZA%20Q3%202018%20EARNINGS%20RELEA
SE%20%255bFINAL%255d.pdf

https://www.shakeyspizza.ph/press-release/shakeys-sales-growth-rises-plus-13-earnings-7-
cost-pressures-persist-company-affirms

-percent increase

-if net income decreased (get the percent increase of cost-Labor cost & advertising )

-in terms of demand use external factors

-internal- (items in the financial statements ex. Labor cost )

-Interest Expense ( Debt of company)

-Operating Expense

• Financial highlights

IV- Sales and demand Projection (5 years) with analysis using regression model.

Format of the report:

Font Type: Times New Roman

Font Size: 12

Spacing: 1.5

Stationery: 8-1/2” x 11”

Submission: Ring bounded

IV. Sales and Demand projection using regression model.

Sales is activity or business of selling goods and services (businessdictionary.com). Basically, sales is one
of the most important components of the business. Aside from being its main purpose prior to the
establishment of the business, this also indicates the performance of the business in the past periods.
Sales is also the main source where it satisfies the needs of the business to continue its operations.

In forecasting the sales, historical data from the past five year (2014-2018) were collected as a basis for
projection. Below indicates the historical data for sales:

YEAR SALES
2014 4,696,486,671
2015 5,244,339,641
2016 5,945,608,528
2017 7,003,813,081
2018 7,578,718,618

A Multiple regression is used when we want to predict the value of a variable based on the value
of two or more other variables (statistics.leard.com). The forecast will be utilizing multiple
regression tool to get the corresponding data. Since the tool requires an dependent variable and
two independent variable, in this case the data for sales will be set as the dependent variable.

Projecting data using the multiple regression requires sample of relevant observations
(corporatefinanceinstitute.com). These observations include the two independent variables that
will be used for forcasting sales, Below indicates the record for the independent variable,
Inventory cost.

YEAR INVENTORY COST

2014 1,939,042,181
2015 2,173,726,913
2016 2,267,285,026
2017 2,565,816,752
2018 2,776,430,919
Inventory cost are the cost which are part of the cost of sales section of the comprehensive
income statement. These serves as the goods which are for the consumption of the customers
in a particular food chain. In connection with this, inventory cost potentially affects the sales of
the product. Below indicates the data for the another independent variable, Labor Cost.

YEAR LABOR COST

2014 524,982,161
2015 541,998,043
2016 710,437,976
2017 906,260,804
2018 971,877,600

One of the factors affecting sales in a food industry is the quality of services given to them in the
time of the consumption of goods. Services and goods come hand in hand in producing quality
performance. And the services in a food chain were given by its employees. If firms were to
spend more on the labor cost, quality of services improve.
Thus, labor cost potentially affects the sales.

In predicting the values of the independent variable, rates of increase/decrease were observed
in the historical data. Below indicates the rate of increase/decrease of the two independent
variables.

YEAR RATE OF INCREASE FOR RATE OF INCREASE FOR

INVENTORY COST LABOR COST
2014 12% 9%
2015 12 3
2016 4 31
2017 13 28
2018 8 7

After calculating the rate of increase/decrease, it was applied to the respective forecasted years.
(2019-2023).

Below indicates the predicted value of the independent variables.

 YEAR INVENTORY COST LABOR COST
2019 1,059,346,584.00 1,059,346,584.00
2020 1,091,126,981.52 1,091,126,981.52
2021 1,429,376,345.79 1,429,376,345.79
2022 1,829,601,722.61 1,829,601,722.61
2023 1,957,673,843.20 1,957,673,843.20

Regression tool was used in order to obtain the intercept for the following variable.
Below indicates the output using the regression tool.

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.999520998

R Square 0.999042226

Adjusted R
Square 0.998084452

Standard Error 52379471.6

Observations 5

Standard
Coefficients Error

-
Intercept 501077520.5 375570441.8

X Variable 1 1.956638488 0.300604634

X Variable 2 2.74596961 0.484720969

The result using the regression tool shows the following values

Intercept = -501077520.5 X Variable 1 (Inventory Cost) = 1.956638488

X Variable 2 (Labor Cost) = 2.74596961

Below illustrates the formula for the forecasted sales using the multiple regression.

Y= B1X1 + B2X2 + a

Where B1= coefficient of X1 (inventory cost)

B2= coefficient of X2(labor cost)

a= intercept

Substituting the values of X1 and X2, the forecasted demand for year 2019 will be

Y= -501077520.5 + (1.956638488* 3,109,602,629.28) + (2.74596961* 1,059,346,584.00

) = 8,492,224,192.99

The following indicates the summary of forecasted values of sales for 5 years.

YEAR SALES
2019 8,492,224,192.99
2020 9,309,616,381.28
2021 10,511,018,550.90
2022 12,531,344,641.16
2023 13,523,698,106.82

Lagay ng graph.. hehe

Reference:

http://www.businessdictionary.com/definition/sales.html
https://corporatefinanceinstitute.com/resources/knowledge/modeling/forecasting-methods/

https://statistics.laerd.com/spss-tutorials/multiple-regression-using-spss-statistics.php
goods and services (businessdictionary.com)