Jollibee merges Chowking, Greenwich, Delifrance

Jollibee Foods Corp. is merging its three wholly-owned fastfood units – Chowking Food Corp., Greenwich Pizza Corp. and Baker Fresh Foods Philippines – in line with efforts to enhance operational efficiency.

In a disclosure to the Philippine Stock Exchange, Jollibee said the merger is part of its program to "simplify its legal structure and improve its administrative efficiency". Chowking will be the surviving entity.

According to the plan, Jollibee will not issue shares to the surviving entity nor will there be any exchange of shares. The net assets of Greenwich and Baker Fresh will be simply treated as additional paid-in capital in the surviving entity.

Chowking which will be renamed Fresh N’ Famous Foods Inc. will be the second largest food service company in the country after Jollibee. It will be 52 percent the size of Jollibee brand in terms of system-wide sales, a measure of all sales both from company-owned and franchised stores.

The merged entity had annual system-wide sales of P12.8 billion in the first six months of the year broken down as follows: Chowking (P8.9 billion), Greenwich (P3.5 billion) and Delifrance (P400 million).

The new Chowking will have a total of 624 stores across the country (as of end-October 2006) — old Chowking (342), Greenwich (241) and Delifrance (41).

The respective boards of directors of Chowking, Greenwich, and Baker Fresh, have approved a plan to merge the three companies, Jollibee said.

Jollibee, as the sole stockholder of the three corporations, has likewise ratified the plan of merger which is subject to the approval of the Securities and Exchange Commission.

Chowking serves Chinese meals while Greenwich serves pasta and pizza. Baker Fresh, the sole franchisee of the Delifrance brand, serves sandwiches and croissants.

Baker Fresh used to be a joint venture between Jollibee and Delifrance Ltd. until Jollibee bought all of the shares of Delifrance in Baker Fresh recently.

Tony Tan Caktiong, chairman and chief executive officer and president of Jollibee, will be the chairman of the board and president of Fresh N’ Famous. The board of directors will be composed of the following executives actively involved in the business namely, Ernesto Tanmantiong, William Tan Untiong, Joseph Tanbuntiong, Rufino Dela Rosa and Edwin Elechicon.

The heads of Chowking, Greenwich and Delifrance business units will continue to serve with their existing management responsibilities.

The Jollibee group has been expanding its business through acquisition and store expansion of existing businesses. In October 2005, Jollibee acquired 100 percent of Red Ribbon Bakeshop for P1.8 billion. In March 2004, it acquired 85 percent of the Yonghe King business in the People’s Republic of China for $11.5 million.

As of June 30 this year, Jollibee’s worldwide store network reached 1,477 – Jollibee 550, Chowking 341, Greenwich 241, Red Ribbon 144, and DeliFrance 39. Abroad, the group had a total of 162 stores — Yonghe King 104 in the People’s Republic of China; in the United States Jollibee 10, Red Ribbon 18, and Chowking 10; in Dubai in the United Arab Emirates — Chowking 5, in Indonesia — Chowking 3 and in other parts of Asia (12).

Jollibee has set aside P1.5 billion this year for the continued expansion of its operations in both local and international markets, including a commissary in the United States and the establishment of 100 to 120 new stores across all its brands.

While the Philippines continues to be its main market, the group also intends to further grow its business in the U.S. and China. It is building its first Jollibee store, the group’s flagship brand, in China.

The group is also exploring opportunities in India and Jakarta, Indonesia. It is also set to open its first Red Ribbon branch in the East Coast, particularly in New Jersey.

It is also planning to acquire two to three new fastfood chains in China, particularly in the noodle and bakeshop businesses.