Jollibee eyes China, US expansion

MANILA, Philippines - Fastfood giant Jollibee Foods Corp. (JFC) is looking to expand its footprint in China and the United States, two of the biggest consumer markets in the world, through acquisitions and organic expansion.

Its Philippine operations, meanwhile, will be supported by new branches that will ride on the strong uptick in the economy and consumer spending, company executives said yesterday.

In a briefing, JFC chairman Tony Tan Caktiong said China and US are the biggest consumer markets in the world, prompting the fastfood chain to focus on increasing its business in the two countries.

“We like to have more play in the US market. We are looking at a certain acquisition in the US market,” he said.

Acquiring a growing quick-service restaurant chain in the US will fasttrack the growth of the international business of JFC, Tan Caktiong said. JFC is looking at an ideal 50-50 mix for its international and local operations.

JFC is already profitable in the US, Southeast Asia especially in Brunei and Singapore, the Middle East, and Hong Kong, JFC chief finance officer Ysmael V. Baysa told reporters.

Operations in Vietnam and China are close to becoming profitable as the company manages costs and creates an economy of scale, he added.

JFC will likely be profitable in China as it hits the 500-branch mark from the current 411 stores, Baysa said. China accounts for 20 percent of JFC’s total international sales and 12 percent of worldwide revenues.

The fastfood giant is also introducing its brands in Canada and Kuwait next year.

For its part, the Philippine operations will remain as the main contributor in the company’s revenues and profits.

“Of course, the Philippines is our main market,” Tan Caktiong said.

“The local economy is strong so purchasing income is growing. Also, the population base is growing,” he noted.

To counter increasing cost of raw materials, JFC has implemented upward price adjustments since December, Baysa said.

“The main thrust will still be aggressive expansion of the company locally and internationally,” said JFC’s incoming CEO Ernesto Tanmantiong.

For 2014, JFC allotted P6.3 billion in capital expenditures to open 300 new stores and renovate existing branches, both in the Philippines and abroad.

Baysa said JFC has opened about 89 new branches this year. The target is to start operations of 200 new stores in the Philippines and 100 new branches overseas.

Strong sales from both new and existing branches significantly boosted the earnings of the fastfood giant in the first quarter. The country’s largest quick service restaurant chain said its net income surged 20.5 percent to P1.07 billion from P895 million a year ago.

Systemwide sales, a measure of all sales to consumers both from the company-owned and franchised stores, picked up 14.6 percent to P27.3 billion from P23.83 billion year-on-year.

JFC operates the largest fastfood service network in the Philippines with 2,217 branches composed of 828 Jollibee branches, 405 Chowking, 202 Greenwich, 287 Red Ribbon, 460 Mang Inasal and 35 Burger King.

The foreign operations of JFC has 588 stores: Yonghe King with 316 stores, Hong Zhuang Yuan with 43 and San Pin Wang with 45, all in China; 103 Jollibee, 32 Red Ribbon, 46 Chowking, and three Chow Fun located in US, Southeast Asia and the Middle East. It also has a 50-percent stake in Highlands Coffee branches in the Philippines and Vietnam; Pho 24 outlets in Vietnam, Indonesia, the Philippines and Japan; and Sabu stores in China.