Jollibee invests P10.4B for expansion this year
HOMEGROWN fast-good giant Jollibee Foods Corp. has set aside P10.4 billion for capital outlays this year, more than double what was spent last year, as it embarks on further store expansion and network support improvement.
Jollibee, which now generates 22 percent of its business from the international market, is the ninth most valuable quick-service restaurant chains in the world.
In a presentation during the company’s stockholders on Friday, Jollibee chief executive officer Ernesto Tanmantiong said the substantial increase in capital expenditures this year would support the opening of 200 stores in the Philippines. Another 80 to 100 stores will be opened in offshore locations.
At the same time, he said Jollibee would open three new commissary facilities to support its restaurant chain as well as expand its existing commissary in Canlubang, Laguna.
At the same time, Tanmantiong said the group would improve its logistics capability by building new warehouses and distribution centers.
On its offshore business, Tanmantiong reported that Jollibee’s largest international business – in China – delivered positive same store sales growth and continued to be profitable even as it faced weak economic conditions in 2015.
“Our US business grew well ahead of the fast food market in the country with strong same store sales and profit growth. Our businesses in Southeast Asia and the Middle East saw strong sales growth in 2015 driven by our Jollibee business in Vietnam and new Middle East markets in the United Arab Emirates and Bahrain,” he said.
Last year, capital expenditures focused on strengthening core businesses. These investments were associated with information technology upgrade, the increase in network development organisation and the acquisition of American hamburger chain Smashburger.
At the same time, he said investments on the supply chain and logistics were needed to support domestic business which had been growing faster than we anticipated. These costs gnawed on Jollibee’s net income attributable to equity holders which declined by 8.1 percent in 2015.
Last year, Jollibee embarked on a record store expansion with the opening of 306 stores worldwide.
Jollibee chair and founder Tony Tancaktiong noted that the group’s acquisition of Smashburger would make the US one of JFC’s most important markets and drivers of long term growth along with the Philippines, China and the Filipino markets abroad.
Smashburger has around 350 restaurants worldwide in 35 states in the US and seven foreign markets. “This acquisition will make JFC’s presence in the US more significant, as it goes beyond the Filipino market by serving mainstream consumers in the $100 billion US burger market, a food segment which is estimated to be almost three times larger than pizza, sandwich or coffee in terms of sales,” Tancaktiong said.
The Jollibee group operates a total of 3,158 stores worldwide, of which 2,506 are in the Philippines. It also owns a 50 percent stake in a regional venture that operates Highlands Coffee, Pho24 and 12 Hotpot. It has a 40 percent stake in Smashburger.
