Jollibee sells stake in US food chain

Homegrown fast-food giant Jollibee Foods Corp. has completed its divestment from niche American restaurant business Jinja Bar and Bistro, in line with its strategy to focus on offshore businesses with a critical mass.

Jollibee recently disclosed the completion of a deal to sell its 80.55-percent equity in Chow Fun Holdings LLC (Chow Fun), developer and owner of Jinja Bar and Bistro, which has three restaurants in New Mexico, two in Albuquerque and one in Santa Fe.

Chow Fun paid Jollibee’s wholly owned subsidiary Jollibee Worldwide Pte. Ltd. (JWPL) $1.6 million to redeem membership units equivalent to an 80.55-percent equity in Chow Fun.

“JFC is just focusing on brands overseas that move the needle in terms of revenue,” said Michaelangelo Oyson, president of local brokerage house BPI Securities.

Prior to this deal, JFC also announced the sale of its 55-percent stake in noodle house chain Guangxi San Pin Wang Food and Beverage Management Co. Ltd. (San Pin Wang), which has 71 stores, mostly in the southern part of China.

“Currently, JFC’s footprint in China is still not as sizable as the one that it has in the Philippines. Reducing its brands to concentrate on a stronger brand is a common strategy, but for them to resort to a brand divestment means that the brand in itself is not doing as strong as it expects it to be. But if around P650 million will be used to expand Yonghe King, then we think that ROI (return on investment) for each unit should be around two to three years,” Regina Capital Development managing director Luis Gerardo Limlingan said.

JFC is using the same strategy for the US market, Limlingan suggested.

“Perhaps they’re looking into more efficient ways of penetrating the US market,” he said.

The Philippines, China and the United States are JFC’s three largest markets.

JFC said the divestment of its shareholdings in Chow Fun was part of its plan to concentrate its resources on building its larger businesses.

The group also operates the following brands in the United States: Jollibee with 34 stores, Red Ribbon with 33 stores and Chowking with 16 stores. It also has a 40-percent ownership in Smashburger, which has a total of 378 stores, mostly located in the United States.

As of Nov. 30, JFC was operating 2,593 restaurant outlets in the country, the largest network for a fast-food chain.  The Jollibee brand has a total of 963 stores while Chowking has 467, Greenwich has 244, Red Ribbon has 392, Mang lnasal has 459 and Burger King has 68.

Including overseas stores, the JFC group had a total of 3,270 stores worldwide as of end-November.

JFC also has a 50-percent interest in joint ventures for the following stores: Highlands Coffee (Vietnam, Philippines) and Pho 24 (Vietnam, Indonesia, Cambodia, Korea and Australia). Including the Smashburger network, these joint ventures have a total of 598 stores worldwide, which are not included in JFC’s consolidated store  count.