‘Kuya J’ chain sees no letup in expansion

Fast-growing Filipino restaurant chain “Kuya J” expects to double its branch network to around 200 by 2020 as it opened the business to franchising via an innovative scheme that comes with in-house financing.

Kuya J, which now has 106 branches, is the flagship brand under restaurant Kuya J Group Holdings Inc., which also owns and operates Isla Sugbu Seafood City, Tsay Cheng Chinese, Majestic and Grand Convention Centre of Cebu. Most recently, it signed a deal to be the Philippine master franchise holder of American fast-food chain Popeyes.

The Kuya J brand alone has expanded by 100 stores in less than three years since the group of businessmen Lowell Yu and Winglip Chang took over the restaurant business, which started in Cebu in 2013.

Yu, who chairs the restaurant group, said the Kuya J brand should have 200 branches by 2020. Opening up to franchising is seen to help the brand achieve this critical mass.

To date, Yu said Kuya J had generated interest from 90 potential franchisees.

“It’s the only franchising program where you have an in-house financing for the franchisee. Instead of the heavy P10 to P15 million (upfront cost), you are just looking at a P3-million investment and you have a full store already,” Yu said in a recent interview during the launch of its new franchising program.

For a 190-square meter Kuya J restaurant, cost of construction and equipment package is estimated at P13.4 million, of which 70 percent or P9.39 million could be financed by the group for five years.

The group charges a one-time franchisee fee of P1.2 million plus a P300,000 service fee.

Business development support, service training programs, management systems and marketing programs are part of the package.

Asked how long it usually takes for a new Kuya J store to break even, Yu said it would be from two to four years. “There were exceptional stores that did it in less than one year but it happened only twice in our experience,” he said.

Meanwhile, Yu said Kuya J Holdings would also expand the other brands in its portfolio. For Popeyes, the commitment is to eventually reach 400 stores and also open up to local franchising in the future.

Like how Kuya J was expanded, Yu said the company would first expand Popeyes by putting up wholly-owned stores. He said franchising could be offered after two years, at the earliest.

The group is also set to open two new branches of Seafood City, a larger restaurant format which caters to a higher-end segment.