JFC profit down 25.5% after booking losses from US burger unit, Red Ribbon
Jollibee Foods Corp. (JFC), the Filipino fast food giant in the midst of global expansion, saw a sharp fall in earnings in the first nine months of the year on losses from new and traditional businesses.
JFC said in a stock exchange filing on Thursday that net income from January to September this year amounted to P4.53 billion, down 25.5 percent. In the third quarter alone, net income dropped 7.9 percent to P1.87 billion.
JFC said it booked losses from the Smashburger chain in the United States and Red Ribbon in the Philippines.
“Production in the new Red Ribbon commissary had reached normal volume level in September 2019 but productivity level has yet to reach the desired level, which is expected to be achieved by the first quarter of 2020,” JFC said in its filing.
The decline came despite stronger sales. JFC said total revenue during the nine-month period rose 9.1 percent to P127.2 billion as system-wide sales hit P171.1 billion, up 11.7 percent.
Apart from Smashburger and Red Ribbon, JFC operates the flagship Jollibee brand, Chowking, Greenwich, Mang Inasal and Burger King in the Philippines. Its international brands include Hong Zhuang Yuan and PHO24. JFC has 5,863 stores worldwide.
Sales from the Philippine business grew by 10.8 percent. Same store sales also increased 3.3 percent while new stores contributed 7.5 percent.
“Same store sales growth in the Philippines was driven largely by growth in volume of customer visits in the stores compared to a year ago,” JFC said.
In a separate filing on Thursday, JFC said it will establish a venture with Dim Sum Pte. Ltd. to operate the Tim Ho Wan dimsum chain in China.
JFC, through subsidiary Golden Plate Pte. Ltd., will own 60 percent in the venture and will invest an initial $7.8 million.
The deal implies that JFC’s is continuing its aggressive international expansion after announcing in September that it completed the acquisition of 100 percent of The Coffee Bean & Tea Leaf specialty coffee and tea brand, based in Los Angeles, California in the United States.
