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Fruitas doubling 2020 capex budget

/ 05:24 AM May 28, 2020

Lester Yu

While other companies are slashing their capital outlays due to the coronavirus pandemic, newly listed leading kiosk operator Fruitas Holdings Inc. is doubling its capital expenditure (capex) budget this year to expand its store footprint and delivery services, improve commissary and launch new concepts.

Fruitas’ capex this year was set at P270 million, more than double last year’s outlays of P130 million, Fruitas chair and president Lester Yu said in a text message on Wednesday.

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As the new coronavirus disease (COVID-19) pandemic may cause stress on some retail businesses, Fruitas also seeks to evaluate attractive acquisition opportunities which may emerge.

“Our business model—built on small-footprint stores offering grab-and-go products, low capital expenditures and flexible cost structure, mitigates the impact of COVID-19. However, we are taking bold steps to further pivot our business to adjust to the ‘new normal,’” Yu told the Philippine Stock Exchange (PSE). “The proceeds from our recent IPO (initial public offering) place us in a good position to withstand the headwinds from the current situation and strategically invest in new revenue and profit streams that will make us stronger after we emerge from COVID-19.”

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For Fruitas, the way to adapt to the new normal is to beef up the delivery business, open new multiproduct stores in communities, and continue to expand through strategic network development, partnerships and disciplined acquisitions, the company disclosed to the PSE.

Yu said part of the P270-million capex budget this year would cover commissary improvement, renovation, expansion and construction for the following brands: Fruitas fresh juice, Soy&Bean, Jamaican Pattie, Porto’s Peri-Peri Chicken and Sabroso Lechon.

Funds will likewise be earmarked for “jackpot” acquisition and store expansion, and for new concepts such as Babot’s Farm. Apart from building more CocoDelivery hubs and expan­ding its delivery fleet, the group also plans to expand warehouse capability.

Building on the initial success of its delivery platform, CocoDelivery, and the subsequent launch of delivery services in Metro Cebu, Fruitas intends to establish more hubs in Metro Manila and in selected high-density provinces. Since its acquisition of CocoDelivery, Fruitas has expanded the product offering of this platform from solely fresh coconut water to include more than a dozen Fruitas brands, including recently launched Porto’s Peri-Peri Chicken.

Fruitas is also looking at ways to facilitate easier orde­ring and faster delivery, and to process accumulated data to maximize average check per customer and maximize deli­very load per trip taken by its riders, the disclosure said.

The designated CocoDeli­very hubs will also double as store outlets serving the communities where they are located. Fruitas expects to convert or expand some existing store locations into such hubs, leading to minimum capital expenditures. These stores intend to offer multiple products to extract maximum sales from each location.

Despite some store openings this year that are expected to be pushed back to the first half of 2021, Fruitas intends to continue its strategic network development. It believes there are still several areas, particularly in the provinces, which are ripe for further expansion. It also intends to forge new partnerships to widen its distribution channels and/or increase product breadth, similar to those it had entered with Pan de Manila, Bukidnon Milk Co. and PeriPeri Corp.

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Fruitas has reopened more stores and is currently operating about 300 stores. —DORIS DUMLAO-ABADILLA

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TAGS: capital expenditure (capex), fruitas
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