Jollibee buys into Asian food group

MANILA, Philippines—Local fast-food giant Jollibee Foods Corp. (JFC) has consummated a deal to buy into a regional food group that operates a chain of Highlands Coffee, Hard Rock Cafe outlets and Pho24 restaurants, thus scaling up its presence across Asia.

JFC, through wholly owned Jollibee Worldwide Pte. Ltd., announced the completion of its acquisition of 50 percent of the business of SuperFoods Group, consisting of a 49-percent stake in Vietnam-based SF Vung Tau Joint Stock Co. and a 60-percent share in Hong Kong-based Blue Sky Holding Ltd.

This buy-in deal will cost JFC $25 million for the 50 percent stake in SuperFoods alone.

But part of the deal is to extend a $35-million loan to JFC’s partner Viet Thai International Joint Stock Co. (VTI) through their joint venture in SuperFoods. JFC has also advanced $5 million to the SuperFoods group.

The SuperFoods group, which has $30 million in annual sales, operates 56 Highlands Coffee stores in Vietnam. Its Pho24 chain of Vietnamese restaurants has 48 stores in Vietnam, 11 in Indonesia, four in Hong Kong, three in Japan, one in Cambodia and two in the Philippines. It likewise has Hard Rock Cafe-franchised stores in Macau, Hong Kong and Vietnam.

Highlands Coffee serves Vietnamese coffee and light meals in 54 coffee shops in Vietnam. It also sells packaged coffee through retail outlets. In the Philippines, the franchising rights for operating Highlands Coffee were granted to IP Ventures Inc., which operates the largest chain of Internet cafés in the Philippines with 116 outlets under the brand Netopia.

JFC is set to use the equity method in accounting for its 50-percent interest in the SuperFoods in compliance with Philippine Financial Reporting Standards and the International Financial Reporting Standards. Under this method, the revenues, other profit and loss items and cash flows generated and the balance sheet held by the SuperFoods will not be reflected in each line item of JFC’s consolidated financial statements.  Only JFC’s investments, loans and advances to and its 50-percent share in the net results of operations will be reflected in its consolidated balance sheet.

The dominant player in the Philippine quick-service restaurant industry, JFC is increasingly turning to the overseas market for future growth. Its offshore business, which now accounts for about a fifth of worldwide sales, is targeted to grow as large as its domestic operations by 2017. As of end-2011, it had a total of 2,003 restaurants in the Philippines. Globally it has 2,471 restaurants.