Jollibee Foods – a company that owns the largest restaurant chain in Philippines – is looking to expand overseas and aims to achieve the opportunities created by the Covid-19 pandemic. Currently, Jollibee is beginning to recover from a year of historic losses due to the pandemic.
After the restructuring last year, Jollibee CEO Ernesto Tanmantiong now has a plan to open 450 restaurants around the world this year while also looking for more acquisition deals with the capital of 57.5 billion pesos ($ 1.2 billion) from cash and other short-term investments.
Tanmantiong still hopes to achieve his long-term goal of turning the company into one of the top 5’s world restaurant chains. However, the company may find this achievement rather difficult to achieve due to its recent obstacles. Specifically, Jollibee posted a loss of 11.5 billion pesos last year – the company’s first-year loss in 3 decades.
He said: “There are many opportunities created by the pandemic. We are constantly approaching these opportunities.”
A drop back from the pandemic
Jollibee – like any other restaurant chain around the world – was heavily damaged by the Covid-19 epidemic. The Philippines economy has fallen into recession in 2020 and the economic recovery progress may suffer even more set back than initially expected as vaccination campaigns are delayed. The country is home to the second-largest number of Covid-19 infections in Southeast Asia. Furthermore, measures to prevent pandemics in the past year were poorly executed. Therefore, it is the businesses that suffered the most, especially restaurants and travel agencies.
In response to the epidemic, Jollibee spent 7 billion pesos to “change business” including upgrading shipping platforms and online ordering.
At the moment, Jollibee’s financial position is stable. CEO Tanmantiong even insists that the company can achieve more M&A deals with great benefits such as The Coffee Bean & Tea Leaf – the biggest acquisition deal that worth 350 million USD in 2019. Set goals for the future, Jollibee has an eye on many brands, yet they didn’t disclose it. Furthermore, they have plans to push forward expansions in the second year.
The future of Jollibee
80% of the company’s new stores in 2021 are overseas. These companies will be evenly split across markets including China, North America, and Southeast Asia. By the end of 2020, 58% of their revenue comes from the Philippines. By 2024, Jollibee expects that half of its revenue will come from overseas.
“We are currently in the expansion phase to prepare for a full recovery from the pandemic and this will continue in the coming years. We are investing more in overseas markets, especially the markets that are recovering rapidly from the pandemic.”
Jollibee had more than 5,800 stores in 33 markets around the world as of the end of last year.
Tanmantiong says he plans to make Jollibee profitable and get the growth rate back to pre-pandemic times by 2022.
Restructuration and virus prevention measures made Jollibee profitable in the fourth quarter of last year, ending three consecutive quarters of losses, bringing its cash balance to 2.3%, at P23.4 billion by the end of 2020.
Bloomberg experts predict that Jollibee will achieve a net profit of 4.12 billion pesos this year, expected to increase to 6.16 billion pesos by 2022.
Tanmantiong thinks that these figures are completely achievable. The challenge depends entirely on the vaccine and the time requires to get to full community immunity.
Jollibee’s impact on the Vietnam market
Jollibee Group has increased its ownership in SF Vung Tau from 50% to 60% in May 2017 through its subsidiary SuperFoods (a Vietnamese company). Meanwhile, SF Vung Tau is the parent company that owns 100% capital of Cao Nguyen Coffee Service Joint Stock Company which owns the chain of Highlands Coffee stores in Vietnam.
According to Jollibee’s financial statements, the amount of money that this organization spent on this M&A deal is 4.81 billion pesos (equivalent to 2,170 billion VND), of which the Highlands Coffee chain takes 3.68 billion pesos (1,663 billion VND), Pho 24 takes 463 million pesos (209 billion VND).
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