Philippines’ Jollibee Firms Up Presence in America, Raises Stake in US Smashburger by $100 Million

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By CLAIRE MORALES TRUE

MAKATI CITY (via PhilAmPress) – Jollibee Foods Corp, the Philippine home-grown fastfood company famous for its chicken joy, continues to further spreading its wings as it announced it would raise its stake in US restaurant chain Smashburger to 85 percent, in a $100-million transaction to be paid in cash.

 Jollibee, founded by Tony Tan Caktiong in 1975 and has presence all over the Philippines, including far-flung Basilan and Aparri in Cagayan, and also in the United States, Canada, Singapore, Brunei, Hong Kong, Indonesia, Qatar, Kuwait, Saudi Arabia, United Arab Emirates, Bahrain, Oman, and Vietnam, said its subsidiary, Bee Good! Inc, would buy from Master LLC an additional 45 percent of Smashburger parent SJBF LLC.
Master will retain the ownership balance of 15 percent, Jollibee told the Philippine Stock Exchange as it went public on its transaction.
 
“The transaction, valued at US$ 100 million is expected to be completed in one to two months, subject to government approvals in the United States and meeting certain closing conditions. JFC will pay Master through BGI in cash,” Jollibee stated.
Jollibee, now one of the Philippines’ top 1,000 corporations with over 1,100 outlets worldwide, already has 35 or so US stores including those in Daly City, South San Francisco, Concord, Union City, Carson City, Stockton, Sacramento, San Bruno, Vallejo, San Jose, National City, Anaheim, West Covina, Eagle Rock, Chula Vista, Cerritos, Panorama, Beverly, Chino, Irvine Rancho Cucamonga in San Bernardino all in California; Waipahu, Ala Moana, Kapolei and Kahili in Hawaii; Guam, Las Vegas, Queens in New York, Tukwila in Washington, Jersey City in New Jersey, Virginia Beach in Virginia, Houston in Texas, Skokie and Chicago in Illinois, Jacksonville in Florida and in the United States. The first outlet in Canada opened in Winnipeg, and the Toronto outlets followed.
Jollibee shares were down 2.12 percent to P277, compared to a 0.32-percent advance in the main index.
Jollibee, which now also owns Chowking, Red Ribbon, Mang Inasal and Greenwhich Pizza, posted a 15-percent increase in profit in 2017 to P7.1 billion after opening its highest number of new stores.  

JFC’s net income attributable to equity holders of its parent firm reached P6.2 billion in 2016.
For the October-to-December quarter alone, its attributable net profit rose by 11.7 percent to P1.98 billion last year from P1.78 billion in 2016.

The company opened 465 stores in 2017, the highest number of new stores in a year in its 39-year history.

JFC’s system-wide sales, a measure of all sales to consumers both from company-owned and franchised stores, grew by 16.9 percent in the fourth quarter compared to sales in the same period of 2016 and by 15.2 percent for the entire year of 2017, driven by the expansion of store network and strong same store sales.

For the entire year, sales of its restaurant chains in the Philippines grew by 13.2 percent while those abroad rose by 23.4 percent.

“Gross profit margins in the Philippines were below year-ago level as our rate of price adjustments was behind cost increases, following JFC’s practice of implementing gradual price adjustments in order to help consumers adapt to rising inflation,” said JFC’s Chief Financial Officer Ysmael Baysa in a statement to the local bourse.

“The gradual price adjustments help to continuously drive volume growth of consumer visits per store despite rising inflation rate in the country. We expect to eventually recover our profit margins in 2018,” he said.

It ended 2017 with 3,797 stores, higher by 16.7 percent compared with 2016’s 3,253 stores.  JFC had 2,875 restaurant outlets in the Philippines, and was operating 922 stores abroad.

Sales of the Philippine business in the fourth quarter grew by 14.8 percent, driven by the acceleration of store network expansion and continued strong same store sales growth.

Sales of the foreign business grew by 21.3 percent, excluding divestments and acquisition, with Southeast Asia, excluding Philippines, growing by 41 percent; China (18.4 percent); North America (20.6 percent); and the Middle East (17.7 percent).

Including divestments and acquisition, sales of the foreign business grew by 26.3 percent, it said in a statement.

The strong worldwide sales growth of 16.9 percent for the quarter was driven by same store sales increase of 7 percent, store expansion of 9 percent, and 1 percent impact of currency exchange rate change.


For 2018, JFC allotted P12 billion in capital expenditures for new stores and renovation of existing stores, both in the Philippines and abroad. (For more information, contact reporter Claire Morales True at philippinestodayusa@gmail.com)

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