In a disclosure to the Philippine Stock Exchange, Jollibee said it has reached an agreement with the owners of Red Ribbon to acquire the latter’s 147 outlets – 131 in the Philippines and 16 in California, USA. The purchase price was not immediately known.
In its last fiscal year ending June 30 this year, Red Ribbon registered revenues of P2.5 billion.
Based on Red Ribbon’s latest available financial statement, its net income stood at P13.4 million in its fiscal year ending April 30, 2004. Net sales registered at P874.3 million while total assets reached P277.2 million. The company changed its accounting period from fiscal year ending April 30 to fiscal year ending June in accordance with tax interim reporting purposes.
"The proposed transaction, however, is subject to the completion of a final due diligence and the execution of the final sale and purchase agreement," Jollibee said.
Red Ribbon started in 1979 out of a home kitchen and is known for its affordable but good quality cakes and pastries. It also serves popular Filipino dishes and confectionaries.
Jollibee said the Red Ribbon chain will complement its existing operations of 1,079 stores comprised of 508 Jollibee restaurants, 310 Chowking Oriental fastfood stores, 228 Greenwich pizza/pasta restaurants, and 33 Delifrance stores.
Jollibee also has 121 stores abroad, which include 88 Yonghe King stores in China.
Jollibee, which had total revenues of P26.2 billion or $468 million in 2004 and has been expanding its foreign operations, expects Red Ribbon to boost its revenues.
The company said Red Ribbon Bakeshop will be a valuable synergistic member of the Jollibee family and looks forward to continuing to delight Red Ribbon Bakeshop customers with affordable and great-tasting cakes and other products in the future.
In the second quarter, Jollibee’s net earnings grew 26.8 percent to P536.2 million, helped by price adjustments and cost improvements that improved sales margins.
Its first half net profit, however, rose a slower 11.1 percent to P894.6 million as a result of the 6.5 percent contraction in the first quarter’s bottom line.
Consolidated sales, which include revenues from franchised outlets, rose 12 percent to P10.2 billion in the second quarter and climbed 13 percent to P19.2 billion in the first half.
The anchor Jollibee brand is one of the most well-known and strongest consumer brands in the country, serving burgers and crispy chicken. Chowking serves Oriental food while Greenwich is one of the leading players in the pizza-pasta market. Delifrance, on the other hand, is a significant player in the French bakery-café segment.
After invading Indonesia, Jollibee is setting its global sights on India as the next site for its expansion.
Jollibee continues to look for opportunities in other foreign markets to sustain growth in its sales. It is also looking at other businesses in the local scene for possible acquisitions as it aims to further boost its cashflow.
For this year, Jollibee has set aside P1.5 billion for the establishment of between 80 to 100 new stores locally and overseas. Of this amount, P200 million has been earmarked for the construction of 20 new Yonghe King stores in China and 10 in the US and other international markets, including Hong Kong, Saipan, Brunei, as well as in Vietnam.
Of the new stores to be opened within the Philippines this year, 20 are Jollibee stores, 30 Chowking and 20 Greenwich.