Jollibee Foods sets aside ­P6B for store expansion next year

MANILA, Philippines - Fastfood giant Jollibee Foods Corp. (JFC) is accelerating its local and foreign store expansion next year that will be supported by a record P6 billion capital spending, a top company executive said.

“Normally, we would grow the store opening by at least 10 percent. If we open 200 this year, you add 20 stores so it will be 220 (branches next year),” JFC chief financial officer Ysmael Baysa told reporters said.

“It’s a way of deliberate growth model we’ve been pursuing in the past years, which has worked for us,” he on the sidelines of a forum sponsored by ING and the Economic Journalists Association of the Philippines (EJAP).

For this year, the quick-service food chain allotted P5.5 billion to put up as much as 300 new stores across all its brands here and abroad.

“The 200 is the realistic target although we hope we will be able to exceed that,” Baysa said, adding that the P5.5-billion capital expenditures will be enough to fund the opening of as much as 300 new stores.

Specifically, 100 stores will be built this year in the Philippines and another 100 abroad, of which 50 will be in China and the rest spread in the US, Middle East and Vietnam.

For next year, JFC’s expansion plans will be supported by a budget of roughly P6 billion.

“The trend is to grow the store expansion and capital expenditures at the same pace,” Baysa said.

Despite the recent volatility in foreign exchange and geopolitical concerns abroad, Bagsa said JFC remains optimistic of the country’s strong fundamentals.

“There are concerns but they do not generally change our strategy and long-term plans,” Baysa said.

For instance, Baysa said the depreciation of the peso will result in higher consumer spending.

A weaker peso increases the value of dollar export earnings and remittances from overseas Filipinos. This jacks up the spending power of families that receive dollars.

Strong sales in existing stores and new branches globally boosted the net income of the fastfood giant to P2.1 billion in the first half, up 32.7 percent from P1.58 billion last year. First semester system-wide sales rose 12.1 percent to P49.9 billion from P44.5 billion a year ago.

“A big part of the growth is the improvement in profitability both in the Philippines and in China,” Baysa said.

JFC operates the largest fastfood service network in the Philippines with 2,102 branches composed of 791 Jollibee branches, 388 Chowking, 198 Greenwich, 234 Red Ribbon, 461 Mang Inasal and 30 Burger King.

The foreign operations of JFC has 569 stores: Yonghe King with 309 stores, Hong Zhuang Yuan with 44 and San Pin Wang with 41, all in China; 98 Jollibee, 30 Red Ribbon, 44 Chowking, and three Chow Fun located in the US, Southeast Asia and the Middle East. It also has a 50-percent stake in Highlands Coffee branches in the Philippines and Vietnam; Pho 24 outlets in Vietnam, Indonesia, the Philippines and Japan; and Sabu stores in China.