Jollibee readies P7-B digital boost to prop up delivery services

MANILA, Philippines — Homegrown Jollibee Foods Corp. (JFC) announced Friday it will beef up its delivery services and close non-performing stores in a multi-billion-peso revamp to prepare the company for a lingering coronavirus threat even when lockdowns are lifted.

A total of P7 billion is being set aside for the plans which also include investing in digital commerce and technology, foremost of which is developing new mobile apps for orders, a disclosure said.

While closing down some bad-performing stores, Jollibee is set to build “cloud kitchen” units, which are basically stores with “no dine-in facility”, eats up less space and therefore rent cost runs much lower.

“The changes will also include the transformation of support and management groups in the field and in the offices,” the firm said.

The Filipino food brand’s adjustments come as the Philippines slowly eases out of tight lockdowns, but is still studying whether dining in restaurants, provided social distancing measures are observed, will be allowed. Currently, only take-home orders and deliveries are permitted nationwide.

“These changes will be made with the assumption that consumers around the world will not quickly revert to pre-COVID-19 behavior once lockdowns and other forms of restrictions are lifted in different countries,” Jollibee said in a statement.

Sought for comment, Luis Limlingan, managing director at Regina Capital Development Corp., said Jollibee's shift to boost its delivery network, including manpower and equipment, can prove challenging. “I assume that they are forecasting more sales will be generated through deliveries versus pre-pandemic levels,” he said.

Apart from the Philippines, the listed food chain said it would enforce the changes “in its largest markets” in China and North America.

Despite the planned investments, Jollibee still joined other companies in cutting down its capital expenditures this year by 63% to P5.2 billion from the original P14.2 billion announced last March.

“2020 is an extremely challenging year for JFC as for most other businesses, but out of this transformation, we aim to emerge in 2021 as an even stronger business and organization,” said Tony Tan Caktiong, the firm’s president, in a statement.

For his part, Ysmael Baysa, chief financial officer, said: “In the next few months, even as lockdowns begin to be lifted, we forecast that sales will continue to be much lower than year-ago levels. Our estimate is that our profit for 2020 will not be good at all due to the overall economic environment.”

Jollibee operates 3,317 restaurant outlets nationwide, which includes its much-prized Jollibee brand, as well as Chowking, Greenwich, Red Ribbon, Mang Inasal and Burger King, among others. Including stores abroad such as in China, Kuwait and the US, the food giant has 5,945 outlets.

For this year, 171 new stores will still be opened on a “very selective basis,” while 96 existing stores will be renovated. 

On Friday, shares in JFC were down 2.56% to end the week at P133 apiece on the stock exchange.