MANILA, Philippines — The Philippines’ homegrown fast-food brand is starting to get most of its financial strength abroad where an easing of pandemic restrictions has translated to new stores, revitalized business and larger sales.
Coupled with spending savings from its digital shift, that offshore boost from Jollibee Foods Corp.’s outlets abroad pushed it back to profitability with P49 million in net income in the first quarter. In the same period last year, the advent of lockdowns resulted in P1.95-billion losses for the company.
Overall sales and revenues were still down for the food giant, which before the pandemic struck had its sprawling brick-and-mortar footprint as an advantage. That proved vulnerable to the crisis however, and Jollibee was forced to trim down underperforming stores last year, while leaving its offshore presence— representing 44.8% of its network—mostly intact and still expanding.
The strategy appears to be paying off. When it comes to sales, Ernesto Tanmantiong, chief executive, said business abroad is now mostly back to “pre-pandemic level,” especially in China, North America, Europe and Middle East. “Same-store sales growth was offsetting the effect of stores closed permanently due to the pandemic,” he said in a statement.
On top of that, Jollibee’s initially loss-making acquisitions have likewise started delivering gains. Without going into specifics, Coffee Bean & Tea Leaf posted “remarkable” profits in February and March. Smashburger has remained in the red, but operating losses were just a third of their levels in March 2020. The US-based store also increased same-store sales 58.7%.
At home, a scramble to put up an efficient delivery service through digital investments worth P7 billion reduced administrative expenses by 16.7% year-on-year. Lower tax payments due to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act that reduced corporate levies also helped.
Savings, in turn, blunted sliding sales and revenues from local stores only allowed to take in as much as 50% of their typical capacity at the time. That had since been reduced to just 20% for indoor dining as of May 15 when a spread of virus variants slowed down reopening. “We look forward to a strong recovery of our Philippine business in the months ahead,” Tanmantiong said.
With Jollibee’s Philippine segment down, the broader system-wide sales shrank 13.4% on-year to P47.78 billion. Philippine sales alone were still down 28.5% from their pre-pandemic level in end-March 2019. Revenues, as a result, sank 12% on-year to P34.68 billion.
Operating income improved to P1.5 billion in the first 3 months from being in the red a year ago. EBITDA, which stands for earnings before interest, taxes, and depreciation of assets, another gauge of financial strength, nearly doubled to P5.17 billion.
Also on Wednesday, Jollibee announced plans to raise funds through an P8-billion issuance of preferred shares. At the same time, the company also is buying back $250 million worth of US dollar perpetual bonds as a means to “restructure its financial obligations” and “reduce its foreign exchange risks.”