Restaurant operator plans to fully acquire Tim Ho Wan

By Keren Concepcion G. Valmonte, Reporter

JOLLIBEE Foods Corp. (JFC) and its subsidiaries swung to profit in the second quarter, the listed restaurant operator reported on Tuesday, when it also announced plans to fully own the Tim Ho Wan brand to further expand its business in serving Chinese cuisine.

JFC reported a P976 million in net income attributable to parent company equity holders in the quarter ending June, a reversal of the P10.29-billion loss incurred in the same period last year that included a P6.2-billion expense provision for business transformation.

Compared with its second-quarter performance in 2019, the latest figure is a 6.2% decline from the P1.04 billion it generated pre-pandemic.

Meanwhile, the company’s revenues grew by 57.2% to P36.69 billion in the second quarter from P23.34 billion year on year.

“Same store sales in the Philippine business increased by 48% in the second quarter of 2021 compared to the same quarter last year, while the international business grew by 28.4%,” Jollibee said.

The company said it was able to achieve a worldwide same store sales growth of 38.4% compared with its second quarter 2020 performance. China-based stores grew by 48% while stores in North America improved by 27.7%.

Meanwhile, stores in Europe, the Middle East, and other parts of Asia grew by 21.2% and The Coffee Bean & Tea Leaf (CBTL) improved by 27.9%. However, Superfoods, which is mostly in Vietnam, declined by 8.1%.

System-wide sales from both company-owned and franchised stores surged by 64.7% to P50.52 billion from P30.68 billion year on year.

“The impact of the pandemic on JFC’s business around the world in the second quarter was mixed,” the company said.

“Off-premise sales, which include those from delivery, takeout, and drive-through channels continued to help drive sales growth in both the Philippines and international markets,” it added.

JFC’s operating income amounted to P1.38 billion in the second quarter from last year’s P5.4-billion operating loss, which was incurred when the company temporarily shuttered stores and as sales declined in the remaining open stores due to lockdown restrictions.

Meanwhile, the company generated an EBITDA (earnings before interest expense, taxes, depreciation and amortization) of P5.52 billion, swinging from a P7.23-billion loss incurred in the previous year. Its EBITDA for the quarter is a 13.4% improvement from 2019’s P4.87 billion.

“All regions achieved significant profit and operating cash flow improvement versus year ago levels,” the company said.

For the first semester, the company generated P1.13 billion in net attributable income, swinging from the P11.96-billion loss incurred in the same period last year. Revenues rose by 13.7% to P71.37 billion from P62.76 billion.

System-wide sales for the first half increased by 14.5% to P98.3 billion from P85.83 billion.

The listed restaurant operator opened 164 new stores in the January-to-June period, 19 of which were launched in the Philippines, 38 in China, 15 in North America, and 9 in the EMEAA (Europe, Middle East, Africa, and Australia).

Superfoods launched 26 branches and CBTL opened 47 stores.

The company permanently shuttered 172 stores in the first semester, majority or 54 branches were closed in the Philippines and 118 abroad.

BUYS OUT PARTNERS IN TIM HO WAN
JFC also announced on Wednesday that it is planning to buy shares owned by the remaining partners in the fund that owns the Tim Ho Wan (THW) brand.

The company’s wholly owned unit Jollibee Worldwide Pte. Ltd. (JWPL) already has an 85% stake in Titan Dining LP, the private equity fund that owns the THW brand and company-owned THW stores. JFC now plans to pay SGD71.56 million to buy the remaining 15% interests of other investors.

JFC invested SGD45 million in the fund in 2018 for a 45% participating interest in Titan Dining, which was then the “master franchisee” of THW in the Asia-Pacific region. The capital commitment of JFC’s JWPL increased to SGD120 million or 60% in 2019 just as Titan Dining acquired the THW brand and its trademarks.

“JFC plans to aggressively expand Tim Ho Wan in mainland China with a target of reaching 100 restaurant outlets within the next four years,” Jollibee said.

The first Tim Ho Wan restaurant in mainland China’s Shanghai was launched in September 2020. As of July this year, it now has three stores in Shanghai.

It currently operates 53 outlets in Asia, most of which are franchised stores. Its largest concentration is in the following: 12 in Singapore, 12 in Taiwan, seven in the Philippines, and six in Hong Kong.

The company said the full acquisition aims to “build as an important part of its portfolio a significant business serving Chinese cuisine in different parts of the world.” It currently has five brands under its belt, namely: Chowking, Yonghe King, Hong Zhuang Yuan, Panda Express, and Tim Ho Wan.

Overall, JFC has 17 brands operating 5,816 stores across 33 countries.

JFC shares at the stock exchange declined by 0.47% or 90 centavos on Wednesday, closing at P191.60 apiece.

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