Jollibee capex set to double amid aggressive store expansion

JOLLIBEE Foods Corp. said it is looking to breach the 4,000-store level across all its brands in 2017, while allocating P14.7 billion in capital expenditure for the period.

The listed fast food chain plans to open 350 more stores this year, after ending May 2017 with a total of 3,555 stores across 12 brands in 17 countries. Of the total store count, 250 of those scheduled for opening will be in the Philippines while the remaining 100 will be overseas.

“Yearend we will be hitting that 4,000 level… we are still focusing on our existing markets and opening more stores in these countries,” JFC Chairman Tony Tan Caktiong told reporters after the company’s annual shareholder meeting in Pasig on Friday.

JFC has allotted more than twice its 2016 capex of P6.7 billion to finance this year’s operations. Bulk of the spending will be for store expansion and renovations at P9 billion, while the remaining P5 billion will be used for expanding its capacities.

Mr. Caktiong further said the group will be aggressive overseas, with first stores in Toronto and the Manhattan borough of New York City, following the successful opening of a store in Jacksonville, Florida last year. The company also has plans to set up shop in Australia and Guam.

In the Asia-Pacific market, the company is planning further expansion in Vietnam and China.

In China, the company targets 35 new stores with the focus on Beijing.

“We can still expand a lot (in the area)… But it can grow outside Beijing. Right now we may even go to Northern China,” Mr. Tan Caktiong said.

To accelerate operations in Vietnam, Mr. Tan Caktiong said JFC is looking to list the Superfoods Group on the Vietnamese bourse by July 2019, but has yet to determine the size of the float.

“(Proceeds) will be used primarily for the expansion because the brand is growing very fast, and the industry in Vietnam is really showing potential for growth. So it’s really for growth in Vietnam,” Mr. Tan Caktiong said, adding that the listing will help finance the construction of 300 stores over the next five years.

Superfoods is JFC’s joint venture with Viet Thai International Joint Stock Co. From 2018 to 2021, JFC is aiming to raise its stake in the venture from the current 40% to 85% in preparation for the listing.

Consolidating Superfoods into JFC will also allow the company to hike the contribution of its foreign business to overall operations. JFC’s foreign business currently accounts for 30% of its systemwide sales.

“We will probably achieve a 50% ratio (for foreign business by the time we consolidate), because we are now basically 30%,” JFC Chief Financial Officer Ysmael V. Baysa said.

Mr. Tan Caktiong added that the group is also looking at entering Japan by 2019.

JFC currently has 12 brands under its portfolio, including Jollibee, Greenwich, Red Ribbon, Chowking, Burger King, and Mang Inasal.

In the first quarter of 2017, the firm booked a net profit attributable to shareholders of P1.53 billion, up 9.65% year-on-year.

Shares in JFC fell P1.40 or 0.68% to P204 on Friday. — Arra B. Francia