Jollibee to enter Italy, European market

MANILA - Jollibee is forming a joint venture with a Singaporean partner BlackBird to own and operate the first Jollibee store in Italy, its first in Europe.

The Jollibee group will own 75% of the joint venture, while BlackBird will own the remaining 25%. Both have committed to invest up to 1-million euros for the joint venture. The strategy is to tap a territorial franchisee for Italy, which can develop and expand the brand in the market.

BlackBird is a Singaporean company engaged in food and beverages and human resource activities. It was incorporated in 2014.

"Expansion to Italy is in line with diversification efforts. They are present outside Philippines, they are in China, the Middle East and the US. I guess, eventually, growth in the Philippines will slow down because they have so many stores here already," says COL Financial's April Lee Tan.

Tan adds, the important questions about this venture are: (1) Are they going to inject just the Jollibee brand? (2) Are they going to target the Filipino market or the European Market? (3) Are they going to do what they did in the US or China where they bought existing brands and used their expertise to build brands?

Tan admits, valuation is still a big concern for Jollibee investors.

"When you are priced at a premium, nothing can go wrong, at this stage, Jollibee will encounter challenges, rise in commodity prices, cost of labor. With that -- it's difficult to justify its share price."

But Tan says, these problems are temporary, and should be overcome in 1-2 years time.

JFC shares are down 0.4% in morning trade to P196.70. It's down 1.3% year to date.

source: news.abs-cbn.com

Jollibee group to open 330 new stores

MANILA – Jollibee Foods Corp. (JFC) said it is investing P9.1 billion in capital expenditures in 2015, 68.5 percent higher than the P5.4 billion spending in 2014.

The firm said a bulk of the spending or about P6.7 billion will be allocated for its Philippine operations while P1.7 billion will be spent for China, and the balance for the US and Southeast Asia and the Middle East.

JFC said it plans to open 330 new stores worldwide, 220 of which are in the Philippines and the remaining 110 overseas.

“The 2015 capital expenditures will be mostly for the store openings and store renovations in the Philippines and foreign operations, and investments in commissary construction and capacity increase in the Philippines,” the company said on Monday.

JFC added that the investments will be financed by its cash reserves and cash expected to be generated from its operations this year.

The Jollibee Group opened a total of 234 new stores in 2014, of which 169 are in the Philippines and 65 are in foreign operation.

As of December 31, 2014, JFC operated 2,301 restaurants in the country under the brands Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal and Burger King.

The firm is also operating 612 stores overseas, more than 400 of which are in China.

JFC posted profits of P5.27 billion in 2014, 12.7 percent higher than the amount generated in 2013 on the back of increased system wide sales.

JFC said its system wide sales, which measure all sales to consumers both from company-owned and franchised stores, grew by 13.3 percent in 2014.

JFC’s Philippine business grew by 13.2 percent while its foreign business grew by 13.7 percent.

“The sales growth for the year was driven by an 8 percent same store sales growth for the Philippines and worldwide and a 5.4 growth in store network,” the firm said.

JFC’s chief financial officer Ysmael Baysa, meanwhile, said raw material cost increases in 2014 brought pressure on the firm's profit margins.

"We made important price adjustments and improved our store and manufacturing expenses during the year. We are now very close to fully covering these cost increases and look forward to the full recovery and improvement in gross profit margins in 2015 through lower cost of energy and more stable raw material prices. We will also offer even better products to our consumers to help ensure our products continue to provide them great value,” he said.

source: www.abs-cbnnews.com