Jollibee Foods Corp has announced plans to boost its expansion plans in the US and China, which could include more mergers and acquisitions.
The fast food specialist, known for fried 'Chickenjoy' and chopped hotdogs in sweet spaghetti sauce, has acquired California-based Coffee Bean & Tea Leaf (CBTL) in July and took full control of Denver-based Smashburger in 2018. US and China expansion plans by Jollibee will be aimed at earning 30% of its revenue in the US within 10 years while also increasing overall sales in China to 30%.
This would mean that the No. 4 ranked quick service restaurant firm in Asia would have to revamp its revenue streams and reduce its reliance on domestic sales to 50% in the medium term. Before acquiring Coffee Bean, the Philippines comprise 73% of the company's sales while 15% came from the US and 12% came from China.
Jollibee chief executive officer (CEO) Ernesto Tanmantiong said "We want to spread our portfolio and risk. There's huge opportunity out there." Currently, Jollibee is valued at $4.8 billion and has a portfolio of 16 brands. It plans to have six brands each in the US and China.
The fast food company currently holds five brands in the US, which includes its namesake Jollibee restaurant chain and a minority investment in the Rick Bayless-run Tortas Frontera, which offers Mexican-inspired sandwiches. Meanwhile, it operates three brands in China, namely the Dunkin Donuts franchise, the Yonghe King noodle and Hong Zhuang Yuan congee restaurant chains.
According to Erwin Elechicon, former chief of Jollibee's international operations, most of their acquisitions resulted from Chairman Tony Tan Caktiong eating in a restaurant and liking the food. Jollibee is known for acquiring small, loss-making firms at low prices and turning them around. Company executives expressed that they are open to acquiring any type of business if the food is good.
However, Renzo Louie Candano, analyst at DBP-Daiwa Capital Markets in Manila, pointed out that "It would be better for them not to do another acquisition at least of this scale until Smashburger and CBTL become profitable."
