Jollibee to expand in Indonesia and Europe

Jollibee Foods Corp., the largest and most profitable fastfood chain in the country, is counting on expansion abroad to continue growing as it saturates its home market.

At the sidelines of the company’s stockholders meeting Friday, Jollibee president Tony Tan Caktiong said the company is stepping up its overseas expansion to maintain its lead over competition and to further boost its profitability.

Tan Caktiong, who was named the 2004 World Entrepreneur of the Year by Ernst and Young, said plans are now underway for the establishment of a Chowking outlet in Indonesia

"Indications are they like the food. We hope to be able to create a niche there," Tan Caktiong said.

Chowking, which serves Chinese food, is the dominant leader in the Oriental quick service restaurant segment in the Philippines.

Tan Caktiong said the group’s decision to expand in Indonesia was due to the country’s huge population. He said there is also less competition in Indonesia.

The Chowking concept, he said, suits the Indonesian market. "In terms of taste, the only difference is that in Indonesia, they really like spicy food, so we have to make sure to add spicy dishes," Tan Caktiong sdaid.

Jollibee chief financial officer Ysmael Baysa said the group would need as much as P9 million to open a store in Indonesia. "Our capex for Indonesia would be P8 million to P9 million per store," Baysa said.

Apart from Indonesia, Tan Caktiong said the group sees huge potential for Chowking in Europe as it received inquiries from interested parties. He, however, said the company would like to first focus its investment on China.

Jollibee recently completed the purchase of 85 percent of Belmont Enterprises Ventures Ltd., the holding company of the Yonghe chain. It acquired a total of 80 Yonghe King stores.

Baysa said the group plans to open 14 new Yonghe King outlets in China this year and expects to add 30 more by 2005. He estimates that the company would shell out $100,000 each for one store. "This would require a lot of manpower resources but we feel we can have significant profit expansion growth," Baysa said.

The group is also considering taking its Greenwich brand to China. Greenwich caters to the pizza-pasta segment and has established a strong presence in the fastfood industry. "We were told that Greenwich might work in China but there are no immediate plans for this market yet as we have to do more studies," Tan Caktiong said.

Baysa expects the Yonghe King fastfood business to add about five percent to Jollibee Group’s system-wide sales.

He also expects international operations to contribute 55 percent to the Jollibee group’s overall revenues by 2010. At present, overseas operations account for only five percent of total revenues.

Aside from its new Yonghe chain in China, the company runs Jollibee stores in Guam, Brunei, Hong Kong, Vietnam and the US. It plans to open outlets in Shanghai, Beijing or Guangzhou in China.

As of end-December last year, the Jollibee group has 988 stores worldwide: 467 Jollibee, 245 Chowking, 213 Greenwich, 30 Delifrance and 33 stores abroad.

Jollibee is eyeing another double-digit growth in net profit for 2004 on the back of more store openings. Baysa said Jollibee would open another 70 to 80 stores this year.

The fastfood giant posted a net income of P1.26 billion last year, up by 21 percent from P1.04 billion in 2002.

From modest beginnings as the owner of two ice cream parlors in Manila in 1975, Tan Caktiong established and steered Jollibee to become one of the most admired and respected companies in Asia.

Jollibee now has a workforce of 26,000 people in almost 1,000 outlets in seven countries.

In the Philippines, Jollibee accounts for 65 percent of the domestic fast food market, competing very successfully against global fastfood giant McDonalds. In 1993, it became the first food service company to be listed on the Philippine Stock Exchange.