Jollibee ventures into tea house business in Shanghai

Fastfood giant Jollibee Foods Corp. is going into the tea house business with the opening of Chun Shui Tang Tea House in Shanghai, China.

The new venture is covered by a franchise agreement between Jollibee International (BVI) Ltd. and Ice Tea International, an affiliate of Chun Shui Tang Tea House Ltd., which gives the Jollibee Group the exclusive right to operate a Chun Shui Tang Tea House chain in the People’s Republic of China.

The Chun Shui Tang Tea House is a brand name and concept owned by Chun Shui Tang Tea House Ltd. of Taiwan. The brand is well known in Taiwan for its ice and hot tea concoctions, pastries and rice meals served in a comfortable restaurant setting. It operates 21 stores in Taiwan.

Jollibee said its first Chun Shui Tang Tea House outlet opened last May 20 at 1 Middle Huaihai Road, Luwan District.

The Jollibee Group operates the largest restaurant network in the Philippines with a total of 1,287 stores as of end-March this year, broken down as follows: Jollibee 540, Chowking 334, Greenwich 238, Red Ribbon 139 and Delifrance 36.

On the international front, the group is operating 161 stores: Jollibee (23 in the United States), Chowking (17 in the United States and Dubai), Red Ribbon (17 in the US) and Yonghe King (104 in the People’s Republic of China).

To ensure continued growth, Jollibee said it will continue buying companies or new brands in the international market. It is aggressively looking at acquiring new fastfood outlets in India and China, to build its steadily growing restaurant chain overseas.

It already has operations in the US and various other Asian countries where there are large concentrations of migrant Filipinos, but it still has a long way to becoming a household name abroad.

The group is also planning to expand its Yonghe King business in China. It is looking at Shanghai, Schenzen and Guangzhou as new markets in China.

The group is considering acquiring two to three new fastfood chains in China, particularly in the noodle and bakeshop businesses, although discussions are still in the exploratory stage.

For this year, the group will open one Jollibee store in China somewhere in the southern part. It will also open a Red Ribbon branch in the US East Coast and will continue expanding.

In a study, ATR-Kim Eng Securities said its expansion into foreign markets is Jollibee’s next engine of growth and would be the source of half of its revenues in the next 10 years.

Last year, Jollibee reported a seven percent growth in net income to P1.67 billion from P1.56 billion in 2004. Revenues rose 10.3 percent to P29 billion from P26.3 billion.

Jollibee plans to open 100 new restaurants this year as part of an ambitious expansion program. Each of the 100 outlets will cost between P10 million to P15 million to build, and all the funds will be sourced from internally-generated funds. Around 40 of those 100 restaurants will be franchised.

In March 2004, Jollibee acquired for $11.5 million China’s Yonghe King. It has yet to find an entry point to the Indian market, but the company is looking at its local Chinese fastfood unit Chowking to that country.

Last year, it acquired the Red Ribbon Bakeshop for P1.8 billion which has about 150 outlets mostly in the Philippines.

Aside from hamburgers and oriented fastfood, Jollibee’s operations also include bakeries, pizza and pasta parlors and Japanese specialty restaurants.