Jollibee allots P1.5B for new stores this year

Fastfood giant Jollibee Foods Corp. is setting aside P1.5 billion this year for the continued expansion of its operations in both the local and international markets, including the setting up of a commissary in the US and the establishment of new stores.

At the sidelines of the company’s stockholders meeting yesterday, Jollibee chairman and president Tony Tan Caktiong said the group is building 100 to 120 new stores across all its brands, 20 to 25 of which will be located abroad.

Tan Caktiong said while the Philippines remains its main market, the Jollibee group also intends to further grow its business in the US and China. He said the group is building its first Jollibee store, the group’s flagship brand, in China.

He said they are also exploring opportunities in India and Jakarta, Indonesia.

As for India, the group’s plan is to acquire a local brand. "We will either acquire or enter into a joint venture with a company there. Hope we can find something worthwhile," Tan Caktiong said.

Tan Caktiong said he believes India has promising growth potential as it rapidly emerges as a mass consumer market and a major low-cost manufacturing center.

"We like India because of its potential market size. We heard that around 200 to 300 shopping malls would be built in India. Can you just imagine the potential for growth in India. We would definitely want to take advantage of this," Tan Caktiong said.

Tan Caktiong said the group is also set to open its first Red Ribbon Bakeshop branch in the East Coast, particularly in New Jersey. He said the group is also building a commissary for Red Ribbon in the US.

On the local front, Tan Caktiong said the group continues to "keep its ears open" for possible acquisitions.

When asked whether the group was interested in acquiring Goldilocks Bakeshop Inc., Tan Caktiong said: "That would be interesting if the price is right."

He said the group has held exploratory negotiations with the owners of Goldilocks several years before it acquired Red Ribbon Bakeshop but nothing concrete came out of the discussions.

Jollibee chief financial officer Ysmael Baysa said the company has more than enough cash to cover its planned expansion in the next two years. The Jollibee group has assets of P17 billion, which is sufficient to fund another acquisition.

Tan Caktiong said the group is also considering acquiring two to three new fastfood chains in China, particularly in the noodle and bakeshop businesses. Discussions are still in the exploratory stage, he said.

Aside from hamburgers and bakeries, Jollibee’s operations also include Oriental fastfood (Chowking and Yonghe King), pizza and pasta parlors (Greenwich), and French-style delicateseen (Delifrance).

For the second quarter, the group is expected to post slower growth in sales due to weak consumer spending and rising utility costs. "2006 will be a difficult year. Consumer spending is down and oil prices continue to go up," Tan Caktiong said.

Baysa said the group expects to post single digit growth in sales for the period April to June this year.

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