Jollibee to slow down expansion amid soaring oil, food prices

Fastfood giant Jollibee Foods Corp. is slowing down on its expansion amid scorching prices of oil and commodities, although it remains on the lookout for possible acquisitions to spur growth.

At the sidelines of the company’s stockholders’ meeting yesterday, Jollibee chairman Tony Tan Caktiong said the group is reviewing its expansion plans because of the challenging business environment spurred by rising prices of raw materials and various other commodities.

Tan Caktiong said the group will continue to build new stores but they would be less than the number of outlets originally planned.  The company, he added, may just postpone the establishment of new stores by six months.

He, however, expressed optimism the company will remain unscathed by the economic downturn, pointing out that Jollibee has been through periods of economic stress in the past years.

“We believe that while the present situation provides a lot of challenges, we will be able to not only perform well, but we can emerge even stronger as we have been able to do in the past,” Tan Caktiong said.

As of end-May this year, the group had opened a total of 54 new stores in and outside the country, 20 of which are located overseas, mostly in China.

 Jollibee chief financial officer Ysmael Baysa said the company still expects to grow this year albeit at a much lower rate than the previous year due to the difficult business environment.

In the past four years, the company has been registering a steady 12 to 13 percent growth in revenues.

“In the first quarter this year, our system wide sales grew 14 percent. We expect that growth would likely go down because of the high inflation rate but we are still growing. The pressure is on our gross profit and our operating profit margin. We don’t know when the commodity price increase will stop. However, if we look back in the past we went through a very difficult situation but we kept on growing our sales and eventually increase our profit as well because our business is resilient. Even if there’s a slowdown in the economy, our business would slow down at much lesser scale  that is why we remain optimistic on how we will perform,” Baysa said.