Jollibee trims 2020 losses with last-minute profit swing

MANILA, Philippines — Homegrown fast-food giant Jollibee Foods Corp. managed to swing back to growth in the final 3 months of 2020, but that was not enough to save the company from a pandemic-induced loss last year.

Jollibee capped 2020 with a net loss amounting to P11.5 billion, a reversal from P7.3 billion net income in the preceding year, the company said in a disclosure to the stock exchange on Monday.

The good news is after incurring net losses in the first 3 quarters of 2020, Jollibee returned to profit in the fourth quarter with a net income of P2 billion, although earnings were still down 34.5% year-on-year. Ernesto Tanmantiong, chief executive, is hoping that the rebound is sustainable. On Monday, shares in Jollibee went up to close at P179.50 each.

"We look forward to sustained recovery of the business as the world gradually returns to normalcy, aided by the introduction of new vaccines," Tanmantiong said.

Even before the pandemic struck, the Jollibee group's profit had been slowly dwindling after failing to swiftly turn two loss-making foreign brands it acquired namely Smashburger in 2018 and Coffee Bean & Tea Leaf in 2019. The company's bottomline plummeted 14.4% annually in 2019 before finally turning red in the first quarter of 2020, with the health crisis acting as the final nail.

The company said both acquisitions "are now in a reasonable position to start generating profit in 2021."

Breaking down the numbers, Jollibee's system wide sales — a measure of all sales to consumers both from company-owned and franchised stores — crashed 27.8% year-on-year in 2020 to P176 billion. Revenues collapsed 27.9% annually to P129.5 billion due to "permanent store closures and lower sales per store" from lockdowns that prevented consumers from dining in.

That said, Jollibee claimed cost-cutting measures allowed it to avert a deeper decline in profits from October to December. Instrumental to this "significant cost reduction" effort was the P7 billion "business transformation program" laid out in the second quarter that saw 486 underperforming stores shutting down and diverting company resources to enhancing delivery systems that boomed amid the pandemic.

Of the amount set aside for this endeavor, P6.7 billion had been spent last year.

Offsetting this spending, closing down poorly performing establishments allowed Jollibee to save P2.6 billion. On top of that, P8 billion in capital expenditures originally set for 2020 were "avoided or delayed to future year" to preserve cash. "It was a very difficult and painful program but the right thing to do for the long term good of the business and the organization," Tanmantiong said.

For 2021, Jollibee is eyeing to spend P12.2 billion on new investments, including opening over 400 new stores worldwide. 

"We aim for very strong sales and profit recovery in 2021 versus 2020. In 2021 and the years ahead, JFC’s sales and profit growth will be driven by its international business," Tanmantiong said.

"We believe that out of this pandemic, we will emerge as a stronger business and organization,” he added.