Jollibee Foods to tap debt market for P17.2-B capex

Jollibee Foods to tap debt market for P17.2-B capex


FAST-FOOD giant Jollibee Foods Corp. (JFC) said it will borrow a portion of its P17.2 billion in capital expenditures this year. 

Ysmael V. Baysa, the company’s chief finance officer, said most of the time its capex came from internally generated funds and only this year will it tap the debt market to augment its needs.

“We are using loans. We do not want to make it complicated. About 70 percent will come from internal funds and 30 percent from outside financing,” Baysa said. 

This year’s capex is higher compared with the previous year’s capex of about P12 billion. 

The capex for 2019 will be used to fund the opening of about 500 stores worldwide, renovation of 90 stores, the building of two commissaries in the Philippines, and investments in information technology for the stores and support groups mainly in the Philippines and the US, the company said. 

Baysa said half of the store openings will be in the Philippines and the other half elsewhere around the world, where it wants its growth to come from across different brands. 

In April, Zenith Foods Corp., a wholly owned unit of the company, started the operations of its new commissary in Canlubang, Laguna, that will supply the products of Red Ribbon stores in several parts of Luzon Island.   The company also opened its first Jollibee store in Guam in April, and then its first flagship Jollibee store in Spain (Madrid), its first Tim Ho Wan franchise store in Shanghai and its first Panda Express franchise store in Manila this year.          

The company said it wants to become the fifth- largest quick-service restaurant in the world in five years starting in 2018, but officials admitted it needs more work to achieve such target.                                 

“The system-wide sales will increase from the present 20 percent to 30 percent. We will eventually achieve our goal of 50/50 revenue split between the Philippines and foreign businesses even as our Philippine business continues to expand strongly since our foreign business is growing even faster,” Jollibee Chairman Tony Tan Caktiong said. ” 

In a related development, homegrown fast-food giant JFC is expanding its footprint in Vietnam as it plans to put up 20 to 30 new stores a year.

“We look at the population of Vietnam which is close to 95 million, about the same in the Philippines and still fast-growing market so there is a lot of opportunities,” JFC Chief Executive Officer Ernesto Tanmantiong told reporters after the company’s stockholders’ meeting on Friday.

JFC Chairman Tony Tan Caktiong is optimistic that Vietnam can replicate the Philippine market.

As of March 31, 2019, JFC was operating 421 restaurants outlets in Vietnam, including Jollibee brand—117; Highlands Coffee— 284; PHO24—18; and Hard Rock Cafe—two.

It was operating 3,141 restaurants outlets in the Philippines.

Meanwhile, Tan Caktiong said the company is studying a plan of bringing its joint venture behind the Highlands Coffee brand to Vietnam’s stock market.

“We are looking into that We’re reviewing that timetable. we’re looking at the entire business,” he added. “The business by the way is doing very well. It’s one of our fastest-growing businesses and one of the most profitable in terms of margin and one of the highest returns on investments.”

In 2019, JFC is looking to open about 500 stores worldwide, half of which is located in the Philippines and the remaining stores in markets abroad.

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