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Philippines' Jollibee Foods plans to enter Indonesia, Malaysia
Publication Date : 06-08-2014
Jollibee Foods Corp. (JFC), the Philippines' leading restaurant chain, plans to enter Malaysia and Indonesia in the next two years and grow its Southeast Asian footprint through franchising.
JFC chief finance officer (CFO) Ysmael Baysa said during the ING Bank-Economic Journalist Association of the Philippines CFO forum on Wednesday that the group had been looking for partners to enter these two big Southeast Asian markets in the last couple of years.
Within the next two years, he said JFC should have set up shop in at least one of these markets. Most likely, Baysa said JFC would come in using the franchising route similar to the expansion strategy in the Middle East.
Baysa, recipient of the 2010 ING-Finex (Financial Executives Institute of the Philippines) CFO of the Year Award, said the Asean – referring to the 10-member Association of Southeast Asian Nations which are forming an integrated economic community by 2015 – would not likely contribute much to JFC's total international business over the short term. “But I think it could be big because the Asean has a very strong middle class,” he said.
Asked why JFC was going into these markets only now, especially Indonesia which is Asean's largest economy, Baysa said the company had tried to enter this market in the mid-1990s but did not push through with plans due to the Asian financial crisis in 1997.
“After the Asian financial crisis, we got into problems so we pulled out of Indonesia. It's more because we didn't have the organisational structure to properly grow into a serious venture in Indonesia.”
But this time around, Baysa said JFC would likely tap a local partner instead of breaking into these markets by itself.
In the case of Indonesia which has a population of 250 million, Baysa said there were only 130 stores of McDonalds, Jollibee's stiffest rival, which meant there was still a big room for JFC. He saidthat in the Philippines, JFC was “three years ahead” of McDonalds.
The strategy is to bring the group's flagship brand, hamburger chain Jollibee.
“So far we cant find an opportunity to buy a local brand in those Asean markets but if we're able to find a good one and if it's for sale, then that will be a good opportunity for us,” Baysa said, noting that in Vietnam, for instance, it had entered into a joint venture that controls the Highlands Coffee and Pho24 chains.
JFC is now the most valuable Asian restaurant company in terms of market capitalisation and the second highest among quick service restaurant globally.
Top officials reported during the company's recent stockholders meeting that based on independent market research, JFC now had the second highest system-wide sales among all Asian restaurant companies, next only to Japanese chain Zenshio Corp. It has outgrown several competitors in the region as of end-2013.
JFC, which last year breached the 100-billion-peso (US$2.3 billion) turnover mark, expects to generate the largest sales among all Asian restaurant chains this year or next.
About 20 per cent of the company's turnover comes from its overseas operations, the biggest of which is that in China which now accounts for 12 per cent of the total business. The goal is to have a 50-50 per cent mix but this has been pushed back because the Philippine market is also growing fast.
JFC is now present in Vietnam, Brunei, Hong Kong, Singapore, USA, Saudi Arabia, Qatar and Kuwait and most recently introduced to Saudi Arabia. It has also announced plans to enter Canada and Kuwait.
As of end-March, JFC had a total of 2,805 stores globally, of which 2,217 restaurants were in the Philippines. Half of its overseas stores are company-owned while the other half are under franchising arrangement.