Jollibee Foods Corp. said it is bringing Tim Ho Wan to China.
The largest quick-service restaurant group in the Philippines said it has signed the agreement with Dim Sum Pte. Ltd. (DSPL) through unit Golden Plate Pte. Ltd. for the venture.
Jollibee will be investing $7.8 million in the venture through a 60-percent owned unit that will be incorporated in China.
Jollibee said its joint venture (JV) unit will sign a unit franchise agreement with Tim Ho Wan Pte. Ltd., the authorized master franchisor of Tim Ho Wan in the Asia-Pacific, to develop and operate Tim Ho Wan stores in Shanghai “and such other cities within the PRC (People’s Republic of China) as may be agreed with the franchisor.”
DSPL is an affiliate of Tim Ho Wan Pte. Ltd. and operates Tim Ho Wan stores in Singapore.
“The Tim Ho Wan deal provides Jollibee with an excellent opportunity to operate and expand one of the known Michelin-starred dim sum restaurant chain brands,” the company said.
Jollibee said it will have a 60 percent share in the venture’s profit, similar to its equity infusion, with the JV company having its own resources and personnel to operate and manage the business.
“The JV is not expected to have an immediate material impact on the Jollibee Group’s sales, profitability and balance sheet as it is not planning for an aggressive expansion in 3 to 5 years. The first few years will be focused on developing and building the store model and economics,” Jollibee said.
Jollibee in February reported its profit last year fell 14.4 percent to P6.33 billion, from P7.04 billion in 2018.
Revenues grew 11.4 percent to P176.64 billion, from P161.2 billion in 2018. System wide sales rose 14.9 percent to P243.79 billion from P212.18 billion.
Jollibee said in the fourth quarter alone, sales jumped 23.2 percent to P52.43 billion from P44.56 billion, including the sales of Coffee Bean and Tea Leaf (CBTL). Without CBTL, system wide sales grew by 9.3 percent in the fourth quarter.
“Global same store sales grew by 4.0 percent representing a marked improvement versus third quarter of 2.5 percent. Philippine business fourth quarter same store sales growth reached 4.6 percent against a third quarter growth rate of 3.3 percent,” Jollibee added.
It said practically all brands in the Philippines improved their same store sales growth between third quarter and fourth quarter led by Jollibee, Red Ribbon, Greenwich and Burger King.
“Same store sales growth in the Philippines was driven by the continued growth in volume of customer visits in the stores compared to a year ago and strong growth in delivery business for all brands. Panda Express which opened its first store in December 2019 has been generating sales above expectation,” it said.
Foreign business meanwhile grew by 59.3 percent, with CBTL accounting for 53.8 percent, new stores 7.3 percent and same store sales growth 2 percent, partly offset by a 5.3 percent downward pull in currency exchange rates.
“North America business grew by 128.3 percent. including CBTL (123.9 percent in peso terms; ex-CBTL 4.0 percent), EMEAA (Europe, Middle East and Asia) business by 17.6 percent (12.0 percent in peso), and the China business by 8.0 percent (1.6 percent in peso). Growth in same store sales of the foreign business was also largely driven by increase in customer visits in the stores and strong growth in delivery business,” the company said.
Jollibee opened 497 stores in 2019, 273 in the Philippines and 224 abroad. It ended 2019 with 5,971 stores. including CBTLӼs 1,173 stores. Total store network increased by 32.1 percent versus end-2018.
For 2020, Jollibee plans to open 600 stores, about 250-300 of which will be in the Philippines and 300-350 abroad. The returns on investment of JollibeeӼs new stores abroad are at least as profitable as those in the Philippines.
