Jollibee chases McDonald's, KFC world crown with acquisition binge

Jessica Fenol and Joel Guinto, ABS-CBN News

Posted at Jan 08 2019 07:22 AM

Jollibee chases McDonald's, KFC world crown with acquisition binge 1
Consumers walk past a Jollibee Chickenjoy sign in Manila. The Philippines' largest fast-food operator is on a global acquisition binge. Jonathan Cellona, ABS-CBN News/File

MANILA -- Jollibee ended 2018 with bets on braised pork and avocado sandwiches and soup dumplings, while bringing its signature fried chicken to more homesick Filipinos overseas, aiming for a spot in the world's top 5 fast-food chains.

The homegrown company is also poised to benefit from both easing inflation and election-related demand this year, in a boost to its expansion and acquisition war chest, analysts said.

Shares of the Philippines' largest quick-service-restaurant operator have climbed steadily since late September, with a one-year return of 22.2 percent as of January. Net income in the first 9 months of 2018 rose 26 percent to P2 billion.

"Before, their strategy is to penetrate market with their own brand. Now they acquire well-known brands in that country to capture the locals," COL Financial Senior analyst Andy Dela Cruz told ABS-CBN News.

This year will be "as rosy as 2018" or even "better" for Jollibee due to slowing inflation, he said.

McDonald's is the world's largest fast-food chain according to Forbes Magazine, followed by KFC, Subway, Pizza Hut and Starbucks.

In the first 9 months of 2018, Jollibee opened 302 stores, 125 of which are overseas. Filipinos queued up in cold weather for its most recent debuts in Manhattan and London for a taste of Chickenjoy and sweet-style spaghetti.

In December, Jollibee took full ownership of US burger chain Smashburger, allowing it to take on Five Guys and Shake Shack.

It also took a 47-percent stake in Mexican chain Tortas Frontera, which serves pulled pork, chorizo and beef sandwiches with sides of guacamole and cilantro salsa.

Avocado in savory dishes may be an alien concept to the Filipino palette that is accustomed to the fruit eaten with milk and sugar as a summertime dessert. But for Jollibee, it makes sense to cater to a wider market, analysts said.

SATURATED MARKET

The Philippine market may already be "saturated" for Jollibee, said Regina Capital head of sales Luis Limlingan.

"The only way they can grow is to make acquisitions. Where the Filipino food isn’t recognized yet, I think that’s where they should go," Limlingan told ABS-CBN News.

Jollibee was also in talks to acquire Pret-a-Manger, a ubiquitous London chain where sandwiches are served cold instead of hot and where breads are chewy instead of soft.

In May, Jollibee invested P1.74 billion to acquire the Asia Pacific master franchise holder of Tim Ho Wan, famous for its barbecue pork buns.

In home turf, the company is expanding its portfolio that includes 3,000 Jollibee, Chowking, Greenwhich, Red Ribbon, Mang Inasal and Burger King stores.

In September, it announced its 50-50 joint venture with the owners of Panda Express to bring the brand and its signature orange chicken to the Philippines.

In April, Jollibee announced its investment in SuperFoods Group to bring the Vietnamese noodle soup chain PHO24 to the country.