Jollibee completes acquisition of Beijing-based congee chain

MANILA, Philippines - Homegrown fast-food giant Jollibee Foods Corp. has completed the purchase of a Beijing-based congee restaurant chain in China, in line with efforts to expand its presence in the populous nation. In a disclosure, the company said the deal to buy Hong Zhuang Yuan was consummated upon approval by China’s Ministry of Commerce and after the congee restaurant’s owners complied with conditions for the sale. The retail giant bought the Chinese food chain for P2.5 billion through its wholly owned subsidiary Jollibee Worldwide, Pte. Ltd. "Of the amount, P1.62 billion was paid to the sellers as initial payment, and the [balance] will be paid within the next 12 months," Jollibee told the exchange. The company said the payment for Hong Zhuang Yuan would be funded by a $100-million loan from several banks. The Beijing restaurant has an estimated annual sales of P1.3 billion this year, and operates a total of 38 restaurants, 31 of which are company-owned. The company first disclosed its plan to acquire Hong Zhuang Yuan in September last year. Jollibee President and Chief Executive Officer Tony Tan Caktiong said the congee restaurant would be a strong addition to their presence in China in terms of market segment and geographical coverage. Jollibee operates the largest restaurant network in the country, operating a total of 1,480 stores — 636 Jollibee branches, 377 Chowking stores, 231 Greenwich outlets, 204 Red Ribbon stores, 27 Delifrance branches and five Manong Pepe outlets. The group also operates 223 stores and has bought a number of restaurants abroad, particularly in Taiwan and China. Aside from Hong Zhuang Yuan, Jollibee has acquired three Chinese restaurants to gain a foothold in the huge consumer market. It bought 70% of Taipei restaurant Lao Dong in June and Chun Shui Tang tea house in 2006. In 2004, Jollibee bought Chinese fast-food chain Yonghe King for $22.5 million. In July, the company entered into a joint venture deal with US-based Chow Fun Holdings LLC, where Jollibee will have a 12% stake in the US-based Asian restaurant for $950,000. The fast-food giant has been hit by rising commodity prices, posting an 18.7% drop in its net profit to P645 million in the second quarter. Shares of the company on Thursday lost 1% or 50 centavos to P49.50. — Kristine Jane R. Liu, BusinessWorld