Home-grown quick service restaurant chain operator Jollibee Foods Corp. (JFC) is expecting a strong recovery post the COVID-19 crisis.
“So while we anticipate that the effects of COVID-19 will continue to be felt even until 2021, we expect these changes to be short-term and manageable,” JFC president and CEO Ernesto Tanmantiong said during the company’s virtual annual stockholders’ meeting on Friday.
“We expect strong growth in sales and profit in 2021 versus 2020, to a point close in our level in 2019,” Tanmantiong said.
In the first quarter of 2020, JFC suffered a financial beating as it posted a net loss of P1.79 billion, a reversal from P1.46-billion net profit in the same period in 2019 due to the impact of lockdowns on its businesses.
“Starting in 2022, we expect that JFC will grow at least in line with its historical growth rate of about 15% per year,” Tanmantiong said.
“In the succeeding years, we expect JFC to grow at that rate, which is doubling the size of its business every five years,” he said.
The fast-food chain giant’s optimism stems for the “signs of recovery and improvement” after the government allowed dine-in services to resume, albeit at reduced capacity.
“We’re also seeing significant improvements in the sales in the Philippines, especially as restrictions are lifted, with 50-75% dining capacity now allowed,” Tanmantiong said.
For its businesses overseas, he said that JFC is seeing sales recovery has already started in the US, China, Vietnam, Singapore, Hong Kong, and Brunei as restrictions are easing up.
“In the US, delivery, drive through, and take out offset the loss in our dine-in sales,” he said.
JFC is also embarking on a P7-billion business transformation initiative, which will focus on building its off-premise channels such as delivery, drive-thru, and take-out.
For his part, JFC chairman Tony Tan Caktiong said the company is expecting that its recently acquired Coffee Bean and Tea Leaf (CBTL) brand will become profitable in 2021.
“We are on-track with our plans for CBTL. In mid-June of this year, we transferred its back office accounting to our shares services based in the Philippines. We are also building and strengthening CBTL’s leadership team,” Tan Caktiong said.
“All these initiatives will drive profitability and sales, and we expect CBTL’s performance to improve by the fourth quarter of this year and become profitable by next year, 2021,” he said.
In September 2019, JFC acquired CBTL for $350 million.
The cost of JFC’s acquisition of CBTL, however, dragged the company’s net income down by 14.4% to P6.33 billion in 2019.
Nevertheless, Tan Caktiong said JFC “very bullish” with the coffee category “as we foresee that demand will continue to significantly grow.”
“We believe that the CBTL brand is one which can resonate and be loved by consumers globally, beginning in Asia and the US,” he said.
Likewise, JFC is seeing its US-based Smashburger brand to reached profitability in 2021.
The company acquired Smashburger for $10 million in 2018.
“Smashburger is performing well. The same-store sales growth for January and February were in the positive territory,” Tan Caktiong said.
“Sales were affected by COVID-19 starting mid-March, as they had to close dine-in service in all of their stores. But to go in delivery, we’re able to significantly offset the loss in dine-in,” he said.
The delivery sales of Smashburger increased significantly by over 500%, contributing close to 50% of total sales.
“We have done several improvements in Smashburger since we became the 100% owner of the brand in December 2018. We have enhanced the product taste, we have adjusted the pricing and serving size to provide better value,” Tan Caktiong said.
“On Smashburger’s profitability, our target is to make it profitable by 2021,” he said.—AOL, GMA News