Jollibee shuts Vallejo, California branch, but to open 3 within year

BY JENNEE GRACE U. RUBRICO, Senior Reporter Jollibee Foods Corp. closed last month one of its 10 stores in the US after the branch suffered losses the fastfood giant blamed on bad location. But an official of the food company said the closure of the 300-square meter Vallejo, California branch is merely a "setback" as the firm plans not only to open another branch in a more favorable location in the same area, but also to put up two more outlets in other cities in the same state within the year. Jollibee, which opened its first branch in the US in 1998, has been having difficulty penetrating the US market, where it has nine stores. The company currently has outlets in Daly City, Union City, and San Jose in North California and in National City, Mira Mesa, Cerritos, Carson, West Covina and Eagle Rock, South California. All the stores are company-owned. "We closed the Vallejo outlet in Jan. 9 of this year. But this is just one step backward for us. We’re going to move two to three steps forward," said Tommy Y. King, vice-president for the US operations and the South Luzon business unit, in a talk with reporters yesterday. Mr. King said the Vallejo branch, which was a stand-alone outlet, was having difficulties competing with other stores located in a nearby arcade that had several Filipino stores and service outlets. The arcade, which is managed by Seafood City, a grocery owned by US-based Filipino businessman Carlos Go, has, among others, Max’s, Seafood City, and remittance outlets, Mr. King said. "Dati sinasadya talaga ang Jollibee (Before people go out of their way to visit Jollibee). But with the opening of the arcade [things changed], it (arcade) became a one-stop area where people could do everything. They had more choices," Mr. King said. But he said Jollibee will reopen in Vallejo as soon as Seafood City is able to allocate space for the fastfood chain. "That should happen within the year. We already have an agreement with Seafood City," he said. In the meantime, Jollibee will open its 10th outlet, a 1,600-square meter store in Vermont, California, by mid-March. "There was just a slide in the timetable, that was supposed to be opened by the first week of March, but we will be opening it in the middle of March. It will be our 10th store in the US," Mr. King said. He said that by June or July, Jollibee will open its 11th store in Panorama City, also in California. The outlet, Mr. King said, will also be located in an arcade that will be sublet by Seafood City. "This is going to be the trend for the new stores. We don’t want to open stand-alone stores any-more," he said. The stores, he said, will cost between $300,000 and 600,000 each to build. Mr. King said Jollibee is also considering venturing into Las Vegas, once Seafood City opens a branch there. "We really want to go into an alliance with Filipino shops that are considered big and successful," he said. Other areas that the company is looking at are New York and New Jersey. "But we’re not putting a timetable for this," Mr. King said. Jollibee US is expecting a turnaround in it is financials this year following the improvements it has put in place. "We should be able to at least break even for the nine existing stores," Mr. King said. He said Jollibee has implemented several changes to improve the bottom line in the US operations, including bringing people from the Philippines to the US to manage the stores and train employees. He said the company has also changed the profile of its products to make it more appealing to the Filipino palate. "When we opened in 1998, our product was more in the Philippine profile. Along the way, there were strategic moves that were done. We were trying to cross over in terms of the taste because the US market is a very big market. Maybe we were just too aggressive at that time When I took over [a year and a half ago], we reviewed the products and we concluded that we will [cater to the taste] of the 1.5 Filipino population," he said, and added that because of the move, "we’ve been experiencing good feedback." Mr. King said the overall financial performance of the US operations will depend on how well the three new stores perform, considering the firm has to invest in building the branches. But he said Jollibee will also be integrating its office and warehouse operations with recently acquired pastry shop Red Ribbon, which is doing well in the US. "That will lower our costs," he said. Operations of the two firms, however, will still be separate. "These are two separate entities," he said. Jollibee employs a total of 315 people in the US. The firm is set to open its first outlet in China, and will add two stores in Brunei to bring the total number of outlets in the country to seven. In Vietnam, it opened one store, while it is limiting its Hong Kong operations to a single store. BusinessWorld