Jollibee to spend US$138m on business restructuring
Part of the plan is to establish cloud kitchens.
Jollibee Foods Corporation (JFC) is spending PHP 7 billion (approx. US$138 million) to implement significant changes to its global business structure even as it anticipates an earnings decline this year.
The conglomerate said in a disclosure to the Philippine Stock Exchange that the changes will involve the rationalization of its non-performing stores, store network, supply chain facilities and management and support group structure.
It will also include establishing revenue growth drivers for the future, which include food delivery-to-home and offices, and take-out and drive-thru, even as it opens new stores.
The company operates nearly 3,300 restaurant outlets in the Philippines, some 70% of its total global store network of 4,689 stores.
Cloud kitchens - unmarked delivery outlets with no dine-in facilities - are also part of the fast food giant’s restructuring plan.
Speaking for the company’s transformation will be set up in the second quarter of 2020 and will be incurred mostly within the year.
“It is again time to embark on another business and organization transformation in response to changing consumer behavior caused by the COVID-19 pandemic,” JFC chief executive Ernesto Tanmantiong said.
JFC chairman Tony Tan Caktiong added: “2020 is an extremely challenging year for JFC as for most other businesses, but out of this transformation, we aim to emerge in 2021 as an even stronger business and organization.”
The planned changes will take place in JFC’s businesses around the world, but especially in its largest markets – the Philippines, China and North America.
JFC said the changes will be made with the assumption that consumers around the world will not quickly revert to pre-COVID-19 behavior once lockdowns and other forms of restrictions are lifted.
Despite slashing its capital expenditures budget for 2020, JFC said it expects to open a worldwide total of 171 company-owned new stores and renovate 96 existing stores in 2020.
“Our sales and profit for the first quarter of 2020 eventually was not good,” JFC chief financial officer Ysmael Baysa said. “In the next few months, even as lockdowns begin to be lifted, we forecast that sales will continue to be much lower than year-ago levels. Our estimate is that our profit for 2020 will not be good at all due to the overall economic environment.”
