HOMEGROWN fast-food giant Jollibee Foods Corp. (JFC) expects its expanding beverage business to contribute as much as 40 percent to total revenues by 2029, with food accounting for the remainder.
JFC Chief Financial Officer Richard Shin told reporters late Tuesday that the group’s beverage units were currently contributing 20 percent to earnings before interest, taxes, depreciation and amortization.
“In 1978, we were a food company with one brand, Jollibee,” he said, adding that “ten years ago, we were still mostly a food company.”
“I think it will be such that in five years, we can be close to 60-40 food-beverages [in terms of income contribution], so I wouldn’t be surprised if that contribution continues to grow.”
JFC has evolved from being predominantly a food company to becoming a comprehensive food and beverage enterprise with the development of its beverage portfolio, Shin said.
The beverage business now includes The Coffee Bean & Tea Leaf, Highlands Coffee, Milksha, The Common Man and South Korean coffee chain Compose Coffee, the most recent addition to the JFC group.
Highlands Coffee has been a “stellar” performer, particularly in Vietnam, and has emerged as a cornerstone of JFC’s beverage strategy, Shin said, adding that JFC’s investment in Botrista, a US-based distribution platform specializing in beverage technologies, would give it added leverage in terms of innovation in the sector.
The JFC CFO said that their beverage subsidiaries typically generate higher net margins and that the lack of kitchens in most beverage establishments significantly reduces initial setup costs, allowing for faster payback periods.
“Beverage net [margins] are always higher [than food]. The kitchens are easier to build because there are no kitchens,” Shin said.
“It’s a higher margin product, and the store cost is lower, payback is quicker. That’s to our advantage.”
He assured stakeholders, however, that JFC would continue to focus on its food business, particularly the Jollibee brand.
“But our heart, our core essence of being, is still Jollibee,” Shin said.
He said JFC, with its network of 1,700 outlets, remains “underpenetrated” compared to its market potential, thus network expansion is a critical part of its growth strategy.
JFC shares rose P6.60, or 2.47 percent, to close at P274 each on Wednesday, tracking the benchmark Philippine Stock Exchange index’s 2.54-percent gain.
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