Restaurant chain operator Jollibee Foods Corp. said it will infuse an additional $100 million to increase its stake in Smashburger Master Llc to 85 percent to expand its business in the United States.
Jollibee said in a disclosure to the stock exchange it would acquire an additional 45-percent interest in Smashburger, pursuant to the amended deal finalized by both parties last year.
Smashburger Master will retain the balance of 15 percent.
Jollibee said the deal would enable it to consolidate Smashburger’s operations into the company and increase its worldwide store network by 365 stores to 4,162.
This will also expand JFC’s geographical presence from 16 countries to 21, adding Costa Rica, Egypt, El Salvador, the United Kingdom and Panama.
“The acquisition will increase contribution to our worldwide system-wide sales from 5 percent to 15 percent. JFC will be able to participate in the very large mainstream American consumer market in addition to serving Filipino-Americans there,” Jollibee chairman Tony Tan Caktiong said.
“JFC believes that it will be able to profitably provide the mainstream American consumer with superior tasting products with excellent services at very good value for money as it has demonstrated in the Philippines, China, Vietnam, Singapore, Hong Kong, Brunei and the Middle East,” he said.
Jollibee initially purchased a 40-percent stake in Smashburger for $99 million in October 2015.
Jollibee said it was expecting the share of its foreign business to its worldwide system-wide sales to go up to 30 percent from the current 20 percent once the deal was finalized over the next two months.
“JFC will eventually achieve its goal of 50/50 revenue split between the Philippines and foreign businesses even as its Philippine business continues to expand strongly since its foreign business is growing even faster,” Tan Caktiong said.
Jollibee said net income in 2017 jumped 15 percent to P7.1 billion from P6.45 billion in 2016 on higher revenues and aggressive rollout of stores.
System-wide sales grew 15. percent to P171.7 billion in 2017 from P149.1 billion in 2016 as sales of restaurant chains in the Philippines expanded 13.2 percent while those abroad climbed 23.4 percent.
The fast-food giant opened a record 465 stores last year to end 2017 with 3,797 stores worldwide.
Jollibee earmarked P12 billion in capital expenditures this year, as it plans to open 328 new stores in the Philippines and 137 stores overseas.