Jollibee spending P7b to shake up business structure

Jollibee Foods Corp., the biggest fast-food chain, will spend P7 billion to re-organize its global business structure in response to the changing consumer behavior caused by the new coronavirus (COVID-19) pandemic.

Jollibee said in a disclosure to the stock exchange Friday the changes would include the rationalization of non-performing stores, store network, supply chain facilities and management and support group structure.

It will also include the creation of revenue growth drivers for the future, especially food delivery-to-home and offices, and take out and drive-thru, even as it opens new stores in prime locations.

The expense provision on transformation will be set up in the second quarter of 2020 and incurred mostly within 2020.

“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,” Jollibee chairman Tony Tan Caktiong said.

Despite the current challenges, Tan Caktiong said the company remained committed to its aim to become one of the top five restaurant companies in the world

Tan Caktiong said the changes were based on the assumption that consumers around the world would not quickly revert to pre-COVID 19 behavior even once lockdowns and other forms of restrictions were lifted in different countries.

The planned changes will include the rationalization of the number of restaurants within certain geography or area and the resources deployed in the restaurants, the implementation of safety and social distancing protocol in the dining area, investment in digital commerce and technology and the increase in the capacity for delivery-to-home and office, take out and drive thru.

Jollibee plans to install mobile applications to facilitate food ordering and payment, establish “cloud kitchen” or unmarked delivery outlets with no dine-in facility located in discreet and low rent sites, and the rationalization of production and distribution facilities.

Jollibee this year plans to spend P5.2 billion, down 63 percent reduction from its original target of P14.2 billion.

The company attributed the lower capital spending to the operational constraints in the construction of facilities and the uncertain volume of demand due to the limited mobility of consumers.

The company plans to open 171 new stores worldwide and renovate 96 outlets in 2020. It also aims to secure excellent locations that will become available due to the weak economic environment.

Jollibee chief finance officer Ysmael Baysa the company’s first quarter performance “was not good.” He forecast lower sales than a year-ago due to COVID-19 pandemic.

“Our estimate is that our profit for 2020 will not be good at all due to the overall economic environment. We are taking this opportunity to implement truly major changes in 2020 so that JFC will start 2021 in a much stronger position in terms of business model, operating efficiency, profitability and organization strength. We will then resume strong and consistent profitable growth for the years ahead,” Baysa said.

Jollibee operated 3,317 stores in the Philippines and 2,638 branches overseas as of end April 2020.

Topics: Jollibee Foods Corp. , Tony Tan Caktiong , global business structure , coronavirus disease 2019 , COVID-19
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