MANILA -- Philippine fast-food chain Jollibee Foods on Friday said it plans to launch a Mexican restaurant business in the U.S. with its purchase of a stake in Tortas Frontera.
Jollibee will pay $12.4 million for a 47% interest in the company, which was founded by celebrity chef Rick Bayless and has four restaurants at Chicago O'Hare International Airport and the University of Pennsylvania. The chain sells tortas -- grilled Mexican sandwiches with a variety of fillings -- and molletes, which are warm, open-faced sandwiches.
Jollibee said it will use the Tortas Frontera purchase to enter the $45 billion Mexican restaurant market in the U.S.
"Together with his (Bayless's) organization and brand, Tortas Frontera, we will build a significant business in the large and fast-growing Mexican food category in the United States," Jollibee Chairman Tony Tan Caktiong told the Philippine Stock Exchange.
The deal underscores Jollibee's effort to raise its profile in the U.S., which is a pillar of the company's global expansion, along with China and the Philippines. Early this year, Jollibee raised its stake in Denver-based Smashburger to 85% from 40%, bringing its total investment in the chain to around $200 million.
The latest stake purchase also highlights Jollibee's strategy of investing in small and medium-size companies in order to expand.
Jollibee, which hopes to become one of the five largest fast-food companies in the world, has earmarked $1 billion for acquisitions. But with valuations of restaurant operators rising due to strong interest from private equity funds, Jollibee could soon exhaust its war chest. Two large Mexican fast food chains in the U.S., Taco Bell and Chipotle, had system-wide sales of $9.7 billion and revenue of $4.5 billion, respectively, in 2017 compared with Jollibee's total sales of $3.4 billion.
In June, when the Philippine company first said it was interested in entering the Mexican food business in the U.S., Tan Caktiong said the company would have to be "creative" in its approach to acquisitions. Officials hinted at the time that they might buy smaller assets.
Jollibee, which runs a burger and fried chicken chain of the same name, owns various types of restaurants. In all, it has more than 4,000 branches, including more than 80 restaurants in the U.S., excluding Smashburger shops, mainly catering to Filipino expatriates.