MANILA -- Filipino restaurant giant Jollibee Foods is attempting to set itself up for rapid growth once the pandemic winds down with an aggressive global brand acquisition strategy that is moving the group further away from its fast-food roots.
In August, the company said it would acquire the remaining 15% stake in Tim Ho Wan from its partner Titan Dining for 71.56 million Singapore dollars ($52.8 million). Jollibee initially bought a 45% interest in Tim Ho Wan for SG$45 million in May 2018, then gradually increased the stake up to 85% as of October 2020.
Tim Ho Wan is a popular Hong Kong-based, Michelin-starred restaurant chain known for inexpensive but high-quality dim sum dishes. When Jollibee bought its first stake in the chain, Titan had the right to operate the Asia-Pacific outlets. But Titan later acquired both Tim Ho Wan's brand and trademark.
Tim Ho Wan operates over 50 mostly franchised stores across Asia, primarily in Singapore, Taiwan, the Philippines and Hong Kong. Since Jollibee began purchasing its stake, the chain has expanded its presence in mainland China as well. A joint venture between Jollibee and Titan opened a Tim Ho Wan restaurant in Shanghai, the chain's first outlet in China, last September. The group has since grown its presence in the huge market and plans to increase the number of its restaurants in China to 100 in the next four years.
The Jollibee group was operating 5,816 outlets around the world, including around 3,200 in the Philippines, as of June 30, serving their signature fried ChickenJoy, burgers and other dishes. Jollibee is the largest fast-food chain in its home country, operating more restaurants than McDonald's there. But Jollibee brand restaurants account for only 26% of the group's outlets around the world.
The company's acquisition spree so far has resulted in a takeout empire that includes a variety of quick-service brands. With 17 brands in 33 countries already, Jollibee CEO Ernesto Tanmantiong has said overseas operations will drive the conglomerate's revenue growth this year and beyond.
In September 2019, the group announced it had acquired U.S.-based The Coffee Bean & Tea Leaf for $350 million. Before the acquisition, Jollibee was operating some 4,600 locations, a figure that has grown by 25% in the past two years.
The group has never been gun-shy about investing in businesses. In 2018, it bought out Denver, Colorado-based Smashburger. In 2012, it purchased a 50% stake in SuperFoods Group, a Vietnamese restaurant group that operates coffee shop chain Highlands Coffee and Vietnamese noodle house chain Pho 24.
The Jollibee fast-food chain itself has also been expanding its international footprint, though with outlets that mainly cater to Filipinos working abroad. The Philippines' large English-speaking population is a major source of immigrant workers. Some 10 million Filipinos, 10% of the population, work outside the Southeast Asian country, according to estimates. The U.S. and the Middle East attract many of these workers.
The acquisitions of Tim Ho Wan and The Coffee Bean & Tea Leaf will help Jollibee's expansions in the Chinese and U.S. markets as a diversified player. Jollibee has announced its intention to enhance its Chinese food offerings through Tim Ho Wan and other operations.
The group racked up 71.3 billion pesos ($1.4 billion) in sales in the first six months of 2021, up 13.7% from a year earlier. It earned 1.1 billion pesos in net profit in the first half, a drastic turnaround from an 11.9 billion peso loss one year earlier. Overseas markets contribute around 40% of the company's overall revenue, and its overseas businesses hold strong growth potential. The group now plans to rev up its global expansion strategy as it eyes rapid growth once the pandemic winds down.