By Reuters

MANILA – Philippines’ Jollibee Foods Corp (JFC.PS) is training its sights on Indonesia, with newly acquired U.S. chain Coffee Bean & Tea Leaf its entry point in the economically expanding and densely populated Southeast Asian neighbor, its top officials said.

jobi - Philippines’ Jollibee sets sights on Indonesia with Coffee Bean beachhead

Ernesto Tanmantiong, the president and CEO of Philippine national champion Jollibee Foods Corp, and Ysmael Baysa, its CFO, pose for a picture outside a Jollibee branch in Pasig City, Metro Manila, Philippines, July 30, 2019. Picture taken July 30, 2019.
(REUTERS / Eloisa Lopez / MANILA BULLETIN)

Jollibee has for years planned to bring its Chickenjoy fried chicken and sweet spaghetti restaurants to Indonesia, but last week’s $100 million investment for the struggling coffee chain has bought it a foothold in the market of 260 million people.

“One thing that might emerge and very interesting is Indonesia,” Chief Financial Officer Ysmael Baysa told Reuters.

The restaurant scene in Indonesia is cornered by the likes of Restoran Sederhana, McDonald’s Corp (MCD.N), and Yum! Brands Inc’s (YUM.N) KFC and Pizza Hut.

“Coffee Bean gives us an immediate presence in Indonesia and also gives us a platform on which we can further expand our business there,” Baysa said.

Jollibee’s purchase of money-losing Coffee Bean from private equity firm Advent International and others was its largest foreign acquisition to date, and its second coffee brand after Highlands Coffee in Vietnam. Coffee Bean has 101 outlets in Indonesia among its 1,189 branches across 27 countries.

Jollibee, the Philippines’ best-known brand, started as two ice cream parlors four decades ago, but soon shifted to the burgers and fried chicken that have been a big draw at home and among many of the estimated 10 million Filipinos who work or have settled overseas.

Through its 12 brands and franchises, Jollibee operates 3,195 outlets in the Philippines and has a further 1,418 dotted across Southeast Asia, the Middle East, the United States, Britain and China, among them Smashburger, Yonghee King, Chow King, Greenwich, Red Ribbon, plus franchises of Dunkin in China and Burger King in the Philippines.

Jollibee is eyeing a turnaround of Coffee Bean to make it profitable in 12-18 months, Baysa said. Coffee Bean posted $313 million in revenue and a net loss of $21 million last year.

The Philippine fast-food chain was worth $5.8 billion prior to announcing its acquisition but shed $890 million in market value in two days as investors sold its stock on concerns about it over-spending on a money-losing coffee chain. It has since recouped more than half of the losses.

Jollibee President and Chief Executive Ernesto Tanmantiong said the firm aims for 50% of sales to come from overseas within three to five years, from about 27% now.

It aims to be among the world’s five biggest fast-food firms, he said, adding it has no qualms about delving into a coffee market peppered with big names such as Starbucks Corp (SBUX.O) and Tim Hortons.

“It’s a very big market to enter,” he told Reuters, adding that the company would continue to broaden its portfolio of businesses when it sees good opportunities.

“Our strategy is to have strong organic growth as well as strategic acquisitions,” he said.

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