Philippines' Jollibee sets sights on Indonesia with Coffee Bean beachhead

Jollibee's purchase of money-losing Coffee Bean was its largest foreign acquisition to date, and its second coffee brand after Highlands Coffee in Vietnam.
Jollibee's purchase of money-losing Coffee Bean was its largest foreign acquisition to date, and its second coffee brand after Highlands Coffee in Vietnam.PHOTO: ST FILE

MANILA (REUTERS) - Philippines' Jollibee Foods Corp is training its sights on Indonesia, with newly acquired US chain Coffee Bean & Tea Leaf its entry point in the economically expanding and densely populated South-east Asian neighbour, its top officials said.

Jollibee has for years planned to bring its Chickenjoy fried chicken and sweet spaghetti restaurants to Indonesia, but last week's US$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 is 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, and Yum! Brands Inc's 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 parlours 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 US$313 million in revenue and a net loss of US$21 million last year.

The Philippine fast-food chain was worth US$5.8 billion prior to announcing its acquisition but shed US$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 per cent of sales to come from overseas within three to five years, from about 27 per cent 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 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.