Philippine fast food giant Jollibee loses US$2 billion on America gamble
- The fast food empire’s latest acquisitions in the US continue to burn cash and the virus outbreak is now threatening to hit its sales
- Jollibee controls about 56 per cent of the US$5 billion Philippine fast-food market
After wooing millions of Filipinos for decades with its signature fried chicken, Tan’s Jollibee Foods Corp. set out on an expansion in America, spending US$540 million buying Smashburger and Coffee Bean & Tea Leaf Co. Even as the two money-losing chains turn out to be a drag on earnings, the coronavirus outbreak is now threatening to hit its sales.
Fuelled by concerns the spread of the disease will weigh on consumer spending, Jollibee shares have dived more than 18 per cent this year, adding to losses in 2019, their worst in two decades. The slide has wiped US$2.22 billion off the company’s market value since the end of 2018.
“The impact of the virus is not yet fully quantified,” said Noel Reyes, who helps manage 58 billion pesos (US$1.15 billion) as chief investment officer at Security Bank Corp. in Manila. “Even if the drag from its acquisitions has plateaued, sentiment will remain bearish until we are certain that the impact of the virus has peaked.”
In China, the Jollibee group – encompassing 15 brands – operates 389 restaurants that account for 7.4 per cent of its sales. The country, where the outbreak started, is one of the company’s major markets outside the Philippines and is home to 15 per cent of its overseas outlets.