Fast-food giant Jollibee Foods Corp. (JFC) said it will spend some P7 billion to transform its global business structure amid the pandemic, as it focuses on food deliveries and drive-thru in its stores.
JFC also said it will rationalize its network of stores and supply chain facilities and management staff. The company said it will start “transformation” during this quarter, and the cash will be spent mostly during the year.
“The planned changes will take place in JFC’s businesses around the world, most importantly in its largest markets—the Philippines, China and North America,” said Tony Tan Caktiong, company chairman.
“These changes will be made with the assumption that consumers around the world will not quickly revert to pre-Covid-19 [coronavirus disease 2019] behavior once lockdowns and other forms of restrictions are lifted in different countries.”
Changes include rationalization of the number of restaurants within certain geography or area, the resources deployed in the restaurants, implementation of safety and social distancing protocol in the dining area.
The company will also invest in digital commerce and technology as it increases the capacity for delivery-to-home and office, take out and drive thru.
There will be mobile applications to be installed to facilitate food ordering and payment as it establishes “cloud kitchen” or unmarked delivery outlets with no dine-in facility located in discreet, low rent sites.
The fastest-growing business in the group is Smashburger with delivery sales growth of 600 percent and overall same-store sales growth at company-owned stores of single digit to double digits in recent weeks.
In March, the company reduced its capital expenditures this year by 63 percent to just P5.2 billion, from the previous P14.2 billion, given the operational constraints to the construction of facilities and to the uncertain volume of demand due to the limited mobility of consumers.
JFC said it still expects to open a worldwide total of 171 company-owned new stores and renovate 96 existing stores this year.
Ysmael V. Baysa, the company’s CFO, said the company’s first quarter sales and income “was not good” due to the temporary closure of many of its stores during the Covid-19 lockdown, which eliminated most of its dine-in sales in stores first in China in February and the rest of the world in March. The company still has to disclose its first quarter figures.
“In the next few months, even as lockdowns begin to be lifted, we forecast that sales will continue to be much lower than year-ago levels. Our estimate is that our profit for 2020 will not be good at all due to the overall economic environment,” said Baysa.
“We are taking this opportunity to implement truly major changes in 2020 so that Jollibee will start 2021 in a much stronger position in terms of business model, operating efficiency, profitability and organization strength. We will then resume strong and consistent profitable growth for the years ahead.”