Jollibee Foods Corp. is wary of investing more in China given that its economy is slowing down.
Richard Chong Woo Shin, Jollibee Foods CFO, said China is going through a challenging time across all industry sectors.
“I think we all understand that there’s some geopolitical tensions driving some of that. There’s some issues around property markets. There’s some confidence issues around the stock market. And of course, consumer confidence level is also slightly down as well,” Shin said.
Same-store sales of Yum China Holdings Inc., the operator of KFC restaurants in China, declined by 3 percent. Jollibee same-store sales dipped 6 percent.
With the market soft and being very careful with capital allocation and investments, the business is careful with how it wants to expand, Shin said.
But according to him, Jollibee is building an additional 100 new stores in China this year to add to an existing network of 560 stores.
“And the reason why we need to expand is because in places like tier 3 or 4 locations, we do not have all of our brands represented. We’re expanding through a franchise model,” Shin said.
He stressed Jollibee Foods is in China for the long haul but recognizes that the short-term is going to be bumpy “and has been bumpy in the first quarter and will probably continue to be bumpy,” he acknowledged.
Shin said no one knows how long this situation will last and that its food brands in China are not exempt from consumers making choices.
Around 85 percent of its China brands is Yonghe King, the balance is Tim Ho Wan which has 19 stores. It also has a regional brand called Hong Zhuang Yuan in Beijing with 65 stores.
He said the company believes Yonghe King can compete with the big players given it is in the value segment so critical right now in China.
