Hong Kong—Fast-food giant Jollibee Foods Corp. is building up its war chest and targets to acquire a US-based fast-food company with a market capitalization of at least $1 billion as it endeavors to increase its revenue flows from its overseas stores.
Jollibee Chairman Tony Tan-Caktiong said a brand with a $1-billion market capitalization would be just about right as the company is shifting away from its traditional market of serving overseas Filipinos in the world’s largest economy.
“It should be a strong regional brand so that we can expand. We don’t want a brand that’s already big,” Tan-Caktiong said at the sidelines of the Asian Financial Forum, where he was a guest speaker.
He acknowledged that since the acquisition may be too big for Jollibee, which has a market capitalization of some P226 billion, the company may also look for a partner, either private equity or a fund.
Tan-Caktiong, who has ceded the day-to-day responsibilities in the company to assume the chairman’s position, said he also sits at the boards of Singapore’s Temasek Foundation and at RRJ Capital.
He said that at his lunch meeting with Ho Ching, Temasek Holdings (not the foundation) executive director and CEO, proposed the idea of one day tapping the Singapore investment firm if Jollibee has an acquisition in mind.
“She [Ching] said, ‘Of course we are interested.’ But we did not explore but only had a chat with her. Maybe we’ll do something like that,” Tan-Caktiong said.
The company’s US expansion is part of Jollibee’s plan to widen the revenue sources of its stores abroad and pair them with revenues coming from the Philippines, where it has more than 2,200 stores.
The franchise has less than 1,000 stores overseas.
“We’d like to target 50-50 revenue sharing between Philippine stores and [our] overseas stores. But we cannot do that yet because the Philippine [operation] keeps growing so the ratio was kept at 80-20,” Tan-Caktiong said.
At the moment, about 80 percent of its revenues still come from the Philippines and only 20 percent
from overseas.
“We have to make more acquisitions to jump-start that. The international revenues will be a combination of different markets. But it will be mainly China and the US,” he said.
The company, at the moment, has 399 stores in China, mostly composed of brands catering to the local market. In the US the franchise has 83 stores composed of 30 under the Jollibee brand, 31 under Red Ribbon, 19 under Chowking and three under Jinja.
Most of the stores cater to the overseas Filipino market, while the Jinja bar and restaurant, all in New Mexico, serves Asian cuisine and targets the general public.
Jollibee’s net income rose in the third quarter of 2014 to P1.2 billion, a 15-percent increase from previous year as both its domestic and international operations continued to expand.
The company said that its operating income grew 16 percent to P1.41 billion as revenues increased by 11 percent to P22.05 billion.
Its third-quarter figures brings its income for the three quarters of 2014 to P3.71 billion, some 18 percent higher than previous year’s P3.14 billion.