LOCAL fast-food giant Jollibee Foods Corp. on Friday said it entered an agreement with another company that will operate a chain of Dunkin’ Donuts brand in China.
The company said in its disclosure to the Philippine Stock Exchange that its unit Jollibee Worldwide Pte. Ltd. entered a deal with Hong Kong’s Jasmine Asset Holding Ltd. to form an entity to operate a doughnut chain that it hopes to build more than a thousand branches in 20 years.
Jollibee will own 60 percent of the entity and the rest by Jasmine Asset.
The company said that both entities has committed to invest up to $300 million, some $180 million of which will be spent by Jollibee in proportion to its ownership.
The two firms has already signed an agreement with Dunkin’ Donuts Franchising Llc. to execute a master franchise agreement. The deal gives Jollibee and its partner the exclusive right to develop the product in Chinese territories such as Hong Kong, Macau, Fujian, Hunan, Jianxi, Guangdong, Hainan, Tianjin, Hebei, Shangxi, Chongqing, Guizhou, Sichuan, Yunnan, Heilongjiang and Jilin.
“The JV will open and operate a minimum of 1,459 shops in China over 20 years, based on an agreed development schedule,” it said in a statement.
As of the third quarter this year, Dunkin’ Donuts, a US brand, has 11,123 stores worldwide of which 7,941 were franchised.
In the Philippines, Golden Donuts Inc. of the Prieto family owns the master franchise of Dunkin’ Donuts.
Jasmine Asset, Jollibee’s partner, is a subsidiary of RRJ Capital Master Fund II Lp., established by RRJ Capital, an investment firm that has offices in Hong Kong and Singapore.
RRJ Capital has two funds with a total size of $5.9 billion invested in companies in China, North America and Europe.
This is not the first time the fast-food giant entered the doughnut market. Jollibee had a doughnut brand in the Philippines under Donut Magic Phils. Inc. but which did not take off in the country.
Jollibee’s net income rose in the third quarter to P1.2 billion, a 15-percent increase from last year as both its domestic and international operations continue to grow.
The company said 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 the year to P3.71 billion, some 18 percent higher than last year’s P3.14 billion.
System-wide sales, a measure of all sales to customers from both company-owned and franchised stores, grew by 12 percent for the third quarter. The Philippine business, which still comprised the bulk of sales, grew by 13 percent for the period and the foreign business in Southeast Asia and the Middle East grew 22.3 percent, China at 8.4 percent and the US at 5 percent.
For next year, the company is allocating a capital expenditure of P9.1 billion, higher than the estimated spending of P6.3 billion this year. The company earlier said it has a capex budget of P9.3 billion for 2014.
Of the said amount of capex for 2015, P6.3 billion is allocated to the Philippine market, P1.7 billion in China and the balance will be for the US, Southeast Asia and the Middle East markets.