LOCAL fast-food giant Jollibee Foods Corp. said it will go slow in the establishment of its Dunkin’ Donuts franchise in China, as it plans to compete head-on with other global brands, such as Starbucks and Costa Coffee.
Jollibee Chairman Tony Tan-Caktiong said the company is not looking for another acquisition for China, the world’s most populous nation, as the Dunkin’ Donuts franchise will keep them busy for a while.
“Dunkin’ Donuts can play in the coffee category. They can also play in the doughnut category. So they can play at two categories. The coffee category is growing fast in China,” Tan said.
“The nice thing about Dunkin’ is that their coffee is cheaper than Starbucks. Like in northeast US, they are stronger than Starbucks because of the price,” he said.
He said the Dunkin’ Donuts brand will compete head-on with global-coffee brands already operating in China, such as Costa Coffee and Pacific Coffee.
Tan said Jollibee will establish some 1,400 Dunkin’ Donut stores in China spread over 20 years, but the bulk of the stores will be in the latter part of their contract period.
“That number [1,400 branches] is more of conservatism, because that is our contract. That should be the minimum [number of stores],” Tan added.
Ysmael Baysa, the company CFO, said the company will establish about three to five Dunkin’ Donut stores in China annually during its first three years of operation.
“Because the first few years, especially the first three years, you are still adjusting the products, [business] models and pricing. You’re developing the concept. So, the first three years is more development rather than expansion. So it [the expansion] is dependent on how fast we can develop the brand,” Baysa said.
Jollibee’s unit last year has entered into a joint-venture (JV) agreement with Jasmine Asset Holding Ltd. to form a company that will own the master franchise holder of Dunkin’ Donuts in China.
Golden Cup, the JV entity, is 60-percent owned by Jollibee and the rest by Jasmine Asset. The move was the company’s aggressive move into China and other countries, as its earlier efforts to expand the Jollibee brand had limited success and catered mostly to the Filipino overseas market rather than the general public.
According to the agreement, the Manila-based firm famous for its Jollibee fast-food stores, will develop the American doughnut brand in territories, such as Hong Kong, Macau, Fujian, Hunan, Jianxi, Guangdong, Hainan, Guanxi, Beijing, Tianjin, Hebei, Shangxi, Chongqing, Guizhou, Sichuan, Yunnan, Heilongjiang and Jilin. The company said that Golden Cup has committed to invest up to $300 million, some $180 million of which will be spent by Jollibee as a proportion of its ownership, while the rest will come from Jasmine Asset.