Jollibee shuts China hot pot chain

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A logo of Jollibee company is pictured in Manila February 20, 2016. REUTERS/Erik De Castro/File Picture

MANILA – Jollibee Foods Corp. is closing its 12 Hotpot restaurant chain in China, as it shifts its focus on building larger brands in the country.

In a disclosure to the stock exchange on Thursday, the country’s largest quick service restaurant operator said it will discontinue operations of 16 stores under the 12 Hotpot brand.

The restaurants, located in Shanghai, are owned and operated by its 48%-owned subsidiary 12 Hotpot (Shanghai) Food and Beverage Management Co. Ltd.

The company noted the 12 Hotpot stores have not been consolidated into its financial statements and store count since it does not hold majority ownership.

Following the closure of the stores, JFC will dissolve and liquidate 12 Hotpot Shanghai, the operating company, as well as its joint venture vehicle, WJ Investments Ltd.

WJ Investments Ltd. was established in 2012, after JFC’s wholly owned units Jollibee Worldwide Pte. Ltd. and Golden Plate Pte. Ltd. entered into an agreement with Wowprime Corp. of Taiwan’s subsidiary Hoppitime Ltd., along with some of Wowprime’s key executives, for the main purpose of owning and operating the 12 Hotpot brand in the People’s
Republic of China, Hong Kong, and Macau.

The store closure is part of the Jollibee’s strategy of concentrating on growing its bigger brands in China.

“JFC will focus on building its larger and fast-growing businesses in China and other parts of the world,” the company said.

JFC reported its systemwide sales in China grew by 17.2% in the second quarter of 2017, showing the slowest growth among its international businesses. JFC’s Southeast Asian business, for instance, grew by 42% in the quarter, while North America followed at 32.5%.

Yonghe King remains JFC’s biggest business in China, ending the third quarter with 305 stores. JFC also operates Hong Zhuang Yuan with 44 stores and Dunkin’ Donuts with 18 stores. This brought the company’s total store network to 367 as of end-September.

On Dec. 30, 2016, JFC sold its 55% stake in China restaurant chain to its joint venture partner, Guanxi San Pin Wang Food and Management Company Limited.

San Ping Wang had a total of 72 stores when JFC sold its stake, as it looked to focus on the growth of Yonghe King, its largest business in China.

On Nov. 23, 2016, JFC bought out its joint venture partner in Happy Bee Foods Processing plant in Anhui Province, China. With the change in ownership, the company said Happy Bee will only produce and sell food products to JFC’s restaurant businesses.

JFC ended the first nine months of 2017 with 2,756 restaurant outlets in the Philippines, with 1,023 under the Jollibee brand, 510 under Chowking, 262 under Greenwich, 411 under Red Ribbon, 471 under Mang Inasal, and 79 under Burger King.

The company has a total of 888 stores overseas, excluding the 355 outlets under the Smashburger brand where JFC has a 40% interest.

This brings the Tony Tan Caktiong-led firm’s store count to 3,644 – 356 stores short of its 4,000-store target for 2017.

JFC’s net income attributable to the parent jumped an annual 14% to P3.489 billion in the first half of 2017, following a 13.5% growth in systemwide retail sales to P81.078 billion fueled by the company’s aggressive worldwide store expansion.

Shares in JFC climbed 0.96% or P2.40 to P251.40 apiece at the stock exchange on Thursday.