Philippines-listed fast-food giant Jollibee Foods Corporation (JFC) is spending 7 billion pesos ($138 million) for a sweeping global business restructuring, including the establishment of cloud kitchens, triggered by the coronavirus pandemic.
In a disclosure to the Philippine Stock Exchange, Jollibee said the planned changes will take place in the company’s businesses around the world, especially in its largest markets – the Philippines, China, and North America.
The company operates nearly 3,300 restaurant outlets in the Philippines and a global store network of 4,689 stores. It capitalises on consumers who prefer to dine-in, targeting families with kids.
But as social distancing and community quarantine measures are in place in the Philippines, its biggest market, most Jollibee stores are operating at minimal capacity, with some offering only take-out and delivery options to customers.
“It is again time to embark on another business and organisation transformation in response to changing consumer behaviour caused by the Covid-19 pandemic,” said JFC CEO Ernesto Tanmantiong.
Part of the restructuring plan would be to the establishment of “cloud kitchens,” which it describes as undermarked delivery outlets with no dine-in facility located in discreet, low-rent sites.
The focus would also be on increasing the company’s capacity for delivery to home and office, take-out, and drive-thru, installation of mobile applications to facilitate food ordering and payment, and the implementation of safety and social distancing measures in dining areas.
Weak-performing outlets will be shut down but JFC said it will continue to open new stores in prime locations. It expects to open a worldwide total of 171 company-owned new stores and renovate 96 existing stores this year.
“These changes will be made with the assumption that consumers around the world will not quickly revert to pre-COVID 19 behavior once lockdowns and other forms of restrictions are lifted in different countries,” JFC said in the disclosure.
In March, Jollibee announced that it is postponing about 9 billion pesos ($177 million) worth of capital expenditures from 2020 to 2021, given to what it described as operational constraints to the construction of facilities and to the uncertain volume of demand due to the limited mobility of consumers.
JFC Chief Financial Officer Ysmael V. Baysa said the company’s financial performance in 2020 started strongly but the Covid-19 pandemic caused the temporary closure of a high number of stores and dramatically reduced or eliminated dine-in sales at our restaurants, starting in China in February.
“Our sales and profit for Q1 2020 eventually were not good. In the next few months, even as lockdowns begin to be lifted, we forecast that sales will continue to be much lower than year-ago levels,” Baysa said, adding that the profit estimate for this year “will not be good at all” due to the overall economic environment.