FASTFOOD giant Jollibee Foods Corporation has not been spared from the economic fallout from the coronavirus disease 2019 (COVID-19) pandemic as it reported losses in the first quarter of 2020.
In a report to the Philippine Stock Exchange, Jollibee said a “high number of stores in the Philippines and markets abroad” temporarily shut down due to the pandemic, resulting in a 2.3% decline in revenues to P39.4 billion.
System-wide retail sales, or sales from both company-owned and franchised stores, increased by a mere 1.6% to P55.1 billion.
The amount also included the consolidation of The Coffee Bean & Tea Leaf. Excluding this, system-wide sales declined by 10%.
The company said system-wide sales grew by 9.9% without CBTL and by 24.9% with CBTL in January, before the COVID-19 outbreak was declared a pandemic.
Sales growth with CBTL slowed down to 15.7% in February and plunged to negative 32.5% in March, when lockdowns were imposed in China, Philippines, United States and other countries.
As of end-March, Jollibee said 69% or 7 out of 10 stores were temporarily closed in the Philippines.
The proportion of closed stores in other countries due to the pandemic were as follows: China, 6%; North America, 16%; CBTL, 32%; and Europe, Middle East and Africa (EMEAA), 23%.
“JFC’s financial performance in 2020 will not be a good one. It will incur even higher losses in the 2nd quarter when the full impact of the lockdowns on the business will be felt,” said Jollibee chief financial officer Ismael V. Baysa.
“We expect the business to start recovering in the 3rd and 4th quarters but we assume that the recovery will be slow. Our strong balance sheet will enable us to withstand this storm, even in worse case scenarios,” he added.
Baysa said the company would have to rationalize and re-design its business structure, and adapt to the new economic conditions and consumer behavior.
“We are setting up a provision of P7 billion for this purpose in the 2nd quarter of 2020,” Baysa said.
Jollibee said the P7 billion will be used to implement significant changes to its global business structure, which will involve rationalization of its existing stores, store network, supply chain facilities and management and support group structure.
It will also include building drivers of revenue growth for the future, such as food delivery-to-home and offices, take-out and drive-through as well as new stores in selective locations.
Other changes will involve the implementation of social distancing and safety protocols in stores, investment in digital commerce and technology, installation of mobile applications for food ordering and payment, establishment of cloud kitchen or unmarked delivery outlets with no dine-in facility to be located in low-rent sites.
“The changes will be global in scope including Smashburger and CBTL where we will pursue aggressive store and overhead rationalization in North America. We will continue to invest in new stores in very selective locations particularly in North America and parts of Asia where JFC’s return on invested capital on new stores are now the highest,” Baysa said.
Operating loss for the first quarter of 2020 amounted to P1.3 billion as against an operating income of P2.1 billion a year ago.
The company attributed the loss to the temporary closures of most stores, lower sales, and additional costs incurred such as the emergency response fund for employees and workers as well as assistance to front liners and low-income households. (Ventures Cebu)