Jollibee Foods Corporation (JFC) took another global restaurant under its wing, this time to run dimsum chain Tim Ho Wan's stores in China.
In a disclosure, JFC said it has signed a $13-million joint venture deal through its subsidiary Golden Plate Pte. Ltd. to open and operate Tim Ho Wan stores in Shanghai and the rest of the Mainland.
"The Tim Ho Wan deal provides JFC with an excellent opportunity to operate and expand one of the known Michelin-starred dim sum restaurant chain brands," the listed food conglomerate told the local bourse.
Under the arrangement, the JFC unit will own 60 percent of the joint venture for a $7.8-million investment. Its partner, Dim Sum Pte. Ltd., will own 40 percent.
The company said the deal would not have an "immediate material impact" in the next three to five years, as JFC will focus on developing.
JFC booked lower profits in the third quarter, bogged down by losses incurred by two of its brands despite sustained sales growth.
The Jollibee Group posted a ₱1.87 billion net income for July to September, down by 7.9 percent from a year ago. The decline was due to losses of the pastry chain Red Ribbon and Smashburger in the United States which have been acquired by JFC, it said in a disclosure on Thursday.
"Production in the new Red Ribbon commissary had reached normal volume level in September 2019, but productivity level has yet to reach the desired level," JFC said, noting the target is eyed by the first three months of 2020.
Tim Ho Wan is headquartered in Hong Kong. This will add to JFC's brands for Chinese cuisine: Chowking, Yonghe King, and Hong Zhuang Yuan. The last two are brands in China.
The July-September bottom line included the one-time gain of ₱1.3 billion from the purchase of the global The Coffee Bean and Tea Leaf brand, a deal closed on September 24.
The Tony Tan Caktiong-led firm is looking to make the languishing coffee chain profitable by transferring its operations to a new company in Ireland.
JFC Chief Financial Officer Ysmael Baysa said CBTL would now be driven by franchising for rapid growth, and should be able to add to the group's profits starting 2020.
Systemwide sales also grew by 7.7 percent to ₱57.36 billion.
For the first nine months, net income stood a fourth lower compared to a year ago at ₱4.53 billion despite an 11.7 percent surge in retail sales. The growth is led by local businesses, while foreign sales stood flat due to foreign exchange diffentials and Smashburger's slump.
JFC currently operates 3,238 stores in the Philippines and 1,451 overseas.
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This article first appeared on CNN Philippines.
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