MANILA: Jollibee Foods Corp, Philippines’ largest food service network operator, is buying US brand Coffee Bean & Tea Leaf (CBTL) for $100 million as part of an expansion outside its home market.
Jollibee, which has a market value of nearly $5.5 billion, is buying loss-making CBTL from private equity firm Advent International and other investors including the Sassoon family, a large shareholder in CBTL.
Los Angeles-based CBTL has 1,189 outlets spread across the United States, Southeast Asia and the Middle East, and is rapidly growing in Asia. Nearly three-fourths of its outlets are franchised.
Jollibee will invest $100 million for an 80 percent share in a Singapore holding company that will acquire CBTL. The remaining 20 percent stake will be owned by Jollibee’s partner in its Vietnam coffee and restaurant business.
As part of the transaction, Jollibee will fork out another $250 million, a portion of which was allotted to pay CBTL’s debt. The amount will be paid back by the holding company.
“The acquisition of Coffee Bean & Tea Leaf will be Jollibee’s largest and most multinational so far with business presence in 27 countries,” Jollibee Chairman Tony Tan Caktiong said in a statement on Wednesday.
The deal allows Jollibee to be a key player in the large, fast-growing and profitable coffee business, said Tan Caktiong, adding that the priority is to accelerate Coffee Bean’s growth in Asia. The acquisition will add 14 percent to Jollibee’s global system-wide sales and 26 percent to its total store network, he said.
“They really want to diversify their income stream. At the same time it is a business they know,” said Robert Ramos, senior vice president and trust officer of Eastwest Bank in Manila.
Jollibee believes higher income in the Philippines will support spending on higher-end products like specialty coffee, said Ramos, who helps manage 30 billion pesos ($585.94 million), including an index fund that holds Jollibee shares.
Known for its sweet-style spaghetti, burgers and fried chicken, Jollibee is dominant in the Philippines, outselling McDonald’s and Yum Brands’ KFC. It operates the largest fast-food chain in the Southeast Asian nation with 3,195 restaurants.
Jollibee also has 1,418 stores across various brands overseas. It is expanding overseas, including in China and the United States, by investing in restaurant chains catering to local tastes.
CBTL posted $312.95 million in revenues and $21 million in net losses last year. It had debt of $83.56 million as of end-2018.
Philippines’ Jollibee buying Coffee Bean & Tea Leaf in overseas expansion
Philippines’ Jollibee buying Coffee Bean & Tea Leaf in overseas expansion
- CBTL has 1,189 outlets spread across the United States, Southeast Asia and the Middle East, and is rapidly growing in Asia
- The deal allows Jollibee to be a key player in the large, fast-growing and profitable coffee business
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
