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Jollibee to build 'cloud kitchens' to offset coronavirus pain

Philippine fast-food giant announces global restructure plan

Jollibee, which operates over a dozen brands, had 3,317 stores in the Philippines and 2,664 abroad as of February, with total sales of around 244 billion pesos. (Photo by Ken Kobayashi)

MANILA -- Philippine fast-food giant Jollibee Foods said Friday it will spend 7 billion pesos ($138 million) to build discreet "cloud kitchens" and a stronger delivery service as part of a global restructuring plan.

Struggling to offset the impact of the coronavirus pandemic, Jollibee said the "cloud kitchens" or unmarked delivery outlets, would not include dine-in facilities and would be located in discreet, low rent sites.

"These changes will be made with the assumption that consumers around the world will not quickly revert to pre-COVID 19 behaviour once lock downs and other forms of restrictions are lifted in different countries," the company said.

Jollibee also announced that it will also close weak-performing outlets and invest more in digital infrastructure.

Jollibee told the Philippine Stock Exchange that it will carry out sweeping changes globally, with special focus on core markets in the Philippines, China and the U.S.

"2020 is an extremely challenging year for [Jollibee] as for most other businesses, but out of this transformation, we aim to emerge in 2021 as an even stronger business and organization," said company Chairman Tony Tan Caktiong, who built the empire from an ice cream parlor in Manila in the 1970s.

The company, which operates over a dozen brands, had 3,317 stores in the Philippines and 2,664 abroad as of February and total sales of 243.79 billion pesos as of 2019.

Lockdown measures have forced Jollibee to temporarily shut stores or prohibit dine-in patrons in the Philippines and U.S., hurting sales even as the company reported a spike in its delivery business.

Jollibee, without elaborating, said it will undertake a "rationalization" of non-performing stores, its store network and supply chain facilities. Jollibee said it will continue to open new stores in prime locations.

The company will also improve its online order and payment systems as well as its delivery service.

Jollibee has slashed its capex this to 5 billion pesos from 14 billion pesos due to the pandemic, which has worsened the prospects for the recovery of its recent U.S. acquisitions Coffee Bean and Tea Leaf and Smashburger.

Jollibee's shares fell 2.56% on Friday, while Manila's benchmark index dropped 1.2%. The company's shares have plunged 38.4% this year.

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