JOLLIBEE REDUCES CAPEX DUE TO PANDEMIC | Marvin Germo
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JOLLIBEE REDUCES CAPEX DUE TO PANDEMIC

By: Marvin Germo | April 10, 2020

Jollibee Adjusts CAPEX

Many big companies are indeed affected by the COVID-19 crisis, including Jollibee Food Corporation (JFC). And to be able to control the impact of the pandemic, JFC decided to cut its capital expenditure (CAPEX) allocation in 2020. The new amount is set at P5 billion. According to this global fast-food company, the previous allocation was at P14 billion. It has reduced its CAPEX by 64%. All other operating costs are minimized across its stores, support services, commissaries, and main offices across the globe. JFC sees this move as necessary. What do you think of it as an investor?

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Postponing Capital Expenditure

The disruption in the operations of the business because of the COVID-19 pandemic drove JFC to postpone P9 billion of its capital expenditures from 2020 to 2021. The operational constraints were considered, especially to uncertain demand volume brought by limited mobility consumers and construction of facilities. This year, JFC is only going to spend some of its budget. The rest of the amount is moved to 2021, which is somehow a move to recover from the damages early this year. Operations are limited locally and internationally.

JFC Stores In The World

As of the end of February, JFC has reached 5,981 stores across the globe. There are a total of 3,317 branches in the Philippine and the other 2,664 are in other countries. Some of its notable foreign footprint include China, Brunei, Vietnam, Hong Kong, Macau, Singapore, Indonesia, Malaysia, Canada, the United States, the UAE, Saudi Arabia, Kuwait, Qatar, Oman, Bahrain, the United Kingdom, Italy, and Guam. The imposed quarantine and lockdowns across these countries have greatly affected the operations of the company. Since there are no signals on when the pandemic will end, JFC is internally strategizing to brace more impact.

Closed Stores and Stopped Operations

In China, which was the previous epicentre of the coronavirus, JFC had 107 stores closed while the remaining of the 342 remained operational during the peak of the pandemic. The company merely relied on the delivery service to sustain its business and grow its sales. In fact, 76% of sales of its Yonghe King brand located in China became possible. JFC was able to open more of its Tonghe King stores as the pandemic in the country subsides. In the Philippines, there is a 5% increase in its delivery service. However, a number of stores are temporarily closed because of the imposed Luzon lockdown.

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