Philippine fast food chain operator Jollibee Foods on Wednesday said it will inject over $60 million into its dim sum chain, Tim Ho Wan, to expand in mainland China, where strict COVID-19 lockdowns have battered the restaurant industry.
Jollibee, which aims to join the likes of McDonald’s and Yum Brands as one of the world’s largest quick-service restaurant companies, has seen its business rebound as economies reopen. But recovery in China has hit a snag due to President Xi Jinping’s zero-COVID strategy, which relies on lockdowns and wide-scale testing to fight outbreaks.
Yet Jollibee remains upbeat about its prospects in China, announcing fresh funding for Titan Dining, the fund that owns the Michelin-starred Tim Ho Wan chain.
Jollibee owns 90% of Titan Dining and will raise its committed capital in the fund to 315 million Singapore dollars ($217 million) from SG$225 million in November, the company said.
The fresh capital, Jollibee said, will mainly fund Tim Ho Wan’s store expansion and capital requirements.
Jollibee Foods aims to open 100 Tim Ho Wan branches in mainland China in the next four years. It currently has 11 stores there, mostly in Shanghai.
Jollibee Foods had over 6,300 branches worldwide under more than a dozen brands, as of August. The company regards China as one of its three key markets. The others are the U.S. — where it has taken over Los Angeles-based Coffee Bean & Tea Leaf and Denver-based Smashburger — and the Philippines, where the company started out as an ice cream shop before becoming an industry leader that outsells McDonald’s in the country.
Before investing in Tim Ho Wan in 2018, the company had built other businesses in China, such as Yonghe King, a Taiwanese food-inspired restaurant famous for its freshly prepared soy milk, and Hong Zhuang Yuan, which serves congee and other hot dishes. Yonghe King and Hong Zhuang Yuan have 410 and 54 branches, respectively.
But the pandemic has hit the restaurant industry hard and a recovery in China has been derailed by the government’s continued reliance on strict lockdowns.
In its latest quarterly report ended June, Jollibee reported record systemwide (franchised and company-owned stores) sales of 73.1 billion Philippine pesos ($1.24 billion), up 44.8% on the year. But while most of its business units expanded during the quarter, China sales fell 28% “due to COVID-related restrictions” that forced the company to temporarily shut some stores.
Even before the pandemic, China has not always been an easy market for Jollibee, which was founded by company Chairman Tony Tan Caktiong, who was born to emigrant parents from Fujian province.
In 2017, the company closed over a dozen hot pot outlets after selling its stake in a beef noodle chain as part of a restructuring the previous year. In 2015, the company announced plans to open more than 1,400 Dunkin’ Donuts shops in China over 20 years under a franchise deal, but it had only opened seven outlets as of June.