Jollibee terminates Dunkin’ Donuts franchise business in China

Filipino foodservice giant Jollibee Foods Corporation will end its operation of Dunkin’ in China after struggling to expand the business.

The joint venture agreement with the US coffee and donut chain began in January 2015 with Jollibee planning to open more than 1,400 outlets over 20 years across select Chinese regions, including Beijing. However, Jollibee has only opened seven stores in total to date.

Jollibee’s partner Jasmine Asset Holdings and the US-based Dunkin’ Donuts Franchising organization have terminated the partnership and the seven Beijing stores will now close, which could result in the US chain exiting the market altogether.

Richard Shin, Jollibee’s Chief Financial Officer, said it was the right decision to ‘reallocate’ the company’s resources. He added that Dunkin’ was not a core Jollibee business in China, stating that the market is more accustomed to tea than coffee.

The Chinese branded coffee shop market presents an attractive opportunity for international brands, but a sustained period of trading restrictions since the start of the pandemic and a nationwide zero-Covid policy have impeded sales growth for businesses.

In its third quarter reporting, US coffee chain Starbucks said its Chinese revenues fell 16%.

However, the Seattle-based company predicts a turnaround in fortunes in its second-largest market, targeting a 50% increase in Chinese outlets to reach 9,000 locations in the country by 2025.

Jollibee continues to scale its brands across China but will now focus on building its Taiwanese restaurant chain Yonghe King and porridge shop Hong Zhuang Yuan. The two brands currently have 418 and 55 stores respectively.

Despite ending its association with Dunkin’, Jollibee retains two coffee businesses. The company acquired US-based The Coffee Bean & Tea Leaf for $350m in 2019 and also operates Vietnamese coffee chain Highlands Coffee.

According to Jollibee’s second quarter results, shared in August 2022, The Coffee Bean & Tea Leaf achieved 16.5% revenue growth in the three months ended 30 June 2022 and operated 1,059 outlets.

Highlands Coffee, which Jollibee highlighted in 2021 as ‘the fastest growing business in the Jollibee Group’, currently operates 525 stores.

Jollibee also owns Taiwanese bubble tea brand Milksha, which has 269 outlets.