Why Is Billionaire Tony TanCaktiong's Jollibee Selling Off Its PHO24 Business in the Philippines and Abroad?

On Wednesday (May 10), Jollibee Foods Corp. announced that it is selling off its PHO24 business to focus on its other franchised food brands. The country’s biggest food company, and one of the largest in Asia, said that its Superfoods Group unit will transfer the assets of its PHO24 business to East-West Restaurant Concepts (EWRC), which is a wholly owned subsidiary of Viet Thai International Joint Stock Company (VTI). 

Superfoods Group owns Highlands Coffee and PHO24, while VTI is the partner of JFC’s wholly owned subsidiary, JSF Investments Pte. Ltd. (JSF), in the SuperFoods Group.

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The company did not disclose exactly how much it was selling the PHO24 unit to EWRC, although it said that less than one percent of the total assets of the company as April 30, 2023 is involved in the transaction.

Why is Jollibee selling PHO24?

According to JFC, PHO24’s sale is meant to free up the JFC Group’s resources to concentrate on building and growing its relatively newer businesses, including Tim Ho Wan, Yoshinoya, and Milksha.

It could be a sign also that the concept did not click with consumers as well as the company had hoped. 

JFC first took control of PHO24 when it acquired 50 percent of Superfoods Group for $25 million in 2012. Back then, PHO24, which features the Vietnamese noodle staple pho as its main product, operated 48 branches in Vietnam, 11 in Indonesia, and a few stores in Hong Kong, Japan, Cambodia, and the Philippines.

The company initially planned an aggressive expansion plan for PHO24, announcing in January 2021 that it was planning to open as many as 100 stores in the Philippines alone.

Today, however, there are only 14 PHO24 stores as well as a pho factory in Vietnam, down from 36 branches in 2021.

Instead, JFC is rolling out a plan to expand its other newly acquired food brands. Through a joint venture agreement with the Tim Ho Wan group, the company said it plans to open 100 branches of Tim Ho Wan within the next few years, particularly in mainland China, which it says remains one of the JFC Group’s four pillar markets. There are currently 16 stores in Shanghai and two in Beijing.

JFC also has a 50/50 joint venture with Yoshinoya International, named Yoshinoya Jollibee Foods, which operates the popular Yoshinoya chain of restaurants from Japan. The plan is to open 50 more yoshinoya stores in the Philippines over the next few years. The brand currently has seven stores in the country.

And in February 2022, the JFC Group, through its wholly owned subsidiary, Jollibee Worldwide Pte. Ltd. (JWPL) completed the acquisition of a 51 percent stake in Milkshop International Co. Ltd. (Milkshop), which owns Milksha, a popular Taiwanese bubble tea brand with 283 outlets: 260 in its home country, 11 in Hong Kong, three in Australia, one in Canada, seven in Singapore, and one in the United Kingdom. The JFC Group, together with Milkshop’s founder, said it plans to grow the Milksha brand globally.

As of the end of Jauary 2023, JFC, which has grand ambitions of becoming one of the top five food brands globally, operated a total of 6,481 stores worldwide broken down as follows: 3,280 in the Philippines and 3,201 in international. It has 520 stores in China, 383 in North America, 305 in EMEAA, 639 with SuperFoods mainly in Vietnam, 1,071 for CBTL and 283 for Milksha.

Its largest brands by store outlets worldwide are Jollibee with 1,585, CBTL 1,071, Chowking 613, Highlands Coffee 609, and Mang Inasal 573.