Jollibee Foods Expands into South Korean Coffee Market with Compose Coffee Acquisition

Jollibee Foods Corp., the Philippines' largest restaurant chain, is set to purchase a 70% stake in South Korea's Compose Coffee for $340 million. This acquisition will enable Jollibee to tap into South Korea's third-largest coffee consumption market, aiming to expand its coffee and tea business. With Compose Coffee's 1,500 stores, Jollibee's store network will reach nearly 10,000, with over 66% located outside the Philippines. This purchase is expected to contribute 2% to Jollibee's revenue and 34% to its store count.

Jollibee Foods Corp., the Philippines' leading food service company, has recently announced its plans to acquire a 70% stake in South Korea's Compose Coffee for approximately $340 million. This acquisition marks a significant step forward in Jollibee's quest to expand its coffee and tea business and tap into the lucrative South Korean coffee market, which ranks third globally in terms of per capita consumption [1].

The acquisition will enable Jollibee to add Compose Coffee's 1,500 stores to its network, bringing the total number of stores to nearly 10,000, with over 66% located outside the Philippines [1][3]. This strategic move will boost Jollibee's global presence and contribute significantly to its revenue, estimated to be around 2%, and pre-tax earnings, which are expected to increase by 12% this year [1]. Moreover, the acquisition is expected to expand Jollibee's store count by 34% [1].

Compose Coffee, founded in Busan in 2014, is currently South Korea's third-largest coffee chain with over 2,600 branches [3]. Its branches operate under a franchised business model, providing Jollibee with a debt-free balance sheet, healthy cash returns, and profit margins [3]. In 2023, Compose Coffee reported an operating profit of 36.7 billion won ($26.4 million), up 47% from the previous year, with sales growing 21% to 88.9 billion won [3].

The acquisition is aligned with Jollibee's commitment to the coffee and tea segment and its franchising initiatives [3]. With Compose Coffee's strong brand presence and operational expertise, Jollibee aims to become a leading player in South Korea's growing coffee market. Moreover, the acquisition will provide Jollibee with an opportunity to leverage Compose Coffee's technological capabilities and local market knowledge to enhance its product offerings and improve its customer experience.

Jollibee's previous acquisitions in the coffee and tea segment, such as The Coffee Bean and Tea Leaf and Vietnam's Highlands Coffee, have laid the foundation for the company's global expansion in this sector. With the acquisition of Compose Coffee, Jollibee is poised to further expand its international business and increase its contribution to global revenues.

References:
[1] Bloomberg. (2024, July 2). Philippine Fried Chicken Giant Jollibee Buys South Korea's Compose Coffee. https://www.bloomberg.com/news/articles/2024-07-02/philippine-fried-chicken-giant-jollibee-buys-south-korea-s-compose-coffee
[2] Yahoo Finance. (n.d.). Jollibee Foods Corp. (JFC). https://finance.yahoo.com/quote/JFC/news?p=JFC
[3] KED Global. (2024, July 3). PE consortium exits from Coffee Bean in six years. https://www.kedglobal.com/food-beverage/newsView/ked202407030013