JBFCF - Jollibee Foods Corporation (JBFCF) Q3 2023 Earnings Call Transcript

2023-11-16 15:25:25 ET

Jollibee Foods Corporation (JBFCF)

Q3 2023 Earnings Conference Call

November 15, 2023, 2:20 AM ET

Company Participants

Richard Shin - Chief Financial Officer

Ernesto Tanmantiong - President and Chief Executive Officer

Conference Call Participants

Presentation

Richard Shin

Good afternoon, everyone. Thank you all for joining this Third Quarter and Nine-Month Year-To-Date Update. And of course, a very good morning to all of you joining us from other parts of the world, from Europe and overseas, from the US as well.

So, without any further ado, we shall start now the update. Next slide, please. Just again, you've seen this before, but if you can bear with me just for 20 seconds while I read through this disclosure statement. This earnings call may be -- include forward-looking statements that are based on certain assumptions of management and are subject to risks and opportunities for unforeseen events. Actual results could differ materially from those contemplated in the relevant forward-looking statement and JFC Group gives no assurance that such forward-looking statements will prove to be correct or that such intentions will not change.

All subsequent written and oral forward-looking statements attributed to the company or persons acting on behalf of the company are expressly qualified in their entirety by the above cautionary statements.

So, thank you for that. We shall now start with slide number one. It was a significantly positive quarter. And therefore, our nine months year-to-date September continues to be growing in a very robust and sustainable way.

To begin with, we delivered the strongest quarter in the history of Jollibee's 45-year history at PHP 87 billion in system wide sales across all of our businesses, both international and domestic. And this also represents three consecutive quarters of posting an all-time best operating income. And this again attest to the fact that we have a very strong and stable business fundamentals.

In terms of network expansion, we grew circa 6% right across the business, driven strongly by our Coffee and Tea segment, which I'll speak to a little bit later on. We remain at 57% franchised globally with an overindex of 67% in Philippines and the Rest of the World being around 47%. And again, I will speak to more details of that shortly.

We also remain confident in our sustainable growth, meaning business as usual underlying business as you may recall last year 2022, we had some significant gains that we posted in our P&L due to our strategy to become asset-light on land, and we have gains on land disposals. And I'll speak to the numbers in Q3 as well as nine months. But extracting all that, this year was, in essence, without those gains. So, you will see that it is organically strong contribution from the business.

Next slide, please. So, let's start with system wide sales. Again, the PHP 87 billion was a record high or represented just under 12% quarter 2022 to quarter 3 2023 like-for-like growth. We're proud to say that growth really came from volume or as we call here, TC, transaction count, which was up almost 5%. And of course, our AC or average check benefited from the price increases that we've taken last year, which carried forward into quarter 3 of this year. Just as a comparison, quarter 3, we've taken very minimal price increase and so most of this gain is really due to our mix and menu management. So, in total, we had a same-store sales growth of 8.8% for the quarter. And of course, for the full year, it was slightly higher and that's at 12.7%, presenting a very strong first quarter compared to last year first quarter, where the Philippines market was still locked down from COVID.

And that, of course, translate into a net operating income of PHP 4.3 billion for the quarter and nearly PHP 12 billion for the nine months that has passed. And that represents, again, just from pure business, near 43% growth versus the same quarter last year 40 -- near 48% growth versus last year nine months. And you can see on the bottom right here, our network continues to expand. We now sit at 6,720 stores across near 34 countries with 429 new stores opened this year. Just as a note, the 28 divested stores happened early this year, and those were related to 424, which was represented in earlier earnings call.

We can move to the next slide. Let's start now looking through the P&L. Again, system wide sales, the number as explained, that translated in our revenues of PHP 61.5 billion, which represented 11% growth versus last year. And of course, year-to-date, higher index at 18% growth. We're also very proud that our middle of the P&L or gross profit remained very robust, delivering PHP 11.3 billion, which represented 18.8% growth versus last year, despite ongoing inflationary challenges that we face, both domestically and also internationally in markets like the US.

Operating income of PHP 4.3 billion, again represents that 42.8% as disclosed in the prior slide. Our EBITDA growth of 5.1%, of course, as we all know, this land gain impact, and it was PHP 2.4 billion in the third quarter. And year-to-date, that land gain impact that we enjoyed last year was PHP 5.3 billion. So, adjusted for that, again, just from an adjusted point of view, our EBITDA is also growing at 48% and 38%, respectively.

Next slide, please. No, continue that. Just want to highlight a couple of important factors here. Our international business, albeit, is still relatively small in terms of profit contribution to entire JFC portfolio. But nonetheless, happy to report that our operating margin of 3.3% is now the highest reported margin percentage in the last five years. And of course, our Philippine business continues to grow. It is still an engine for us. And once again, it's showing a very strong OI margin as well, 9.4%.

Further down the P&L, as we get to our net income, you'll see here PHP 2.5 million -- sorry -- PHP 2.5 billion for the quarter and PHP 7.2 billion for nine months. Our NIAT, so reducing tax and tax provisions, we are now sitting at PHP 6.8 billion for the nine months. And you can see our earnings per share increase as well. The columns here noted adjusted just takes out the land gain, so that we can see what the organic business growth rate looks like. It's rather quite phenomenal, given that we had a very strong Q2, Q3 and Q4 last year as well.

Next slide, please. Moving on now, a little bit deep dive on the top line. System wide sales, you can see, the trend going all the way back to pre-COVID. So, we show years 2018, 2019, of course, the COVID year impacts of 2021. And then last year, we started to report that we're coming out of it. I'm happy to report again that this quarter, Q3 of 2023 is yet a record high. All the bars marked in red are actually all-time highs. And the eight bars marked in black shows eight consecutive quarters of record highs versus the same quarter of previous years.

Moving on to the next slide. Just take a little bit deeper dive look on the quality of our top line deliverables. We have here system wide sales next to an RB or rolling base, which is the same as the same-store sales growth. And you can see starting with the Philippines in the quarter, 16.5% SWS growth versus the same quarter last year. Contribution on that -- significant contribution of that was actually our same-store sales growth, which is to say that our stores are actually, both with dine-in and also with off-premise, is to say that we are enjoying a continuous robust gain.

Looking down at some of the other major markets. China, for example, you can see system wide sales at 2.6%. We had a ForEx unfavorable impact that negated quite a bit of our growth from new stores and our rolling base. So, apart from ForEx, you can see that actually, we would have had a much higher single digit growth in a very challenging macro market.

North America, you can see the 7.5% combined for Jollibee brands versus Smashburger. Again, very strong RB growth rates there. We're doing very well in our third biggest -- sorry -- third biggest priority market outside of the Philippines, meaning China and US ahead of that. And you can see Vietnam here with 15.1% system wide sales. Again, two-thirds of that contributed by rolling base.

CBTL, although we had a system wide sales growth of 3.6% in the quarter, we are facing a little bit of a challenge in some of our markets. And I'll explain a little bit later, but it's really -- the opportunity for Coffee Bean & Tea Leaf within our company-owned stores in the US still remains ahead of us. Once we cross that, we can see International parts of the business for CBTL still enjoying solid growth.

SuperFoods, of course, is Highland Coffee, and that's primarily in Vietnam. And 85% of our stores in Vietnam, at the moment, are company-owned with very good payback. But what's happened there is strong macros really starting from Q2 continue into Q3 and have seen a softness in our RB.

Having said that, compared to our competitors in the market, we're still ahead. We've taken this opportunity also to expand our footprint and hence gained circa 4% of share market since last reporting. So, we'll continue with that strategy to scale and grow, while the macros plays itself out. And we think by Q1 or Q2 of next year, we should have better macros in Vietnam. Milksha, our most recent acquisition continues to be very strong for us.

Moving on. Store network. It's just a summary as I've mentioned several pieces of this. 61% of our total footprint growth comes from our coffee and tea segments, so the three brands here, Coffee Bean & Tea Leaf, SuperFoods and Milksha, where the rest of the business, we continue to cautiously as we have slightly different paybacks for restaurants versus coffee shops. We're cautiously evaluating where we put our capital and of course, attacking in places like Vietnam, where it makes sense for us to attack, while there's an opportunity for us to gain greater footprint. So, this is what we're seeing.

If we move on then to the next slide. So, we'll get into the earnings KPIs. So, what you see on this slide is quarter-to-date and year-to-date operating income and of course, our net income after tax. You can see international's growth both in the quarter and also year-to-date in operating income and NIAT. The slight decrease here that you see in the third quarter as well as the full year for Philippines is really, again, due to the gain that we enjoyed last year on the sale of land. Extracting that, of course, we're growing in the Philippines at a very healthy pace.

Next slide. This is EBITDA by region and business categories. Again, Philippines and the softness in the movement from last year, that's a reflection of that PHP 2.4 billion that I mentioned in the quarter and the PHP 5.3 billion that I mentioned for year-to-date. Adjusted for that, of course, we have a much stronger EBITDA growth in the Philippine, as explained.

China, you can see the impact of a one-time adjustment that we took in last year third quarter, and that was related to our exiting of Dunkin' Donut. We have a franchise in China. And we decided that was not strategic for us, so we exited. And barring from that, on a normalized basis, China continues to -- within the macro headwinds and difficulties, continues to show signs of improvement.

Smashburger at PHP 49 million compared to the first quarter and a much stronger number that we reported. Again, really, there was a lot of provisions and adjustments. So, on run rate, it's around what we're seeing here to slightly higher, as we enter fourth quarter peak season.

The coffee and tea business here is a combination of several businesses, the three businesses that I mentioned with Coffee Bean & Tea Leaf, as I explained, and the Highland Coffee explained. Milksha is a very small part of that. So, we have seen a softening in the quarter, but we know where the challenges are and where the opportunities are. And the team is no doubt fully focused on reversing that.

The Rest of the World is all the other markets that's not mentioned here, meaning Europe, Vietnam plus North America, our Asian brands there. We also report in here our FVTPL, the gain and losses from our fixed income instruments. So, we're seeing that can we cycle out of that, as you can see by the strong growth numbers.

Next slide, please. Key KPIs. I want to leave the audience with here. Again, gross profit margin once again is food and packaging costs as well as labor, as well as rent and also all the costs behind supply chain and our commissaries. When you add all that up, you see our gross profit margin increasing by 120 basis points, again through cost efficiencies as we are not passing on 100% of inflation to consumers with some moderate price increase in there, but essentially, mostly coming from efficiencies and holding our strategies around hedging of our key raw materials and making sure we're very lean in terms of our overheads.

Operating profit margin, so sees the benefit of that plus our overall overhead management. So, we've increased from 5.4% now to 7%. Our net income after tax margin also slightly increased, again our 2022 number here in gray represents those one-time gains.

Free cash flow were up again to 12.8%. So, I think, it's important to point out that right across the board, all of our key profitability and cash KPIs continue to improve.

Next slide, please. I've shown this slide at previous earnings call as well. But once again, our cash position remains strong, increased from end of last fiscal year. Our instrument in fixed income holdings, you can see that we continue to dropdown some of it, but most of it is available as needed.

Our bank loan position remains flattish. So, our net debt has significantly come down from PHP 16.2 billion to PHP 11.8 billion. And of course, our working capital, an area where we're very focused. So, our average collection continues to improve from 15 days to 12, creating better cash flow for us.

Inventory days has also come down as we've locked in supplies as needed. And so, therefore, don't need as much safety stock as we did last year when things were a little bit more uncertain. Days payable remains robust at 51. And again, it's a mix between making sure we get best pricing and offering good terms to our strategic vendors. Our current ratio has improved. Our debt to equity has improved and of course, our debt to EBITDA ratio also has improved.

Moving on to the next one. Slightly busy slide. But I just want to focus on a couple of key items. So, quarter 3, we're delivering a 12.8% free cash flow margin. If you were to compare that to our operating profit margin, you can see that it's quite a robust number here. Q3 of last year was at 10.9% and of course, rolling up now, we are running our business around 11% FCF margin rate.

You can see the CapEx line at the bottom year-to-date. Although, we have higher ceilings for available capital to be invested, we're being very cautious and investing wisely. So, you can see PHP 7.4 million after nine months. So, we'll be way below our guidance that we've given in the past.

Next slide. In terms of guidance, so we're still holding to our guidance of 15% to 20% SWS, rolling base of 7% to 10%. It is fair to note that year-to-date September, we're slightly ahead of these targets. We're just being a bit cautious with some of the geopolitical potential risk that we're seeing in markets like China. So, we plan to beat the guidance, of course, but again, just being a bit conservative in terms of the unknowns.

Year-to-date, network expansion, pretty much right on track as well, but CapEx will be way below that ceiling of PHP 17 billion to PHP 19 billion that we've reserved for investments. And we'll certainly not pull back from building stores, but we just want to be cautious on how we invest.

Year-to-date operating income growth of 48% is above our guidance of 20% to 25% so therefore, I think we can confidently say, barring any catastrophes in Q4, we believe that we will exceed the guidance of 20% to 25%.

Okay. I think that's it for the slides. We shall now open it up to Q&A.

Question-and-Answer Session

Q - Ernesto Tanmantiong

Hello, Richard. So, we've been getting questions from the audience primarily concerning about year-to-date guidance. So, from the audience, why didn't you upgrade the revenue and operating profit growth guidance for the full year? Given the strength trend year-to-date, will Q4 be weaker than usual?

Richard Shin

Thank you for the question. Let me break that into domestic Philippines, where we have a -- I guess, a more mature business and a clear read. We are not slowing down whatsoever. And the reason for that is because again, I think we've taken the right pricing strategies to ensure that we don't lose volume elasticity. We're also seeing dine-in coming back and at the same time, due to consumer convenience, we're seeing our digital channels also growing in terms of absolute pesos.

So, Philippines looks robust. In Q4 will deliver yet another strong quarter, and that's consistent with prior years where Q4 was traditionally one of our stronger quarters due to seasonality. It's the Rest of the World that I just want to make sure that we don't over celebrate before the end of December. So, we're just being cautious in some of our markets. So that's the reason why we haven't taken the guidance up. But I can perhaps use the language saying we have all intent on beating our guidance.

Ernesto Tanmantiong

All right. Thank you, Richard, for that. There's a question here about price increases. So they were saying if we compare the third quarter for this year versus last year, and what was included in this quarter in equity and net earnings of PHP 420 million? And is this expected to be recurring?

Richard Shin

Yes. So, let me address the price increase. We're looking at our basket of goods inflation rate compared to December of last year. So, we're just looking at the incrementals on every quarter. As of course, from that perspective, it's not as challenging as it was in Q2, Q3 and Q4 last year, where we had extreme inflation. Having said that, Philippines in particular continues to be in an inflationary environment. We've taken less than 1% price increase in Q3.

And if you look at our gross profit margin and how we've increased that, that is then again to say that we are -- we keep on pushing through our process of procurement, supply chain commissary efficiencies, better buying, and that's how we're getting the bottom line profit. So, it's not coming from pricing, per se. In fact, I would say pricing is a smaller contribution versus volume and efficiencies.

The Rest of the World, if I take US as an example, the inflation index is slightly different for our business. So, we've taken a slightly higher price increase in the US. But nonetheless, again, not up for inflation. So, we're not going backwards on our margins in any of our businesses, but we're also not profiting from price increase to the bottom line. So, it's robust and as I say, sustainable through volume.

Ernesto Tanmantiong

Right. And in relation to that question, can you share indications for the fourth quarter this year in performance, both in the Philippines and as well in other countries?

Richard Shin

Again, I think I have to just make sure that I caution this very carefully because on any forecast forward, I do want the investors to understand that there's always risk. Having said that, we do not see any reasons in the Philippines that our fourth quarter will slowdown versus our third quarter. And again, with seasonality, it should prove to be yet another very strong quarter, both from a quarter-on-quarter basis but also Q4 versus last year Q4. That's on the top line.

On the bottom line, again, as a reminder to all, last year fourth quarter, we had a catch-up on our A&P in the fourth quarter. That's to say that first quarter of last year, we underspent our A&P because of the lockdown in the Philippines and I demonstrated that through the quarterly percentages and the rest of it.

I also want to assure everyone who's dialed in today that we are not spending less A&P dollars year-to-date. On an absolute dollar basis, we have spent 15% more A&P in our first nine months than we did last year. So, as a percentage, we may see some ups and downs. But in aggregate, nine months, we've maintained that spend level quite well. So, apart from that, there were no big callouts last year. And this year, we think it will be normalized. Fourth quarter should be a robust and strong fourth quarter.

Ernesto Tanmantiong

All right. So, it says here from the questions from the audience, they're asking, are you seeing any spending stress from the inflationary environment? And are you still on track to your store opening target for 2023? Which brands might have growth in store network?

Richard Shin

I think it's probably in the best interest of all companies to be very cost conscious in particular, capital allocation, where CapEx has an impact not only for the period, but also for several years out. So, we're very analytical with our CapEx spending. We look at payback. We look at return on invested capital. We look at categories. We look at opportunities to franchise, where that opportunity presents itself.

So, having said that, we are managing our costs very tightly. But we're not holding back on investment. Again, to reiterate, A&P, we've spent 15% more than we did last year. So, we continue to spend behind the brands. We're spending behind digital. We're spending behind technology. Anything consumer facing, we are investing. And of course, the last part of the question around store network. International continues to get more of our investment dollars as we need to catch-up. I said this before, but on a unit basis of one product, international business will always have a higher margin dollar and also higher margin percentage. So, we need to make sure international contributes to the bottom line. So, we invest accordingly. The real opportunity, as our brand gets stronger and bigger, is the mix between our company-owned store expansion and of course, our franchise opportunities.

And so the four areas that we're prioritizing for our capital investment, I won't say by brands necessarily, but categories, so coffee and tea category, led by CBTL. We're also prioritizing the chicken category, of course, led by Jollibee, both in the Philippines and international. And we have Better Burger, Smashburger, there we're very cautious. We do not plan to open any more or a lot more of company-owned stores in the future, but rather really accelerate our franchising strategy there. And lastly, our Chinese category is led by Tim Ho Wan and it's still a smaller brand compared to the others. But we are investing behind that brand as well.

Ernesto Tanmantiong

Okay. Given that we're still in the topic of international expansion, what is Jollibee's long-term strategy for international business?

Richard Shin

I think we have to be careful, because there are many market opportunities. One could argue Southeast Asia possibly could rank right on top because the nature of our brand, the familiarity of the products that we sell, so just fried chicken. But at the same time, I think we've got to prioritize the largest TAMs, which is the US and China. So, we continue to have the same strategy of investment for China, scale long-term through franchising and expansion in the US through Jollibee brand, again with [indiscernible] franchise and CBTL growing. So, we continue to have the same focus.

Ernesto Tanmantiong

Okay. And another from the audience, how do you see the Jollibee growth model evolving going forward? Will it continue to generate strong operating gross profit in the foreseeable future? And how do you see margins trending?

Richard Shin

Yeah. For us at Jollibee, it's equally important. These two factors are equally important, sustainable growth as well as profitable growth. So that's why I talked a lot about margin rates and financial KPIs and the rest of it, including cash. So, we don't want to build businesses based on a lot of upfront investments and very little return. So, we're trying to balance between that. And again, one strategy to balance that is the franchise model where we can go very capital-light, but start to enjoy right away the royalties and other income flows. So, I think that's a better growth model than perhaps another mega M&A, et cetera. So, for that reason, we are very focused on organic growth for the next few years.

Ernesto, I think you're on mute.

Ernesto Tanmantiong

Thank you. Now, there's a question here about Highland. So, why is Jollibee doing well in Vietnam, while Highlands Coffee is doing -- I wouldn't say well here, how does the macro affect these two businesses separately?

Richard Shin

Yeah. Great question. Let me talk a little bit about Vietnam. I think everyone understands from a consumer opportunity point of view, Vietnam is very similar to Philippines in population, in average median age, et cetera, et cetera. Vietnam arguably in the midterm run will benefit more from the manufacturing base switching out of China. So, Vietnam is actually a very exciting market and we are very fortunate that Jollibee with 170 stores right now is a very close number two in the market. We're very confident that we will be number two soon. And of course, we aspire to be number one, a very profitable number two as well.

Having said that, it's in food and in services, certain basic needs, so we are seeing double-digit growth in Vietnam for those reasons, despite the macros. Whereas Highland Coffee, a slightly different strategy in that. One would argue that it's possibly 100,000 coffee shop market, if you count all the various local brands and different types of stores. We have about 700 stores. That is to say, even if we get to 10,000 stores, that's only 10% of that market. So, the upside of Highland Coffee is tremendous because the sector is very, very interesting. And it's not overseas players. It's really dominated by the locals, of which Highland Coffee happens to be a strong number one. Again, earlier, I mentioned we picked up 4% market share, which is quite significant in that market.

So, we'll continue to increase our footprint. But it's -- in some ways, it's a discretionary spend. Whereas people need to eat -- some people may cut back a little bit. So, what we're seeing is on a like-for-like basis with competition, we're not -- we're declining slower than they are due to the macros, but it's still a very profitable business and continues to have very strong box economics.

Ernesto Tanmantiong

All right. Cool. Now, people are curious about the optimal year-in target. So, would you like -- can you share more about this? Any plans on reducing current debt levels and concerns, issues with high interest rates?

Richard Shin

Sure. Thank you for that question. The way to look at it, by design or luck, we find ourselves to be very fortunate that we have fixed terms, meaning long tenures beyond this year. And our total obligation, so if I add in our preferred shares and if I add in our perps, which sometimes you can argue it's accounted for as equity, when you add all that as obligations, we're running around 86% fixed rate. And that fixed rate happens to be around 4% to 4.3%, which is significantly lower than our borrowing rate. So, for that reason, I think everyone would agree that unless there's a real compelling reason, there is no reason to paydown debt, because it's actually a very effective cost.

Our returns on our stores in our coffee business, we go up as high as 48% ROIC. In our food business, we can be running around 33% ROIC. So, therefore, we will continue to have the right level of leverage. So, when we look at the optimal levels of capital structure, et cetera, factoring in our cost of equity as well or total cost of WACC, we find ourselves actually to be in a very good place. So, although, we want to be conservative for unknown, we also want to make sure that we have enough leverage, because it's a good return on that leverage for the shareholders.

Ernesto Tanmantiong

Right. Right. Now, they're asking now more about EBITDA weakness. So, they're looking for more reasons. Is this something that you can share with us, please?

Richard Shin

Yeah. One of the trends we're seeing at least that's quite interesting. If I was to look at just third quarter this year and third quarter last year, in some of our businesses, for example, Smashburger, where we haven't really built out new stores, is we're starting to see the depreciation add back, which is part of EBITDA. We're starting to see that coming down. So, the add back from depreciation is unfavorable this year, because we have less stores to add back versus what we saw last year. So, I think that's one. And if you go a line above EBITDA and you look at EBIT, earnings before interest and tax, we start to see that places like China are trending nicely into the positive zone. So, I think we have to really look at the reason why each of the business EBITDA is trending the way it is. Philippines is very easy. You take out the PHP 5.3 billion land gain sales and you'll see that our EBITDA is growing at very strong double-digits.

Ernesto Tanmantiong

Right. Thanks for the clarification on the Q3 EBITDA. Seems like many investors are very interested in that one. Now, stepping back on the consumption. So, they were asking what do you think is driving consumption for the domestic businesses, considering that consumers are seeing weak sales volumes?

Richard Shin

Yeah. I think to take a step back and look at what business we're in, we're in the business to serve great tasting, affordable proteins and other elements of food for families. So, when you're seeing the dine-in coming back, you're actually seeing families coming back to really have meals. So, I think it's just some fundamental stuff that's working in our favor. We're also seeing a very robust overseas remittances continue to come in. And you can see during some holidays or seasonality, and we'll see it again in Christmas, et cetera is that this helps as well in the Philippine markets. The way I think we handled our pricing was also fair to the consumers. I think they appreciate that, and we'll continue to innovate. So by that, I mean if there is a segment that is requiring a lot more price-balanced meals, we are offering that through our mix and match program, which we started back in June, and we continue to do it. So, this is not a promotion. It's really to address the needs of what people need. So, for me, the basics of providing really tasty, affordable food, along with how we are managing the consumer needs, both channel and menu selection and innovation, seems to be the reason why we're still holding on to the number one position.

Ernesto Tanmantiong

Right. Now diving back into EBITDA, some audience are kind of curious about the Rest of World by region. They were asking if you could break down the PHP 1.8 billion EBITDA in Rest of World, again by region.

Richard Shin

So, let me describe what's in there first. So, it's North America, Asian brands or Jollibee brands, other than Smashburger. It's all of Rest of Asia. It's -- tip of my tongue, just lost it -- Europe and it's Middle East and Africa. And again, we booked our -- earlier, I mentioned to you our FVTPL. So, our fixed income instrument, the gain on mark-to-market translation or valuation, that gets booked in there as well. So, those are the components. And if I was to rank the biggest contribution to that big swing from negative last year to that PHP 1.8 billion this year, it would be the fact that our FVTPL losses last year have disappeared, and we're starting to see consistent gains. And it's our Europe business doing much better and Rest of Asia doing -- growing. So, those would be the three highlights.

Ernesto Tanmantiong

All right. Now there's another question here about breaking in into the Korean food market. Is this something that has in mind?

Richard Shin

Yes. I think Asia is a very interesting place to further explore. So, you can break that down into Southeast Asia, you can look at even Australia as part of Asia-Pacific. So, we're looking into all possibilities. Of course, the two that sticks out at the moment, which has a very proportionately high index of QSRs and coffee, is Korea. Japan, of course, we understand as well. They're very competitive markets. And we think we probably have other easier market entries. Korea is on the list, but I will not call that a priority for us at the moment, because of the competitiveness to crack the market.

End of Q&A

Ernesto Tanmantiong

All right. Thank you. And quite frankly, we're having a lot of questions right now. But in the interest of time, we encourage everyone to send their questions to ir@jollibee.com.ph. That ends our Q&A session for today's briefing. Thank you for joining us today.

Richard Shin

Thank you very much.

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Jollibee Foods Corporation (JBFCF) Q3 2023 Earnings Call Transcript