BREAKINGVIEWS-Asia’s McDonald's bites off more than it can chew

By Katrina Hamlin

HONG KONG, Jan 28 (Reuters Breakingviews) - Asia’s fast-food giant has indigestion. Jollibee’s JFC.PS shares have barely budged after a decade-long global acquisition spree overseen by its long-time CEO Ernesto Tanmantiong. Now the $3.8 billion Philippine group wants to list its unprofitable international brands on a U.S. bourse as an independent company. Spinning it off will, if nothing else, refocus attention on the more promising domestic business.

The Manila-listed company, known for its eponymous brand’s crispy fried chicken, has made more than a dozen foreign acquisitions over the past ten years, per Dealogic. The international arm, a strange mix that includes Jollibee restaurants, Hong Kong's Michelin-starred Tim Ho Wan, American fast-food outlet Smashburger, coffee shops and more, accounted for around two-fifths of its nearly $4 billion revenue in January to September. The segment squeezed out a 0.7% net margin in its last quarterly earnings but hasn’t turned an annual net profit since 2021, as losses at Smashburger and slower growth in China drag.

Though New York exchanges host a crowd of restaurant operators, including McDonald's MCD.N, Chipotle Mexican Grill CMG.N and Domino's Pizza DPZ.O, Jollibee's new listing could end up as an orphan, barely noticed stock. The unit is smaller than those operations and its brands aren't U.S. household names. Sales grew a rapid 11% last year, per Visible Alpha estimates, about twice as fast as McDonald's. But its EBITDA margin, which reached roughly 12% in the first nine months, is just half the 2025 average for a basket of peers across the U.S., Europe and China. Analysts at Jefferies hailed the IPO plan as premature, given the current earnings imply "no value", even though losses are narrowing and the mooted listing is slated for late 2027.

In hindsight, Jollibee bit off more than it could chew with its push overseas. Separating the global unit will at least redirect attention to its robust domestic business, where net margins have averaged around 7% since the pandemic. By 2022, it held 50% market share in the Philippines, and it is still growing. Its Manila-traded stock has risen 16% since the company outlined the spinoff plans earlier this month. For Jollibee, there's still no place like home.

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CONTEXT NEWS

Jollibee Foods, the Philippine fast food group, plans to spin off its international operations and list the new unit as an independent company on a U.S. bourse, it said in a filing with the Philippine Stock Exchange on January 6. The domestic operations will remain listed on the local bourse.

The restaurant operator said it intends to execute the transaction in late 2027, subject to market conditions, due diligence and regulatory approvals. The company's Manila-traded stock has risen 16% as of market close on January 16, compared with the close on January 5.