Jollibee’s Costly Expansion Strategy Weighs on Profits as Financing Burden Mounts

Jollibee Foods Corporation (JFC), the country’s largest quick-service restaurant operator, is feeling the sting of its aggressive global expansion as acquisitions that promised growth are now eroding profitability under the weight of soaring financing costs.

The company’s nine-month net income in 2025 inched up just 1.6% to ₱9.02 billion, despite a robust 14.3% revenue surge to ₱224.22 billion, according to its latest SEC filing. Behind the muted bottom line: a sharp rise in interest expense and losses from newly consolidated brands.

Interest expense ballooned 47.9% year-on-year to ₱5.04 billion, driven by the issuance of ₱16.99 billion in senior debt securities and heavier reliance on short-term borrowings after redeeming ₱20.26 billion in perpetual securities. The debt binge funded acquisitions like Tim Ho Wan, which added ₱2.18 billion in revenue but posted a ₱86.9 million net loss in the first nine months. JFC booked ₱9.96 billion in goodwill for the dim sum chain, raising future impairment risk if performance fails to turn around.

Legacy deals also continue to cast a shadow. Smashburger, acquired in 2018, remains under pressure amid store closures and declining U.S. sales, while Coffee Bean & Tea Leaf—once a drag—has only recently begun to recover. The group’s equity in net earnings of joint ventures plunged 79% to ₱214 million, removing a key buffer against acquisition-related losses.

Analysts warn that while JFC’s global footprint now spans 10,304 stores, the cost of chasing scale is biting hard. “Revenue growth looks healthy, but the financing structure amplifies the impact of any underperforming asset,” said one Manila-based fund manager. “Interest costs alone wiped out more than a billion pesos of potential profit.”

With gross margins slipping to 18.7% and advertising spend up 30%, JFC faces a delicate balancing act: deliver on its international ambitions without sacrificing shareholder returns. The company insists its coffee and premium dining bets will pay off long term, but for now, investors are watching whether these acquisitions can justify their hefty price tags—or trigger write-downs.

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