Jollibee to Acquire Majority Stake in Korea’s Compose Coffee

This is an English adaptation of a FoodBud historical article originally published on July 24, 2024.

In early July 2024, Jollibee Foods Corporation (JFC), controlled by billionaire Tony Tan Caktiong and his family, said it would acquire a 70% stake in South Korean coffee chain Compose Coffee for $238 million, as part of its global expansion strategy.

Hong Kong-based private equity firm Elevation Equity Partners Korea will acquire another 25%, while JFC’s investment arm Titan Dining II LP will hold 5%. The deal values Compose Coffee at $340 million, or about RMB 2.47 billion.

Why Compose Matters

Founded in Busan, South Korea, in 2014, Compose Coffee had 2,470 stores as of March 2024. Outside Korea, Singapore was its only international market, with one store.

After completion, Compose Coffee would become the largest brand in JFC’s portfolio by store count.

Compose Coffee is South Korea’s fourth-largest branded coffee chain, behind:

• Ediya Coffee: 3,800 stores
• Paris Baguette: 3,750 stores
• Mega Coffee: 3,000 stores

According to JFC disclosures, Compose Coffee generated KRW 137.5 billion in revenue in fiscal 2023, about RMB 700 million.

Tony Tan Caktiong, JFC’s founder and chairman, said in a statement that Compose Coffee was a strong strategic fit and had the potential to become Korea’s largest, fastest-growing, and concept-leading coffee brand. He said JFC was honored to play a role in its next stage of development.

JFC’s Coffee Portfolio Expands

Compose Coffee is JFC’s fourth coffee-chain acquisition, following:

• The Coffee Bean & Tea Leaf in the United States
• Highlands Coffee in Vietnam
• Common Man Coffee Roasters in Singapore

Common Man Coffee Roasters opened its first Manila branch this year through a joint venture.

John Gatmaytan, chairman of Manila-based Luna Securities, said Korea’s coffee market is close to saturated, but the move gives JFC a substantial market share position.

The acquisition gives JFC a foothold in what the article describes as the world’s third-largest coffee market. Tony Tan Caktiong said JFC would work with Compose Coffee’s management team to support continued growth in existing and emerging markets.

Scale and Sales Impact

With Compose Coffee added, JFC’s global store count would approach 10,000, with more than 66% located outside the Philippines.

In the Philippines, Jollibee has competed strongly against McDonald’s, building its business around fried chicken, sweet-sauce burgers, and spaghetti.

JFC said Compose Coffee would lift group sales by 2% this year and increase the share of its international business to 41%.

JFC traces its roots to 1975, when Tony Tan Caktiong and his family opened an ice cream shop in Quezon City, a suburb of Manila. After adding sandwiches and other menu items, the first Jollibee restaurant opened in 1978. In the Forbes Philippines rich list published in August 2023, Tony Tan Caktiong and his family ranked fifth with a net worth of $3.2 billion.

Note: acquisition valuation and forward sales-impact figures are historical as of the July 24, 2024 source article.