Digital Adoption And Rising Middle Class Will Boost QSR Expansion

Key Takeaways

• Accelerated international expansion and menu innovation are expected to drive significant revenue, margin, and market share gains beyond current forecasts.
  
• Strong domestic performance, digital transformation, and a diversified multi-brand strategy support sustained high-quality earnings growth and global leadership in key QSR segments.
  
• Shifting consumer preferences, global expansion risks, sustainability demands, rising labor costs, and currency volatility threaten Jollibee's profitability and future revenue growth.

Catalysts

Develops, operates, and franchises quick service restaurants.

• Analyst consensus expects Tim Ho Wan's repositioning and menu innovation to support revenue and margin growth, but early outperformance in Hong Kong and rapid transaction increases in China suggest Tim Ho Wan could become a major earnings driver across Asia faster than expected, materially boosting group profitability over the next two years.
  
• While analyst consensus sees North American expansion as an earnings tailwind, the pace of franchisee interest and strength of box economics indicate Jollibee could accelerate its US store openings and market share gains, leading to system-wide sales growth and EBITDA uplift far above current forecasts.
  
• Strong double-digit domestic same-store sales growth and resilient traffic in the Philippines-buoyed by rising middle class consumption-highlight the potential for sustained multi-year revenue increases and stable gross margins as Jollibee continues to dominate an expanding mass-market QSR segment.
  
• The group's digital transformation, particularly the rapid rollout and scaling of its loyalty program across all brands and regions, could unlock exponential growth in customer frequency and lifetime value, contributing to persistent same-store sales growth and structurally higher net margins over time.
  
• Jollibee's diversified multi-brand strategy and leadership position in both established and emerging QSR categories-including coffee, bakery, and Chinese casual-position it to capture global shifts towards convenient, affordable dining and internationally branded experiences, driving robust, defensive, and high-quality earnings growth across cycles.

Jollibee Foods Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Jollibee Foods compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Jollibee Foods's revenue will grow by 10.7% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 3.5% today to 4.8% in 3 years time.
• The bullish analysts expect earnings to reach ₱18.3 billion (and earnings per share of ₱16.47) by about August 2028, up from ₱9.7 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 30.7x on those 2028 earnings, up from 25.7x today. This future PE is greater than the current PE for the PH Hospitality industry at 11.3x.
• Analysts expect the number of shares outstanding to decline by 0.12% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 15.26%, as per the Simply Wall St company report.

Jollibee Foods Future Earnings Per Share Growth

Risks

• Rising global consumer preference for plant-based and health-conscious eating threatens Jollibee's core focus on fried chicken, burgers, and other traditional fast-food offerings, which may result in declining same-store sales and stagnating revenues over time.
  
• The company's aggressive international expansion, including acquisitions like Compose Coffee and rapid store openings in markets like China and North America, exposes Jollibee to integration risks and underperforming assets, which can lead to increased impairment charges and negatively affect earnings and return on invested capital.
  
• Heightened expectations from consumers and regulators regarding ESG practices and sustainability could force Jollibee to make substantial investments in supply chain transparency and packaging, leading to higher operational costs and pressure on net margins.
  
• Escalating labor costs and potential talent shortages, particularly in international markets like North America, are expected to inflate operating expenses and reduce overall profitability, impacting net income and margins.
  
• Increased reliance on international revenue streams exposes Jollibee to the risk of currency volatility and macroeconomic fluctuations, leading to unpredictable earnings and potential margin compression in long-term financial results.

Valuation

• The assumed bullish price target for Jollibee Foods is ₱330.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Jollibee Foods's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₱330.0, and the most bearish reporting a price target of just ₱192.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be ₱378.7 billion, earnings will come to ₱18.3 billion, and it would be trading on a PE ratio of 30.7x, assuming you use a discount rate of 15.3%.
  
• Given the current share price of ₱222.4, the bullish analyst price target of ₱330.0 is 32.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.