Jollibee Foods Corporation to Acquire the Most Loved South Korean Value Coffee Brand, Compose Coffee

Jollibee Foods Corporation (JFC), one of the largest Asian food service companies today signed definitive agreements such that its wholly owned subsidiary, Jollibee Worldwide Pte. Ltd. (JWPL) shall acquire majority shareholding of effectively 70% in “Compose Coffee Co., Ltd.” and “JMCF Co. Ltd.” collectively called “Compose Coffee”. The remaining shareholdings shall be held by Titan Dining II LP (Titan Fund II) and Elevation Equity Partners Korea Limited (Elevation) with effective shareholdings of 5% and 25%, respectively. 

Elevation is a private equity firm focusing on mid-market buyouts and growth capital opportunities in the consumer space in Korea and the rest of Asia. Its founding members have over 30 years' experience investing in Asia and Korea, mainly within the consumer sector. Elevation's most recent exit, involving one of Korea's largest F&B franchise companies, was Korea's largest and most successful F&B franchise exit to date.

Titan Fund II is focused on strategic investments in food and beverage concepts with the objective to further grow in Asia Pacific food service brands and /or bring strong global food service brands to Asia Pacific. JFC through JWPL has a 90% participating interest in Titan Fund II.

Compose Coffee ranks 1st in the industry for having the highest growth rate in the number of franchised stores and in terms of brand satisfaction among Korean coffee brands. Its 2,470, 100% franchised stores are fully supported by Compose Coffee’s largest in-house coffee roasting plant in Korea, enabling the provision and distribution of high-quality, specialty beans at low cost. Compose Coffee is on track to be the largest, fastest growing and leading value coffee player in South Korea, with V of BTS as its current brand ambassador.

The total consideration for the acquisition is approximately USD340 million (~KRW470 billion) at ~8x EV/EBITDA multiple on a debt-free basis and cash accretive position (~KRW 70 billion Cash). JFC closed this deal at a more favorable transaction multiple compared to average EV/EBITDA multiple in the coffee industry. Completion of this transaction is subject to closing and financing conditions, final purchase price to be confirmed thereafter.

Further, Compose Coffee has a debt-free balance sheet, superior cash returns and excellent profitability margins, evidenced by its high double-digit Earnings before Interests, Taxes and Depreciation and Amortization (EBITDA) and EBIT margins due to its capital-light, 100% franchised business model. Compose Coffee will be consolidated into JFC’s financial statements immediately upon completion of the acquisition, with an estimated uplift of +2% in Revenues bringing the international business’ contribution to 41% of Global Revenues, +12% in EBIT in 2024 and +34% in store count (2,600+ stores). Compose Coffee will be JFC’s biggest brand in terms of number of stores. It will bring JFC’s store network closer to 10,000 stores, more than 66% of which will be outside the Philippines. Compose Coffee will also further strengthen JFC’s Balance Sheet since it has no existing loans nor non-trade obligations.

This acquisition is aligned with JFC’s commitment to Coffee and Tea Segment and franchising initiatives. This strategic, rapid growth, financially lucrative investment serves as JFC’s gateway in unlocking the fast-growing international value coffee market in South Korea which ranks 3rd globally in terms of coffee consumption per capita.

JFC Chairman Tony Tan Caktiong commented, “The business that Compose Coffee has built in the past 10 years is impressive and we are excited to play a major role in its next phase of growth. We believe that Compose Coffee is a compelling strategic fit for JFC and is on track to becoming the largest, fastest growing and leading value coffee player in South Korea.” He added, “Together with Elevation and Titan Fund II, we look forward to working with the Compose Coffee’s accomplished management team to further accelerate the company’s growth in existing and new markets and capture the significant whitespace in South Korea’s value coffee market.”

Elevation’s Managing Partner Gordon Cho commented, “We are delighted to enter this partnership with JFC. We believe that JFC’s resources and expertise in F&B brand development combined with Elevation’s entrepreneurial mindset and local market expertise in value coffee will provide synergies in securing a sustainable future for Compose Coffee that will enable it to grow for many years to come.”

Compose Coffee and its roasting facility JMCF Co. Ltd. were founded in Busan in 2014. It is one of South Korea’s leading coffee franchise in the fast-growing value coffee segment with 2,600+ stores in the country as of June 2024. Compose Coffee’s menu boasts a huge variety of coffee and non-coffee options led by its flagship product, the KWR1,500 Americano. The brand was named South Korea’s favorite coffee shop at the 2023 Korea’s Most Loved Brand Awards, an event organized by Forbes Korea and sponsored by South Korea’s Ministry of Science and ICT and Ministry of Trade, Industry, and Energy. On its 10th year anniversary, Compose Coffee announced V (Kim Taehyung) of BTS as their new brand ambassador.