Restaurant Industry in Crisis, CJ Foodville Halts All Investments to Survive
Comprehensive Cost Control to Strengthen Cash Flow... Full Effort to Improve Liquidity
Sale of Fixed Assets Including Real Estate, Closure of Low-Profit Stores, and Suspension of New Openings
[Asia Economy Reporter Lee Seon-ae] CJ Foodville, the dining subsidiary of CJ Group, is implementing a high-intensity 'self-help plan' to overcome the crisis caused by the spread of the novel coronavirus infection (COVID-19).
On the 31st, Jung Sung-pil, CEO of CJ Foodville, announced the 'self-help plan for survival' and stated, "In response to the global economic crisis and worsening business environment caused by the COVID-19 outbreak, we will devote the company's full capabilities to securing liquidity through measures such as selling fixed assets including real estate, freezing new investments, maximizing expenditure restraint, executives returning their salaries, and suspending new store openings."
Accordingly, CJ Foodville will completely halt and minimize all investments until it judges that business normalization has been achieved. All investments except those unavoidable due to safety, hygiene, and related regulations are prohibited. The expansion of the new bakery B.I (Brand Identity) will also be restrained. In particular, when investing in franchise store renewals, investment subsidies that previously exceeded legal standards to strengthen mutual growth will inevitably be adjusted to meet legal standards. The dining business is effectively in a temporary closure state as this year's sales are only about 30% compared to the same period last year due to COVID-19.
To strengthen cash flow, comprehensive cost control measures such as strengthening receivables and payables management and suppressing internal and external cash expenditures will be implemented. For the dining business, stores with low profitability will continue to be withdrawn, and new store openings will be suspended to improve cash liquidity. For businesses suffering from a 'double burden' due to high rent costs and a sharp decline in airport users, such as stores located in Incheon International Airport, CJ Foodville plans to strongly urge landlords to prepare realistic support measures.
Along with this, to take the lead in overcoming the crisis, the CEO, executives, and organizational leaders have decided to voluntarily return part of their monthly salaries until the first half of the year. Employees will voluntarily take at least one week of unpaid leave by June.
A CJ Foodville official said, "Due to the shock caused by COVID-19, all business sectors of the company are facing red lights, making the implementation of a self-help plan for survival inevitable," adding, "Consumers avoiding dining out due to infection concerns is causing the domestic dining industry itself to collapse."
The official continued, "Since the dining industry is heavily influenced psychologically, it is expected that damage recovery will be difficult in the short term even after the end of COVID-19," emphasizing, "Today's survival promises the future, so I want all employees to understand and participate in this self-help plan."
Finally, CJ Foodville stated, "As a large corporation operating in the low-profit domestic dining market, we have taken pride not only in pursuing simple profits but also in contributing to society through large-scale job creation and spreading K-food worldwide," adding, "We deeply regret the current situation where we are pushed to the brink of survival due to COVID-19, but we hope to overcome it through this self-help plan."
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