Cumulative Operating Profit in Q3 Last Year Up 34% YoY
Sales Also Increased 7.1% to 653.8 Billion KRW in Same Period
Turned Profitable in 2021 After Years of Losses... Sustained Growth
Overseas Bakery and Domestic Dining Drive Performance Together
Franchise bakery brands 'Tous Les Jours' and 'VIPS', operated by CJ Foodville, are expected to record the highest performance in the company's history by achieving profitability across all business sectors last year. This success is attributed to the bakery sector overseas and the dining sector domestically both driving strong results.
According to CJ on the 9th, CJ Foodville's cumulative operating profit on a consolidated basis until September last year was 38.2 billion KRW, a 33.5% increase from 28.6 billion KRW in the same period the previous year. Sales during this period also rose 7.1% to 653.8 billion KRW.
Previously, CJ Foodville recorded its highest-ever annual performance with consolidated sales of 844.7 billion KRW and operating profit of 45.3 billion KRW in 2023. Last year’s growth was even steeper, making another record-breaking performance highly likely.
CJ Foodville had long been called the "ugly duckling" within the group. It recorded losses every year since 2015, causing profitability to decline. Due to accumulated losses, it even faced capital erosion in 2017. However, CJ Foodville sold its cafe brand Twosome Place in 2020 and undertook a major business restructuring including overseas subsidiary efficiency improvements and localization strategies. As a result, it successfully returned to profitability in 2021 and has maintained growth through last year.
CJ Foodville’s business is broadly divided into bakery and dining sectors. The bakery sector, which accounts for about 70% of total sales, led strong performance by turning a profit in all major overseas markets including the U.S., Indonesia, and Vietnam last year. In particular, the U.S. became the first overseas subsidiary of CJ Foodville to turn a profit in 2018 and is known to be on track to set new records for seven consecutive years. Sales are also expected to exceed 100 billion KRW for the second consecutive year following the previous year.
Tous Les Jours currently operates 150 stores across 27 U.S. states, covering more than half of the country including California, New York, and Massachusetts. Initially, franchisees in the U.S. were limited to Korean Americans, but the company explains that recognition of K-bakery has recently increased, accelerating franchise expansion. CJ Foodville aims to secure 1,000 stores in the U.S. by 2030. This year, it plans to complete a factory in Georgia with an annual production capacity exceeding 100 million units.
Southeast Asian operations in Indonesia and Vietnam are also expected to maintain profitability for three consecutive years following a return to profit in 2022. With double-digit operating profit margins projected so far, CJ Foodville plans to accelerate store openings mainly in major cities of these countries this year. It also intends to diversify its revenue structure by expanding B2B and O2O businesses.
The dining sector is also expected to improve profitability, with VIPS showing particularly notable growth. VIPS achieved an average annual sales growth per store of 35% through premiumization by 2023. CJ Foodville has responded to this growth by opening new stores after the COVID-19 endemic, increasing the number of stores from just 25 in 2022 to 32 last year. It is reported that sales per store at newly opened locations last year were about 35% higher than existing stores.
A CJ Foodville official said, "VIPS offers not only luxurious interiors but also optimal seating arrangements such as private rooms, couple seats, and window seats tailored to gatherings of family, friends, and couples, providing a high-quality dining experience." The official added, "Recently, due to rising prices, many customers are seeking to experience upscale dining culture at relatively reasonable prices." CJ Foodville, powered by the strong performance of dining businesses including VIPS last year, expanded its dining outlets such as The Place, Jeil Jemyunso, and N Seoul Tower to a total of 59 stores. This year, it plans to further expand evolved models for each dining brand.
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