War-Linked Rise in Costs Eat Into Philippine Fast-Food Giant Jollibee's Profit

By Amanda Lee and Fabiana Negrin Ochoa

Shares of Jollibee Foods Corp., the biggest fast-food chain in the Philippines, suffered their worst day in over six years after rising costs stemming from the Middle East conflict took a bite out of the company's profit.

Jollibee, famous for its fried chicken, burgers and spaghetti, said that it is reviewing its expectations for 2026--including for store openings, spending and profitability--to account for geopolitically driven input cost volatility.

The company's stock sank 11% in Manila on Tuesday, its biggest one-day percentage decline since March 2020, after it reported a 39% drop in first-quarter net profit.

Revenue rose 9% from a year earlier for the quarter. System-wide sales, the group's measure for all sales from company-owned and franchised stores, increased 10%.

The fast-food giant said it continued to generate healthy sales amid broader macro headwinds from inflation, currency volatility and rising geopolitical uncertainty amid the war in Iran.

While profitability was affected by cost pressures during the quarter, underlying demand across the business remained healthy, said Richard Shin, chief financial and risk officer.

"We view these headwinds as manageable, supported by disciplined cost controls, ongoing productivity initiatives, and targeted margin recovery actions across our brands and markets," Shin said.

Jollibee operates in markets in Asia, Europe and the U.S., and has a portfolio of brands, including fast-casual chain Smashburger and Hong Kong dim-sum restaurant chain Tim Ho Wan.

The company attributed the deterioration in profitability for the quarter to elevated direct costs, which rose 12% primarily due to inflationary pressures affecting certain commodities and supply-chain inputs due to recent geopolitical developments.

Jollibee's home market of the Philippines has experienced a surge in inflation in the wake of the conflict in the Middle East, which is driving up prices of energy and other key commodities as well as raw materials that it imports.

The company said it has been taking measures to cushion against the headwinds, citing mitigating actions across sourcing, productivity, pricing and cost management.

"The Jollibee Group remains confident in its long-term growth strategy and continues to see resilient underlying demand across key markets," it said.

Write to Amanda Lee at amanda.lee@wsj.com and Fabiana Negrin Ochoa at fabiana.negrinochoa@wsj.com

(END) Dow Jones Newswires

May 12, 2026 06:35 ET (10:35 GMT)