South Korea’s food service company CJ Foodville Co. returned to profit after seven years of making losses thanks to its aggressive push for new businesses such as food delivery and restaurant meal replacement (RMR) products.

CJ Foodville was estimated to have recorded around 6 billion won ($5.2 million) in operating profit in the second quarter ended June, according to sources from the investment banking (IB) and retail industry on Sunday. The sound second-quarter earnings offset the losses in the first quarter, helping the company swing back to the black for the first half of the year.

The stunning turnaround in seven years was driven by bold business restructuring and active push for new businesses and overseas operations. The company has closed down loss-making offline outlets including those of coffee franchise Twosome Place and shifted its focus to food delivery and restaurant meal replacement (RMR) products. The number of its franchise restaurants has declined by 30 percent to around 60 as of the end of June.

The company has been launching RMR products based on more than 10,000 popular recipes it has developed over the past 20 years for its franchise restaurant brands.

As the delivery business is booming amid the Covid-19 pandemic, it launched VIPS Yam Delivery in August 2020, a delivery-only store brand. As of July, 47 stores provide the delivery service including offline VIPS restaurants and delivery-only stores.

The new businesses including RMR and delivery were estimated to have increased to 15 percent as of the end of June, according to market sources. CJ Foodville expects the proportion to grow to 30 percent at the end of the year.

Its bakery chain Tous Les Jours has also expanded delivery service with nearly 90 percent of the stores offering delivery services. Its sales from delivery shot up by 270 percent during the first six months of this year compared with the same period a year ago.

Its overseas business also performs well. Tous Les Jours USA, its American subsidiary, is almost sure to post a profit for four consecutive years this year, and Indonesian business is also expected to record a black figure. Its Vietnamese operation is struggling due to the resurgence of virus cases, but it is expected to turn around next year.

Thanks to the sound overseas business, the company has set a goal to run 2,000 overseas stores with 1,000 in Asia and 1,000 in North America, according to sources. It aims to increase the number of stores in America from the current 68 to 80.

By Kim Hyo-hye, Jin Young-hwa and Choi Mira

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