Philippine Seven Corporation, the local licensee of the 7-Eleven chain of convenience stores, is allotting P600 million for capital expenditures to open 150 new outlets this year up to 2008.

Philseven president Jose Victor Paterno said the firm intends to open a total of 70 stores this year of which half will be company-owned while the other half will be co-owned with franchisees.

For 2008, the firm is planning to open 80 stores of which half will also be company-owned while the other half will be franchised outlets.

Paterno said each store costs about P4.5 million to put up while they invest about P2.5 million for franchised outlets since the franchisee spends P2 million for the building and the franchise fee.

He said both the company owned stores and franchised outlets will be put up in Metro Manila and key cities in Luzon as the firm has yet to set up a supply chain to expand its operations to Visayas and Mindanao.

"It's so difficult to open stores outside Luzon since we will have to figure out how to ship supplies to the islands," Paterno said pointing out that deliveries have to be made everyday specially for the perishables.

Paterno said capital expenditures will be financed from internally generated funds. "Given our cash flow, we have no need to raise more equity for now," he said.

He noted though that if there is a sudden demand for more stores in the market, Philseven may consider raising funds to finance a rapid expansion by taking advantage of the buoyant stock market.

Philseven chairman Vicente Paterno said the company will continue to invite franchisees, citing their tremendous contribution to the growth of the 7Eleven chain in the Philippines.

"It's not far-fetched to look forward to a time when the great majority of the company’s stores are operated by third parties," he said noting that "this is the actual situation with other 7-Eleven licensees around the world.