Jollibee-The Biggest Challenge For McDonald’s In The Philippines

When we think of major restaurant retailers, names such as Subway and McDonald’s come to mind. However, there is one chain that did not allow Macdonald’s to dominate a country, Jollibee. With over 1,200 outlets worldwide and over 13,000 employees, Jollibee is one of the biggest fast-food chains in the Philippines. Unlike other major retailers that started out as a restaurant, Jollibee started out as an ice cream shop.

“If you take care of your people, they will take care of you. I also hope that our story becomes more than simply an inspiration that will inspire more entrepreneurs who can create new and world-class companies and likewise make a difference.” -Tony Tan Caktiong

Tony Tan Caktiong was born in Davao del Sur, Philippines. The family had migrated from Fujian, China to the Philippines. His father owned a restaurant in Davao and young Tony help his father’s from a young age. With the success, the family could finally afford to send Tony to the University Of Santo Tomas, where he graduated with a degree in chemical engineering, but as fate has it, Tony had other plans.

One day Tony and his friends went to an ice cream plant in Manila, little did Tony know, this trip would change his life forever. Tony fell in love with ice cream. He returned from his trip and discussed his findings with his parents. He expressed an interest in buying a franchise from Magnolia Dairy Ice Cream. The family collected 350,000 pesos from their savings and in 1975 they bought 2 outlets of the franchise. The shop welcomed customers by offering ice cream.

As time went by, Tony started to see a decline in sales. It turned out that the customers were not only looking for a dessert but also, a meal. Looking out for his customers, Tony decided to include fries and hamburgers. But coming up with a recipe for a burger proved to be a lot harder for Tony.

“My mother would say I was the most difficult to bring up because I was the choosiest in terms of taste, whereas my brothers would just eat anything”

Before bringing his own burgers to life, Tony and his wife went on a tasting tour in Manila, sampling as many burgers as they could. But when the burger and the fries did come to life at the restaurant they proved to be very popular and in two years the restaurant that started out with only ice cream had turned into a food restaurant. Tony decided to rebrand and change the restaurant’s name.

The rebranding was done carefully, as they wanted to portray a feeling that would welcome families, something that would make kids drag their parents inside the restaurant. Something that would mix in the food culture of the Philippines. Many Filipinos prefer sweet, but not just candy-sweet, they prefer sweetness in their meals. And keeping that in mind Tony and the team came up with the mascot, a bee dressed in a blazer shirt, and chef’s hat.

The bee showed the sweetness and the dress gave the feeling of getting served at a restaurant. The name they decided to go with was “Jollibee”. And so in 1978, the Billion-dollar franchise business was born. The bee represented more than just the sweetness, it also represents a hardworking Filipino, as the bee works hard for its food. This left a mark on Filipinos around the world, as we will later find out.

From the very beginning, Tony had plans to go big, as for his plans he needed investments. Walking into a bank and showing them a business model with a crude, strange-looking bee did not go well with the banks.

However Jollibee and his cheeky smile today have become a pride for every Filipino, the burger and the fries place was a hit, so much so that in 1981 Jollibee acquired Greenwich Pizza Corp, entering the pizza and pasta food market. With the success of Jollibee, the JFC was born, acquiring Jollibee’s competitors. Also in 1981, first-ever McDonald’s opened its doors for customers in the Philippines. Many of Tony’s friends advised him to sell out as McDonald's has been dominating every market they step in. However, Tony did not back out and took McDonald’s heads on.

Little did McDonald’s knew, Jollibee had the upper hand in the Philippines. As Macdonald’s maintains a standard throughout the world, possibly one of the reasons why they are successful, they do not have the sweetness in their taste. So Jollibee just added more items on their menu that were sweeter. Macdonald’s couldn’t keep up and abandoned their plans of expansion in the Philippines. However, the historic first-ever Macdonald still stands in Morayta, Manila.

JFC’s success did come with many challenges and push back. At the time Jollibee was only in the food business, and then one day a clothing lineup and shoes started to pop out with Jollibee’s name printed on them. The team at Jollibee was confused and shocked, as it turned out, the already trusted brand was used by others to make a quick sale. JFC reacted to trademark infringements and enforced the use of the trademarks only at their store. Tony believes that if they would not have made the move at the time, their brand image would have been diluted, and the customer’s trust in the brand would have been lost, destroying their image.

By the end of the 1970s, Tony grew JFC spectacularly: today, Jollibee is the leading fast-food chain in the Philippines with over 50% market share and hundreds of restaurants all over the country. The company is present in Brunei, China, Hong Kong, Indonesia, Saudi Arabia, United Arab Emirates, United States and Vietnam. As of November 2015, Forbes estimated Tony’s net worth at $4.1 billion.

Jollibee’s plans for 2020 were to double the number of restaurants to 4,000 outlets worldwide. However, 2020 has been one of the worst years for the restaurant industry. As the world was under pandemic dine-in was out of the question. Reports say that Jollibee lost $2 billion and will close 255 stores.

A statement from Jollibee CEO:

“The business results were very bad but in line with our forecasts. We are now focusing on rebuilding our business moving forward along with implementing major cost improvement under our business transformation program”

What these changes would be remains yet to be seen. Jollibee expects to be back up and running by 2021 with a projected growth rate of 15% in 2022. These projections were calculated based on the assumption that lockdown restrictions will not be imposed again.

Customer satisfaction has always been the key to Jollibee’s success. Jollibee is so well-loved by Filipinos, every time a new store opens, especially overseas, they always form long line ups to pay tribute to the “hard-working” symbol. It is more than just a restaurant for them, it is a stronghold of heritage, a Filipino pride.