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Jollibee (Jollibee Foods Corporation [JFC]) is one of the…
Jollibee (Jollibee Foods Corporation [JFC]) is one of the Philippines’ phenomenal business success stories. Jollibee, which stands for ‘Jolly Bee’, began operations in 1975 as a two-branch ice-cream parlour. It later expanded its menu to include hot sandwiches and other meals. Encouraged by early success, JFC was incorporated in 1978, with a network that had grown to seven outlets. In 1981, when Jollibee had 11 stores, McDonald’s began to open stores in Manila. Many observers thought that Jollibee would have difficulty competing against McDonald’s. However, Jollibee saw this as an opportunity to learn from a very successful global competitor. Jollibee benchmarked its performance against that of McDonald’s and started to adopt operational systems similar to those used at McDonald’s to control its quality, costs and service at the store level. This helped the company to improve its performance.
As it came to better understand the McDonald’s business model, Jollibee began to look for a weakness in McDonald’s global strategy. Jollibee executives concluded that McDonald’s fare was too standardised for many locals, and that as a local company Jollibee could gain share by tailoring its menu to local tastes. Jollibee set its hamburgers apart using a secret mix of spices blended into the ground beef to make the burgers sweeter than those produced by McDonald’s, appealing more to Filipino tastes. It also offered local fare, including various rice dishes, pineapple burgers, and banana langka and peach mango pies for desserts. By pursuing this strategy, Jollibee maintained a leadership position over the global giant. By 2012, Jollibee had 750 stores and nearly 40 per cent share of the hamburger market in the Philippines; McDonald’s, in contrast, had a market share of around 15 per cent.
By the mid-1980s, Jollibee had also gained enough confidence to expand internationally. Its initial ventures were into neighbouring Asian countries such as Brunei, where it pursued a strategy of localising the menu to better match local tastes. Jollibee then entered the Middle East, where a large contingent of expatriate Filipino workers provided a ready-made market for the company. The strategy of focusing on expatriates worked so well that in the late 1990s Jollibee decided to enter another foreign market where there was a large Filipino populationthe United States. Between 1999 and 2012, Jollibee opened 26 stores in the United States, starting in California and expanding to six other states. Even though many believe that the US fast-food market is saturated, the stores have performed well. While the initial clientele was strongly biased towards the expatriate Filipino community, where Jollibee’s brand awareness is high, non-Filipinos increasingly started coming to the restaurant. In the San Francisco store, which has been open the longest, more than half the customers are now non-Filipino.
In 1998 Jollibee opened its first store in China, but after three years it was forced to close. This failure prompted the company to change strategy within the Chinese market. Instead of trying to build its own brand, it expanded in China by purchasing existing brands and improving the back end of the operations. The strategy proved successful, with nearly 290 Yonghe King fast-food outlets, over 50 Hong Zhuang Yuan congee outlets and the Chinese beef noodle chain San Pin Wang.
By 2016, Jollibee had 157 international stores in 15 different countries including the highly competitive Singapore market. Jollibee continues to expand internationally, opening a new store in Oman in 2017. Its president and CEO Tony Tan Caktiong announced that the company is also planning to open a store in Melbourne, which will be the first in Australia. Many believe that Jollibee has a bright future as a niche player in the international fast-food market, which has historically been dominated by US multinationals.
Discuss the advantages to Jollibee of not being a first mover in the fast-food restaurant market.
What mode of entry strategy did Jollibee adopt in China, and why? e.
Jollibee dominates the domestic fast-food market in the Philippines with over 750 stores. What advantages does it capture by going international? d.
What level of success do you think Jollibee would have achieved if there had not been a large expatriate Filipino community in its international destinations?
