Philippines fast-food chain beats McDonald's at its own game

Philippines fast-food chain beats McDonald's at its own game

Karl Wilson
Agence France Presse/Manila

Jollibee may not be an international household name like the US
fast-food giant McDonald's, but in the Philippines the smiling
red bee with the Mickey Mouse eyes is king when it comes to local
taste buds.

Not only has Jollibee taken the shine off the Golden Arches by
snatching 65 percent of the fiercely competitive local fast-food
market, it is also the only country where a local outlet has
managed to keep McDonald's in second place.

According to Ysmael Baysa, vice president for corporate
finance and chief finance officer for Jollibee, "the story of how
Tony Tan Caktiong and his brothers turned two ice cream parlors
into a fast-food giant has now become legend."

"From those humble beginnings in 1975 Jollibee has grown into
the biggest fast-food company in the Philippines employing over
26,000 people in over 1,000 stores in seven countries," he added.
So how has Jollibee succeeded in keeping the fiercely expansive
McDonald's at number two?

Baysa said the secret of success was simple ... good food,
Filipino taste, a successful branding campaign and pricing.

"McDonald's is a vast global company with a global product.
Jollibee is local with a local product that is being constantly
improved depending on customers' needs," he added.

Recently Ernst and Young named Tan Caktiong, Jollibee's
chairman and founder, as World Entrepreneur of the Year at a
lavish ceremony in Monte Carlo.

News magazine Philippine Graphic said: "In a world grappling
with economic malaise and in a region struggling to find its
niche amid the pressures of globalisation, Tan Caktiong's
achievement provides lessons for the sustainability of business.

"And yes, for the trouble-plagued Philippines, a display of
Filipino can-do attitude."

Jollibee has been the best performing stock on the local
Philippine Stock Market this year, rising some 28 percent.

Last year its net profit rose by 20.8 percent to 1.25 billion
pesos (22.32 million dollars) and Baysa is confident it would
rise to around 1.57 billion pesos this year.

Jollibee will spend a billion pesos this year for expansion
both locally and overseas with some 100 new stores planned.

In March Jollibee took its biggest step overseas when it
acquired an 85 percent stake in Belmont Enterprises Ventures,
which operates the Yonghe King restaurant chain in China, for
11.5 million dollars.

"With 77 restaurants in China it is considered a small to
medium player in the fast food business with total sales last
year of 24 million dollars," Baysa said.

"But we are confident China will be a major growth centre for
the company in the coming years."

He said the company would be giving priority to foreign
markets in Asia, particularly Indonesia and China.

"Europe is not a priority for us at the moment," he said.
"We believe there is a significant unmet consumer need in Europe
but we will focus on Asia first.

"In Indonesia we have had a team there since last year doing
feasibility work and food development and testing."

He expects the company will open one or two stores there in
early 2005.

But it is in China where Jollibee sees its greatest potential.
"At the moment we are looking at opening 20 stores a year in the
first two to three years," Baysa said.

"So far this year we are on track with 13 opened to date. Then
we plan to open 50 a year in the fourth year and by year five we
hope to be looking at 100 new stores a year.

"But our main priority at the moment is to further develop the
brand, the concept, the store design and the menu."

Jollibee has three outlets in Vietnam. In India the company is
looking further ahead. "I don't envisage anything in India in the
near term," Baysa said.

At the end of last year, Jollibee Foods Corp. had 970 outlets
in the Philippines including 467 Jollibee chicken and hamburger
outlets. Its nearest rival McDonald's has 240.

Jollibe's Chinese fast food Chowking restaurants had 245
outlets (nearest competitor Luk Yuen 136), its pizza and pasta
outlet Greenwich had 217 (nearest rival Pizza Hut 113) and its
bakery unit Delifrance had 29 stores.

kw/cgm/dk
Philippines-Jollibee-INTERVIEW
AFP

GetAFP 2.10 -- JUN 27, 2004 10:26:26