Jollibee Food Corp By Yankees Spring 2008
Overview History of Fast Food History of Jollibee Jollibee Vs. McDonalds Jollibee International Division Strategy: Three Decisions
The Fast Food Industry Popularity begins: 1960’s Pioneers Ray Kroc – McDonalds Colonel Sanders – Kentucky Fried Chicken Concept Serve time-constrained customers Good quality food Clean dining environment Low price
Profit Factors High customer traffic Convenience Location Speed ● Franchising (Fees and Royalties) o Chain-wide Consistenceo Advertising and Purchasing economies of scaleo Waste reduction
Jollibee Foods Corporation Brief History Founded by Chinese-Filipino Tan family in 1975 – selling ice cream and sandwiches Incorporated a 100% Filipino company 1978 First international venture – Singapore 1985 31 stores in 1986 All growth financed internally till 1993 IPO for 216 million Pesos ($8m)
Jollibee vs McDonalds – The Philippines Market 1981: o McDonalds enters the Philippineso Jollibee owns 11 restaurantso McDonalds builds 6 in two years • 1983: o McDonalds – 27% market o Jollibee – 32% • 2001: McDonalds – 28%; 235 storesJollibee – 52%; >400 stores
Jollibee Wins Local Dominance • Events in the general environment (Political) – 1981 – 1986o Assassinationo Public demonstrationo Foreign investment slowdown • Operations management capability captured in “Five Fs” philosophyo Friendliness, Flavorful food, Fun atmosphere, Flexibility in catering to customer needs, Focus on families. o Close knit structure
Competitive Advantage Business Level Strategy – Differentiation o Appeal to tastes and eating habits of locals – a distinctly Filipino taste (Example: Champ Vs Big Mac) • Company Perspective o Constant innovation and improvement in products, service and store design.
Corporate Strategy Vertical Integration (Commissary) Jollibee – hotdog making line and meat processing line for burger patties McDonalds – products are supplied to its commissary by different food firms Cooperative (Franchising) Royalties and Franchise Fees
Corporate Strategy • Diversification o Jollibee o Greenwhich Pizza Corporation (Pizza-Pasta) – 1994 o Delifrance (French Café – Bakery) – 1995 o Chowking (Oriental Quick Service) – 2000 o Yonghe King (Chinese Fast Food) o Red Ribbon (Cake and Pastries) o Chun Shui Tang (Tea Drinks) • Dominant Business Strategy 2001 Jollibee – 75% Greenwhich Pizza – 11% Chowking – 10 % Others – 4%
International Ventures Singapore – 1985 Misunderstanding with local partner; franchise revoked 1986 Taiwan Conflict with partner Property market; dissolved venture 1988 Brunei – 1987 Hands on involvement in operations Good relationship with partner Indonesia – 1989 Conflict with partner Sold to new franchisee Success Factors: Partner relationship management Prime Location
Tony Kitchner 1994 – 1997 Priority to develop International Division Autonomy Resources Capabilities Local partners with market connections Image reinvention Increase pace of international expansion One of the world’s top 10 brands by 2000
Strategic Thrust Targeting Expatriates Pros: 1) Supports entry into market 2) Reduces need to customize menu Cons:1) Limited market and growth • Planting the Flag (First Mover Advantage) Pros: 1) Establish Recognition 2) Secure resources Con: 1) Rash market choices e.g Middle East
International Expansion • Opened 22 stores between 1994 and 1997 o Asia – Planting the Flago Middle East – Target Expats • Evaluating Kitchner’s Strategy: o Kitchner’s strategy did make sense, and was effective in pursuing the goal of rapid expansion. However, his inability to work efficiently with the local division caused tension and the ultimate breakdown of the strategy.
Three Options 1. Papua New Guinea: Raising the standards. 2. Hong Kong: Expanding the base. 3. California: Supporting the settlers.
Decisions Papua Guinea: Do not enter Hong Kong: Expand California: Enter
Conclusion Jollibee is constantly growing around the world. (2005-2006) o System Wide Sales – 13.5%o Revenue – 16.8%o Foreign Business – 42.7% Celebrating 30 years in Business