Why Is McDonald's Struggling In The Philippines? Jollibee
Summary
TLDRJollibee, a Filipino fast-food chain established in 1978, has successfully dominated the Philippine market, outperforming global giant McDonald's. Known for its sweet and savory menu, including spaghetti with sweet banana ketchup sauce, Jollibee has captured the hearts of Filipinos with its family-oriented branding and 'Langhap-Sarap' tagline. With a majority stake in other local chains and a growing international presence, Jollibee is expanding beyond its home base, targeting the Filipino diaspora and exploring acquisitions in the U.S., such as Smash Burger and Tortas Frontera, to increase its global footprint.
Takeaways
- đ McDonald's is a global fast food giant with over 37,000 restaurants worldwide but faces a unique challenge in the Philippines.
- đ Jollibee is the leading fast food chain in the Philippines, having established a strong presence since 1978 and outperforming McDonald's in the local market.
- đ° Jollibee offers competitive pricing, often being cheaper than McDonald's, which has helped it capture a significant market share.
- đ The Filipino taste preference for sweet flavors is catered to by Jollibee, with unique menu items like sweet spaghetti and burger steaks.
- đšâđ©âđ§âđŠ Jollibee's branding emphasizes family values and a cheerful, busy Filipino spirit, resonating with the local culture and consumers.
- đ Jollibee Foods Corp. has a diverse portfolio, owning other popular food chains in the Philippines, including ChowKing, Greenwich, and Red Ribbon.
- đ Despite being the top fast food chain in the Philippines, Jollibee is looking to expand internationally, targeting the Filipino diaspora and new markets.
- đ Jollibee's international expansion includes over 200 locations in countries like Saudi Arabia, Kuwait, Italy, Canada, and the United States.
- đșđž In the U.S., Jollibee has opened locations primarily in cities with large Filipino communities, such as New York City's Times Square.
- đ Jollibee Foods Corp. has also acquired stakes in American brands like Smash Burger and Tortas Frontera to increase its presence and appeal to a broader audience.
- đŒ While Jollibee is successful in the Philippines and expanding abroad, it still lags behind McDonald's in terms of global revenue and brand dominance.
Q & A
Why has McDonald's struggled to become the number one fast food chain in the Philippines?
-McDonald's has struggled in the Philippines due to the strong presence of Jollibee, which established itself early and offered competitive pricing and recipes that resonated with Filipino tastes.
When was Jollibee founded and what is its significance in the Philippine market?
-Jollibee was founded in 1978 and has become significant as it captured the market early, offering a value proposition that was hard for international brands like McDonald's and KFC to match.
How does Jollibee differentiate its menu from McDonald's to appeal to Filipino consumers?
-Jollibee's menu includes items like sweet burger steaks and spaghetti with sweet banana ketchup sauce, which cater to Filipino preferences for sweeter flavors in their fast food.
What is Jollibee's pricing strategy compared to McDonald's?
-Jollibee positioned itself as a more affordable option compared to McDonald's, with a price difference of about 50 cents to a dollar for every value meal.
What cultural elements does Jollibee incorporate into its branding and marketing?
-Jollibee uses the tagline 'Langhap-Sarap,' which emphasizes the pleasant smell of its food, and its mascot, a human-sized bumblebee, represents the Filipino spirit of being busy yet cheerful.
How has Jollibee expanded its presence beyond the Philippines?
-Jollibee has expanded internationally with over 200 locations in countries like Saudi Arabia, Kuwait, Italy, and Canada, and it has also opened locations in the U.S., targeting cities with large Filipino communities.
What is the current market share of Jollibee compared to McDonald's in the Philippines?
-In 2017, Jollibee captured nearly 36% of the fast food market in the Philippines, while McDonald's had about half of that share.
Which other food chains does Jollibee Foods Corp. own in the Philippines?
-Jollibee Foods Corp. owns other chains in the Philippines, including ChowKing, Greenwich pizza, Red Ribbon, and U.S.-based Burger King.
What is Jollibee's strategy for growth given the saturation of the domestic market in the Philippines?
-Jollibee is focusing on international expansion, targeting the Filipino diaspora and diversifying its brand portfolio with acquisitions like Smash Burger and Tortas Frontera.
How does Jollibee's revenue compare to McDonald's on a global scale?
-While Jollibee is the leading fast food chain in the Philippines, its global revenue is significantly lower than McDonald's, which made nearly $23 billion in 2017 compared to Jollibee Foods Corp.'s revenue of only 10% of that amount.
What steps is Jollibee taking to expand its presence in the U.S. market?
-Jollibee is opening locations in U.S. cities with large Filipino populations and has taken a majority stake in Smash Burger to increase its presence and target American consumers.
Outlines
đ Jollibee's Dominance Over McDonald's in the Philippines
Jollibee, a Filipino fast food chain founded in 1978, has successfully resisted McDonald's attempts to become the market leader in the Philippines for nearly 40 years. With its lower prices, tailored recipes that cater to Filipino tastes with a sweet twist, and effective branding, Jollibee has captured the hearts of Filipinos. The brand's mascot, a bumblebee symbolizing the Filipino spirit, and its focus on family values in advertising have resonated deeply with the local population. Jollibee Foods Corp. also owns other popular chains in the Philippines, giving it a significant market share. Despite McDonald's global presence, Jollibee has nearly twice the revenue in the Philippines and a larger number of locations.
đ Jollibee's International Expansion and Challenges
While Jollibee dominates the fast food market in the Philippines, the company faces challenges in its international expansion. With the domestic market becoming saturated, Jollibee has set its sights on the Filipino diaspora and other international markets. The brand has over 200 international locations, including 37 in the U.S., primarily in areas with large Filipino communities. Jollibee has also acquired stakes in American brands like Smash Burger and Tortas Frontera to increase its presence and target American consumers. The company's expansion into China and Vietnam through strategic acquisitions has been more successful due to logistical advantages and the owners' Chinese roots. However, Jollibee's global revenue is only a fraction of McDonald's, indicating that there is still a long way to go for Jollibee to achieve McDonald's level of worldwide success.
Mindmap
Keywords
đĄMcDonald's
đĄJollibee
đĄMarket Dominance
đĄFilipino Diaspora
đĄBrand Positioning
đĄCultural Relevance
đĄQuick Serve Restaurant (QSR)
đĄMascot
đĄMarket Saturation
đĄStrategic Acquisitions
đĄRevenue
Highlights
McDonald's struggles to become the top fast food chain in the Philippines despite its global dominance.
Jollibee, a local chain founded in 1978, has been successful in maintaining its market share against international competitors.
Jollibee's competitive advantage includes lower prices and tailored recipes that appeal to Filipino taste preferences for sweetness.
The brand's menu features a unique blend of American fast food with a Filipino twist, such as sweet spaghetti and burger steaks.
Jollibee's branding emphasizes family values and the Filipino spirit, resonating with the local culture.
The mascot of Jollibee, a bumblebee, symbolizes the cheerful and busy nature of the Filipino people.
Jollibee Foods Corp. owns multiple food chains in the Philippines, dominating the fast food market.
In 2017, Jollibee's revenue in the Philippines was nearly twice that of McDonald's, capturing 36% of the fast food market.
Jollibee's domestic market is becoming saturated, prompting the company to focus on international expansion targeting the Filipino diaspora.
Jollibee has over 200 international locations and is expanding its presence in countries with significant Filipino populations.
The company has opened locations in the U.S., particularly in areas with large Filipino communities, such as New York City.
Jollibee's distinct Filipino taste has been well-received by Filipino Americans, as evidenced by customer testimonials.
Jollibee Foods Corp. has taken a majority stake in Smash Burger, an American burger chain, to increase its U.S. presence.
The company is also exploring the acquisition of Tortas Frontera, a Mexican sandwich chain, to enter the U.S. Mexican food market.
Jollibee's expansion strategy includes China and Vietnam, with strategic acquisitions in coffee and pho sectors.
Despite its success, Jollibee's global revenue is significantly lower than McDonald's, indicating a need for continued growth.
Jollibee's domestic success in the Philippines is contrasted with its ongoing challenge to achieve similar global dominance.
Transcripts
McDonald's is an American fast food behemoth
With more than 37,000 restaurants in 120 countries, the chain dominates pretty much every market it chooses to enter
It has a reputation for taking over, fast
But in the Philippines, where McDonald's has been trying, and failing, for nearly 40 years to be number one
there's a local chain giving McDonald's a run for its money
Jollibee
Jollibee, you know, came way back in 1978, really established its presence and, you know, captured the market, a lot
So then subsequently when these brands like McDonald's and KFC came in
you know, it was hard for them to take away the value acquisition that Jollibee offered
Filipinos love Jollibee and it's not just because it was their first or that it undercut its competition on prices
They nailed their recipes
And of course I think they positioned themselves a bit cheaper than McDonald's
So when McDonald's came in, the difference was maybe 50 cents to a dollar for every value meal
So that's how they had to position themselves
Filipinos love American food but there's also a twist in it because we like it sweet
For example, we serve spaghetti and they try to make the sauce a bit sweet
The menu covers a lot of ground, fried chicken, french fries, sweet burger steaks
chicken sandwiches, and a spaghetti with a sweet banana ketchup sauce and hotdog chunks
Culture also plays into it
They have a tagline, it's called "Langhap-Sarap" meaning it smells really good
So it's really inviting to smell
And I think they they know where they should be targeting the market so it's really
Its really the middle class market for Filipinos because they initially presented it as a fast food
But now I think since the mass market is developing, I think they positioned it as a QSR so a Quick Serve Restaurant
Its mascot is a human sized, red and yellow bumblebee wearing a blazer and chef's hat
It's meant to epitomize the Filipino spirit of an always busy but cheerful people
Jollibee is the biggest fast food chain in the Philippines itself
So it is hugely popular and a lot, lot part of this is because of its branding itself
So it has become to be known as a very household and a family oriented brand
That, you know, that really connects and resonates and strikes a cord among Filipinos
Jollibee has also pushed out TV commercials and ads that are big on family values
And the numbers show that so far, Jollibee indisputably trumps McDonald's in the Philippines
McDonald's has roughly half as many locations as Jollibee there
And while neither company isolates its revenues in the Philippines, Euro Monitor estimates
show that Jollibee pulled in nearly twice as much as McDonald's in 2017
Jollibee captured nearly 36% of the fast food market in 2017 and McDonald's took roughly half that
And Jollibee's hold on the market doesn't end with its own chain
Jollibee Foods Corp. also owns chains in the Philippines like Chinese fast food chain ChowKing
Greenwich pizza, Red Ribbon which sells pastries and even U.S. based Burger King
Almost all of which rank in the top five list of chain fast food restaurants in the Philippines
So the company literally owns its competition but Jollibee is now at a crossroads
The domestic market is oversaturated, so it's instead setting its sights on the Filipino diaspora
If you look at the international expansion, I think year to date, at least
they've gone around 25% so it's already starting to overtake the domestic front
The same store sales growth, meaning it compares stores that they're already operations from the previous year
So it's only been growing 8% and it is a publicly listed company, 8%
isn't enough if you're just going to grow organically so they have to expand
So far Jollibee has more than 200 international locations in countries ranging from Saudi Arabia and Kuwait to Italy and Canada
The Filipino chain is also taking on rival McDonald's on its home turf
Since 1998, Jollibee has opened 37 locations in the U.S. all in cities with big Filipino communities
Just take New York City
There are more than 250,000 Filipinos living in the New York metropolitan area
In the fall of 2018, Jollibee opened its second location in the city, this one in the heart of Times Square
Jollibee has a very distinct Filipino taste
So most, most of the dishes here have a sweet taste to it
I always loved Jollibee since birth because back in the Philippines we always do, we always eat there
CNBC decided to fact check
Our team of producers put Jollibee's sweet and savory menu to the test
Oh, that's good
I think it's good, it's not that spicy, yet
Our producers approved for the most part
Yeah, I don't like that at all
Jollibee may be striking a nerve with Filipino Americans, but the company appears to be thinking much bigger when it comes to dominance
With only 37 Jollibees and roughly 4 million Filipinos living in the United States
Jollibee's reach in the country is far from the command it had in the Philippines
And targeting Filipinos in the U.S. isn't enough for the company to skyrocket to success
That's why Jollibee Foods Corp. decided to take a majority stake in a popular American burger joint called Smash Burger
We, we wanted to replicate the success of the Philippines in the U.S.
Which is to have a multiple number of brands that they're successfully American and that's why we have the Smash Burger
We have Tortas Frontera and we're continually exploring other possible acquisitions
Smash Burger only has 323 restaurants in the United States, a far cry from McDonald's more than 14,000 stores
But it gives Jollibee the opportunity to increase its presence in the U.S. and allows it to target American consumers as well
That's kind- that's more of their foray, one into the overseas market and second into QSRs
In September 2018, Jollibee said it was also looking to get in on America's $41 billion Mexican food market
by purchasing a stake in Tortas Frontera, a small Mexican sandwich chain in the U.S.
But the United States isn't the only country where Jollibee has set its sights
They've also been expanding in China for example
So I think the experiment and I think that's been more successful
The owners have roots from China so I think that has proven to be more successful
And of course, logistically it's more accessible to, to I guess like expand, I guess in the area that's closer to home
Jollibee has also made a few strategic acquisitions in China and in Vietnam, where it's leaned into coffee and pho
Though Jollibee has expanded its reach to other countries, McDonald's still squashes the company when it comes to revenues
McDonald's made nearly $23 billion in 2017, while Jollibee Foods Corp. brought in only 10% of that
Jollibee has a long way to go until it can replicate the success McDonald's has seen around the world
But until then, it comfortably holds its number one spot back home in the Philippines
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