Why Is McDonald's Struggling In The Philippines? Jollibee

Summary

Jollibee, 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

• 🌏 McDonald's is a global fast food giant with over 37,000 restaurants worldwide but faces a unique challenge in the Philippines.
• 🏆 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.
• 💰 Jollibee offers competitive pricing, often being cheaper than McDonald's, which has helped it capture a significant market share.
• 🍔 The Filipino taste preference for sweet flavors is catered to by Jollibee, with unique menu items like sweet spaghetti and burger steaks.
• 👨‍👩‍👧‍👦 Jollibee's branding emphasizes family values and a cheerful, busy Filipino spirit, resonating with the local culture and consumers.
• 📊 Jollibee Foods Corp. has a diverse portfolio, owning other popular food chains in the Philippines, including ChowKing, Greenwich, and Red Ribbon.
• 📈 Despite being the top fast food chain in the Philippines, Jollibee is looking to expand internationally, targeting the Filipino diaspora and new markets.
• 📍 Jollibee's international expansion includes over 200 locations in countries like Saudi Arabia, Kuwait, Italy, Canada, and the United States.
• 🇺🇸 In the U.S., Jollibee has opened locations primarily in cities with large Filipino communities, such as New York City's Times Square.
• 🍔 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.
• 💼 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

00:00

🍔 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.

05:01

🌐 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.

Keywords

💡McDonald's

McDonald's is a globally recognized American fast-food chain known for its widespread presence with over 37,000 restaurants in 120 countries. In the video, it represents the archetype of a successful international fast-food brand that, despite its global dominance, struggles to become the market leader in the Philippines due to local competition.

💡Jollibee

Jollibee is a homegrown Filipino fast-food chain that has managed to outperform McDonald's in the Philippines since its establishment in 1978. The video highlights Jollibee's appeal to Filipino taste preferences, its competitive pricing, and its strong branding, which contribute to its status as the leading fast-food chain in the country.

💡Market Dominance

Market dominance refers to a company's control over a particular market, often due to its size, popularity, or strategic positioning. The video discusses how Jollibee has achieved market dominance in the Philippines, despite competition from global giants like McDonald's.

💡Filipino Diaspora

The term 'Filipino diaspora' refers to Filipino communities living outside the Philippines. Jollibee's international expansion strategy includes targeting these communities, as seen in its U.S. locations, which are often in areas with significant Filipino populations.

💡Brand Positioning

Brand positioning is the strategy of creating a unique image or identity for a brand in the minds of consumers. Jollibee's positioning as a more affordable and culturally resonant alternative to McDonald's is a key factor in its success, as illustrated in the video.

💡Cultural Relevance

Cultural relevance is the extent to which a product or service aligns with the cultural values and preferences of a target audience. Jollibee's menu, which includes sweet spaghetti and burger steaks, reflects the Filipino preference for sweet flavors, demonstrating cultural relevance that appeals to local tastes.

💡Quick Serve Restaurant (QSR)

A Quick Serve Restaurant (QSR) is a type of fast-food restaurant that emphasizes quick service and convenience. Jollibee has positioned itself as a QSR, aiming to serve the middle-class market in the Philippines and adapting to the evolving needs of the mass market.

💡Mascot

A mascot is a character or symbol used in marketing to represent a brand. Jollibee's mascot, a red and yellow bumblebee, embodies the Filipino spirit of being busy yet cheerful, which helps to strengthen the brand's connection with Filipino consumers.

💡Market Saturation

Market saturation occurs when a market becomes flooded with similar products or services, leading to reduced growth potential. The video mentions that Jollibee is facing market saturation in the Philippines, prompting its international expansion efforts.

💡Strategic Acquisitions

Strategic acquisitions refer to the purchase of other companies or brands to expand market presence or enter new markets. Jollibee Foods Corp. has made strategic acquisitions such as Smash Burger and Tortas Frontera to increase its presence in the U.S. and diversify its brand portfolio.

💡Revenue

Revenue is the income generated from a company's business activities. The video compares the revenues of Jollibee Foods Corp. and McDonald's, highlighting the significant difference in scale between the two companies, with McDonald's generating nearly $23 billion in 2017 compared to Jollibee's much smaller figure.

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