How Jollibee beat McDonald's in the Philippines

by Cathy Rose A. Garcia,

Posted at Feb 11 2013 12:38 PM | Updated as of Feb 12 2013 02:22 AM

MANILA, Philippines - With over 2,000 branches around the country, there is bound to be a Jollibee anywhere you go in the Philippines. 

Jollibee's continued success in the Philippines and the company's aggressive expansion overseas is making international headlines. Jollibee's Filipino-Chinese founder Tony Tan Caktiong is now on the cover of Forbes Asia's February issue.

Tan talked to Forbes Asia about how he started his business with an ice cream parlor and how his restaurant with a bumble bee mascot managed to beat American fastfood giant McDonald's in the Philippines. 

After opening the ice cream parlors in 1978, Tan said he decided to shift from ice cream to hamburgers when he saw customers wanted sandwiches.

However, the entry of McDonald's in the Philippines in 1981 was a cause of concern for the fledgling fastfood chain.

Tan recalled how they went to the US to study McDonald's operations, and studied how Jollibee compared to the American fastfood chain. 

"We found that they excelled over us in all aspects – except product taste... It suited Americans but not really Filipinos. Our (food) tends to be sweeter, more spices, more salty. We were lucky as it was not easy for them to change their product because of their global image," Tan told Forbes Asia. 

Jollibee worked hard to compete with McDonald's, from advertising to stores to service.

And their hard work paid off. "We were surprised customers ranked us higher in courtesy and service style. Maybe they felt we were warmer? And then they liked our marketing, promotion and advertising better. And then customers kept just coming back," he said. 

One advantage Jollibee had was offering hamburgers and other fastfood with a distinct Filipino flavor. For instance, Jolly Spaghetti has a sweet meat sauce with hotdog slices. 

Eventually McDonald's took the cue from Jollibee and offered McSpaghetti and other similar products aimed at the Filipino market.

Forbes Asia said Jollibee now controls 18% of the market in Metro Manila, handily beating McDonald's which is said to only have 10% share of the market.

Jollibee now operates the country's largest food service, with a total of 2,040 stores as of end-September. The firm's stores include Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal and Burger King.

For its foreign operations, the company has 541 stores as of end-September. Aside from the Jollibee foodchain, stores abroad include Yonghe King, Hong Zhuang Yuan, San Pin Wang, Red Ribbon, Chowking, and Chow Fun.

But what is the secret to Jollibee's phenomenal success?

"We keep things simple and fill a simple need: very tasty food at a reasonable price. To this day I repeat to my people what my father told me – you have to make sure your food tastes really good," Tan said.