The Filipino Fast-Food Chain Outcompeting McDonald’s
Robert Torpey
September 22, 2023
Read time: 5 minutes
Good morning! It's Friday, September 22nd. Today we are looking at Jollibee, a multi-billion-dollar fast-food chain and one of the few to outcompete McDonald’s in its domestic market!
THE FEATURE
The Filipino Fast-Food Chain Outcompeting McDonald’s
The global fast-food industry has long been dominated by McDonald’s, which seems to magically conquer any market it steps foot in. However, there’s one country that McDonald’s can’t compete in– the Philippines.
Jollibee is the Philippines' premier fast-food restaurant with commanding control over its domestic market and a $5.7B enterprise value.
What’s The Business?
Jollibee was founded as an ice cream parlor in 1975 by Tony Tan Caktiong. The business was successful enough to have two locations, but the 1977 oil crisis had an unexpected consequence: it doubled the cost of ice cream.
To compensate, Jollibee began selling traditional fast-food items like burgers and fried chicken. At the time, this was one of the few fast-food restaurants in the Philippines and it experienced rapid growth as a result. But in 1981, tragedy stuck Caktiong’s business again when McDonald’s opened its first location in the Philippines.
By the 1980s, McDonald’s was already known to quickly establish dominance in any fast-food market it entered. For example, there were already 5,000 McDonald’s locations in Japan before the company expanded into the Philippines. All of Caktiong’s advisors told him to sell his six-year-old franchise to McDonald’s, but the founder had different ideas.
In preparation for his David versus Goliath battle, Caktiong went to America and absorbed everything he could about McDonald’s operations and what made them successful. Upon returning to the Philippines, Caktiong revamped Jollibee by copying all of McDonald’s strategies.
While Jollibee began operating much like McDonald’s, Caktiong knew he had to find an advantage over the fast-food titan. So, he leaned into his national identity and created fast-food versions of traditional Filipino cuisines.
With the convenience of American fast-food joints and a menu of sweet and spicey Filipino dishes, Jollibee not only survived the McDonald’s invasion but thrived. By 1988, Jollibee had a 57% market share and 302 franchise stores. Today, the company generates $4.1B across its 1,500 stores and has become a cultural icon of the Philippines.
How They Win: Selling Culture
McDonald’s believed that they’d be massively successful in the Philippines considering that the nation was a US colony for 48 years and Filipinos have a love for American culture and food. However, they didn’t foresee having to compete against Caktiong.
Jollibee has classic American food like fried chicken and burgers, but its main draw is its Filipino dishes like sweet spaghetti, shrimp noodles, and rice-and-beef breakfast platters.
Filipino culture is also present in the company’s mascot, the Jolly Bee, which embodies the nation’s values of hard work and optimism. Though it’s modeled after Ronald McDonald, the Jolly Bee is seen as uniquely Filipino and even had a dedicated children’s show that ran for six seasons.
Of its 1,500 stores, 234 are located in foreign markets with plans for further expansion. International expansion may seem like a blunder for a brand that’s so focused on the culture of one nation, but it’s worked out fantastically.
10% of Filipinos work overseas, and they tend to live in communities of people from their home country. Jollibee has easily found success in America by opening franchise locations in areas with dense Filipino-American populations. Though Jollibee hasn’t disclosed American sales figures, they’ve reportedly had double-digit sales growth since 2017.
There are currently 68 Jollibee restaurants in the United States, with plans to reach 500 stores in North America in the next five years. With countless stories of homesick Filipinos driving hundreds of miles to eat at the nearest Jollibee, there is sufficient consumer demand to warrant expansion.
Key Observation
Caktiong’s success against McDonald’s highlights a crucial tactic for competing against industry titans.
By catering to the desires of a specific consumer group, you can earn their loyalty and a sizable portion of the market. While Jollibee is too niche to have widespread market control, dominance among just Filipinos has brought in billions.