Jollibee Foods Corporation International Expansion
Jollibee Foods Corporation International Expansion
Jollibee Foods Corporation International Expansion
International Expansion
Company History
● Started in 1975 by the Chinese-Filipino Tan family as an ice cream parlor
● Ice cream → Hamburger
○ 1977 Oil Crisis: Double the prices if ice cream
○ Burger: Customers’ favorite; recipe from Tony’s chef father
● Name origin: From TTC’s vision of employees working happily and efficiently, like bees in a hive
● Everyone in the company addressed each other by their first names and removing honorifics like Sir or Ma’am
● Five F’s (Jollibee Philosophy): Friendliness, flavorful food, a fun atmosphere, flexibility in catering to customer
needs, and a focus on families
● Affordable price: Well-developed operations management capability
● One of the key success factors: A well oiled machine that keeps close tabs on day-to-day operations
● Quick expansion in the Philippines until 1993
● Tan family members occupied several key positions – vital operation functions
● Marketing and finance managers were outsiders
● Franchises: Members and friends of the Tan Family
● 1993: Jollibee went public and raised 216 million pesos
○ Tan Family retained majority of ownership and control
● 1994: Acquisition of Greenwich Pizza Corporation
● 1995: Joint Venture with Deli France
○ 85% of revenues came from Jollibee stores
Industry Background
● 1960s: Fast food industry pioneers, Ray Kroc of McDonald’s and Colonel Sanders of Kentucky Fried Chicken: Created
a value proposition that became the standard
● Fast food outlets aimed to serve time-constrained customers by providing good quality food in a clean dining
environment and at a low price
Managing a Store
● Profitability depended on high customer traffic and tight operations management
● Outlet opening required large investments in equipment and store fitting
● Keeping it open: High costs of rent, utilities, and labor
● High volume → Convenience → Store location is critical
● Choosing a site: Traffic patterns, potential of the city, competition nearby
● Good operations management, reducing waste, ensuring quality service, and self-productivity were important
● Store managers: Motivated and controlled crew members, preparing food, and keeping restaurant cleanliness
● Faster service and reduced number of crew members needed with efficient use of time
Managing a Chain
● New stores → Growth of franchising → Chains to stake out new territory by acquiring market share and building brand
recognition in an area
● Expansion: Needed to achieve economies of scale in advertising and purchasing
● Key driver of success for the fast food executives: Chain-wide consistency and reliability
○ Standardization of the menu
○ Raw material quality
○ Food preparation
○ Assurance of uniform standards of cleanliness and service
○ Uniformity of image
● McDo: Believed that they were selling an image of American pop culture
● Major fast food chains pushed their international subsidiaries to maintain or impose standardized menus, recipes,
advertising themes, and store designs
franchisee
● Market was promising
Lessons from Jollibee’s First International Ventures
● McDonald’s succeeded everywhere because they selected the right partners. They can get the 100 candidates and
choose the best - we didn’t have the name to generate that choice yet
● Key factor in business: Location. It’s hard to get prime locations if you’re new.
● People said not to go international yet until we had solved these issues: location and power
Building an Organization
● 1993: TTC: International operations required greater structure and more resources
● January 1994: Hired an experienced outsider as Vice President for Int’l Operations because his mgmt team was only
interested in growing the local business
● Kitchner
○ Divide his division and be separate from Jollibee’s PH side -- Different identity and capabilities
○ Agreed with TTC: Attracting partners with good connections in the markets is a priority BUT Jollibee’s simple
image and basic management approach will be a problem
○ To project the image of world-class company: First dress code in the company → Managers to wear ties (7th
Strategic Thrust
● Kirchner decided to increase the pace of international expansion
○ Objective: Make Jollibee one of the world’s Top 10 fast food brands by 2000
○ Strategy: (1) Targeting expats (2) Planting the flag
● Thousands of Filipino expatriates in the Middle East, Hong Kong, Guam, and other Asian countries -- Latent market for
Jollibee as a good initial base to support entry
● Focused on the Filipino guest-workers in the Middle East
○ Opened stores in Dubai, Kuwait and Dammam BUT → Limited market → Restrictions on the poorer workers’
freedom of movement and Wealthier expatriates prefered hotel dining (Alcohol consumption is allowed)
● Other strategic criterion: First mover advantages
○ Jay Visco, International’s Marketing Manager: You can set the pace and the standards.
○ Jollibee (6 stores), McDonald’s (1 store), KFC (3 stores)
● Planting the Jollibee Flag
○ Be there where competitors had little or no presence
○ Store expansion → Brand Awareness → Positive impact on sales
○ Problem: Circularity: Only after achieving a certain level of sales could franchisees afford advertising and
promotion needed to build brand awareness
○ Problem: Rapid expansion → Resource constraints: Difficulty in supporting multiple simultaneous start ups
Operational Management
Market Entry
● Tony Kitchner negotiated the franchise agreement with an investment by the parent company to create a partnership
with the franchisee
● Franchise Service Managers (FSM)
○ Key contacts between the company and its franchisees
○ Support group in Manila was built to prepare them to manage an offshore franchise
○ Encouraged to adapt the preferences of the franchisee for the counter and dining areas
○ Kitchen: Followed the standard Jollibee design for proper production flow
○ Kitchner: Adapt the counter and dining area to the space and preferences of the franchisees
○ Responsible for engaging local architects to plan the store
● Project Manager
○ Hired a month before opening by FSM
○ Usually a native of the new market
○ Manages the first store
○ Made important decisions along with the FSM
○ Works with International Division finance staff to develop budget for materials, labor, etc.
○ Identified local suppliers and negotiated prices
● Franchisees’ level of involvement varies per country, but they were deeply involved in selecting and securing the site
of the first store (with advice from International Division staff)
● International Division staff
○ Had to develop skills very different from those of their Jollibee colleagues in the Philippines
○ Prepared marketing plans for the opening and first year’s operation
○ Made positioning and communications strategies
■ Based on surveys, aggregate market data, analysis of major competitors
○ Trained local marketing manager, local store manager, assistant managers
○ Trained crew members hired by project managers (trained on cooking, serving, and maintaining the store)
Looking Forward
● Noli tingzon was aware that his predecessor’s plan was to open 1000 Jollibee stores abroad before the turn of
the century
● McDonald’s took 20 years for its international operations to count for more than 50% of total sales.
○ Tingzon aimed to do it in 10 years
● The decisions he made on the three entry options would have a significant impact on the strategic decision he
made on his international division took and on the organizational capabilities it needed to get there