EXECUTIVE SUMMARY

In early 2003, message boards on many websites on the World Wide Web were flooded

with rather disturbing news about Jollibee Foods Corp. (Jollibee), a fast-food major from

the Philippines. The message claimed that the company had misled millions of

customers into eating what they believed were burgers containing pure beef.

Jollibee was reported to have been using earthworms in its beef patties for many years

to get customers 'addicted' to certain so-called chemical elements in earthworms. The

company strongly denied the above allegations through a statement released on its

website. It showed in detail its manufacturing facilities on its website and stated that the

allegation was a hoax. The incident soon died a natural death - however, it seemed to

have brought Jollibee in the 'big league' of global fast-food majors who had been

accused of such practices in the past. Not that it needed any such dubious claims to

fame - the company had been earning laurels from the global corporate world for many

years now; In 2001, The Far Eastern Economic Review1 (FEER) named it the top

corporation in the Philippines and the sixth leading corporation in Asia.

Jollibee had also won recognition for its contribution to the economy of the Philippines

and the success of its strategies by the Asian Business Review, leading management

consultants Hewitt Associates, and many Filipino corporate bodies. Jollibee also had

the distinction of being one of the very few companies that had been able to give

multinational fast-food giants such as McDonald's and Burger King a run for their

money. While Jollibee had a market share of over 60%, its closest rival, McDonald's had

less than half of that.

In 1975, Tony Tan Caktiong, a Filipino of Chinese ancestry, and his brothers opened

two ice cream parlors in Manila’s commercial districts of Cubao and Quiapo. These ice

cream parlors were an instant hit among food-loving Filipinos, who came to associate

the stores with special occasions such as birthdays and holidays. In no time, the Tan

brothers had decided to expand their menu and began offering other quick meals such

as hot sandwiches, spaghetti and burgers. After its second year of operations, the Tan

brothers noted that the store was actually earning more from the side orders, specially

their burgers, than from the ice cream. Following the taste and feel of the market, the

Tan brothers decided to develop their own unique brand by coming up with a menu that

would appeal to the Filipino palate. Jollibee was conceived as a fast-food outlet of high-

quality but reasonably-priced food products tailored especially for Filipinos, who were

served by a jolly, “busy-as-a-bee” restaurant crew. Hence the birth of the bright red and

yellow “Jolly Bee” mascot, which had since become a favorite among Filipino children.

In response to the growing popularity of their sweet homemade burgers — made from

their mother’s secret recipe — and the other hot meals, Tony Tan and his brothers

formed

ISSUES

In the Philippines, people love to eat and are used to doing so up to ve times daily,

enjoying snacks in between meals and a comfortable place to chat with friends and

loved ones. As a result, the nation had become an attractive market for global players
such as McDonald’s, KFC, Wendy’s, Burger King, and Pizza Hut. Yet, despite growing

competition, Jollibee had managed to maintain its dominant position as the leading fast-

food chain in the Philippines, with a menu tailored speci cally to the Filipinos’

preferences. Jollibee’s keen insight and understanding of the Filipino psyche had

brought to everyone’s lips the promise of langhap-sarap (freely translated, this means

“smells good so it must taste good”). In addition to meals with fries, Jollibee o ered rice

or spaghetti with its entrees. Its moist burger patties and spicy sauces were so distinctly

Filipino that Jollibee’s burgers were oen likened to what a Filipino mother would cook

at home. is strong understanding of Filipino’s taste and preferences set Jollibee apart

from its competitors.

Even as the Jollibee brand achieved market dominance, the rm was also pursuing a

strategy of diversication as a hedge against both competition and downturns in

specic market niches. Reaching out to other segments, Jollibee Foods Corporation

had acquired a portfolio of other fast-food concepts, to which it applied its carefully

honed operational and marketing skills. In 1994, it purchased Greenwich Pizza, the

Philippines’ leading pizza and pasta chain. e following year, seeking to cater to the

changing taste preferences of the Filipinos, JFC acquired the right to operate the

Philippine’s franchise of Délifrance, an international chain of French bakery-cafés

headquartered in France. In 2000, JFC bought Chowking Foods Corporation, the

Philippines’ top chain serving Chinese fast-food.

Alternative 1: The acronym FSC, described by the company on its website as “a byword

in all of Jollibee,” represented its commitment to meeting high standards in three key

areas: Every Food (F) item served to the public must meet the company’s excellent

standards or it will not be served at all; the Service (S) must be fast and courteous; and

Cleanliness (C) from sidewalk to kitchen, from uniforms to utensils, must be maintained

at all times. Alternative 2: haired girl named Hetti (a mascot for Jollibee restaurants)

were better known and loved in the Philippines than Ronald McDonald. Jollibee

endeavoured to maintain its dominance in the children’s segment by promoting its Jolly

Kiddie Meals and offering a choice of Regular Yum, Spaghetti Special or Chicken joy.

Having an advertising strategy that was deeply rooted in the traditional values of family,

with a tinge of national pride, allowed Jollibee to position itself as the destination outlet

for family outings.

RECOMMENDATION

Jollibee should always consider applicants who have successful track record in the

business, who have good standing in the community, and who have excellent people-

handling skills. They should also consider those who are willing to spend time managing

the restaurant and committed to provide total customer value and satisfaction.

Therefore, Jollibee should grant the franchise to Mr. Alberto Z. Artiaga. This is because

he has a better business background than Mrs. Carmencita Ng. Based on his resume,

he has a successful track record in the business since he owns and manages a gas
station for five years. Moreover, his reason of applying, which is he can always notice

that the customers of the gas station are always asking for a restaurant nearby, proves

that he is willing and committed to provide customer value and satisfaction. With this,

both parties, Mr. Artiaga and Jollibee, will be having a win-win situation. Mr. Artiaga’s

income on the gas station will increase because Jollibee can help attract more

customers. We can also say that Jollibee can be assured with Mr. Artiaga’s

management because of his business experience.

ORGANIZATIONAL STRUCTURE

By concentrating on a country market with distinct preferences, Jollibee had been

able to tailor its menu and marketing strategies to better reach and satisfy the

customers. While global players like McDonald’s and KFC chose to spread their

resources among their fast-food chains worldwide, for many years, Jollibee focused its

eorts only in the Philippines. During the 1980s, when political instability hit the

Philippines, McDonald’s had to curtail its expansion process. Jollibee, on the other

hand, continued with its strategic plans of expansion. By the time the country was back

on track, Jollibee had already gained the upper hand in terms of store locations, thus

leaving the global giant trailing behind. A unique geographical structure of the

Philippines with its many islands made it a challenging market for fast-food companies.

Among all the fast food chains competing in the Philippines, Jollibee was the only one

that operated nationwide. In some locations, it faced no competition from other fast-food

chains. JFC’s strategy included a focus on achieving operational efficiency in its

planning. To meet the challenges of a more intensely competitive market and to

manage business more effectively, the company had undertaken a major initiative in

2000 to re-align the structure of Jollibee Philippines, decentralizing the organization into

four autonomous Regional Business Units (RBUs) that corresponded to the country’s

major geographic markets: Mega Manila, Luzon, South Luzon, and Visayas-Mindanao.

This structure ensured a more manageable business size and span of control. Key

support functions like human resources and administration, finance and network

development were transferred to the RBUs for greater efficiency in the delivery of

products and services, quicker coordination, and more timely decision-making. The

Head Office/Corporate Services functions (Marketing, Finance, Restaurant Systems,

Engineering) were re-aligned as a Support Center to provide corporate-level direction

and continuing assistance to the RBUs. Top management believed that the new

structure had resulted in better execution of programs and renewed enthusiasm and

commitment from JFC’s managers and employees. The continuing growth in the

number of Jollibee, Chowking, and Greenwich restaurants obscured the fact that each

year, some stores were closed, either because they were underperforming or because

they were being replaced by newer and larger stores in a better location. Over time, a

higher percentage of stores were being operated by franchisees instead of company-

owned

RATIONAL ATTRIBUTES.

Of the top 10 rational attributes underlying selection of a fast-food restaurant, the most

significant, cited by 90% of respondents, was for it to be “affordable and/or cheap”

Other attributes mentioned were “tasty”, “variety of food”, “accommodating personnel”,

“delivery services”, “promotional items are useful”, “frequent and effective ads”, and

“offers seasonal products”. Among Jollibee’s patrons, affordable/cheaper prices was

ranked top, with 94% mentioning this attribute, followed by accessibility/94% mentioning

this attribute, followed by accessibility/many outlets (72%) and tastier (66%). However,

only 44% of respondents cited “faster” as a desired attribute.

EMOTIONAL ATTRIBUTES

For fast-foods in general, the three most dominant attributes were friendly atmosphere

(76%), family-oriented or pampamilya (74%), and hang out or tambayan (66%). e

other emotional attributes considered by respondents were mass appeal, better

environment for kids, patriotic or pam-Pinoy or lasang Pinoy, “brings you closer to

home,” “likeable Filipino selections” or putaheng Pinoy/sangkap Pinoy, “use of Filipino

language” particularly by the service crew, and the use of “wholesome” or “cute”

endorsers (Exhibit 7). Broadly similar ratings of these attributes were achieved for

Jollibees, although “family-oriented” was ranked rst, and “friendly” second.