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McD vs Jollibee

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Jessica C

on 15 December 2012

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Transcript of McD vs Jollibee

McDonalds VS Jollibee: Latest Figures Presented by Professor Brian To
(Senior Wharton Fellow)
bto@wharton.upenn.edu In 1954, at the age of 52, Ray Kroc discovered the McDonald's® hamburger stand in California, owned by Dick & Mac McDonald. Ray Kroc had never seen so many people served so quickly, and was impressed with the way the limited menu allowed a focus on quality at every step. He bought the franchise of a small burger joint owned by Dick and Mac McDonald, and opened his first restaurant in Des Plaines, Illinois in 1955 Now, McDonald’s has more than 30,000 restaurants, serving nearly 50 million people in over 119 countries everyday, making it the number one quick-service restaurant in the world. George T. Yang built the first Golden Arches in the Philippines in 1981. As of 2005, McDonald’s Philippines is a 100% Filipino-owned company. McDonald’s is now a multi-billion peso company that continues to expand and serve Filipinos all over the country. McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. Local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia) The company was founded in 1975 and is headquartered in Pasig City, the Philippines. Filipino entrepreneur Tony Tan Caktiong set up a two-outlet ice cream parlor business in the city of Manila. Though the ice cream parlor business was doing well, Tony wanted to do something bigger in the foods business - in the form of a fast-food outlet chain. His vision was inspired by the global popularity of companies like McDonald's (which incidentally, was planning to enter the Philippines during that time), Wendy's and Burger King (these two already had a presence in the Philippines). Deciding against becoming a McDonald's franchise, Tony established his own chain of seven hamburger outlets in 1978 under the name Jollibee The aim was to avoid 'reinventing the wheel' and to benefit from tested business practices. By establishing Jollibee in 1978, Tony pre-empted McDonald's entry into the country and differentiate his company by making it a 'symbol of Filipino pride.' All the food products were prepared keeping in mind the tastes and flavors prevalent in the country. Since Filipinos liked eating out in groups and ordered different dishes, the menu was quite exhaustive (as compared to the limited menu offered by US fast-food outlets). Both Jollibee and McDonald’s offer cleanliness, fast service and convenient locations. Jollibee’s Champ burger competes with the Big Mac and its Peach Mango Pie replicates McDonald’s Apple version.

However, Jollibee’s menu and flavors are specially suited to Filipino tastes. The local chain cooks up sweet, spicy burgers and serves seasoned chicken and spaghetti with sweet sauce, the way Filipinos like it. They serve these meals with rice or noodles and not with French fries. Crispy skin is the hallmark of Jollibee fried chicken. There is no extra-crispy or barbecue or spicy. Jollibee chicken comes in just one variety Jollibee also serves hamburger steak with gravy, and lumpia, and halo halo, a Filipino dessert of shaved ice, evaporated milk, and sweet beans. Jollibee owed its success to its constant attention to three crucial issues: innovation, testing and piloting To establish ownership of the Filipino family, “langhap-sarap” was dimensionalized in the context of Filipino family values. TV advertising laced with authentic endearment relationship between the brand Jollibee and mainstream Filipino families made Jollibee became unstoppable, posting double-digit growth every year. So confident was Jollibee about its future that it implemented a two-to-one preemptive growth strategy versus McDonald’s. McDonald’s advertising issue then was a question of image. It was doing excellent consumer off-take in middle class and business locations, but lacked associative appeal among the masa and provincial people. research showed that in Batangas, many of the masa customers did not feel at home in the American milieu of McDonald’s store and the English idioms of the front service crew. While its past advertising got memorable recall it did not establish people affinity with the masa. Not only does Jollibee have a concept targeted for the everyday Filipino, Jollibee also combined the attributes of the two most popular competitor products: Hamburger, and Friend Chicken (a Filipino favourite). Price marketing by Jollibee also worked to the fast food chain’s advantage, promoting budget prices most importantly, increasing sales and profit through selling by the family servings as compared to McDonald’s single servings. Jollibee has boasted consistent dominance in market share of the hamburger business, retaining over 50% of the market in the past decade and fending off global competitors such as McDonalds. Jollibee is the largest fast food chain in the Philippines, operating a nationwide network of over 750 stores. A dominant market leader in the Philippines, Jollibee overshadows McDonald’s 300 stores nationwide in the Pinoy market. Under Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal, Yonghe King, Hongzhuangyuan, and San Pin Wang are part of Jollibee brand names McDonalds embarked on a $USD 1billion makeover to all their retain outlets worldwide to reimage the stores for their product. With stores in over 119 countries, McDonalds leads internationally as the leader of the fast food market. At the end of 2011, up to 30 new McDonald’s branches are eyed to open in the Philippines every year until 2016 as the expected growths of the economy and business process outsourcing industry are seen to continue to drive consumption, Since the start of the year, the McDonalds has already hiked prices by an average of 2%. Rival Jollibee Foods Corp. for its part recorded an 8.8% decline in net income to P631 million in the first quarter. Although Jollibee is much smaller than McDonald’s in global terms, Jollibee concentrates most of its limited resources within the Philippines, where its restaurants outnumber McDonald’s. But its primary advantage comes from simply doing a better job of giving Filipino consumers what they want. While McDonald's penetration within the Philippines is comparatively slower, Jollibee seemed to have adopted a dual approach - continue expanding internally in a limited way while exploring the option of tapping new countries
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