Jollibee Foods Corporation

Keys to cracking the US market

Executive Summary: Expand, but slowly.

Jollibee is well positioned to enter into the U.S. fast food market and has proven its readiness through its success in Guam a high labor cost environment. High Filipino populations in California make it an ideal point of entry into the market, making TTCs long-held dream a reality.
Recommendation: Expansion into the U.S to challenge McDonalds on its home turf is an absolutely viable goal. However, this must be done with care. Specifically, opening only a few locations targeted specifically at Filipino populations in California is our gateway to brand recognition. Additionally, tailoring the menu to local American taste will be a key component of our strategy. Daly City and the Bay Area are attractive entry options, as they have a relatively low concentration of fast-food competitors, and a high concentration of immigrants from the Philippines.

Challenges

Took McDonalds 20 years for intl operations to count for more than 50% of sales. Strained global-domestic relations at Jollibee and plant the flag mentality. With new locales half a world away Jollibee HQ must be flexible and cooperative to maintain strong relationships with a new US based franchise.
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Proven Successful Tactics

Expansion into Hong Kong targeting Filipino populations was an instant, overwhelming success. Adjust menu to local tastes. Cater to the Filipino population, but also recognize American taste buds and tailor accordingly. Building brand recognition first this is what enables McDonalds to select strong partners and gain premium locations.

Agenda

Introduction: Expand into the U.S. Keys to Expansion into U.S. Fast Food Market for Jollibee

Past ventures have proven immediate success with Filipino population. Brand recognition is critical to gain foothold in new markets Tailoring menu to local tastes has proven successful.

Challenges and Lessons:

Expansion cannot simply be a plant the flag maneuver, as past ventures have shown. It must be slow and deliberate in order to build brand recognition and an efficient operation.

Closing: Low fast food presence and high affluent Filipino population in Bay Area California make it an attractive option. Tailor the menu to focus the offerings and appeal to both Filipino and American taste buds. Sources

Introduction
Expansion into the U.S. Fast Food Market is critical to Jolibees continued growth.
Manila businessmen are 40% partners in the venture, reducing capital investment directly from Jolibees resources. Low competition is seen in the Bay Area of California, and a high Filipino population. International operations account for 50% of total sales at McDonalds.

The consumer market outlook: Americans love food.

Common knowledge details that Americans are a people who love food. A 24 hour channel called The Food Network is beamed to approx. 83% of homes that have television in the U.S. according to tvbythenumbers.com. It is a culture wired to explore and adopt new, fast, and easy food offerings.

Success of Jollibee in Guam proves preparedness for U.S.

Operating methods in a high labor cost environment were developed and proved successful. In Guam, 25% of population was of Filipino extraction, but food also appealed to Americans based there.

Expansion into the U.S. fast food market shows great future potential
History Jollibee growth had been internally financed until 1993. Movement offshore from 1986-1997 has brought great opportunities for expanding the Jollibee brand and name recognition throughout the world. Today Over 220 stores in the Phillipines and abroad bring in annual revenue of $179M USD. McDonalds operates 14,000 stores in the US alone. This is a large market waiting to be tapped. Manila-based businessmen have entered as 40% partners in a U.S. venture, reducing the risk and liability to Jollibee. Heavy Filipino populations in the U.S make it an attractive market to enter.
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Low competition, high target population make Californias Bay Area attractive. Brand Recognition Measured Growth Strong Business Case
Phillipine ex-pats know the Jollibee brand. This gives competitive advantage and instant success walking into a heavily Filipino market. Brand recognition enables a franchise like McDonalds to secure prime locales. Building Jollibee in the new market is critical to success and ease of expansion down the line.

Jollibees expansion cannot simply be a plant the flag maneuver to expand as quickly as possible and growing the business footprint. Past ventures, such as those in Singapore, Taiwan, Brunei, and Indonesia have shown that this is not an effective method of growing the business. It must be slow and deliberate in order to build brand recognition and an efficient operation in a new market place.

Expansion into the U.S. Fast Food Market is critical to Jollibees continued growth. It is worth noting that McDonalds has grown to 50% of its total sales being accounted for through international operations. Manila businessmen are 40% partners in the US venture, reducing capital investment directly from Jollibees resources. This makes a stronger case than the alternative option, dominating an emerging market through expansion into Papua New Guinea, a population of only 6.3 million vs. 316.8 million in the U.S. financed entirely by Jollibee. This carries higher cost and does not offer the same growth opportunity.

Tailoring the menu to local tastes is a critical strategy component of tapping into a new market
Fast-food in the United States has a well-established menu including burgers, fries, and pop. While certain menu items may appeal to the Filipino base, the same items may turn off the American crowd.
At the first couple stores, gauging and experimentation should occur with the menu. Jollibee staples such as Chicken and mushroom pasta and Palabok Fiesta may prove to be discordant with American fast-food tastes. Start with a diversified menu, and whittle down after the market determines what works and what doesnt.
Jollibees current menu is highly diversified and may prove to appear too far diversified. Ex: Pasta, Chicken, Burgers, Hot Dogs, Rice in the United States represent foods that would be found at 4 different types of fast-food restaurants this may lead to a lower quality perception among American consumers, who may become confused at what Jollibees product differentiation and specialization is.
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Challenges and Lessons Learned Past events

Dont just plant the flag Indonesian expansion has shown that a brute force effort to simply plant the flag is not an effective means to grow Jollibees business. Expansion into the U.S. exposes Jollibee to an excellent opportunity and brand new market. It takes time Took McDonalds 20 years for intl operations to count for more than 50% of sales. Our goal of opening 1000 Jollibee stores abroad before the year 2000 is certainly ambitious, but not realistic if the plan is to be thought through and set up for success. Cooperative Relations Strained internationaldomestic relations at Jollibee have hindered business. With new locales half a world away Jollibee HQ must be flexible and cooperative to maintain strong relationships with a new US based franchise.

Closing: Expansion Recommendations

Expand into the United States in order to grow Jollibee
Start with slow growth, targeting Californias Bay Area. There are few competitors, and an existing affluent Filipino population.

A measured entry enables Jollibee to establish recognition, and work out the kinks. Do not simply plant the flag. Menu tailoring will position Jollibee for popularity and success among Filipino and American audiences alike.

Works Cited
Bartlett, C. A. (2001). Jollibee foods corporation (a): International expansion. Business Case Study, Harvard Business School, Cambridge, MA, . Seidman, Robert "List of How Many Homes Each Cable Networks Is In - Cable Network Coverage Estimates As Of August 2013 <http://tvbythenumbers.zap2it.com/2013/08/23/list-of-how-many-homes-each-cablenetworks-is-in-cable-network-coverage-estimates-as-of-august-2013/199072/>. Menu, about us. (2013, 10 05). Retrieved from http://www.jollibee.com.ph/

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