The Jolibee Story

Tony Tan Caktiong’s Jollibee phenomenon is recognized globally as a shining example of entrepreneurship

It came as no surprise when Tony Tan Caktiong, president and CEO of Jollibee Foods Corporation, was voted the World Entrepreneur Of the Year 2004 by Ernst & Young. Just two months before bagging this prestigious award, Tan Caktiong was named the Entrepreneur Of the Year (EOY) in the Philippines when Ernst & Young launched the awards locally. Ernst & Young established EOY in 1986 to honor pioneering individuals who took risks in setting up enterprises and conquering all odds to make their endeavors succeed.

Tan Caktiong’s Jollibee story is considered a phenomenon in Philippine business. It is the only homegrown brand that has outnumbered and outsold the foreign competition in the Philippines.

Ice Cream to Burgers

It was a college class trip to the Magnolia Ice Cream parlor in Cubao, Quezon City that gave Tan Caktiong the idea of going into the food business in the 1970s. Since he already had acquired some experience while helping out in his father’s Chinese restaurant in Davao City, it only seemed natural that he would also be going into the same line of business.

“We had two Magnolia Ice Cream houses which we opened in 1975 but as time went on, we noticed that people started asking for something hot in our menu like sandwiches and burgers,” Tan Caktiong relates.

So in addition to ice cream, Tan Caktiong’s ice cream parlor started serving hamburgers. When that happened, more and more people started lining up not for the ice cream but for the hamburgers. With that, he decided to transform their ice cream parlor into a hamburger chain.
The next thing he did was to look for an appropriate name for his new business. The name Jollibee was the result of a brainstorming session with the members of his family. “The bee is a symbol of diligence and teamwork,” he explains. “The bee buzzes around the beehive, working in perfect harmony with others in the colony.”

He adds that he added “jolly” because he believes that people should enjoy what they are doing while they are working hard at it. Thus, Jollibee was born and Jollibee Foods Corporation was incorporated in 1978 with seven outlets. Jollibee made P2 million in sales in its first year.
By 1984, Jollibee reached the P500 million annual sales mark, catapulting the company into the list of the Top 500 Philippine Corporations. In 1987, barely ten years in the business, the company joined the ranks of the Philippines’ Top 100 Corporations.

One Thousand Stores

Today, Jollibee employs about 26,000 people in more than 1,000 outlets in seven countries, including the United States and China. In the Philippines, Jollibee commands 65% of the domestic fast food market, competing very successfully against established global brands. In 1993, it became the first fast food service company to be listed in the Philippine Stock Exchange. In the ten years since, the company has been consistently profitable, reaching an annual net income of P1.170 billion as of September 2004.

Profits in difficult times like these are unimaginable. Tan Caktiong admits that in some way or another, Jollibee has been affected by the economic crisis because prices of their raw materials have gone up.
“The good thing with a fast food chain though is that when the economy is experiencing good times, the mass market can come to our stores and enjoy our food. But when the country is in an economic crisis, the upper market no longer goes to fine-dining restaurants but they go to Jollibee. In other words, our market is flexible,” he states.

He believes that crisis or no crisis, consumers still look for the same qualities in their food preferences – good taste, great service, warm ambiance, and affordability. “We make sure we meet all these. We also take into account the need for variety and novelty so we always improve our menu by adding variants and new products.”

In a speech before the 3rd Management Association of the Philippines (MAP) International CEO Conference, Tan Caktiong recalled the numerous crisis the country faced like the political turmoil brought about by the EDSA Revolution, the fuel crisis, and the Asian economic crisis. He recounted how Jollibee was able to emerge from these crises, not only unscathed but with flying colors as well.

It is during times like these that Tan Caktiong focuses attention on things that he could control — and that is to do his business well. “During these times, we resolve to continue aggressively growing our business in spite of reductions in our sales levels,” he said. Trying times force people to think of more creative ways of improving the business and reaching out to more customers.

Conquering Foreign Markets

One of the decisions made during the difficult times was to venture into new markets. Tan Caktiong opened Jollibee branches in unfamiliar places like Digos, Kidapawan, Surigao, Vigan, Laoag, and Ozamis. He also made the bold step of opening stores abroad like in Hong Kong, Dubai, Guam, Taiwan, Singapore, and the United States.

Not content with bringing Jollibee to foreign shores, Tan Caktiong also acquired four new brands – Chow King, Greenwich, Delifrance, and Yonghe King (in China). These acquisitions are in line with the goal to be the dominant food service company in the country.

“But while we were aggressive in our growth plans, we were conservative in our cash management,” Tan Caktiong explains. “During times of crisis and turbulence, our leadership team would roll up their sleeves and watch our cash position closely.”

He is also a firm believer that the sort of decisions he makes during the good times can affect how the bad times will impact on him and his business. “The time to reorganize, the time to realign and reposition oneself is when times are good,” Tan Caktiong shares. “Then the change can be better managed without the sword of closure hanging overhead.”

Good Endorsements

Another factor that has contributed to the success of Jollibee is the use of celebrity endorsers who embody the company’s values and who believe in the firm, in their people, and in their products. “But we don’t rely on celebrities alone. We have been able to grow our brand through advertising that is anchored on strong family values. Many of our ads whet not only appetites but touch the heart as well.”

When asked about his management style, Tan Caktiong answers that he spends more time listening than talking. He recalls a time when he was tempted into availing of dollar loans because interest payments cost less than peso dominated loans. He was ready to make the plunge but there was an employee who cautioned him on the risks involved. He listened and he managed to save significant amounts because of the sudden devaluation of the peso that followed.

“It never ceases to amaze me how each and every person has one good or even brilliant thing to say when you stop talking, just keep quiet, and start listening to them.”

Tan Caktiong also tries his best to motivate his employees to come out with excellent results, “hoping that they will look at me as someone who will always inspire them to give their best all the time.”

He is grateful to his parents for making him what he is today. It was his parents, Tan Caktiong proudly says, who always reminded him to be humble, to work for his dreams, and to think of the good of others.

Source: http://www.philippinebusiness.com.ph/archives/magazine/vol11-2004/11-9/cover.htm

Tagged as: Business & Economy, Hamburger, Jolibee, Profiles, Tony Tan Caktiong