When Tony Tan Caktiong looks back at his childhood, he remembers tasting things. His father, a chef in a Buddhist monastery in Manila, would return home to cook for his family, making delicious meals from whatever simple ingredients he could find. “My mother would say I was the most difficult to bring up because I was the choosiest in terms of taste, whereas my brothers would just eat anything,” recalls the third of seven children. “She would say, ‘You are the hardest to satisfy.’ ”
Starting with two Manila ice cream parlors in 1978, Tan has built his Jollibee Foods into one of Asia’s largest home-grown restaurant companies. It boasted 2,581 Jollibees and other fast-food restaurants under various brands as of Sept. 30. Today what he calls Jollibee’s “flavorful environment” and his Buddhist penchant for simplicity are on full display at outlets from Saudi Arabia to the borough of Queens in New York City. “We keep things simple and fill a simple need: very tasty food at a reasonable price. To this day I repeat to my people what my father told me–you have to make sure your food tastes really good.”
Jollibee’s red-and-white bumblebee logo is a familiar sight in the Philippines, where there are now 2,040 outlets after roughly 120 were added in past three years. It controls 18% of the Metro Manila market, compared with 10% for McDonald’s, according to a report on last year’s third quarter compiled for internal use. That ubiquity has made Tan a billionaire–worth roughly $1.3 billion by FORBES ASIA’s latest estimate. Not bad for a restaurant owner whose wife, Grace, says has never really learned to cook.
Now he’s pushing an ambitious international expansion. His vision is clear: He wants to become a global player, with a 50-50 split between domestic and international sales by 2020. After a false start or two, the company’s 541 overseas outlets–up from 326 at the end of 2009–now contribute 20% to revenue. “It’s a challenge to reach 50% because the Philippines is growing fast so the outside has to grow much faster,” he says in an interview in his Manila office.
So Tan, who turned 60 last month, is not only adding outlets in the U.S. and other places where large parts of the Filipino diaspora have settled. He’s also buying local chains in huge markets such as China and Vietnam that have few Filipinos. Last year Jollibee was the world’s fifth-fastest-growing restaurant company outside the U.S. in terms of sales, according to Euromonitor International.
The rapid expansion is boosting revenue while profit margins hold steady. This year analysts expect Jollibee to earn $102 million, or 22% more than last year. Revenue figures to reach $2 billion, double the 2009 sales. Meantime, the stock jumped 11% last year.
A big part of Jollibee Foods’ success has been the development of market-leading brands across several categories. Jollibee outlets accounted for 49% of the company’s sales, as of September, and that share is slipping as the rest of its brand portfolio–both in the Philippines and abroad–grows faster. In the Philippines the company boasts Chinese fast-food chain Chow King, Red Ribbon bakeries, Mang Inasal grilled chicken outlets, Greenwich pizza parlors and its U.S. chain Burger King franchises. Lovell Sarreal, senior assistant vice president of research at Maybank ATR Kim Eng Securities in Manila, says, “Most competitors have single brands. Having multi-food concepts enables Jollibee to capture a bigger chunk of the dining-out market. For example, a typical customer can eat at Jollibee on Monday, Chow King on Tuesday, etc.”
Jollibee made its initial moves abroad confident in the brand loyalty of the 10 million Filipinos working overseas. The company opened Jollibee, Chow King and Red Ribbon stores in the U.S. in the 1980s, and by 2008 it had franchises in Saudi Arabia, Qatar and the United Arab Emirates. A new Jollibee in Jersey City, New Jersey drew lines around the block for days after it opened last June. In the next few months Jollibee will open its first restaurant in Singapore and plans more. Opening Jollibees in places with large Filipino communities will continue, says Tan: “We don’t have to advertise when we open in these places. The longing for home is there. It’s just packed. They come here because it’s the taste of comfort food. When we opened a store in the Middle East, a customer asked me, ‘Sir, can you play your old jingle? I want my daughter to hear it.’”
Lyn Mina, a domestic helper in Hong Kong who visits the Jollibee branch in Central on her days off, explains, “All Filipinos love Jollibee because we feel like we are at home.” The sight of the bumblebee logo outside of the Philippines fills her with pride: “Jollibee can do what other food chains can do, franchise to other countries. It means that Filipinos can ma ke their name [around the world].”
Jollibee hasn’t expanded into Europe, where large numbers of Filipinos work, but Tan is open to it. “Filipinos are asking for it,” he says. “And interested parties are asking for a joint venture or franchise. So it’s a matter of internal capability and whether we have the people and support team. Right now we have not focused there yet.”
But the road to becoming an international force must go through countries without a strong Filipino presence. In China the company opened a Jollibee in Xiamen in 1998 but had to close it three years later. So instead of building its own brand, Jollibee decided to buy already-popular brands and work to improve their strength in the marketplace. “We decided the harder thing to do was marketing the brand, so we buy brands with a following and just have to improve the back end of the operation,” says Tan.
Jollibee opened more than 100 Yonghe King fast-food outlets in China over the last two years and now has 288 there; it bought the noodles, rice and dim sum chain in 2004. With its 52-outlet Hong Zhuang Yuan chain, a congee brand purchased in 2008, Jollibee improved the taste of the food, redesigned the restaurants and introduced new products. Last March it paid $6 million for 55% of Chinese beef noodle chain San Pin Wang, which now has 39 stores. Overall sales for Jollibee’s China operation rose 20% last year. “We don’t even have to launch a Jollibee store in China–these branches in themselves can be a major business,” says Tan.
