Market Analysis of Jollibee Fast-Food Restaurant - Report Example

Market analysis of Jollibee Fast Food Restaurant Table of Contents Table of Contents 2 History: Jollibee Company 4 Initial Leadership Strategy: Jollibee Company 4 Environmental Analysis 5 Current Market Trend and Position 5 Target customers 5 Competitor Analysis 6 International Expansion 6 Analysis of the Fast Food Market in United Kingdom (UK) 6 Current Position of the Fast Food Market in UK 6 P.E.S.T analysis of the Fast Food Market in UK 8 SWOT Analysis of Jollibee Company 9 Strength 10 Weakness 10 Opportunities 11 Threats 11 Strategic Issues 11 Recommendations 12 Conclusion 13 References 14 History: Jollibee Company The company “Jollibee” was introduced in the year 1975 by five Chinese Filipino brothers known as the Tan Caktiong family. Initially, they opened a two branch ice-cream parlour (Thompson and Martin, 2005) which later developed into a fast food restaurant offering unique Filipino cuisine. Soon, the company emerged to be one of the most successful business food chains in Philippines. In 1981, Jollibee had established 11 stores in Manila whereas McDonald’s had just opened one store (Hill and Jain, 2011). By 2003, it had opened 467 stores in Manila and had earned a market share of more than 50% and revenue of $500 millions. It had surpassed the revenues of McDonalds in 2003 (Hill and Jain, 2011). Initial Leadership Strategy: Jollibee Company Jollibee Company has become one of the finest fast food restaurants of Philippines. This was mainly due to its unique marketing strategy devised by the owner. When McDonald’s planned to open its first store in Manila, Jollibee planned to have a Unique Selling Proposition (USP) that would set it apart from its competitor McDonald’s. The key strategies followed by Jollibee Company were as follows: It offered American fast food but kept the Filipino cuisine in mind. For example, it served Asian style hamburgers and the pastas tasted like ‘Chinese Chowmein’. Desserts offered were of unique flavours like Peach Mango Pie and Banana Langka. They kept the local consumers’ taste and preference in mind (Thompson and Martin, 2005) They studied the operation system and marketing strategies devised by McDonald’s very closely. Jollibee offered the same range of products but with a difference in taste, so that it would set them apart from its competitor (Hill and Jain, 2011). Prices of food products were kept lower than that of McDonald’s (Hill and Jain, 2011). These strategies worked very well and eventually Jollibee became one of the most coveted and popular restaurants of Philippines. Environmental Analysis Current Market Trend and Position The company Jollibee is operating worldwide with 750 stores operating in the Philippines itself. It has become a market leader in fast food restaurant business. It enjoys a lion’s share of the profits that is greater than the other multinational brands combined. The company has embarked on an international expansion with 80 stores operating outside Philippines; 26 stores in the USA, 32 stores in Vietnam, 11 stores in Brunei and 7 stores in Qatar, Kuwait, Hong Kong and Jeddah. It has received the ‘Best Employer’ award in Philippines from Hewitt (Jollibee, 2013a). The company’s international marketing strategy has been a huge success and this is mainly due to the large flock of Filipino population residing abroad, which provided as a readymade market base to the company (Gillespie, Jeannet and Hennessey, 2010). As per some theorists, the USA fast food market is saturated despite that Jollibee has performed very well in the US and the Middle East markets (Hill and Jain, 2011). According to a survey conducted in Philippines, Jollibee has received the highest ranking in the consumer category ahead of major brands like Nestle, Procter & Gamble, etc (Gillespie, Jeannet and Hennessey, 2010). Target customers The target customers of Jollibee Company would be consumers of all ages. Fast food is preferable among the teenagers and adults alike. Jollibee focuses on the importance of traditional family values and offers a warm and cosy environment to its customers (Jollibee, 2013b). Competitor Analysis The major competitors of Jollibee are McDonald’s, Wendy’s and KFC. The main competition of Jollibee has always been McDonald’s, since both had evolved in Philippines at the same time. According to reports of a survey, 69 percent of the Filipino residents visited the Jollibee restaurants compared to a 16 percent of residents visiting McDonald’s (Gillespie, Jeannet and Hennessey, 2010). Jollibee operated 1400 restaurants in Philippines compared to 280 stores of McDonald’s in the year 2010 (Gillespie, Jeannet and Hennessey, 2010). In 1984, it reached the five hundred million sales mark crossing McDonald’s sales and in the year 1993 it became the first fast food chain to be listed on the Philippines Stock Exchange paving the path for International Expansion (Ungson and Wong, 2008). International Expansion It opened its first international store in 1987 in Brunei where a majority of Filipino population resides. They provided as a readymade customer base for Jollibee. It slowly penetrated into other Asian and Middle Eastern markets such as Indonesia, Doha, Kuwait, Guam, Malaysia and New Guinea (Jollibee, 2013a). It opened its first five stores in California where its sales skyrocketed. The concept of opening stores where a majority of Filipino population resided provided a breakthrough in sales. There are only two stores in Doha and 200000 Filipino expatriates live in Doha. In Dubai there are 300000 Filipino expatriates, this is the main reason behind Jollibee’s increasing sales (Gillespie, Jeannet and Hennessey, 2010). Analysis of the Fast Food Market in United Kingdom (UK) Current Position of the Fast Food Market in UK The American fast food franchisors consider the UK as the gateway to Europe, as the American franchise units in the UK has outnumbered the local UK fast food restaurants. London and South East UK are popular destinations for fast food franchise restaurants (Lashley and Morrison, 2012). Let us now analyze the below mentioned chart which contains details of the leading fast food franchise restaurants in the UK. We can see from the below mentioned chart that most of the fast food restaurants have been established in the late 1980s and early 1990s. These restaurants are still operating in the market because the attitude of the consumers towards fast food has not changed. The main reasons for the popularity of fast food in the UK are due to the below mentioned reasons: Busy lifestyle. They suit the taste buds of the consumers residing in the UK. They comply with health and safety guidelines issued by the government. Figure 1 (Source : Lashley and Morrison, 2012) P.E.S.T analysis of the Fast Food Market in UK Political The fast food restaurants should comply with the health and safety guidelines. The food should contain Genetically Food organism (GM). Economic The setup cost for the franchise units is low. It is a growing market in the UK. Social The busy life style of the consumers makes it convenient for them to eat at a fast food restaurant. Increased vegetarianism among individuals has increased visits in the fast food joints. The fast food restaurants serve an array of options to customers who prefer vegetarian food. Technological Ordering of food online has made it a huge favourite among the common people. SWOT Analysis of Jollibee Company Strength It is a well positioned company in Philippines, Middle East and US markets. The strength lies in its popularity and serving traditional Filipino cuisine. Most of the existing staff members of Jollibee have been working right from the evolvement of the company, which depicts that the management of the company is very good. Weakness The Operation systems are not efficient. It is unable to synchronize between the international and local Filipino operation system. Apart from the Filipino cuisine, they should try serving international cuisine which could attract more customers. Though standardization of menu is not possible by any restaurant, Jollibee can add one or two food items which are popular among the locals. For example, if the UK residents prefer fish and chips, they should introduce items which include fish and chips. Jollibee has also failed in certain international markets. The company opened its first store in Taiwan in the year 1988 which was not popular among the locals. The store had eventually shut down (Thompson and Martin, 2005). The Chinese people did not find Jollibee to be very appealing and eventually it had to close its operations in China too. Opportunities Entrance into the Fast Food industry is very easy because the common people have started accepting the cultures of other countries. They would also accept Filipino food with open arms. Threats There are major competitors which may prove as huge threat to Jollibee Company. The company needs to come up with a unique marketing strategy which would stand out from the other fast food restaurants. There are a huge number of brands which offer more or less the same variety of food. Jollibee should introduce an unique cuisine which becomes the USP of Jollibee. Strategic Issues The company can face certain strategic issues while entering into the UK markets. Strategic issues affect the present and future performance of a company (Dutton, Walton and Abrahamson, 2001). Fast food may have become a popular concept in the UK and the rest of the world but there are certain strategic issues which have been bothering the residents of UK. A recent report on Fast Food industry claimed that certain companies serving fast food used horse meat instead of chicken, beef and pork which has resulted in an increased number of diseases in the UK like Rhinitis, Eczema and Asthma (Fletcher, 2013). This has become a huge concern for the people residing in the UK and faith in fast food restaurant seems to be reducing gradually. Supermarkets in the UK have removed burgers from their shelves to keep their reputation intact (Fletcher, 2013). Most of the fast food restaurants have defaulted in complying with the health and safety guidelines issued by the government. This has provoked the institutions fighting for animal rights and there has been a rapid increase in the protests for animal rights. This has resulted in decline of certain fast food restaurants like Burger King and Wimpy, whose outlets have reduced by 8.l3% and 12.9% respectively in the year 2009 (Thompson, 2009). The only fast food restaurant to increase its outlet was KFC (Kentucky Fried Chicken) whose store outlets increased by 9.5% in the year 2009. Initially there were 347 KFC stores which eventually increased to 705 stores in UK. Jollibee should not be demotivated by this piece of news because the demand of fast food has increased. The store outlets of fast food restaurants like Subway, Domino’s and Eat have had increased in the year 2009 by 25.9%, 19.8% and 17.8% respectively (Thompson, 2009). Recommendations Jollibee should not be deterred by the existing competitors in the UK .The increase in the demand of fast food proves that consumers in the UK would welcome a change of taste. Jollibee should continue to use its marketing strategy and highlight its USP i.e., unique Filipino cuisine combined with fast food. Prices of the fast food items should be kept lower than the competitors. One thing should be kept in mind that the number of Filipinos residing in the UK is comparatively less than other countries. The Filipinos currently residing in the UK may have adapted to other fast food restaurants so they might not provide a readymade base for Jollibee anymore. Jollibee should focus on increasing the nutritional value in their food items and should comply with the health and safety guidelines established by the government. They should increase awareness of the health benefits in their food items. The company should also keep a close watch on the competitors’ pricing and marketing strategy as most would try to prohibit the entry of this company. For example, in 1997, Jollibee overcame a major setback. When the company opened a branch in Papua New Guinea, there were alleged reports that the company was serving meat of cats and dogs (Thompson and Martin, 2005) this was basically done to tarnish the image of the company. Jollibee has to be very aware of competitors’ conspiracy against it. Conclusion The company “Jollibee” is one of the most popular fast food chains of the world. The company should revamp its marketing strategy which could attract the common people residing in the UK and other parts of the world. Equal amount of resources should be divided among the international and regional division. Managers should develop a congenial work atmosphere and should maintain clear communication with the employees of the company. References Dutton, J.E., Walton, E.J. and Abrahamson, E., 2001. Important Dimensions of Strategic Issues. [pdf] Available at: [Accessed 26 February 2013]. Fletcher, I., 2013. Food for thought over horse meat. The National, [online] 26 February. Available at: [Accessed 26 February 2013]. Gillespie, K., Jeannet, J.P. and Hennessey, H.D., 2010. Global Marketing. 3rd ed. Connecticut: Cengage Learning EMEA. Hill, C.W.L. and Jain, A.K., 2011. International Business. 6th ed. New York: Tata McGraw-Hill Education. Jollibee, 2013a. International. [online] Available at: [Accessed 26 February 2013]. Jollibee, 2013b. About Us. [online] Available at: [Accessed 26 February 2013]. Lashley, C. and Morrison, A., 2012. Franchising Hospitality Services. Abingdon: CRC Press. Thompson, J., 2009. Britains appetite for fast food is proving insatiable. The Independent, [online] 25 November. Available at: [Accessed 26 February 2013]. Thompson, J.L. and Martin, F., 2005. Strategic Management: Awareness and Change. 5th ed. Connecticut: Cengage Learning EMEA. Ungson, G.R. and Wong, Y.Y., 2008. Global Strategic Management. New York: M.E. Sharpe. Read More