In the business world, having a good rivalry can help your company in many ways which keeping you focused is among the most important of them. For Ernesto Tanmantiong and Tony Tan Caktiong, the two brothers who founded Jollibee, this good competition came in the huge form of iconic fast food chain McDonald’s.

It was 1981, and the brothers had just started out on the bold vision of building a fast food kingdom in their native Philippines when McDonald’s landed in town and began to conquer the business with a massive desire for global growth.

Jollibee already had evolved considerably from what began in 1975 as an ice cream parlor in Quezon City, just outside of the city of manila. But, with only a couple hundred fast food stores spread around the fragmented archipelago, it was a meager fry compared to McDonald’s thousands of locations across the U.S. and global markets.

Matter of fact, friends told these two brothers as much, and urged them to withdraw from the competition, Tanmantiong disclosed in a latest issue of CNBC’s “Managing Asia.”

Jollibee early days
Jollibee in its early days

“Once we heard that McDonald’s was heading to the region, friends were advising us to run away from competition — act (like) other companies and do not attempt to challenge the international leader,” Tanmantiong, President and CEO of Jollibee, says to CNBC’s Christine Tan.

But Tan Caktiong declined to hear it, Tanmantiong said. Rather, the then-28-year-old entrepreneur brought the organization together to shape an offensive strategy.

“All we did was have internal strategy preparation,” said Tanmantiong.

“We performed a SWOT analysis of our strengths, weaknesses and the gaps,” he said, referring to a standard analytical methodology aimed at determining the strengths, weaknesses, chances and threats of a company.

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Although McDonald’s gained from economies of scale and years of experience and knowledge, Tanmantiong said they found one big region in which the U.S. giant did not compete: Taste. Filipinos prefer to choose sweeter and fierier foods, he said, and it will be tough for McDonald’s to respond to this without damaging the classic American taste for which they had just become hugely popular.

“After that important session, we were pretty confident. But instead of chickening out, we laughed and said we’re actually serving Chickenjoy, “Tanmantiong said, pointing to the company’s main fried chicken dish.

It’s that special menu — including the sweet ‘Jolly Spaghetti,’ hot dogs and spicy burgers — that has bolstered the vast global expansion of Jollibee Foods over the years. The company currently has more than 3,500 restaurants in the Philippines and another 1,000 worldwide, including Smashburger, Burger King Philippines and Panda Express Philippines under its other brands.

Jollibee founding brothers
Source: Reuters

But as the company continues further development into the United States, which is one of its main strategic countries next to China, McDonald’s will once again come as a direct rival to Jollibee – this time on the home ground of the American rival. Earlier this year, Jollibee opened its first branch in Manhattan, New York, which is currently one of only 37 U.S. locations.

Tanmantiong says he, Tan Caktiong (now the chairman of Jollibee), their two other siblings and the entire team, were initially planning to focus on that route by approaching Filipino clients living abroad. But, in reality, he said, they were shocked to see that the unique taste of Jollibee has a home among non-native patrons. Indeed, they represent 50 per cent of the overseas customer base of the business.

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That might aid Tan Caktiong on his latest quest to transform Jollibee into one of the top five restaurant franchises in the world in terms of market share. After becoming Asia’s biggest restaurant in 2014, Jollibee must compete against the likes of Starbucks, Yum! Brands and Domino’s in order to win the accolade.

However, Tanmantiong has said his brother loves a challenge.

“Tony is a thinker and is fond of dreaming high,” said Tanmantiong. “That’s mostly why (Jollibee Foods Corporation) is where it is now. Because of that bold dream, the entire company has been challenged, but it’s been satisfying to achieve that dream.


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