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Inside the Leader’s Mind: Jollibee’s Founder Tony bamboo nnovator Tan Caktiong R.E.S.-ilience in Value Creation 《竹经：经商经世离不得立根创新》 Q: “Tony, the success of the Jollibee story is truly inspiring. Jollibee not only grew into the country's biggest food giant, even beating McDonald's, but has also been embarking on an international expansion. Can you share with us the story of how the Jolly Bee started? What are the business and personal challenges that you face along the way. how did you overcome them and what are the lessons that you have learnt?” Tony: “Being born into a poor family which migrated from Fujian in southeastern China to the Philippines in search of opportunity, I became involved in the food and beverage Jollibee’s Founder Tony Tan Caktiong and wife Grace Ang Caktiong Industry at an early age as my family ran a restaurant which sustained the family and put me through college. At the age of 22, my wife Grace and I put up an ice cream parlor two months after graduating as engineers from college. We got the idea of putting up an ice “… way back then, we learned that cream parlor after visiting a Magnolia shop which had a notice saying a franchise for a it pays to give customers more store is available. We spent P150,000 for the store which opened its doors to customers than they expect. That was the in 1975. There were many ice cream parlors at the time, and they were all selling the first lesson - and it is something same stuff. Our challenge was how to attract customers to our stores. We decided to that Jollibee espouses to this day. I offer extra-big scoops of ice cream, provide cleaner stores than others, and super believe that we should give our efficient service. Happily, customers flocked to our stores and way back then, we learned fellow men more than they expect, that it pays to give customers more than they expect. whether they be customers, co- workers, suppliers, family and That was the first lesson - and it is something that Jollibee espouses to this day. I believe friends. I think that comes from that we should give our fellow men more than they expect, whether they be customers, the view that we don't have to be co-workers, suppliers, family and friends. I think that comes from the view that we don't greedy in our daily lives or have to be greedy in our daily lives or business. If we strike the right balance, we share business. If we strike the right the benefits with whomever we're dealing. This eagerness to give people what they balance, we share the benefits wanted and more, was what pushed the firm's entry into the fastfood business. When with whomever we're dealing.” we found out that our customers were craving for something hot, we introduced sandwiches until we decided on adding the store's popular Yum burger and Chicken Joy to the menu in 1978. And soon enough, the hamburgers were outselling the ice cream.” 33 Inside the Leader’s Mind: Jollibee’s Founder Tony bamboo nnovator Tan Caktiong R.E.S.-ilience in Value Creation 《竹经：经商经世离不得立根创新》 Tony: “The idea of expanding the store's menu came from the store's patrons. From early on, we were already listening to our customers. At first, it was actually chicken sandwich, and hotdog, and cheese--those were the three sandwiches we started with. They were very simple but good. Then we embarked on a ‘research’ stage, looking for the right hamburger we can add to the growing menu. We went out almost everyday to all the hamburger stores in town. We bought burgers and we dissected them... we tried to see what each was made of. We kept on eating until one day, we said, 'this is good'. Before we came out with the burger, it was, I think, over a year. So we were eating burgers everyday for over a year. “Many of my well-intentioned The second lesson was endurance. Just as Jollibee started growing, we found out in 1981 friends advised us to sell out while that the world's biggest hamburger chain McDonald’s was about to enter the Philippines. we still could. The mindset was, Many of my well-intentioned friends advised us to sell out while we still could. The 'How could a small Filipino mindset was, 'How could a small Filipino company with only 5 stores take on a big company with only 5 stores take multinational company in a business they practically invented?' Friends started asking us on a big multinational company in if we were going to get a McDonald’s franchise but I remember saying, if you franchise, a business they practically you can’t grow outside the Philippines. This was a moment of truth for us. A moment invented?' Friends started asking that directly tested my hope and ambition. In one of our early planning sessions, my us if we were going to get a vision was to create the largest food company in the world. Some people thought I was McDonald’s franchise but I overly optimistic. The mindset and optimism in making a business succeed is very remember saying, if you franchise, important. If I had no hope, I would have sold out the business right then and I would you can’t grow outside the not be standing in front you of today, I might just be flipping burgers for you-know-who. Philippines. This was a moment of truth for us. A moment that Was it naiveté? Maybe, but it was definitely not blind faith. I believed that we could directly tested my hope and succeed in the hamburger business even against the biggest player in the world. I did not ambition.” make up that belief - I really believed it. For better or worse, that was my mind-set. That's because I knew our customers liked our hamburgers. They liked their taste and they kept coming back.” 34 Inside the Leader’s Mind: Jollibee’s Founder Tony bamboo nnovator Tan Caktiong R.E.S.-ilience in Value Creation 《竹经：经商经世离不得立根创新》 Tony: “Taste - that was the secret, and what made the difference. We had a meeting to strategiZe how we could compete. After a long trip to the U.S. to study how McDonald‘s operated, top managers brainstormed over every attribute that helps decide where customers go to eat and measured how Jollibee compared on each one. We found that they excelled over us in all aspects--except product taste. It suited Americans but not really Filipinos. Our food tends to be sweeter, more spices, more salty. We were lucky as it was not easy for them to change their product because of their global image. We innovate smartly - taking risks while focusing on known strengths. My father who once helped found a restaurant in Davao once told us that in the restaurant business, it's the taste that counts. That sounds elementary, doesn't it? And very basic. But it is very “Till today, we keep things simple important. My mother would say I was the most difficult to bring up because I was the and fill a simple need: very tasty choosiest in terms of taste, whereas my brothers would just eat anything. She would say, food at a reasonable price. To this ‘You are the hardest to satisfy.’ I was convinced that our company could offer better- day I repeat to my people what my tasting products than our competitors. So we went ahead and we opened up one store father told me--you have to make at a time, slowly at first. Then when we saw that each store was making money, we sure your food tastes really good. opened more. And since then, we never lost our leadership position, and I guess that's Jollibee’s mission statement is ‘To because our customers really liked our products. Till today, we keep things simple and fill serve great tasting food, bringing a simple need: very tasty food at a reasonable price. To this day I repeat to my people the joy of eating to everyone’.” what my father told me--you have to make sure your food tastes really good. Jollibee’s mission statement is ‘To serve great tasting food, bringing the joy of eating to everyone’. But even with better-tasting food, could we really compete? If we want to compete we have to make sure we at least equal them in all the other attributes. It was a challenge because in advertising, promotion, store look, siZe, playgrounds, service speed, we ranked lower. We focused on the other attributes one by one. Sometime later we did a customer survey, and we were surprised we ranked higher than McDonald's on a lot of attributes.” 35 Inside the Leader’s Mind: Jollibee’s Founder Tony bamboo nnovator Tan Caktiong R.E.S.-ilience in Value Creation 《竹经：经商经世离不得立根创新》 Tony: “We were surprised customers ranked us higher in courtesy and service style. Maybe they felt we were warmer? And then they liked our marketing, promotion and advertising better. And then customers kept just coming back. But those early days were not easy. We faced many challenges and took many risks. In taking these risks there were times we lost money due to the mistake we made. The brands that we started but failed to grow included Mary's Chicken and Copenhagen ice cream. Lots of research went into these brands but the products that were eventually launched were far from what was originally tested.

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