People generally think Jollibee is doing better than McDonald’s. Nope.
McDonald’s, run by George Yang and property tycoon Andrew Tan, is actually doing much better than Jollibee, run and owned by Tony Tan Caktiong. McDo is infinitely more profitable, renders better service and its people are warmer and less bureaucratic.
Jollibee has been cutting corners, on service, on warmth of its staff, on the passion to try to accommodate the customer as much as possible. Jollibee outlets scrimp on everything they can make money on—on the catsup, on napkins, on the coffee. (In Megamall, try ordering coffee after 7 p.m.; they won’t give it to you. Why? Because it takes time to brew for just one cup of coffee and risk of spoilage is high.
By the way, at Megamall Jollibee, why does one have to queue twice, first to place an order and second, to pick up your order. This certainly gives a new dimension to the meaning of fast food. Have you ever tried driving in for an order at Jollibee? Watch out. Oftentimes, you will find your takeout bag without any napkins, without any catsup and without any spoons and forks. Spaghetti? Try eating that with bare hands. With Jollibee, you can never take things for granted.
You have to demand what is due you. That is how profit-oriented Jollibee has become.
At McDo, the customer is first. At Greenhills, McDo doesn’t bother to ask for your senior card before giving you your 20-percent discount; Jollibee does, as if you would lie on something as small as a P25 cup of coffee. Jollibee doesn’t offer free refill. McDo not only offers free refill. Its attendants go around merrily filling up your cup, unlimited.
The bottom line? Customers are turned off. As a result, McDo makes more money than Jollibee.
McDo, with 259 stores—just 15 percent of main rival Jollibee’s local and overseas network of 1,527 outlets—is beating the homegrown fast-food giant in revenue per store.
Based on first quarter of 2007, Golden Arches Development Corp. (GADC), local franchisee of McDonald’s, generated average revenue of P696.5 million per store, 22 percent higher than Jollibee Food Corp.’s P569.7 million per store.
During the first three months of 2007 GADC reported gross revenues of P1.8 billion, up 14.7 percent from P1.37 billion for the same period last year. JFC’s revenues stood at P8.7 billion, also up by 14.8 percent from P7.6 billion.
On the profit side, GADC saw its net income rising 50 percent to P306 million for the first three months of 2007 from P204 million a year ago.
JFC reported a first-quarter 2007 net profit of P529.18 million, up by just 18 percent from P448.44 million.
In 2006 McDonald’s gross profit rose 22 percent to P929 million from P761 million; the gross profit of Jollibee gained 7.3 percent (a third of McDo’s) to P3.48 billion from P3.24 billion.
McDo’s gross margin increased to 14 percent from 12.3 percent; that of Jollibee was stagnant, at 23 percent.
Clearly, Jollibee is losing ground to McDo and the reason I believe is Jollibee’s penny-pinching manners. Also, it now takes more time to get your food from Jollibee. It’s fast food in slowmo.
GADC’s marketing campaign has focused on branding and increasing customer awareness. McDo also has the better and better quality giveaways for kids’ meals.
The McDonald’s franchisee also introduced campaigns to increase its drive-thru and breakfast business. In addition to the five new restaurants, GADC also opened 12 new delivery hubs and two additional kiosks.
The 17 new restaurants that were opened between April 1, 2006, and December 31, 2006, also contributed to the improvement in revenues during the first quarter of 2007.
McDo’s gross margins improved due to improved cost-efficiency by, among other things, better management of its supply chain.
GADC attributed its revenue growth to successful marketing promotions and opening of 22 new licensee and company-owned stores the remodeling of 30 GADC-owned restaurants to attract customers, the introduction of new products for sale, such as the McRice Burger and the McRice Chicken Fillet, and extensive advertising and promotional campaigns beginning in the latter part of 2005.
Other innovative products—Red Hot chicken, Longa McRice burger, bubblegum and strawberry float—were introduced during the first quarter of this year.
The company says its Ang Pao coupons proved to be very effective, increasing sales of burger and chicken McDo, regular fries and spaghetti.
Alliance Global entered the QSR (quick-service restaurant) business in March 2005 through the acquisition of 49 percent of the common shares of GADC, which oversees the operations of McDonald’s restaurants in the Philippines.
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