#15 How Tony Tan Caktiong Scaled Jollibee to 5800 restaurants

Tony Tan Caktiong is the Filipino founder and chairman of Jollibee Foods Corporation.

Jollibee Foods is the owner of the fast-food chains Jollibee, Chowking, Greenwich Pizza, Red Ribbon, and Mang Inasal among others.

Tony Tan Caktiong
How Tony Tan Caktiong

Tony started when he was 22 with an ice-cream parlor. He subsequently scaled his company to make it the largest fast-food corporation in Asia.

Jollibee Foods Corp. operates more than 5 800 venues in the world, and owns more than 50% of market shares in their primary market, the Philippines.

Tony Tan Caktiong’s net worth amounts to $2.1 billion as these lines are written.

This is how he did it.


Beginnings

Tony was born in 1973 to Chinese immigrants in the Philippines. The Chinese Filipinos are one of the largest communities of immigrants in Asia. He was the third of seven kids.

When Tony was in high school, his dad worked as a cook in a Buddhist temple. Soon after, he opened a restaurant.

The kids helped in the kitchen and did the service, which enabled the family to make some money and send Tony to study mechanical engineering in one of the best universities in the country.

During his studies, Tony had the chance to visit the ice cream plant of Magnolia, an ice-cream parlor franchise company.

He learned that opening a franchise was “only” 175 000 pesos, which is around $3 500 or $18 000 with inflation.

Since the parents had savings amounting to 350 000 pesos, they backed their son.

In 1975, Tony opened his two ice cream parlors in Quezon, the biggest city in the Philippines.

He sold ice cream for two years and grew the business from 2 to 6 parlors.

In 1978, customers told him they liked ice cream, but they were also interested in proper food. So Tony added sandwiches and hot meals to the menu, and they soon became more popular than ice cream.

A year later, the hot food worked so well that Tony gave up on the ice cream, revoked the franchises, and opened his own fast-food restaurant. He chose the name “Jollibee”.

The bee was supposed to represent hard work, and “jolli” was meant to remind people of joy.

image 89
The Jollibee logo. Source: Wikipedia.

While the smiling red bee was good marketing, it was so estranged from Filipino culture that no bank wanted to lend Tony a single pesos.

That didn’t stop him, and he opened Jollibee in 1978.

He soon realized operating a fast-food restaurant was completely different than operating an ice-cream parlor.

Despite that Wendy’s and Burger King were already present in the Philippines, Tony took one of his brothers and left for the United States.

They spent a few weeks in the country, visiting McDonald’s restaurants, and learned everything they could.

The business seemed so good that they went back to the Philippines and copied everything from McDonald’s except for one thing: the menu.

Tony Tan Caktiong Success Story 2
The very first Jollibee.

Jollibee serves customed-made food adapted to Filipino’s tastes. Tony researched and developed recipes for all foods on the menu.

He wanted to make sure it would please Filipinos.

Finding a good spaghetti recipe took him so much time that he asked his sister for help.

Today, their fried chicken “chickenjoy” is by far their most popular product.

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Scaling

Jollibee grew fast.

When McDonald’s entered the market in 1981, everyone told Tony to sell as he was going to get crushed. But he didn’t.

While McDonald’s sold US food, Jollibee focused on food Filipinos enjoyed.

As a result, Jollibee became bigger than McDonald’s.

The company IPOed in 1993 to raise enough money for acquisitions.

One year later, they bought 80% of Greenwich Pizza, a pizza chain in the country. Tony grew it from 50 restaurants to 240 in 2005, then 330 in 2011. They bought the remaining 20% of Greenwich in 2006.

Jollibee expanded outside of the Philippines in 2004 when they bought the Chinese fast-food chain Yonghe Dawang. Two years later, they created a joint venture to develop Jinja Bar Bistro in the US with their owners.

That same year, they bought a restaurant in Taiwan, which they sold a year later. They also bought Delifrance, and sold it four years later.

In 2007, they bought yet another Chinese fast-food chain and two more in 2008 and 2010.

In 2010, Jollibee bought Mang Inasal, a fried chicken restaurant franchise in the Philippines.

In 2012, they bought a 54% stake in Burger King Philippines, which they now control.

Three years later, they bought 40% of US Smashburgers and the remaining 60% in 2018.

In 2016, they signed a deal with Dunkin’ Donuts to build 1400 venues in China.

That same year, they entered the chicken production business and created a joint venture with Cargill to produce and process 45 million chickens per year in Quezon. This will help them decrease chicken costs.

In 2018, they bought the Michelin-star franchise Tim Ho Wan. One year later, they bought the chain The Coffee Bean and Tea Leaf.

Jollibee subsequently created several joint ventures in 2019 and 2021 to develop foreign restaurant chains in the Philippines.

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Business

Jollibee operates in 33 countries (Philippines, United States, Canada, China, United Kingdom, Italy, Vietnam, Brunei, Singapore, Saudi Arabia, UAE, Qatar, Oman, Kuwait, Bahrain, Indonesia, Costa Rica, Egypt, Panama, Malaysia, South Korea, Japan, and India).

They use different means to operate as many restaurants as possible.

The first is owning and operating the restaurants themselves. About half of Jollibee venues are operated directly by Jollibee Foods Corp.

The second way is through franchising. Half of all of the other Jollibees are franchises. Since the Jollibee brand is their biggest USP, Jollibee Foods make sure all of the franchises comply with the highest level of standards.

Not everyone can just open a Jollibee. Successful applicants must follow a 3-month intensive program in a restaurant where they will be trained to run it properly.

Jollibee also provides management, marketing, decoration, and other types of consultancy services to help their franchisees deliver the best experience possible.

The third way is by signing development deals with foreign brands, like they did with Dunkin’ Donuts in China.

Finally, the last way is by creating joint ventures with chain owners to develop and manage the chain, like they did with Highlands Coffee in Vietnam.


DoubleDragon

When Jollibee bought Mang Inasal in 2010, Tony aimed at acquiring more than just restaurants.

Mang Inasal founder Edgar Sia had created a real estate company called DoubleDragon in 2009, and Tony wanted in.

After the purchase of Mang Inasal, Tony became co-chairman of DoubleDragon.

DoubleDragon quickly announced that they planned to build 100 shopping centers in the Philippines through their subsidiary CityMall by 2020.

They have built 39 of them as these lines are written.

They are now planning to create the biggest real-estate investment trust in the world.

The REIT will own warehouses, logistics networks, cold storage facilities, and many restaurant venues which Tony aims to transfer directly from Jollibee to the trust.

JT article
The Jollibee tower, built and managed by DoubleDragon. Source: Jollibee.

Conclusion

Tony is often credited for the following quote.

If you dream big and put your dreams into action, you will indefinitely make mistakes. But don’t be scared to make mistakes, just be quick to recognize them and learn from them as fast as you can.

In the early days of Jollibee, the fried chicken chickenjoy was the most popular product on the menu. For some unknown reasons, Tony decided to replace it with roasted chicken.

It was a total failure and customers were so angry they brought the chickenjoy back right away.

As Jollibee was penetrating the US market, they bought Mary’s Foods, Copenhagen Ice Cream, and Donut Magic.

All three failed, and Jollibee eventually discontinued them.

As Tony said, mistakes are normal, and making them helps you learn and succeed later.

I love Tony’s story. When you compare it to the other billionaires, it’s quite simple.

Step 1: Build a restaurant.
Step 2: Repeat 1 600 times.

The simplest way to become a billionaire is not to invent something new with crazy engineering and new tech.

It is far simpler than that: scale.

Tony became rich fast because he built many restaurants, bought some more, and developed others.

This is it.

The biggest impact you make, the more money you will make.

And scale is the only tool that helps you do that.

You don’t need to build a tech company.

1000 restaurants are enough.

For more billionaire stories, head to auresnotes.com.

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Sources:

Wipo

Wikipedia

Wikipedia

Successstory

Businessnews

Jollibeefods

Primer

Filentrep

iFranchise

Stockbytes

Joseph Buarao

Bworldonline

Philstar

Wikipedia

Wikipedia

Wikipedia

DoubleDragon

Forbes

Linkedin

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