Fast Food IndustryIanne Patrick

SantiagoMarivic MariscalMichael LualhatiJay-ar de Castro

Chaofan Zhu

Industry Background

Prepared and served quickly in a restaurant. Inexpensive foods. Begins on the mid-twentieth In the Philippines, fast-food restaurants specialize

fried chicken, french fries, burgers, spaghetti and a beverage.

The largest fast-food industry in the Philippines is the Jollibee food corporation.

Jollibee Corporation is composed of several fast foods chains like Jollibee, Chowking, Greenwich, Red Ribbon and Mang Pepe's.

Quick Service Restaurant or QSR

Definition

Fast Food Operation

Nationwide market coverage Caters to all ages / broad market segment Slow service vs. commitment to quick food

preparation Menu is limited to the products the store offers Lack of food stock Space for fast food is small Capacity is 100 sq m at the minimum Cleanliness of the store sometimes is not properly

maintained due to underman staff.

Scope and Limitations

Regulated by the Department of Trade and Industry.

RA 7394 or the Consumer Act of the Philippines. Department of Health and Bureau of Food and

Drugs According to Omana (2005), the fast-food market

is dominated by the Filipino-owned Jollibee Foods Corporation with 52% market share.

It is being followed by American food brands like McDonald’s, Wendy’s, Burger King, and KFC.

Total Industry

Key Player / Brands

Jollibee Food Brands

Market Structure

Population growth rate more than 4% per year.

Consumer preference: quick, quality, clean, convenient, and affordable dining experience.

Customization products (e.g. rice meals for Filipinos, potato fries for Americans)

Domestic: 3-8% annual growth rate in the Philippines Average annual income of Php 62,000 for “poor”

families and Php 268,000 for “rich” households.

Market Structure - Demand

Status – Domestic Fast Food: Entrants of foreign cuisine (e.g. Asian, European,

Western) Jollibee as market leader for Philippine Fast Food

Export: Jollibee branches in other countries (Middle East, North

America, Southeast Asia) Chowking’s expansion abroad

Projections: Improving food and service quality over time Expansion by opening more stores Product Development

Market Structure – Demand (cont.)

Mixture of local and foreign brands: Jollibee (operated by Jollibee Foods) McDonalds (locally controlled by Alliance

Group) Domestic:

Market Structure – Supply

Sources: Annual Reports from JFC and AGI and corporate websites.

Imports: Rice importation Other products

Projections: Largest index of value among other industries Continuous increase in population Sales growth of leading brands Business expansion

Market Structure – Supply (cont.)

Cost and Prices: Ala-carte meals at Php 50-150 Combo meals at Php 82 on the average /

Premium items at Php and above Factor goods (Source: Bureau of Agricultural

Statistics, 3/2011)

Market Structure – Cost and Prices

Commodities Average Price (in Php)

Potatoes 60 / kilo

Ground Beef 240 / kilo

Well-Milled Rice 35 / kilo

Cooking Oil 54 / liter

Dressed Chicken 130 / kilo

Average of 100 seats for dining customers Number of Consumers: 200 pax / branch /

day (at 110 sq. m store size) Number of Transactions: 100 orders (from

11AM-2PM) Number of Meals per Transaction: two (2)

meals

Market Structure – Capacity Utilization

Source: Mang Inasal Baclaran branch

Financial Structure

Financial Performance Jollibee Foods Corp grew a net profit last year

by 16 percent to P3.09 billion

Financial Structure

Financial Structure

Strengths , Weaknesses, Opportunities and Threats

SWOT AnalysisStrengths:

Quickest Serving Time Among Other Food IndustryCost Saving / Systematic Food PreparationOption to Deliver Food to Houses, Offices, and Other EstablishmentsWide-Range of Food Options/ChoicesCustomization of Meal Servings Tailor-Fit to Consumers’ AppetitePositions in Strategic Location in Populated AreasFlexibility on Preparing Food Time

Weaknesses:

Product Development for New Offering Takes Too Long / Does Not Change Products OftenKnown to Serve Unhealthy Meals Limited Menu Offered to Consumers High Employee Turnover (Operation)

Opportunities:

Growing Philippine’s Economy per CapitalContinuous Products and Service ExpansionAdaptation on Products and Services to Culture and Tradition

Threats:

Consumers Look for a Healthier LifestyleIndustrializationHigh Number of Foreign Companies Entering the Fast Food Market vs. Local BrandsNon-Compliance to Sanitary Standards

Strategic Trends

Current Trend for Fast Food

Strategies

Strategies Strengths / Weaknesses Addressed Opportunities / Threats Addressed

1. McDonald’s “Made-For-You”

Strengths: 1. Quickest Serving Time Among Other Food Industry 2. Flexibility on Preparing Food Time

Opportunity: Adaptation on Products and Services to Culture and TraditionThreat: High Number of Foreign Companies Entering the Fast Food Market vs. Local Brands

2. Freebies and Budget Meals (All Brands)

Strengths: 1. Customization of Meal Servings Tailor-Fit to Consumers’ Appetite2. Cost Saving / Systematic Food PreparationWeakness: Limited Menu Offered to Consumers

Opportunity: Continuous Products and Service Expansion

3. Healthy Meal Offerings Weakness: Known to Serve Unhealthy Meals

Threats: 1. High Number of Foreign Companies Entering the Fast Food Market vs. Local Brands 2. Consumers Look for a Healthier Lifestyle

Outlook and Summary

Fast food industry will continue to grow Extreme popularity of dining outside

more than 18% of total food expenditure went toward food for consumption outside of the home (Agri-Food Past, Present & Future Report 2007)

Popularity of food retailers in malls and shopping centers than shops-on-site

Filipino consumers are by nature price-sensitive best value for money (value menus) Popularity of items sold for around PHP25 or PHP50

Outlook / Summary

Fast food industry has helped to transform not only diet, but also landscape economy, workforce, and popular culture

Whole experience of buying fast food has become so habitual

Outlook / Summary

Conclusion and Recommendation

Opportunity for economic growth Rapid increase of opening new food

chains Exploring the international market

helps advertise our country that we offer good food

markets tourism and build awareness increase sales of the company strengthens GNP

Conclusion And Recommendation

Rising concerns for “health and wellness’’ Offer nutritional items on the menu Possibility of creating a policy that will

address the health and wellness concern Positive brand - promote an ambience of

being caring to customers

Conclusion And Recommendation

Thank You