Jollibee and McDonald

Manila — Sometime in the late 1970s, Tony Tan Caktiong, the owner of a small ice cream parlor in a lower- middle-class neighborhood here, learned that an American hamburger chain was coming to invade the Philippines.
Worried that his store, which had just started selling burgers, might get floored by the new competition, Tan Caktiong, a Filipino of Chinese descent, took a leaf from the Chinese military tactician Sun Tzu: he flew to the United States to know his future enemy.
When he returned to the Philippines a few weeks later, Tan Caktiong brought with him an arsenal of ideas on how to fortify his store, called Jollibee, to face the newcomer.
By the time McDonald's put up its first store here, in 1981, it no longer offered anything new. Jollibee, meanwhile, was already prepared, having opened nine branches and started an aggressive marketing campaign. Jollibee entered the list of the top 1,000 corporations in the Philippines that same year. By 1984, it was in the Top 500 list and dominated the local fast-food market.
The Philippines, The Economist magazine wrote in 2002, "is a huge embarrassment to McDonald's," citing a Taylor Nelson Sofres study showing that Jollibee was the "most often visited" fast-food restaurant in the country.
Jollibee had grown so big and confident that, in 1986, it opened its first store overseas, in Taiwan. It was a sign of things to come. In 1998, Jollibee would encroach on McDonald's home territory, opening its first U.S. store in Daly City, California, which has a large Filipino population.
Today, Jollibee has more than 700 stores in the Philippines and 25 in other countries, selling more than half a million burgers every day. McDonald's has about 700 outlets in the Philippines, according to Cerwin Eviota, a public relations consultant for the chain.
According to company officials and food experts, Jollibee owes its success to the fact that it respects local tastes. Unlike McDonald's, which was constrained by its obligation to remain faithful to its core products, Jollibee was flexible.
It helped that Jollibee makes sweet spaghetti, which is a turnoff to foreigners but loved by Filipinos, particularly children. It also offers Filipino fare like palabok - vermicelli noodles topped with sauce and fish flakes - and arroz caldo - rice porridge with chicken bits.
It may be hard for McDonald's to match that, but it is certainly trying. This year, the McDonald's Philippine franchise became 100 percent Filipino-owned, which gave its owners some flexibility. George Yang, the Filipino-Chinese chairman of Golden Arches Development, the local McDonald's franchisee, now has taken a leaf from Tan Caktiong's book.

Yang said that his full acquisition of the franchise here would enable McDonald's to "give our customers even more by being more sensitive and responsive to their changing tastes and wants and by adding a local flavor to our product range."