EXTERNAL ASSESMENT

A. ECONOMIC FORCES

The Philippines is among the fastest-growing economies in Southeast Asia. The

Philippine Government focuses on economic growth, accelerating employment on a

massive scale, and reducing poverty.

Threat: Inflation gained pace late in the year 2019

The Philippines' annual inflation rate eased to 3.3 percent in March of 2019 from

3.8 percent in the previous month and below market expectations of 3.5 percent. It was the

lowest inflation rate since December 2017, mainly due to a slowdown in cost of food and

housing. On a monthly basis, consumer prices rose by 0.1 percent in March, the same as in

a month earlier and marking the third straight month of rise. Inflation Rate in Philippines

averaged 8.37 percent from 1958 until 2019, reaching an all time high of 62.80 percent in

September of 1984 and a record low of -2.10 percent in January of 1959.

Opportunity: Growth of OFWs

Number of Deployed Overseas Filipino Workers

2016 2017 2018

2,230, 223 2,456,854 2,621,152

This helps local fast-food chains to establish internationally for Filipino workers.
Opportunity: Unemployment rate lessened

Unemployment rate fell to 5.4 percent in 2018 from 5.7 percent in 2017, according

to the Philippine Statistics Authority.

Opportunity: Positive ratings outlook and investors are more comfortable in investing in proven

fast-food chains.

The stability of the Philippine economy urged ratings agency Fitch to revise its

outlook for the country from stable to positive in late September. The agency also affirmed

the Philippines' long-term foreign- and local-currency issuer default ratings at “BBB-” and

“BBB”, respectively, maintaining the country’s investment-grade standing. The

expectations that the positive economic and fiscal trends will continue for the next one to

two years.

Threat: Weakening of the value of peso

The Philippine peso may continue its weakening trend against the US dollar over the

coming months to end 2019 above the P54-per-dollar level, higher inflation could pressure the

peso, which could depreciate further by 3.0 percent to P54.13 versus the greenback by end-2019.

Opportunity: Strong domestic consumption

The country has strong fundamentals and derives a larger percentage of growth

from domestic consumption. Additionally, according to Philippine Statistics Authority,

almost 42% of Household Final Consumption Expenditures in 2018 is attributable to

consumption of Food and Non-alcoholic Beverages.

While many international chains are struggling to retain their footing on key

markets, local chains have become serious strategic competitors. Asian foodservice

categories are anticipated to see significantly more growth than other categories over the

next five years, and local chains are well positioned to take advantage of this demand.

Threat: Stock market trends

Trading started to go down in the second half, after US Federal Reserve Janet

Yellen signaled the starting of monetary tightening. Concerns about the weakening Chinese

economy also contributed to the market’s decline.

BPI Securities chief executive officer Michael Angelo Oyson said the PSEi could

hit between 7,600 and 8,200 in 2016 on election-related spending and increased

government expenditures

Opportunity: Growth of the GDP trend

The Philippines is expecting growth of 6.1% next year as robust domestic demand

and election spending are seen to offset weaker trading and slow public spending. The

economy’s high dependence on domestic demand will likely insulate it from the ongoing

global trade recession.

The country’s strong services sector gives it “steady footing” as external trade in

goods and overseas workers’ remittances grow weak, the economist said, while household

consumption and pre-election trends are seen to make up for weak public spending.
B. SOCIAL, CULTURAL, DEMOGRAPHIC, AND ENVIRONMENTAL FORCES

Opportunity: Population growth/ Growing middle class

Euromonitor says that in 2030, the population of the Philippines will reach nearly

128 million. Population growth will be driven by increases in all age clusters with

predominantly fast growth in the 60+ age groups. However, the Philippines will remain a

massively young country in 2030 with 71.4% of the population aged 40 years or under.

The urban population will overtake the rural population for the first time in 2016 and by

2030 it will make up 56.3% of the population.

Another factor is the Philippines’ growing middle class, many of whom are likely

to trade affordable full-service restaurants at the expense of fast food.

Opportunity: Filipino consumer preference towards value-for-money goods and services

In a study conducted by Euromonitor International, Filipino consumers identified

value for money as an important goal when buying food and restaurant products. 91%

percent of their respondents noted that quality of products comes first and the price ranked

second with 86% in food purchase decisions. Filipinos are into purchasing value-for-

money goods and services.

Information obtained as Mang Inasal for example, offers unlimited servings of rice.

Mang Inasal continues to meet the customer’s satisfaction by providing high quality and

value in relation to cost goods and services.

The country’s top three retailers, Ayala Land Inc., SM Prime and Robinsons Land,

are expected to launch more shopping malls and account for the bulk of the new retail space

this year through 2018 on the back of rising incomes. Aside from expansion in Metro

Manila, developers are also exploring more opportunities in the provinces and neighboring

cities. “One example is the SM City Seaside in Cebu with a gross floor area of 472,400

sqm. SM City Seaside is also slated to be among the world’s largest shopping malls once

it opens in 2015,” the report said.

Opportunity: Convenience and experience are primary growth drivers

Filipinos of different social classes are leading hectic lifestyles. This pushes them

to go for products which provide convenience. As such, ready meals and foodservice are

prevalent meal preferences among busy individuals. Also, most impressive growth

opportunities globally are being driven by demand for convenience, like of retail

foodservice or home delivery.

In the recent years, the food service sector has posted strong growth and is expected

to continue doing so over the next years. It is so because time-pressed consumers utilize

restaurants as a convenient and time-saving alternative to cooking food at home.

According to Kantar World Panel, 78% of Filipinos preferred food that was

convenient to eat or prepare, while 80% of respondents indicated that they prefer food

establishments that have short cooking times.

According to Euromonitor, the number of foreign brands continues to grow in

consumer foodservice in the Philippines as local companies tend to favor the launch an

international brand over the creation of a home-grown one. In addition, an established

foreign brand is offering better prospects for success as less effort is required to build the

brand in the Philippines nowadays. American brand Applebee’s is already among those

that should be marked as major competitor as Global Restaurant Concepts Inc. confirmed

its launch in the country during the first quarter of 2015. The company is also reported to

be in discussions with four other international companies, including one which owns a

burger restaurant. The enthusiasm that foreign brands make among consumers who are

looking for variety is likely to encourage more companies to bring in more international

foodservice brands rather than create a home-grown one. International brands are also

perceived as providing a more authentic version of a particular cuisine, which makes them

an alternative places for consumers craving a particular food.

Threat: Growing numbers Street Stalls/Kiosks in the Philippines

Food truck markets are expected to continue operating in the Philippines over the

forecast period. More capitalists are expected to be attracted to investing in food trucks due

to the relatively small investment that it entails. Also, consumers are expected to be

consistently drawn to food truck markets due to the unique experience they provide. These

are expected to be popular destinations, especially among food bloggers and young adults

who like to go on food adventures with their friends and take pictures with unique food

and distinctive places.

Prosperity from the growing economy across Asia has seen a shift in local appetite

from staple grains toward more meat, fish and other foods. The research report on the

“Philippines Food and Drinks Market: Emerging Opportunities” attributed the rise in the

demand for health food and drinks to the growing young affluent population, rising

disposable income and increasing consumer awareness of health and safety concerns.

Filipino population regarded themselves as conscious in their health and well-being as they

started to pay more attention regarding to their food intake.

Threat: Increased in natural and human-induced disasters, calamities or disturbances

The Philippines was fourth in the world among countries hit by the highest number

of disasters over the past 20 years, according to the United Nations Office for Disaster Risk

Reduction (UNISDR). A total of 274 disasters were recorded in the Philippines from 1995

to 2015. The information comes from The Human Cost of Weather Related Disasters report

covering weather-related disasters from 1995 to 2015. The Philippines is also among the

top 10 countries with the highest absolute number of affected people, with 130 million.

The report found that 90 percent of major disasters were caused by weather-related

events. A collaboration by the UNISDR and the Centre for Research on the Epidemiology

of Disasters (CRED), the study reports that 606,000 people died and 4.1 billion people

were injured or left homeless because of the aforementioned disasters. Economic losses are

a major development challenge for many least developed countries battling climate change

and poverty.
C. POLITICAL, GOVERNMENTAL AND LEGAL FORCES

Opportunity: Improved Food Safety Standard according to Republic Act No. 10611 or the

“Food Safety Act of 2013”

An act to strengthen the food safety regulatory system in the country to protect

consumer health and facilitate market access of local foods and food products, and for other

purposes.

Threat: 3% decrease in the corruption perception index of 2015

In the study conducted by Transparency International in which a country or

territory’s score indicates the perceived level of public sector corruption on a scale of 0

(highly corrupt) to 100 (very clean). A country's rank indicates its position relative to the

other countries in the index. Year 2018's index includes 168 countries and territories.

Philippines ranked 95 with the score of 35 out of 100 which is 3% lower than 2015’s 38

out of 100. Despite of President Duterte’s anti-corruption drive, investor services might

disapprove even if there is an improvement in the investor confidence of the country.

D. TECHNOLOGICAL FORCES

Opportunity: Rampant use of social networking in the Philippines

Both and beyond the Jollibee food industry, some of the technological advances

will serve to improve the experience both for the industry and for the patron. Yet with every
 new advance comes a new challenge, and with technology moving faster these challenges

can seem insurmountable. It allows the patrons to find restaurants, rate them, and decide

where they want to spend their money when they go out to eat. It allows restaurant owners

to be more efficient and effective in the areas they feel can be streamlined.

In 2016, the Philippines has shown a rapid rise in the number of users of social

networking sites such as Facebook. As of April 2019, the Philippines ranks 6th in the world

with highest Facebook penetration.

Opportunity: Significant growth of internet retailing

Internet retailing will remain to experience strong growth over the projected period

as more Filipinos are expected to be drawn to the method due to the convenience, wide

selection of products and attractive promotions that retailers will continue to provide. More

payment options will also be made available to encourage more consumers to shop via the

internet. Innovations such as cash/credit card payments of food delivery & delivery to

another address system.

I. ADVERTISING

Jollibee – Needs improvement in advertising strategy as compared to McDonald’s

although it focuses on family values and delicious but affordable products. Recent

use of highly popular loveteam.

Aside from promoting a family oriented work environment, the brand’s values also

reflect on their advertising and marketing. Jollibee knows their target audience very

well: the traditional family. All communication materials focus on the importance of

family values, making Jollibee the number one family fast food chain in the Philippines

and a growing international QSR player. In addition, Jollibee stresses the affordability

of their products. Recently, JaDine, a popular loveteam in the country appeared in

their tv commercial. The company has their own official website where it can help them

in offline marketing for them to reach a multitude of potential customers. In addition,

The Jollitown is a show whose objective is to attract kids and promote their products

through them.

McDonald’s- Excellent marketing and advertising strategies through the years.

The company has gained firm brand identification in the country through it

excellent marketing and advertising efforts. In recent years, the advertising agency of
McDonald’s, DDB Philippines, garnered numerous awards for their McDonald’s

campaigns. DDB won 6 Bronze trophies for Film with entries that include Grab and

Go Breakfast “Cook,” “Hold This Please,” and “McDonald’s First Love.” According

to Euromonitor, Filipinos continue to identify more with Jollibee but McDonald’s

Philippines has started to make inroads in getting the Filipino customers’ attention

through Filipino-themed marketing campaigns such as “Love ko ‘to.” (Tan, N.A)

In 2015, McDonald’s Philippines won the inaugural Digital Marketer of the Year

and Digital Advertiser of the Year. The company won 4 bronze awards under the

Campaign category, 3 awards under Effective Campaign category and “Business

Results Excellence” award under Special awards.

In addition, the company is known for using highly popular artists, sports figures

and loveteams such as AlDub, Enrique Gil, Nino Muhlach, Luis Manzano, Toni and

Alex Gonzaga, Jessy Mendiola and Jeric and Jeron Teng.

The McDonalds objectives in advertising are to make people aware of an item, feel

positive about it and be sentimental about it. The McDonalds first love commercial was

aired 2009 where it gave the consumers to remember their nostalgic childhood

memories by using the backdrop of memorable Eraserheads song Ang Huling El Bimbo

which was also became Top Ten Philippine Advertising Campaign in 2009.

KFC – Focuses on introducing and promoting their products. Weak advertising

campaigns.
 KFC continues to struggle to connect with general masses which comprise a large

portion of fast food consumers. KFC ranks 3rd in brand identification tests of fast food

chains in the Philippines. According to Euromonitor, the company lags behind Jollibee

and McDonald’s in terms of brand equity. One of the reasons as to why the company

fails to connect to Filipino consumers is because the focus more on the introduction

and strengths of its product rather producing a heartwarming commercials which

attracts mostly the Filipino people.

II. PRODUCT QUALITY AND TASTE

JOLLIBEE

Jollibee ranked first in the overall food quality and taste among Filipino consumers

according to an independent consumer food panel testing conducted by Datamonitor in

2015. Chickenjoy also reaped the highest percentage among chickens offered by

competitors. Spaghetti and burgers also garnered a favorable rating.

MCDONALDS AND KFC

McDonalds and KFC followed Jollibee in the ranking as they tied second in the

survey. McDonald’s product such as Big Mac and Chicken McDo had positive

satisfaction rating of 74% and 70% respectively. KFC’s Zinger, Hotshots and KFC

chicken also garnered a favorable satisfaction rating of 75%, 70% and 70%,

respectively.
III. PRICE COMPETITIVENESS
PRICE COMPARISON BETWEEN JOLLIBEE,

MCDONALD’S AND KFC

Category Jollibee McDonald’s KFC

1. Chicken Php 99 Php 102 Php 119

2. Spaghetti Php 50 Php 50 Php 50

3. Plain burger Php 30 Php 35 Php 35

4. Regular fries Php 29 Php 33 Php 36

IV. NUMBER OF STORE LOCATIONS

JOLLIBEE

JFC has a total store network of 2,951 stores worldwide as of March 31, 2015. In

the Philippines, JFC’s store network totals to 2,335: Jollibee brand 869, Greenwich

216, Chowking 419, Red Ribbon 334, Mang Inasal 452, and Burger King 45. Abroad,

it operates 616 stores: Yonghe King 313, Hong Zhuang Yuan 43, and San Pin Wang,

53, all in China, Jollibee 123 (USA 32, Vietnam 60, Brunei 12, Saudi Arabia 10, Qatar

3, Kuwait 3, Singapore 2 and Hong Kong 1), Chowking 47 (US 19, UAE 20, Qatar 5,

Oman 2 and Kuwait 1), Red Ribbon US 34 and Jinja Bar US 3.

McDonald’s has grown to have more than 33,000 restaurants all over the

world. Today, McDonald’s has grown to become one of the country’s leading fast food

chains with more than 460 restaurants nationwide.

KFC

As of year-end 2018, there are 23,000 KFC outlets in 119 countries and territories in the

world.

V. SPEED AND QUALITY OF SERVICE

JOLLIBEE

Jollibee highlights the need for quick and good quality of service. The crew are

trained to be professional and approachable at the same time. Through this they

developed a welcoming and family-oriented approach in serving their customers. They

conduct comprehensive training programs that seek to improve their ability to serve

consumers at the shortest possible time. Though they have shown great emphasis in the

need for quick and good quality of service, there have been reports and experiences

that shows Jollibee’s slow service due to inexperience & inadequate number of crew

members as well as the process time of orders especially in peak hours.

MCDONALD’S
 McDonald's emphasizes to its customers that it is committed in providing optimal

service quality and speed. It has also an advantage in improving customer service

through advance technology. According to customer services at McDonald's, every

customer receives an accurate, personal and timely response from their feedbacks.

Employees trains to deal with complaints effectively through tools and resources.

Nonetheless, there are still ordinary problems and feedback from the customers. They

pointed out the members of the crew for not being courteous and such.

KFC

KFC introduced an ordering and claiming system so that service and quality would

be improved. But consumer reports show that due to inefficient crew members, KFC

suffers from slow service. Though KFC introduced a new system to improve their

quality of service, there is a need for the company to improve their crew members.

VI. PRODUCT VARIETY AND MIX

JOLLIBEE

Jollibee has expanded its menu with the introduction of new rice meals such as the

Garlic Pepper Beef meal, Reese’s and Hershey’s Mix-In, Amazing Aloha Champ,

Ultimate Burger Steak, Garlic Bangus, and the reintroduction of Peach Mango Pie.

Jollibee also provide a large set of food choices from breakfast meals to desserts. Their

breakfast meals offer classic Filipino foods such as hotdog, beef tapa and longganisa.
 MCDONALD’S

McDonald’s Philippines has introduced a innovative line of deserts that aim to

please customer’s needs. The new products include: the Oreo Overload McFlurry, the

Double Hot Fudge Sundae, the Double Hot Caramel Sundae, Green Apple Sprite Float,

Waffle cone w/ caramel Toppings and large Strawberry/Ube McDips. They also offer

a wide variety of cafes such as McCafe Iced Mocha, McCafe Double Choco Frappe,

and McCafe Strawberry Smoothie. However, as McDonald’s focuses on launching new

deserts and drinks, it continues to lag behind other competitors in terms of rice meals.

KFC

KFC has recently diversified their product line-up with the introduction of the

Cheezy Bacon Fest that includes a Pasta Bowl, Zinger, Twister, Chik’n Fillet,

Cheezified Baconized rice meal, and a bucket of fries which is topped by cheese and

bacon. They also introduced Korean Bibimbap and Texas Barbeque. They also

introduced new flavours of KFC Krushers, its line of drinks, which include Rockin‟

Road, Kookies n‟ Kream and Mixed Berries.

VII. FINANCIAL POSITION

JOLLIBEE

The total assets of Jollibee Corporation as of 2018 is Php 74.11 billion with a

recorded liabilities of Php 34.04 billion. Revenues coming from sales is Php 102.20B

while cost of sales reached Php 87.72B. Based from the financial statements presented
by Jollibee, it can be seen that their financial position is very strong as their sales, and

assets are continuously increasing. This conclusion can also be derived at good

financial ratios of the company.

MCDONALD’S

McDonald’s restaurants are franchised in the Philippines through Golden Arches

Development Corporation. GADC has recorded revenues of Php 27.74 billion, Php

35.97B and 49.92B in the years 2016, 2017 and 2018, respectively. Costs and expenses

are recorded at 17.64B.

KFC

The total assets of KFC as of 2018 is Php 14.11 billion with a recorded liabilities

of Php 3.04 billion. Revenues coming from sales is Php 10.20B while cost of sales

reached Php 7.02B.