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In direct service to the more than 500,000 Filipino expatriates living and working in the United Arab Emirates, Jollibee opened its first outlet in the Dubai Mall in 2015, and has since expanded to four outlets across the market, with further openings planned. The fast food chain is much loved at home in the Philippines, with a very strong 37% value share in fast food in that market, and can be found in other selective markets in which the chain unabashedly caters to the greater Filipino diaspora living abroad but looking for a familiar taste of home.
The United Arab Emirates is no different. Leveraging this powerful sense of nostalgia, the chain’s Dubai Mall opening was the company’s most successful global launch to date, according to the company, and, as of January 2016, the outlet has been Jollibee’s single best-performing outlet worldwide. Foodservice in the United Arab Emirates is experiencing a premiumisation trend, however, and global chains have justifiably targeted the market for growth. Nevertheless, Jollibee has managed to tap into a relatively underserved market for a value-orientated positioning in fast food, providing a service that low-income consumers need and an experience they are likely to prefer.
In what might seem like a departure from standard global foodservice strategy, Tony Tan Caktiong, founder of Jollibee Food Corp, the Manila-based parent company of the Jollibee fast food chain, utilises the Jollibee brand as the face of the company, but engages a strategy of acquiring popular foreign chains in order to grow the company internationally, as opposed to prioritising the expansion of the Jollibee brand into new markets. Other major global fast food chains such as McDonald’s and the Yum! Brands’ concepts, by contrast, have modified formats and menu offerings to generate the broadest appeal for local consumers and facilitate expansion. Menu offerings at McDonald’s outlets can look drastically different across markets.
When the company has expanded the Jollibee brand to new markets, however, it has done so, unapologetically, to specifically target local populations of Filipinos, rather than modifying the concept for broader appeal. The format, menu offerings, overall experience – and even price points – do not stray far from the original concept Filipinos will remember from home in the Philippines. For this reason, Jollibee’s global presence is centred on the US, the Middle East and Southeast Asia, regions with large populations of Filipinos. Relying on the acquisition of other brands for global growth, such as the nearly two dozen Chowking outlets of Asian fast food the company already maintains in the United Arab Emirates, has given Tan the financial flexibility to replicate the authenticity of the original Philippines Jollibee experience, regardless of local market dynamics, for the specific benefit of the greater Filipino diaspora.
Given the large community of Filipino expatriates, and the fact that fast food grew 11% in value terms in 2015, the United Arab Emirates might be an obvious choice for expansion of the Jollibee brand. The foodservice market, however, is generally trending up towards more premium concepts, as evidenced by the surge in fast casual formats, such as Five Guys, which also entered the market in 2015. Fast casual formats as a category grew at a 60% value CAGR in the 2010-2015 review period, and even McDonald’s is tapping into this upmarket swing by rolling out “Create Your Taste” kiosks and limited table service in order to remain competitive amongst premium-orientated consumers.
Despite these trends, approximately 89% of consumers in the United Arab Emirates are expatriates, according to BQ Magazine, a business editorial based in Qatar, and most of them are comparatively low-income, working-class consumers who rely on foodservice, albeit non-premium foodservice, for their meals. Given the limited earning potential common to migrant workers, shared living conditions with limited access to proper kitchens or cooking equipment are common. Additionally, grocery prices are high enough that cooking at home can be nearly as expensive as dining out. Cheap foodservice options, therefore, are extremely attractive to this large consumer segment.
Undoubtedly, the most financially viable method of eating out for low-income consumers driven to foodservice by necessity is the inexpensive street food widely available, such as any of the market’s ubiquitous shawarma stands. However, consumers looking for a better foodservice experience seek out value-orientated fast food concepts. To illustrate these options, a one-piece Chickenjoy combo meal with rice and a drink at Jollibee, for example, costs AED12 (US$3.27), while typical shawarma can cost between AED7-10. By comparison, a chicken deluxe meal (including fries and a drink) at McDonald’s costs AED25 and a cheeseburger, small fries and a drink at Five Guys rounds out to a whopping AED71 (US$19.33), according to Zomato.
This means by resisting fast casual prices that might boost profit margins, Jollibee is well suited to providing that much-needed option for consumers looking for a little more in terms of experience, but who are not able to afford more expensive fast casual concepts. Jollibee’s diverse menu of offerings typically uncommon to fast food, such as spaghetti, also gives the brand a leg-up on other value-orientated fast food chains, such as KFC, with more common offerings.
Jollibee has an immediate and loyal consumer base amongst the United Arab Emirates’ large population of Filipinos, which, alone, would be enough to maintain profitability. But Jollibee is filling a gap in the market that has the potential to attract a much wider set of consumers looking for a bit of the experience Filipinos already know so well. Expect to see more Jollibees in future.