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Inclusive Asia

Inclusive Agribusiness Roundtable in Southeast Asia

The story of

Jollibee Foods Corpora on

Sourcing strategy for quick service restaurant
Developed by

Monika Sopov

Centre for Development Innova on, Wageningen UR, 2015

1 | Company background 4
2 | Launch of Jollibee Group Founda on (JGF) 6
3 | Lessons learnt 12
4 | Ques ons the company is struggling with 13
New Business Model Principles 14

1. Company background

ollibee Foods Corpora on (JFC) is the Philippines

largest food service business. It has been the
dominant force in the local fast food landscape
with its domes c market share more than all the other
fast food restaurants combined. JFC has a System
Wide Sales of Philippine Pesos (P) 117.9 billion and a
Net Income of P5.4 billion in 2014.

The company started in 1975 when Tony Tan Cak ong

and his family opened a franchised Magnolia Ice
Cream parlor in Cubao, Quezon City. In 1978, the
company shi ed its business focus from ice cream
to hamburgers to sa sfy peoples demand for sandwiches and hot meals.
Since then, JFC has grown its presence exponenally in the region, boas ng several popular food
service restaurants with more than 2,300 branches
locally and more than 600 in various countries. Its
brands are Jollibee, Greenwich, Chowking, Red Ribbon,
Mang Inasal, Burger King Philippines, Yonghe King,
Hong Zhuang Yuan and San Pin Wang, the last three
brands all located in China.
JFC also has a 50% share in joint ventures with
Highlands Coee. Pho 24, 12 Sabu.
The Jollibee brand operates in an American-style
fast food restaurant se ng serving burgers, chicken,
spaghe and some local Filipino dishes.

1.1. Rapid growth

1.2. Market leader

During more than three decades of existence, Jollibees

exponen al and constantly expanding growth has
always been one of the most lauded success stories
in the country.

In 2014, Jollibee Foods Corpora on has grown to

become Asias number one restaurant chain in terms
of market capitaliza on. It is also one of the most recognized and highly preferred brands across the region.

Jollibee started opera ng with five branches in 1978

and has now expanded to a robust store network
of 882 stores in the Philippines, and 132 stores interna onally with a total of 1014 stores worldwide as
of July 2015. Jollibee has store presence in the following countries: USA, Vietnam, Brunei, Saudi Arabia,
Qatar, Kuwait, Singapore, Hong Kong, and UAE. The
fast food chain aims to open more stores both in the
countries where they are already opera ng and in
countries where there are large Filipino communi es.
The brand opened successful milestone stores in the
following years:

Jollibees success is a ributed to its everyday delicious

and aordable menu line-up, adherence to world class
opera ng standards and the universal appeal of the
family values the brand represents.

100th in Davao on 1991

200th in Malolos, Bulacan in 1996
300th in Balagtas, Bulacan in 1998
400th in Intramuros, Manila in 2001
500th in Basilan in 2004
600th in Aparri in 2007
700th in Harrison Road, Baguio City in 2010
800th in Malaybalay City, Bukidnon
on October 18, 2013


Jollibee has received many accolades in the internaonal front. It has consistently been men oned as
one of the Philippines and Asias most admired and
outstanding companies from interna onal publicaons such as Forbes Asia, Euromoney, The Asian Wall
Street Journal and Asia Money. In 2008, it was also
the recipient of the FMCG and F&B Asia Pacific
Supply Chain Excellence Award at the SCM Logis cs
Excellence Awards.

1.3 Family oriented approach

At the heart of its success is a family-oriented approach
to personnel management, making Jollibee one of
the most admired employers in the region with an
Employer of the Year Award from the Personnel
Management Associa on of the Philippines, Best
Employer in the Philippines Award from Hewi Associated and a Top 20 Employer in Asia cita on from
the Asian Wall Street Journal.

2. Launch of Jollibee Group Founda on (JGF)

In December 2004, the corporate social responsibility
(CSR) arm, Jollibee Group Founda on (JGF), was established by Jollibee Foods Corpora on (JFC) to make
giving back an organized corporate commitment. The
Founda on provided JFC the mechanism to organize
all the outreach ac vi es of the company under one
umbrella. The Founda on aims to contribute in ensuring that Filipino families access basic community
services and live a life defined by dignity, purpose
and ac ve par cipa on in na on-building. The Jollibee
Group Founda on is built on three principles:

3040 1.5%

million pesos/ of JFCs net

year the average annual income donated

1. Linking CSR to Core business

Programs should be strategically linked to the core
business of JFC, building on the strengths of the
company to ensure sustainability.

JGF program budget

2. Work with proac ve communi es

Help those who are determined to help themselves.
Work with communi es as partners not as mere

Foundation is working with


3. Build value-based partnership

Form partnerships with like-minded individuals and
ins tu ons, and harness their exper se and passion.
Partnerships are valuable to mobilize all the needed
resources and to make the work impac ul.

on 3 main islands

to JGF annually

Land owned
by the farmers
supported is

500 square
meters (small)

5 ha (big)
average is 1 ha

JGF builds on the strengths of JFC as a food service

company with the following key programs:
Educa on
Busog (Healthy), Lusog (Well-fed),
Talino (Smart) School Feeding Program

1 group rents
cold storage facilities

Livelihood for small farmers

Farmer Entrepreneurship Program
Disaster relief and rehabilita on
Jollibee Group Food Aid Program

It is not that people are not willing, but it is not easy to do JGF employee

JGF posi oned its assistance to provide support to

farmers up to the point where they are able to nego ate
their own contracts with companies. To do this, it had
to work with like-minded partners.

2.1. Farmer Entrepreneurship

Program (FEP)
Despite the high demand for agricultural produce
and livestock, many individuals and families in rural
areas struggle daily to make ends meet.

The program provided smallholder farmer groups with

a package of support consis ng of agro-enterprise
training through the partner Catholic Relief Services
(CRS), access to credit through the Na onal Livelihood Development Corpora on and its partner
micro-finance ins tu ons, and direct market access
for their produce which JGF facilitated. In that same
year, 5 farmer groups (442 members altogether) were

JGF wished to develop strategic programs that would

build on the core competency of the company. A very
relevant entry point was buying fresh produce from
farmers. With its parent company, JFC, subscribing
to global standards, JGF had to contend with the
fact that the farmers have li le capital, lacked access
to resources, were not ready to engage in business
rela onships, and were not able to provide consistent
quality and quan ty of produce.

The JFC Purchasing Group iden fied the following

crops for sourcing from smallholder farmers: onion,
green bell pepper, chilli and Philippine lemon. Onion
was the first product farmers produced for JFC. Prices were agreed per season for the onion, and were
nego ated each month for bell pepper, tomatoes and

The Farmer Entrepreneurship Program (FEP) was

launched in 2008 by the Founda on in partnership
with the Catholic Relief Services (CRS) Philippines and
the Na onal Livelihood Development Corpora on
(NLDC). The program has three key components:

Between 2008 and 2014, the Founda on and its

partners trained more than 1800 farmers on how to
access markets. The program trained farmers regardless
whether they could supply input for JFC, or would sell
their produce to others, even to compe tors.

1. Farmers Training
The program trains farmers on agro-enterprise development, using the eight-step clustering approach
developed by the CRS.

In 2015, JGF started directly working with 11 farmer

groups from 5 provinces that are supplying JFC. As
peeled onions fetch 20% higher price than unpeeled
onions, farmers got engaged in peeling the onion
before transpor ng them to JFC. Currently, 25% of
onion and chilli demand of the company is met by
smallholder suppliers. On the other hand, the capacity
of the farmers to produce more bell peppers can s ll
be improved.

2. Partnership Management
JGF assists farmers in organiza onal development
and partnership management to ensure the sustainability of the links established between the farmers
and their ins tu onal buyers local fast-food restaurants, supermarkets, and food processors.
3. Advocacy and Promo on
The program, in partnership with academic ins tu ons,
documents its ini a ves and develops program materials case studies and audio-visual presenta ons
to share the learnings from the FEP.

The inten on of the company is to increase sourcing

of dierent produce from smallholders, but for risk
management purposes (quality, quan ty, natural disaster), other suppliers will s ll be maintained at the
same me.

2.1.1. Incen ves

For JFC and JGF, the key incen ves to be engaged in
Inclusive Business (IB):


Fulfill JGF vision of helping Filipino communi es

to access basic services and ac vely par cipate in
na on-building.
JFC is able to expand its base of local suppliers.
Reduced post-harvest handling JFC can source
fresh, high-quality produce that goes through less
layers and thus less handling. There is also shorter
lead me for ordering deliveries and ge ng feedback from the farmer suppliers.
Assurance of quality requirements because the
farmers know how to meet JFC specifica ons.
Improve employee morale JFC employees feel
proud that they are able to help smallholder farmers.

have delivered
to institutional


linked to smallholders


For farmers, the incen ve to be engaged in IB:


Increased income for farmers and other community

Changed view on the future agriculture can be
a sustainable long-term business that can support
their families and oer a promising future.
Development as entrepreneurs access to skills,
inputs and markets to be able to capitalize on the
opportunity above.
Change in quality of life as a result of economic
growth: food security throughout the year, children
can be sent to be er schools, addi onal assets can
be acquired (tricycle, machinery, equipment, etc.);
there is no need to borrow as much money as before, and now, farmers know whom to borrow from.
Pride knowing that they can comply with the
stringent quality standards of a global corpora on.
Become empowered to nego ate price for produce
with company.
Contribute to community development.

trained in enterprise

Farmers are from


cities partners


working together to
support the program

Their program partners, CRS Philippines and NLDC,

provide the technical trainings and access to credit via
accredited microfinance ins tu ons (MFIs). The program
also helps ensure local support by partnering with local government units (LGUs) for the implementa on
of the FEP in their respec ve municipali es/ci es.

My dream is that the farmer cooperative will be

stable with many members continuing production (currently, we have 72 members). We want
to double the volume of production. I would like
to get into other businesses: sourcing inputs
(e.g. varieties of produce, fertilizers); I want to
be able to provide better services to members.
Also, opportunities are opening up to supply produce to other companies through the exposure to
JGFs network. (General Manager of Kalasag Cooperative

JGF plays a bridging role between the farmer groups

and JFC. The Founda on manages the social preparaon of the farmers, working with various partners to
facilitate both technical and leadership training for
the farmer groups.

in San Jose)

2.1.2. Achievements

In addi on, JGF is suppor ng the se ng up of a FEP

learning centre in San Jose City, Nueva Ecija, its first
pilot site. The learning centre aims to disseminate
knowledge on FEP to interested par es. The learning
centre is owned and managed by the local government
unit of San Jose City through its City Coopera ve
Oce. The Centre will provide the following:

For the pilot year of the project (20082009), five

municipali es in the provinces of Nueva Ecija, Nueva
Vizcaya, Bukidnon, and Zamboanga Sibugay par cipated in the project. The project provided training
to increase the farmers produc vity and gain skills
in enterprise management as well as improve their
access to credit through the help of partner finance
ins tu ons.

data from the experience of working with farmers

since 2008 are collected and systema zed (produc on, marke ng, etc.);
visit farmers and meet farmer leaders on site;
video clips are also available to enrich the learning

The results of the pilot project were varied. Farmers

were able to deliver onions from Nueva Ecija and
Bukidnon as well as bell pepper from Nueva Vizcaya.
But they were unable to sustain a year round delivery
due to lack of produc on and post-harvest facili es.
Other products such as rice, Philippine lemon from
Mindanao and carrots faced significant constraints
promp ng the group to review the inclusion of either
the products or the sites in the project.

2.1.3. Extent of inclusiveness

To evaluate to what extent a business rela onship
with a formal buyer is inclusive of small-scale producers, the Business Model Principles from the LINK
methodology (CIAT, 2012) were applied.

By 2014 the program has assisted 27 farmer groups

from Luzon, Visayas, and Mindanao. From these,
20 groups have delivered to various ins tu onal buyers
such as restaurants, supermarkets, and food producers.
In addi on, 20 ins tu onal markets had experienced
directly sourcing from smallholder farmers for their
vegetable material requirements through FEP. These
companies prac ce inclusive business by oering
the farmers opportuni es to be directly part of the
supply chain. FEP has partnered with 85 local ins tuons to train and develop more than 1,800 farmers
from 15 provinces na onwide. The Department of
Agriculture has also provided training and agricultural

Extent of inclusiveness in the trading relationship

between JFC and farmer groups
Chain-wide collaboration

of outcomes


The FEP experience has demonstrated that by combining the elements of market, finance and agro-enterprise clustering, farmers can meet the volume, quality
and meliness requirements of ins tu onal buyers.


Fair and
Equitable access to services

Kalasag Farmers Cooperative Onion delivers to JFC (in metric tons)








Effective market


Chain wide collabora on

and Industry (DTI). Members of DTI conducted

a learning visit to the FEP site in Nueva Ecija to
learn how the mul stakeholder model was able
to assist farmers to develop their agribusiness
(LMPC) in Cebu, and the Alabat Island Farmer
Producers Coopera ve in Quezon.

Clearly, the partnership between academics, microfinance ins tu ons, dierent levels of government,
JFC, JGF and the farmer groups are set up with shared
goals for collabora on. That is reflected in the contribu ons of the dierent partners to the ini a ve.

New market linkages

Several champions ensure that the ini a ve receives
due a en on:

JFC provides stable linkages to market for farmers.

Parameters of requirements are clearly communicated to farmers. During the last season, out of
the 81 onion deliveries, only 1 was rejected and the
farmers understood the reasons why based on
the communicated parameters.
The market linkages translate into an increase in
income, which has a posi ve impact on the livelihoods of farmers.
Currently, there are few instances when the farmer
groups fail to meet 100% of the agreed volume for
delivery. Due to changes in their leadership, some
of the farmer groups are s ll at the beginning of the
learning curve.
Price of the onion oered by farmers is compe ve
in comparison with onions produced elsewhere in
the Philippines, but they are not compe ve when
it comes to interna onal markets. Because onion
is only planted once a year, at certain mes of the
year, onion imports from Vietnam, China, etc. are
much cheaper than the domes c supply.
The company delivers not only commercial but
also social value, as the market linkages allow
farmers to get out of poverty.

the founders/leaders of JFC and JGF are highly

mo vated to give something back to the communi es, and link the strategy to do so to the
core business of the company;
the Mayor in San Jose is eager to increase economic development in the region by suppor ng
smallholder farmers.
Key partnerships are contribu ng to the success of
the program:
FEP was co-developed with CRS Philippines and
NLDC. The CRS promotes market-driven strategies
that facilitate farmers ac ve par cipa on in modern
markets, and implements assistance projects for
smallholder farmers funded by donors such as the
United States Department of Agriculture (USDA).
The CRS has developed and has trained farmers on
an eight-step clustering strategy/approach to agroenterprise development.
NLDC is a government-owned corpora on that
provides credit to farmers through accredited microfinance ins tu ons (MFIs) rural banks, cooperaves, and nongovernment organiza ons (NGOs).
The on-the-ground program implementers are local
government units (LGUs) and MFIs. These local
implemen ng partners play an important role in
facilita ng the process with the farmers. This includes strengthening rela onships with farmer
groups and ensuring that both the technical aspects
(produc on and marke ng) and organiza onal/
ins tu onal systems are aligned with JFC and JGF.
In 2013, the Department of Agriculture (DA),
provided support to FEP for addi onal trainings
and farm inputs. The project, which was implemented from 20132014, u lized government
funds worth PhP8.15 million to provide postharvest facili es (rain shelters, transporta on vehicles, and tractors), agricultural equipment (water
pumps for irriga on) and inputs, and other forms
of assistance to FEP farmers.
JGF and FEPs partners have been tapped as resource persons in the development of Negosyo
(Business) Centers by the Department of Trade

Fair and transparent governance

The contractual arrangements are between farmer
groups and the company. Ini al volume commitment
is agreed upon before plan ng. Farmer groups
commit themselves to provide certain quan ty and
quality of produce at a certain me in the future,
and the company commits to buying it. However, during produc on there might be adverse
eect on the plant (drought, pests, and diseases),
therefore, before delivery, a more specific contract
is agreed between the par es. This set-up allows
the farmer to decrease volume delivered and to
avoid receiving a nega ve mark on their records.
Receiving a nega ve mark leads to reduced orders
from the company.
Currently farmers have diculty in securing crop
insurance (weather, storage/inventory).
Prices are nego ated between farmer group and
the company. Prices are ocially not communicated across farmer groups.


Equitable access to services

Access to knowledge:
Through local partner of JGF, farmers have access
to capacity building in basic business management
and produc on technology. However, farmers would
need a lot more support in terms of agro-technology
(technology; post-harvest, pest-management, increasing yield, right variety). Unfortunately, farmers
do not have easy access to this knowledge from
research ins tu ons. In the case of pest management for tomatoes only 1 person was iden fied at
the state university to be able to have up-to-date
knowledge on fruit flies. A possible reason is that
the government programs are focusing on rice,
not on onion, bell pepper, chilli and Philippines
Access to credit:
JGF did not provide the financing but instead
engaged third party providers to take up that role.
Interest rates are generally high. In addi on, new
financial products are needed that would allow
farmers to access credit to finance transporta on
of their produce, and other ac vi es such as
marke ng, storage, etc.
Access to technology:
In the case of onions, technology remains a problem. Lack of mechanisa on increases produc on
Access to transporta on:
This is a key issue for smallholders. They generally
do not own trucks, and there is no logis cal service
provider filling in the gap. The combina on of
distance to JFC and high transporta on costs also
hike up the prices.
Inclusive innova on
While JGF is keen on working together with the
farmers, co-innova on is s ll a challenging process,
as most cases farmer groups are not business savvy
enough to iden fy opportuni es for improvements,
and act in a more leading role when it comes
to innova on whether it is products, services or
Measurement of outcomes
JGF is s ll in search for an appropriate M&E system.
The Founda on has started developing its M&E
system this year that is easy to manage and can
be operated with an aordable cost structure.

3. Lessons learnt
Working with the public sector

Selec on of farmers

Agriculture is covered by 3 dierent government

agencies: Department of Agrarian Reform, Department of Agriculture, and Department of Environment and Natural Resources. As a private
sector actor, it is challenging to have to talk to three
dierent agencies. It would help if a mechanism is
available to help coordinate the work among the
three agencies.
Agriculture research is lagging behind for high
value crops: agro-technology, post-harvest, pestmanagement, increasing yield, right variety.
In hindsight, JGF could have reached out to research/
academic ins tu ons in the early stage of the program to develop an appropriate M&E system.

Selec on is mostly le to partners as they know

the farmers in the region. The Founda on focuses
on selec ng geographic diversity to ensure proper
risk management (natural disasters, climate) and a
be er yearly coverage of JFC demanded by farmers.
Onion, for example, is sourced from 3 provinces.
JGF can work with exis ng or new farmer organizaons but they need to have a legal en ty (i.e. government registered) and must be registered with the
Bureau of Internal Revenue to be able to issue
Working at dierent levels
The Founda on works at na onal, province/city
and municipal levels; this way it can a ract the a enon and needed support not only for its own FEP
program, but to IB in the Philippines in general.

Selec on of partners
JGF has learnt that good inten ons do not necessarily lead to good results. The Founda on
worked with partners in the past that did not
have the required competencies to fulfil their role
in the partnership, nor they could acquire those
competencies during the trajectory. Therefore, the
Founda on now places great emphasis on partner
selec on.
3 local partners that compose the site working
group: local government, microfinance ins tuons (private sector), academic ins tu ons.
Within the local government, there is a need for
a partnership among the dierent departments
to achieve meaningful and sustainable results:
Coopera ve development oce, city agricultural
oce (quality issues), environmental oce.
Partners that are selected have their own means
to invest in the partnership
Local partners cover salary of their own sta
Farmers provide food during mee ngs
Local government might support the farmers
with special incen ves.

Championing and inspiring leaders

The hearts of the founders of JFC/JGF are set on
suppor ng smallholder farmers, and that kind of
DNA permeates the company.
Local leaders: the most successful ini a ve of
FEP is in an area where the Mayor got into power
in 2007, and had the business acumen to see the
poten al of working with the Founda on. She had
been already engaged in business, as her family
owns and runs a rice milling company. At that
me, producing onion was a dying business. The
mayor was eager not only to provide poli cal
support, but with her business insights she has
been a key figure in shaping the FEP strategy with
JGF in the region and transforming onion produc on into a booming business for smallholders.


4. Ques ons the company

is struggling with
Need for


intermediary organiza on that can bring dierent

partners together (organizing, financing, producon, technology)

How many small holders does JGF have to train?

Currently 50% of the trained farmers are delivering
to other companies. What is the appropriate level
of scale that will demonstrate the value of the
model for other companies to adopt the same?
Infrastructure for logis cal issues (farm to market
roads, vehicles?) What logis cal systems are
there to support farmers (from consolida on to
delivery to company)? How to put logis cal systems into place that are aordable for farmers?
How to do further business development? JGF is
s ll a founda on; next challenge is growing the
business. How to get the assurance that farmers
do not go back to poverty? How to build resilience?
What could be the next steps? What is it that will
be eec ve?
How to measure impact of the FEP program of
JGF in a cost-eec ve manner?

Spill over eect

Overall higher prices for farmers for produce:
when traders find out that farmers can sell to JFC,
they are not in a posi on to oer a lower price.
The impact spilled over other farmers in nearby
areas as well.
Technology spill over:
other farmers look at farmers par cipa ng in FEP
for new way of farming; they have the market in
mind when they plant.
Government incen ve
There are government incen ves currently being introduced in the inclusive business field. The government
focus is on ensuring inclusive growth. In line with that
thinking, an accredita on system is being developed
by the Department of Trade and Industry for companies
engaged in IB. The accredita on would be applicable
for certain programs of the company, not for the
company as a whole. It would allow companies who
receive the accredita on to access non-financial incenves of the government.

How to engage other companies in the process of IB?
Could input supply be organized across companies?
What company is out there that needs a certain
volume of a certain local produce?

Who could bring the dierent par es together
in the Philippines? How about Southeast Asia?
GrowAsia? How to convene and how to keep the
energy going?
Who should we talk to on government level as
private sector? There are many agencies involved
in agriculture. How could we approach se ng up
a dialogue? Who would be willing to take it on?
Who could be the champion?
How to create successful PPPs? It is picking up
in Philippines; it is on the agenda of the administra on; this process helped create trust among
public and private actors that the government is
willing to work together.


New Business Model Principles

Framework used for case analysis
Chain-wide collabora on

Equitable access to services

The resolu on of problems, in both the commercial

and social performance of new business models requires all or most chain actors SET SHARED GOALS
The development of a systemic view of the chain
recognizes and values the interdependence of the
actors. Reaching and implemen ng agreement o en
involves IDENTIFYING one or more CHAMPIONS
along the chain to lead the process.

One of the special challenges faced by small-scale

producers is access to services such as finance,
market informa on, and best agronomic prac ces
that could improve quality, yields, food safety, and
environment performance. Successful solu ons enable
TECHNOLOGY, and develop incen ves that encourage producers to invest in their own produc on
based on market needs.

New market linkages

Inclusive innova on

For farmers and their organiza ons, market linkages

should provide a STABLE MARKET with clear quality,
volume and price signals as well as access to key
services (Principle 4). These linkages must contribute to
improved livelihoods.
For buyers, solu ons must provide A CONSISTENT
SUPPLY of safe, quality products at a compe ve
price. The achievement of both producer and buyer
goals in prac ce require the delivering social and
commercial value up and down the chain.

New business models PROMOTE INNOVATION by

mul ple actors along the chain in PRODUCTS and
SERVICES as well as the PROCESSES that underpin
Innova on should be done WITH SMALLHOLDER
FARMERS, rather than for them. Inclusive access to
innova on provides a means to remain compe ve in
dynamic markets; build the commercial value of goods
and services; and, share innova on gains among
partners all of which builds business durability.

Fair and transparent governance

Measurement of outcomes

Fair and transparent governance refers to the establishment and enforcement of CLEAR AND CONSISTENT
GRADES AND STANDARDS, CLEAR COMMITMENTS to buy and sell certain volumes of certain grade
products at certain mes, and equitable processes of
chain actors is a key criterion. Shared commercial risk
and insurance against failure are frequently cited as
the cement of successful rela onships.

The business axiom states that you cannot manage

what you do not measure. Our sixth principle is to
incorporate TAILORED INDICATORS AND MONITORING PLANS to assess the health of the on-going
trading rela onship as a for-profit business and also
its eec veness as a vehicle for community development. Constant monitoring of the health of the trading
rela onship reduces the risk the minor problems will
destroy the business.


All of the informa on and material inclusive of text, image, logo is the property of
and are used with permission by Jollibee Group Founda on (JGF). The informa on
may not be distributed, modified, displayed, reproduced in whole or in part without
the prior wri en permission of JGF.