JMJ Marist Brothers

Notre Dame of Marbel University

COLLEGE OF BUSINESS ADMINISTRATION
BUSINESS ADMINISTRATION PROGRAM
City of Koronadal, South Cotabato, Philippines

POTATO CORNER
AN EVALUATION

In Partial Fulfillment of the Requirements in

FME 104: FRANCHISING (MIDTERM CASE)
AY 2022-2023 2ND SEMESTER

Presented by:

ESTELLE BEATRICE I. GADIA

BSBA-FM2

MARCH 30, 2023

History and Franchise Profile

Potato Corner is the Philippines' first and largest flavored French fry brand. It is a
fast-food restaurant that offers and sells a variety of flavored French fries. In October
1992, Cinco Corporation built the first Potato Corner stand at SM Megamall in the
Philippines. The company aims to be present in every major city or town worldwide. The
five-year strategy seeks to improve the company's local presence by enhancing its
current business strategy. Since then, Potato Corner has expanded swiftly to include
over 1,000 locations in the Philippines and over 200 stores outside the country.
Franchising has contributed significantly to its expansion. 70% of the company's outlets
are franchised, while 30% are company-owned (U-Franchise, n.d.).
Potato Corner's CEO and co-founder, Joe Magsaysay had limited corporate
knowledge and experience when he created the company. But through sheer
determination and effort, he grew Potato Corner into one of the industry's most
prominent brands. His initial foray into the sector came after he dropped out of college
to assist his mother with the family's finances by working at a hamburger chain. In 1992,
his brother-in-law suggested they establish a side business selling flavored French fries
to supplement their income. Co-founded with Danny Bermejo and Jorge Wieneke, the
company specialized in flavored French fries and was an extension of Montelibano's
flavored popcorn business at the time (BusinessWorld, 2019). In 2021, the
According to the Potato Corner (n.d.), the brand has operated for over 25 years
and has earned various awards. In addition to these awards, Potato Corner was called
the Best Business Model. The Franchise Excellence Hall of Fame award was also
presented by the Philippine Franchise Association in 2003. Potato Corner has strived
for quality over the past three years, as evidenced by its Best Franchise and World
Franchise Awards. The brand has risen from a popular local brand to a rapidly
ascending global brand in the food cart market, with over one thousand locations
worldwide.

SWOT Analysis

Strength
1. Well-known brand: Potato Corner has been a leading brand for over 25 years
and has been labeled as the World's Best Flavour Fries (Potato Corner, n.d.).
Their tasty fries have won the hearts and trust of many Filipinos.

2. Minimal investments risks: Franchising Potato Corner could serve as a solid

foundation for your business and investment portfolio as its initial investment
ranging from PHP 290,000 to PHP 410,000, is relatively cheaper than the other
franchising business outlets. Potato Corner will assist you in establishing your

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 franchise. Moreover, investment carries a low degree of risk. It will be profitable
given that Potato Corner is already a leader in the Philippine franchise rankings.

3. Economies of Scale: Potato Corner has achieved economies of scale and gained
market dominance. As the company grew, the large scale allows it to take
advantage of economies of scale in producing, distributing, and advertising which
can decrease long-term expenses, improve efficiency, and therefore boost
profitability.

4. Customer loyalty: The Potato Corner has created delicious fries that have
satisfied buyers and inspired them to return repeatedly. It has also extended to
the global market as Potato Corner's patented flavors attract new customers.

5. Supply chain: Potato Corner exclusively supplies fries and flavor powder to their
franchisees for official use in franchise operations. Potato Corner obtains their
imported potato from Belgium and the United States, which is less expensive
than local potatoes (BusinessWorld, 2016).

Weakness

1. Limited Product Variations: Potato Corner only sells French Fries only with
different flavors. This lack of product variety can increase the risk of consumers
getting tired of the products they offer.

2. Small kiosks: The small kiosks at malls are sometimes too small to
accommodate the large number of customers. Those who want to buy but lack
the time or willingness to wait are discouraged by these long lines, which typically
occur anytime the designated mall has special offerings or during the holiday
season. These small kiosks with small workers per kiosk result in sales losses
that can be avoided by taking the appropriate measures.

3. Online presence: In the modern world, the online market is crucial for showing
information and selling products. Potato corner has a lack of internet presence
and insufficient information on Facebook, Twitter, and Instagram, which can lead
to missed opportunities.

4. Cost structure: Several potential customers may be deterred by the price of the
product. Only a few individuals can afford 200-peso fries and above at any time.

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 This may result in opportunity costs for the company, as it loses potential
customers due to the steep price point. Their servings are way more expensive
than the common fry options supplied by prominent restaurants locally.

5. Lack of innovation: The franchise business forbids franchisees from introducing

or suggesting new not specified in the franchise agreement.

Opportunities

1. New ingredients/ products: With people increasingly more health conscious, the
franchisor should look for more healthy options such as olive oil in frying fries as
well as offering healthy fruit juice.

2. Online Promotion: Potato Corner can also establish itself online like other
companies do. For instance, they can hold a competition for online fans where
the winners were to receive unlimited stocks of Potato Corner fries by promoting
and marketing the products the best way they can. That small gimmick can earn
thousands of entries, offering thousands of people worked to market the products
of the fries that we all know and love, thereby expanding the company's online
reputation.

3. Innovation: Innovation is one of the ways Potato Corner may expand its presence
in its sector. Potato Corner must learn to provide more products, such as frittatas,
potato disks, etc. Potato Corner flourished for many years on French fries, but
even established brands must adapt to avoid obsolescence.

4. International Expansion: The business may have access to extra markets

through international expansion. Entering new markets enables the Potato
Corner to expand beyond the customers and potential buyers in their original
country. It provides the franchise business with more revenue, making them
more resistant to market volatility and changes.

5. Emerging market: Many kiosks in Manila have also entered the online emerging
market, by contracting food delivery giants like Grab Food, Food Panda, and
others to allow customers to purchase from the store without even leaving their
house. This brings more revenue and allows the franchise business to be
accessible to even people who just need food but cannot leave their respective
locations at a time.

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Threats

1. Threat of new entrants: A competitor can enter the market anytime, steal their
fries recipe, and offer similar product and taste but under a different brand name.
They would be powerless to stop this rival from cutting into their market share.

2. Change of the trend or taste: The preferences of consumers are so influential

that they can force companies to alter their operations or risk losing money.
Businesses like Potato Corner, which cater to customers who are increasingly
worried about what they put in their bodies, might benefit from providing them
with additional dietary details and healthier menu options.

3. Inactive promotions and advertisements: Without promotions and

advertisements, the franchise business may be alright for a while but eventually
results to sales losses due to attrition. Their customers may shop elsewhere
during these inactive times if their competition has offered them the desired
deals.

4. Political risks: Political risk is the possibility that the franchise business could
suffer due to political changes in a country: conflicts, government policies such
as minimum wage, and changes in international policies or relations between
countries.
5. Bad economy – Franchise businesses may encounter declines in sales and
profits in a recession. Their efforts to cut costs may contain layoffs and cuts in
capital expenditure, marketing, and research. Recessions may result in limited
credit, slow collections, and business bankruptcies.

Criteria in Selecting a Franchise

i. Costs

As stated by Potato Corner, the franchise fee is relatively low compared to other
popular food businesses, initial investment ranging from PHP 290,000.00 (customized
cost package) to PHP 410,000.00 (standard cart package). The customized store
package has inclusions of franchise fee for 5 years, wares, equipment, and initial
supplies excluding the construction cost. Meanwhile, standard cart package has

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inclusions of franchise fee for 5 years, 5-sqm cart, wares, equipment, and initial
supplies. Compared to other food businesses, Potato Corner’s franchise fee is relatively
affordable, making it attractive option for investors. The small cost may also make it
simpler for entrepreneurs to enter the market and compete with established brands. The
renewal fee is 50% of the prevailing franchise fee.

In addition, as specified by Potato Corner, they do not charge royalty fees but
only ongoing fees. These fees can include management, marketing, and advertising
fees. The construction cost associated with customized store is PHP50,000 per sqm. A
franchisee operating in a prominent location may incur greater rent and construction
costs, which can have an impact on the franchise's overall investment and profit.

ii. Demand and Competition

The demand for French fries especially during snack time had been increasing
steadily, driven by the market’s preference for the brand itself and the increasing
purchasing power of the consumers.

Competitors of the Potato Corner are composed of direct and indirect

competitors. As observed, direct competitors are Jollibee and McDonalds where they
offer a wide variety of products but when it comes to fries they offer to their customers
are not the same with Potato Corner. In some aspects, it may still affect the daily sales
of the franchise business. On the other hand, indirect competitors such as Takoyaki and
Master Siomai may not share the same market/customers as Potato Corner, but still
may have an impact on the franchise business's sales.

iii. Training and Support

Potato Corner provides comprehensive training to franchisees to assist them set

up and run the franchise business. This training recommends two personnel for the
cart’s opening and closing shifts. Potato Corner will cover their training, but franchisees
need to set aside a budget for their regular salary. The training undergoes for six days,
the first of which will give them the basics of the brand and the instructions of how to
cook the fries and how to keep the cart running. The next four days are in-store
immersions that will give them an overview of happens on a day-to-day basis. The sixth
day is for their exams, which will be given in Potato Corner’s office (Owen, 2019). This
training program can be a substantial advantage for prospective franchisees who will
give an idea of running their business smoothly and effectively.

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iv. Abilities

It may be challenging to own a franchise, and it takes a certain combination of

abilities and qualities to be successful. First and foremost, the candidate must be
financially capable of owning a Potato Corner franchise business and possess at least
business management and marketing skills. Moreover, they should have strong
adaptability and flexibility to operate a successful business. Before investing in a Potato
Corner franchise, prospective franchisees should evaluate their abilities and determine
if they possess the essential abilities and knowledge needed to be successful in the
business.

v. Franchisor’s Experience

As mentioned by Potato Corner, the business opened its first location in October
1992 and began franchising the following year. Now, the industry has expanded from
small carts to retail outlets found in malls, schools, hospitals, bus stations, amusement
parks, and even international tourist destinations. Potato Corner, which has been in
operation for 25 years, is a pioneer in the franchise market, continuously receiving
honors for its simple yet efficient business concept. Potato Corner has been given the
Franchise Hall of Fame Award and the Global Franchise Award by the Philippine
Franchise Association and Department of Trade and Industry, respectively. Thus,
Potato Corner is an ideal partner for making a solid investment in your future, as its
global reach demonstrates that the franchisor has a plethora of business knowledge
and has effectively adapted to different markets and cultures.

vi. Expansion Plans

In 2022, Shakey’s Pizza Asia Ventures Inc acquired Potato Corner renowned for
its flavored fries. Potato Corner has over 1,000 stores in the Philippines and an
extensive worldwide store network. With exciting plans in 2023 and beyond, the
company is confident that Potato Corner will continue to grow as it rolls out its
expansion plans, both domestically and internationally. Its purpose revolves around
offering opportunities for small and micro entrepreneurs around the world (Tecson,
2022).

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Conclusion

After considering the franchise's strengths, weaknesses, opportunities, and

threats (SWOT), as well as other relevant criteria, it is prudent to conclude that Potato
Corner is a wise investment. One of the main reasons why Potato Corner is an
incredible deal is because of its well-known brand. Its high-quality ingredients and
delicious taste have earned the brand devoted customers. Franchisees can also benefit
greatly from the training and continuous support, which are both part of the franchise
business’ support system.

Moreover, prospective franchisees need to assess their own abilities to

determine if they are qualified to run a franchise. Those who lack the necessary
business judgment and management skills may find it difficult to run a successful Potato
Corner franchise. All things considered; Potato Corner is a promising business venture.
However, before putting money into it, it is vital to think about the difficulties that may
arise and assess one's own abilities. The franchise business Potato Corner may be
fruitful and profitable with careful planning and management.

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Reference

BusinessWorld. (2016, April 29). Getting Big While Staying Small.

Retrieved fromhttps://www.bworldonline.com/weekender/focus/2016/04/29/
4780/getting-big-while-staying-small/#:~:text=Potato%20Corner's%20spuds
%20are%20sourced%20from%20Belgium%20and%20the%20US.

BusinessWorld. (2019, September 24). Corner of Success. Retrieved from

https://www.bworldonline.com/top-stories/2019/09/24/255030/corner-of-
success/

Owen, C.J. (2019, March 26). How to Franchise Potato Corner, Plus Rates and Other
Requirements. Retrieved from https://www.femalenetwork.com/work-money/how-
to-franchise-potato-corner-a00189-20190326-lfrm
Potato Corner. (n.d.). Countries. Retrieved from https://potatocorner.com/countries/

Potato Corner. (n.d.). Franchising. Retrieved from

https://potatocorner.com/franchising/packages

Potato Corner (n.d.). History. Retrieved from https://potatocorner.com/history/

Tecson, J.M. (2022, October 12). A POTATO CORNER AT EVERY

CORNER: PC WOWING THE WORLD WITH OVER 1,300 STORES
GLOBALLY. Retrieve from https://www.shakeyspizza.ph/investordocuments
/pressreleases/20221012%20A%20Potato%20Corner%20at%20Every%20Corne
r%20%20PC%20Wowing%20the%20World%20with%201,300%20Stores%20Gl
obally%20-%20filing%20(1).pdf

U-Franchise. (n.d.). Potato Corner. https://www.ufranchiseasia.com/philippines/food-

franchise/potato-corner