Joe Magsaysay poses with the Potato Corner crew at a kiosk at the World Trade Center during the AFFI Franchise Show.
When Joe Magsaysay asked a US-based marketing guru if it would be a good idea to take the Potato Corner concept there and sell flavored French fries to the Americans, his response was an emphatic ‘no.’
It would not work, the marketing expert declared, as it was like selling ice to the Eskimos.
After all, the United States practically owns the French fries category, thanks to the global presence of such quick service restaurants as McDonald’s, Wendy’s and Burger King where French fries are among the best-selling items on the menu.
Doing the opposite
Fortunately, Magsaysay did not listen and went on to do the exact opposite.
Today, there are over 30 Potato Corner kiosks in the United States, which is just one of the growing number of countries where the proudly Filipino-owned Potato Corner is making its presence felt.
“I really do not listen to negative comments, I use them to temper what we like to do but we remain pointed in our chosen direction,” Magsaysay tells BusinessFriday in an interview.
And that audacious goal is to quickly achieve market dominance in its category, with franchising as its preferred method of expansion.
“Like in the Philippines, our strategy is to achieve market dominance quickly in this category that’s why franchising will also help us in the US and in the international markets. Franchising helps us do a hyper-growth. And the US is not only the home of French fries, it is also the home of franchising. We are in familiar territory,” says Magsaysay.
Magsaysay says that Potato Corner, which has operations in Egypt, Oman, Kuwait, Syria, Lebanon, Jordan, Bahrain, Saudi Arabia and Qatar, is in the best position to conquer foreign markets and strengthen its hold on the Philippine market as it took to heart the many lessons from the expensive and painful mistakes over the past 21 years.
Potato Corner was born in 1992 when Magsaysay and some of his friends transformed their love for the snack food—described as the popcorn of the 21st century—into a business, with a starting capital of just P150,000.
To differentiate itself from the market, Potato Corner added flavors such as sour cream and cheddar to the fries, and introduced the shaking ritual that has made Potato Corner such an instant hit, especially among children.
“We had to change the rules or be innovative. We changed the way French fries are cooked, the way they are handled and the way they are served. If we did not re-invent some rules on how to manage French fries, Potato Corner wouldn’t have been a success and the current brand and product DNA wouldn’t have been born,” says Magsaysay.
“Our shaking, and our flavors make a difference. We own the shaking ritual for flavored French fries,” he adds.
Rapid expansion
From 1992 to 1994, Potato Corner expanded rapidly, from just one cart to 70 in just two years.
“We were one of the pioneers in the cart franchise business in Asia. Even in the way we franchised, we were innovative, we changed the rules of franchising to fit our business model and to be compatible with the Philippine setting,” he says.
By 1997, Potato Corner had grown to a network of 120 stores and the group was on top of the world.
Then, the Asian economic crisis that started in Thailand crashed into Philippine shores. The value of the peso plummeted and companies large and small were closing fast. Potato Corner came very close to becoming one of the many casualties of the crisis.
“We started almost from scratch. From 120 stores in 1997, we were left with just 40 in 2000,” says Magsaysay.
He knew, however, that flavored French fries, which appealed to the entire family, would always have a market.
Thus after radically changing its processes and sharpening its focus, Potato Corner got its groove back and it has expanded to 300 outlets in the Philippines, 24 outlets in the United States and 30 stores in Indonesia. It also has a presence in Malaysia, Panama and in the Middle East with plans to enter even more markets.
And just as it got into franchising as early as its second store, Magsaysay says that it will continue to look for partners to rapidly expand its operations and plant the Philippine flag in more countries.
Magsaysay stresses that it was franchising that enabled Potato Corner, which received the Franchise of the Year Award from the Association of Filipino Franchisers Inc., to survive the onslaught of competition from other companies that unabashedly copied the flavored fries concept.
“If we did not go in to franchising the time we did, we wouldn’t have achieved the economies of scale and wouldn’t have gained market dominance. Within our first two years, we counted over 300 brands that tried to copy selling Flavored French Fries,” Magsaysay says.
“We owe a lot to franchising. Because of franchising, we had to become even more focused on the brand, take good care of the supply chain and always look at long term because we now have franchisees who are our partners and we are responsible for them and we want to make sure their business, Potato Corner, grows and is sustained,” says Magsaysay,” Franchising forced us to make our company and brand better.”
Magsaysay says that even with the success, Potato Corner is well aware that it cannot afford to rest on its growing profit if it wants to win the battle for share of wallet.
Innovations
This is why it is rolling out innovations such as the new look of the stores, the development of new store concepts from just kiosks to stand alone restaurants, and the expansion of the menu to include chicken and new fries formats and flavors. It is also looking to add new brands to its portfolio.
All these are part of the company’s thrust to be a worthy flag carrier abroad and to bring up the profile of small- and medium-scale enterprises.
“We will continue to be a trail blazer in the industry and be an inspiration and guiding light to our fellow Filipino entrepreneurs,” Magsaysay says. “We are thinking about many new innovations. We want to share them so that we continue to set the bench higher and improve business for SMEs.”