“Nobody knew who I was before McDonald’s." 

Thus, recounted George T. Yang who pioneered the fastfood chain business in the Philippines which catapulted him to fame and fortune.

Now one of the country’s best-known tycoons, he fondly remembers that, when he brought the McDonald’s franchise to the Philippines in 1981, few people knew he was the man behind it.

This lasted until one fateful day when he was talking to a business associate at the lobby of the Manila Peninsula Hotel when a sharp-eared journalist heard him talk about the new fastfood restaurant and named him as the franchisee in a newspaper article and, the rest, as they say, is history.

But how did an independent businessman manage to bag the local master franchise of what was the hottest food craze in the US at that time? This is a story of sharp business acumen, perseverance, hard work and dedication.

“You see, I got an MBA from a small business school in Pennsylvania called Wharton,” Yang deadpanned. “So this is why I liked to read business news. One time I read about quick service restaurants and thought that this will work in the Philippines," he said.

This was in 1974 when Yang saw the huge opportunity for the new food concept and immediately reached out to McDonald’s in the US to set up a meeting where he proposed to open a chain of McDonald’s restaurants in the Philippines.

He noted that, “at that time, they didn’t know much about the Philippines so they asked me ‘How many branches are you planning to open?” and I said ‘10!’ and this surprised the McDonald’s chairman who said ‘That many?’”

It took a while for McDonald’s to seriously consider Yang’s proposal as the company was at that time aggressively expanding in the US. But he never lost hope and never gave up on that plan and finally found his chance to remind them of his proposal when he reported to McDonald’s that some Philippine restaurant was already using the already popular Big Mac name for its own menu. 

But, by that time, Yang was not the only one interested in a Philippine franchise for McDonald's. His competition was big business including tycoon Andres Soriano.

Yang said McDonald’s eventually decided to choose him because they saw that he is more committed to the brand and had more time and energy to dedicate to growing the business compared to his bigger rivals who also had a lot of big enterprises to take care of.

To emphasize this, Yang’s firstborn Kenneth recounted that his father surprised him in 1980 by asking him to pack up for Hong Kong only to find out that they were there to experience and train firsthand as service crew of the McDonald’s branch in Tsim Sha Tsui which is very popular among tourists.

“I was wearing a crew uniform and hat, toasting and dressing buns in a McDonald’s restaurant along Granville Road in Tsim Sha Tsui. What made this experience more memorable for me was that my dad was wearing the exact same uniform, grilling patties beside me. At 15 years old, he put ketchup in my veins,” Kenneth said.

So this led to the successful entry of the first foreign fastfood franchise into the Philippines and started what would be a flow of more fastfood chains trying their luck in the country. 

The franchise started as a joint venture between Yang’s Golden Arches Development Corporation (GADC) and McDonald’s US and this partnership prospered until McDonald’s took another tack and decided to just earn from the franchise and sell its majority share to Yang.

“This is when I decided to partner with Andrew Tan. Andrew was aggressive and willin to invest in the restaurant business. So I just bought a few more shares to bring my stake to 51 percent while he took up the balance,” said Yang. 
 

This partnership remains strong to this day with GADC’s performance reported regularly by Tan’s conglomerate Alliance Global Group Inc. 

Currently, Yang said they are focused on aggressively expanding the presence of McDonald’s throughout the country after growth was slowed down by the pandemic. He added that they are also trying to capitalize on the growth opportunity post pandemic to narrow the gap with its primary competitor whose was modeled after McDonald’s in its early days.

"Our biggest competitor affected my business in the past. But we are catching up today,” said Yang, adding that they intend to put up an average of 50 new restaurants a year in the Philippines to rapidly grow from the 700 they had last year.

Even though it is not publicly-listed, only indirectly via Alliance Global, stock analysts are upbeat on the prospects of McDonald’s in the post-pandemic era.

“There is a clear distinction in the McDonald’s target market in the Philippines compared to that of Jollibee. This helps because upper-middle income (and higher) spending is expected to be more resilient,” said Abacus Securities Corporation. 

The brokerage added that, “it also helps that despite market positioning, McDonald’s products are often cheaper than that of Jollibee. So, despite an expected slowdown in consumer spending, we are still looking for 20 percent to 30 percent profit (contribution to Alliance Global) growth for GADC.”

Abacus also pointed out that, in 2022, McDonald’s profit was already at par with its pre-pandemic performance, even though its rivals have yet to recover, and with commodity prices normalizing at the end of 2022, GADC is expected to perform even better this year.

Unfortunately for the investing public, Yang dashed any hopes for a McDonald’s IPO (initial public offering). He explained that their franchise agreement stipulates that GADC cannot be publicly-listed. 

This is partly because McDonald’s, which is a publicly-listed company in the US, does not want its share price to be unduly affected by the performance of the local McDonald's or "McDo" franchise here. 

But, those who really want to be part-owners of the McDo franchise can be like George Yang and exercise persistence and patience and maybe, one day, McDonald’s US may suddenly change it’s mind and relent on its “NO IPO” provision.