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RESEARCH | Staff Reporter, Singapore
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Jollibee faces growing threats in competition, labour rules

The fast food chain is facing mounting challenges.

Rival fast food chain McDonald's growing profits, followed by the Philippine government's new rules on labor contractualization are threatening Jollibee's top spot in the fast food industry, according to analysts at Macquarie.

“Our latest consumer survey shows that McDonald’s has been closing in on Jollibee in terms of preference,” Macquarie analyst Karisa Magpayo wrote in a report, cited by Bloomberg.

Jollibee is currently ahead of McDonald's in the Philippine market, even as the US-based fast food giant continues its dominance over the rest of the world. Golden Arches Development Corp owns the master franchise of McDonald's in the Philippines.

McDonald's is in a better position to pass on the rising cost of raw materials with its customers belonging mostly to the middle and upper income segments, according to the Macquarie report.

Meanwhile, Philippine Labor Secretary Silvestre Bello III recently issued an order imposing a total ban on labour-only contracting, strictly regulating lawful contractual arrangements and ending 'end of contract schemes'. Under end of contract schemes, workers renew their contracts every five months. Employers can avoid paying them as regular employees, and thereby granting them benefits and privileges which may cost companies more.

The order could pose a challenge to Jollibee as the chain moves to restructure its hiring process in accordance with the government's new rules.

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