The journey of George Yang

The history of McDonald’s in the Philippines may appear as a simple success story of a global brand finding a firm foothold in the heart of Filipinos. It may appear as a straightforward triumph of understanding a very specific local culture, with its distinct nuances and collective aspirations, by one of its own — George Yang.

But behind the business headlines is the personal journey of a determined entrepreneur, a journey peppered with inspiring episodes of self-understanding and realization, and a journey from whose twists and turns are culled priceless lessons in entrepreneurship.

“I was determined to become an entrepreneur,” recalls George Yang. “I didn’t know it was going to be in the food business, I just knew that I wanted to do my own thing.”

Having come of age under the influential shade of his grandfather’s entrepreneurial venture, George Yang had been keenly aware of the joys of growing a business, as well as the infinite rewards of being captain of your ship, well before joining the international McDonald’s community.

After completing his MBA at the Wharton Business School, and after returning from a side trip to Europe that doubled as a honeymoon, George returned to Manila, settled in to start a family, and began a two-year juggling act of working as a marketing manager of a tobacco company called Bataan Cigarettes; consulting for a manufacturing company; and selling a variety of things on the side — from insurance, to nicotine guards and imported cosmetics; and teaching finance management and marketing at De La Salle University along Taft Avenue in Manila.

Welcome to Manila: McDonald’s Philippines chairman George Yang and son Kenneth who is now  president and CEO pose with Ronald McDonald and their crew. In 1980, father and son worked as crew members at McDo in Hong Kong’s Kowloon district, mopping floors, wiping kitchen counters and flipping burgers.

These are years best remembered by his wife, Kristine, who says, “George was very ambitious, focused and hardworking — he kept at least three jobs in the early years of the marriage, and I completely supported him.”

In Kristine he had found a partner who shared the same entrepreneurial drive and who echoed his work philosophy, and together they found a working dynamic that proved fruitful. After he had created a brand of cigarette filters called Tar-Off, she became one of his sales managers, going down the length of a street, knocking from shop to shop, offering the filters on consignment. And when she decided to put up a jewelry business, he threw his full support behind her, streamlining production and sales. At the prodding of Don Amado Araneta, who noticed Kristine’s industriousness and drive, what started out as a nameless counter in supermarkets — whose primary market was young working mothers — then evolved into a more sophisticated brand, Kristine’s Jewelry, that offered fine jewelry to an expanded market that now included upscale clients. While Kristine served as the face of the business, George immersed himself in learning its finer points — from understanding market behavior to monitoring fluctuations in the price of gold in the global markets — and running the factory of 50 workers.

The success of the jewelry business inspired George to start something yet again, this time on a much larger scale. As a wide reader he had come across news and trend reports on a growing American fast-food chain called McDonald’s, a company whose premium on high-quality fast-food products and service were being extolled in business reviews in many other countries.

And so he wrote the McDonald’s headquarters and expressed interest in the Philippine franchise. But in 1974, the Philippines was, as George puts it, “very far from their radar” and they returned his letter, declining his offer. They were not ready to come to the Philippines.

Kita-kits sa McDo: McDonald’s was the first fastfood chain in the country to include stores that are open 24 hours and offer 24-hour delivery service.

Although the Philippines did not have as flourishing a quick-service restaurant industry as it does now, it was George’s contention that the environment at that time was ripe for it. In the years prior there had been a number of American restaurant franchises brought into the country that were well received. It was no secret that the Philippines, given its four-decade history as American-occupied territory, was still, to a large extent, a fan of American culture and its prime exports — music and movies, fashion and technology, food and beverages.

George Yang was certain and willing to bet his fortunes that McDonald’s, a growing brand that was sweeping across the world and meeting overwhelming success, was going to fare even better than its predecessors had in the Philippines.

Rather than wait for the Americans to acknowledge the Philippines as a potential area for expansion, George Yang decided to take charge of their education and elected to bring the Philippines’ growth to their attention. “I would send them clippings of economic news, so that they would realize that the Philippines was ready for this business,” he says, then adds an almost winking afterthought: “Or sometimes I would just write in to say hello, make sure they didn’t forget about me.”

And he did just that for the next two years.

In 1976, a team of McDonald’s executives from the mother company in Oakbrook, Illinois arrived in Manila to explore business possibilities, and to assess several candidates for a master franchise. Anyone looking for proof of progress and vibrancy in Manila was sure to find it in electric proportions that year — for instance, as host of the 1976 International Monetary Fund conference, the city’s skyline changed drastically with the rise of 14 new hotels slated to accommodate hundreds of dignitaries from around the world.

A hands-on boss: George knows his burgers and fries well enough to be able to cook them himself.

George Yang was one of those the McDonald’s team had arranged to meet with. Although he had been diligently keeping contact for the last two years, George knew he wasn’t the only one who had expressed a desire to bring McDonald’s to the Philippines. Other bidders included well-established holding companies looking to diversify or expand their portfolios; still others were businessmen whose last names rang of well-established roots in the fast-moving consumer goods industry, or whose network of political connections could inspire snappy salutes. George realized soon enough that he was, in fact, up against the big guys.

“Compared to the other groups making a bid for McDonald’s, I was a nobody,” George says matter-of-factly. “Everyone else had either huge assets or names that could back them up. I didn’t. I was, well, small fry.”

It might be tempting to recast his pre-McDonald’s episode as a David-versus-Goliath story, but George Yang had never really imagined himself on the losing end. A little disadvantaged, yes, but he was never one to underestimate the power of persistence. It had, after all, gotten him as far as a meeting. 

All he needed was time — enough to convince the McDonald’s team that he was their man. 

After the McDonald’s executives were received at the airport, billeted at an expensive hotel and chauffeured around town in a limousine care of one of the other bidders, it was George’s turn to play host. It is a virtue of both the wise and the seasoned entrepreneur to hope for the best and expect the worst, and it is a virtue that proved essential to George Yang on the day he met with the McDonald’s team.

He took the McDonald’s executives on a tour of Metro Manila’s dining establishments, and around the metropolitan area’s different commercial centers such as Makati and Cubao, in a borrowed old Mercedes- Benz with his brother-in-law behind the wheel. The car broke down in the middle of the street, and the air-conditioner conked out, giving the Americans what they hadn’t expected to experience — a good serving of real tropical heat. “They were loosening their ties and sweating like mad,” he recalls. “And I thought to myself: patay na ako dito.”    

Teaching a work ethic by example: George with children Kenneth who is in charge of McDonald’s; Richie who has a restaurant chain that includes Super Bowl, Big Budhha and Chili’s; Kristopher who handles his Fun Characters licensing business; and Karen who is setting up a pastry line of her own soon.

But the opportunity to make his pitch had not disappeared; it was, in fact, still sitting in the backseat of the Mercedes, melting under the sweltering heat. And so, despite the inconvenience on their part and mild embarrassment on his, he soldiered on.

“The pitch was me,” he explains. “I told them that if they wanted a long-term partner, a partner who was going to roll up his sleeves and do the work, I was the one they were looking for. I told them this straight and was honest about who I was and what I was capable of.”

It also helped that he had attended an American business school, one widely acknowledged as one of the best in the world, and that afterwards, he taught what he had learned at his own alma mater, De La Salle University. He was a person who could speak their business language, and he was a person whose instincts and keen sense of observation had given him a deep understanding of the local culture.

“Then I presented my family as well,” he adds, demonstrating to his guests what was important to him: his wife, his children, his parents, and grandparents. “My grandfather and father had good reputations in their line of business, and they were known for their high sense of integrity. So I emphasized that. Although I didn’t have a large fortune, I had my family and our reputation as respectable businessmen to build on.”

In the period of deliberations that was to last four years, George Yang refused to let the brief encounter in less than favorable circumstances with the McDonald’s team dampen his determination to win the franchise. Until it had been officially awarded to a local partner, anything was possible.

So determined was he that he took the initiative to learn the business during the long wait. He contacted a friend, Daniel Lee, a Hong Kong-based businessman who held the McDonald’s franchise in what was then still British territory, and enlisted as a McDonald’s crewmember. Whether it was proof of his foresight, or that he simply needed the company, George took with him his eldest son, Kenneth, who was then 15 years old the summer they flew to Hong Kong. Thirty years later, after approximately 23 years at various posts within the organization — from a part-time summer crewmember to purchasing officer for 10 years — Kenneth is now the company’s chief executive officer.

‘Burger! Burger!”: Yang says he owes a lot of McDonald’s success to a hungry Filipino market.

The year was 1980, and the self-assigned mission was to work at the McDonald’s branch on Granville Road in Hong Kong’s Kowloon district. From their rented New World Apartments unit along Victoria Harbour, father and son would wake up at the crack of dawn in order to be at their stations as early as six in the morning in time for the day’s opening. They would then don their uniforms — back then, a brown polyester shirt-and-pants number topped with a paper hat — and join the ranks. Kenneth, because he was a minor, worked a maximum of four hours, often manning the counter with a Mandarin-speaking buddy and assembling orders on a tray. George, because he was eager to learn the system from top to bottom, worked the whole circuit for much longer hours, mopping floors, wiping kitchen counters, flipping burgers, and ringing up the cash registers. Kenneth thrived on the simple rewards of a daily Big Mac meal; George flourished on the whole idea of learning something new, on top of the promise that in the likely event that he would get the franchise, he would already know exactly what to do.

News of George’s stint in Hong Kong reached Oakbrook, where McDonald’s executives wondered what he was up to. He assured them that he was making the effort for his own education. “I also wanted to show them how serious I was about getting the franchise.”

But in late 1980 — six years after he first made contact with McDonald’s headquarters, four years after he first met with the American executives in Manila, and just months after voluntary immersion in one of the fast-food giant’s Hong Kong outlets — the Americans returned to Manila and met with him again, this time to deliver the good news: from a pool of bidders that included a successful conglomerate and at least one taipan, he was being awarded the franchise. It came as little surprise. “Somehow I was confident that at the end of the day, I would get it.”

The first McDonald’s store in the Philippines opened in 1981 in Morayta. “I was astounded,” he says, recalling the fanfare that surrounded the much-anticipated store opening. “People were lining up, waiting to come in. So many people knew of the brand. We had to close the door to keep more people from coming into the store; otherwise, it would just burst. It was overwhelming and very satisfying because of all the time, hard work and effort to get to that point.”

It had been an arduous one-year trek from the time he had won the franchise to the day the first store opened. “I had to have further training in Hong Kong as part of the franchise,” George recalls, “all the while setting up an organization here and building a store at the same time.”

It was during this time that one of his tenets of entrepreneurship has crystallized, one that he had passed on to his children when they began to helm their own enterprises, and one that his managers in McDonald’s come to appreciate. “Invest in good people,” he likes to say, repeating the hard-won credo as one of the secrets of his success.

When he began the crucial task of forming a management team, he went about looking for people “who could do the job and who had the potential to grow with me.” He learned quickly, and soon enough the company was offering competitive rates and compensation packages that attracted a slew of talented employees. The premium he has put on people is evident in the way several longtime key members of the organization talk about George Yang as an inspiring company leader.

It is not uncommon to find members of the current management team who have been with the company for more than two decades. Nellie Naguit, who heads the company’s accounting division, joined McDonald’s as a 25-year-old CPA in February of 1982 when it was operating from a small head office in Farmer’s Plaza and had but two stores in its roster. It was the sense of being recognized for her contributions to the company that had kept her in it for the next 29 years.

The current head of human resources, Chona Torre, has stayed with the company for the same number of years. She echoes Nellie’s appreciation of the tone George Yang had set in the workplace. “The culture of development as a person within the company is performance-based,” she says. “You advance on your own merit, and it makes you feel good and inspired to be recognized for the good work that you do.”

George Hizon, head of the company’s supply chain division, has grown with the company for the last 22 years. “What’s important for me is when my boss shows confidence in me and trusts in my capabilities,” he says. “And that’s exactly what I got from the company, all the way from the top.”

The fast-food chain appealed to both adults and children, and if they were quick to embrace the burgers and fries, they all but flipped over the introduction of a McDonald’s icon — the never-before-seen-in-the-Philippines multi-tiered burger aptly called Big Mac.

After the first McDonald’s store opened in Morayta, a second one quickly followed in the New Frontier Theater in Cubao. The overwhelming success rested primarily in its core menu of iconic fast-food products — the McDonald’s Quarter Pounder with Cheese, Cheeseburger, World Famous French Fries and Apple Pie. Add to that the swiftness of the service, the cleanliness of the surroundings, as well as the youthful and friendly vibe in the stores, and the arrival of McDonald’s in the Philippines spelled nothing less than a revolution in the Filipino’s dining experience.

Over the years, McDonald’s managed to stay at the forefront of quick-service dining with a series of innovations. In 1985, the Breakfast Menu was introduced in its stores — a variety of options from hotcakes to rice meals, with its famous brew of piping hot coffee or orange juice — that became part of the daily ritual of many urbanites.

Still, George Yang believed that satisfying stomachs and winning over hearts was a continuing process, and he lobbied to incorporate a local flavor into the menu. This led to the introduction of McSpaghetti in 1986, a take on the Filipinos’ distinct version of spaghetti. Catering to the local palate proved hugely popular, and two other food choices followed: the Chicken McDo in 1987, and the Burger McDo in 1993. Four years later, the Happy Meal arrived, with the freebie toy collectibles becoming a hit not just among kids, but among grownups as well.

McDonald’s innovations were not limited to its products but likewise extended to the service, the ways and means by which the brand connected to its customers. As early as 1982, the first drive-thru outlet opened in the Greenhills store, redefining convenience and ease in having one’s fill of McDonald’s cravings while on the road. In early 2001, the first McCafé opened, serving specialty beverages and gourmet snacks.

The following year marked yet another milestone in the local fast-food industry: the one-number delivery system which made 8-MCDO the number on everyone’s lips. McDonald’s again upped the ante in terms of convenience when it became the first fast-food chain to include stores that stayed open round-the-clock, and to offer a 24-hour delivery service. Cravings at any given time of the day or night could now be quickly satisfied by simply dialing 8-MCDO. In the age of the Internet, the McDelivery system now includes a go-to website — www.mcdelivery.com.ph — that allows customers to order online.

The continuing innovations of McDonald’s show a brand that, 30 years after opening its doors and first meeting the Filipino customer, has never lost touch with the people it caters to. From two stores in 1981, to over 320 nationwide in 30 years of breakthrough innovations in our food, menu as well as service offerings. The changing times have inspired changing needs, and McDonald’s in the Philippines has always been up to the challenge of giving customers what they want and need.

 It turns out that an entire generation craved not just the food, but a definition as well, a continuing relationship with a brand that they had grown up with. This might explain why McDonald’s has made such an indelible mark on local culture.

For starters, it is perhaps only in the Philippines that McDonald’s has been given a nickname by which it is most commonly referred to: “McDo.” And many catchphrases in McDonald’s commercials have found their way into the local lexicon. After Sharon Cuneta, one of Philippine cinema’s most beloved leading ladies, casually sang the words, “Kita-kits sa McDo” in a 2002 television ad, “kita-kits” instantly became the shorthand for “See you there” or “see you around.” When a group of boys needled a friend with “Pa-Cheeseburger ka naman!” in a more recent commercial, the phrase again became such an enormous hit that it continues to be part of colloquial language, carrying with it such a nuanced world of meaning. After George Yang sang to a packed Araneta Coliseum, the crowd cheered then chanted, “Burger! Burger!” You know you’ve done something revolutionary when the very thing that you start becomes far bigger than yourself, takes on a life of its own, and creates its own personality. This is the personality of McDonald’s in the Philippines, one that is forever and quite deeply embedded in the local culture.

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The article and interviews on this page are excerpts from a soon-to-be launched book on the life of George Yang, written by Tara Sering and edited by An Mercado Alcantara, to be published by ABS-CBN Publishing.