A very interesting entrepreneurial start

Potato Corner is a wholly-owned Filipino company that is now one of the most successful local businesses that is also reaping success in other countries.  It can be found in all malls and the brand has gone from just kiosks to stand-up stores.  Its amazing success, like most other success stories, started with a leap of faith and has gone on to establish it as one of the most profitable franchises in the country.

One of the original founders of Potato Corner, Joe Magsaysay, shared with Business & Leisure the company’s humble beginnings over 20 years ago.  It started with four partners:  Ricky Montelibano, Joe’s brother-in-law, and friends Danny Bermejo, George Wieneke and their wives. 

Ricky was the first to start the flavored popcorn in the Philippines which became a craze among young Pinoys. With only two flavors, barbecue and cheese, Ricky was making so much money that he could afford a new car and a new cell phone back when these were very new and very expensive in the country.

Joe, on the other hand, was working with Wendy’s, a modestly successful foreign brand here, but he needed a “sideline” to earn more for his growing family. With Ricky’s flavored popcorn business as model, the idea was born:  flavored fries.

The group needed to put up P150,000 as starting capital for Potato Corner. Joe remembers that he didn’t have the money and had to scrounge around for P37,500, his 25 percent share in the business.  Like him, the other members of the group also had to borrow to come up with their share of the total starting capital.

Meanwhile, Joe, who had been working with Wendy’s for nine years, was confronted with a choice — it was Wendy’s or Potato Corner.  He couldn’t have both, so Joe made his incredible leap of faith right there and then and left the safety of a stable corporate job for the unknown.

That was in 1992, and they opened their first store in October of that same year. It was a only a cart in Mandaluyong because, as Joe simply said, they couldn’t afford anything bigger.  In just 30 days, Joe was able to pay back the P37,500 loan he got, and so did the rest of the group. This was phenomenal success for their novel product and the group saw the opportunities that were open to them.  That was the time to expand, and franchising was certainly the most promising option they considered seriously because, with very little funds at their disposal, franchising seemed to be their only option to raise additional capital.

At that time, franchising was a still a novel idea here, and the group did not have the advantage of our current entrepreneurs who have the support of organized bodies like our national franchising associations.  Joe knew about the mechanics of franchising through his old job at Wendy’s, which is a local franchise.

Undaunted, he read books and researched on franchising. Armed with only the basics of the mechanics of franchising, the group accepted their first franchisee, with a franchise agreement that they copied on the net. Their first three franchises were closed on mere handshakes, Joe recalls, and they had no manuals to go by to guide them. Their gut feel for the business was so strong that they plunged into it without second thoughts.

As things turned out, their franchise business grew faster than their company-owned stores. This was because the group was bent on raising funds for their planned expansion.  “It’s because of franchising that we were able to dominate the market,” Joe said. 

Fast forward to 2006. There was an Indonesian student who studied here, got a degree and eventually went back to his native country in 2003. Joe received a call from him expressing his interest to bring Potato Corner’s flavored fries to Indonesia.  Joe was not yet interested because they were still fully developing the local market. The persistent student called again in 2004, in 2005 and finally in 2006 when Joe relented and entertained the idea of bringing the brand to a foreign country. That same year, they opened their first store in Indonesia. 

In 2010, they brought the brand to the United States.  It was also another student whose father used to head the security of the Israeli Embassy here who was instrumental in bringing Potato Corner to the land of French fries. The student who studied at the International School and lived in a condo along Ayala Avenue used to walk every day to Glorietta to buy from Potato Corner and wanted to bring it to the US.  Joe and his group studied the market there and talked with a marketing guru in the US who actually advised him against it, likening the prospect to selling ice cream to an ice cream house. Their group, however, had more faith in his gut feel and went ahead with Potato Corner’s invasion of the land of French fries.

Today, Potato Corner has over 100 stores in Indonesia, 45 stores in the United States and several others in various countries.  Panama is one of these countries, and it was incidentally also a foreign student studying at the Poveda who made the first step here.  In all of these countries, Potato Corner was the first to offer flavored fries.

Starting with only a service crew of four, the enterprise now employs over 200 hundred in their corporate offices and company-owned stores. Some of them who have been with the company when it started in 1992 continue to serve up to this day. The company now sends the deserving ones to earn their masteral degrees in schools like the Ateneo. Joe himself turned 55 in August of this year and decided to retire early.  It’s time, he says for the company to take care of him now. Their company continues to grow and they are looking forward to having 150 company-owned stores before the year ends and more stores in other countries.  They are also looking forward to their 25th anniversary in 2017.

His advice to would-be entrepreneurs?  “Consider franchising, and don’t wait until the “fad”, the strong market acceptance fades.  If you have a good product, aim to achieve market dominance at the soonest time, and continue to find ways to control the business.”

Mabuhay!!!  Be proud to be a Filipino.

For comments & inquiries (email) [email protected]