A celebration of any momentous occasion, from birthdays to weddings, is incomplete without cake. In the Philippines, two brands come to mind when serving celebration cakes on the dining table, Goldilocks Bakeshop and Red Ribbon.
It may now seem like the two bakeshop brands have been competing intensely since Red Ribbon was formed in 1979, more than a decade after Goldilocks Bakeshop was set up in 1966. But that wasn’t the case. Until the 1990s and early 2000s, Goldilocks Bakeshop dominated the field and was the dominant choice for most Filipinos as the trusted brand for celebration cakes.
Established in 1966 by Filipino-Chinese sisters Milagros Leelin Yee and Clarita Leelin Go, and her husband Freddie Go, Goldilocks started as a small bakery along Pasong Tamo in Makati City. Its offerings have become iconic Pinoy staples and go-to pasalubong for Filipinos residing abroad, may it be its cake rolls or fluffy mamon.
On the other hand Red Ribbon was founded by the married couple Amalia and Renato Mercado in 1979. But for more than a decade, it remained as a small bakeshop in Quezon City. Only in the 1990s did its owners became more ambitious and began expanding aggressively by setting up stores in both Visayas and Mindanao. By the early 2000s, it had become a household name, eventually gaining the attention of fast food giant, Jollibee Food Corporation (JFC). In 2005, JFC acquired the bakeshop.
Jollibee’s entry in 2005 triggered a decade of rapid growth that helped Red Ribbon’s revenues to catch up and almost match Goldilocks’ revenue in 2015. That year, Red Ribbon’s gross revenues reached Php5.3 billion compared to Goldilocks’ Php5.7 billion. Ten years before, in 2005, Red Ribbon’s revenues of only Php892 million were a little more than a quarter of Goldilocks’ revenues of Php3.2 billion. (See infographic)
In 2016, Red Ribbon closed the year with 430 branches, 33 of which are in the US. On the other hand, Goldilocks now have 579 branches worldwide, based on latest reports.
However, since 2012, Red Ribbon has consistently posted higher net income than Goldilocks. A look into the top expenses of the two companies may give as an idea why Red Ribbon has been posting higher net income despite reporting lower gross revenues. As can be seen from the table, in almost all expense categories, Goldilocks outspends Red Ribbon by at least two or three times. (See table in the infographic)
The SM Group’s possible entry into Goldilocks may yet again intensify the competition between the two. In late August, the country’s biggest conglomerate SM Investments Corp. disclosed to the Philippine Stock Exchange that it is in talks “for a possible equity investment, joint venture or other cooperation arrangement with Goldilocks Bakeshop."
Elyssa Christine Lopez is Entrepreneur Philippines' staff writer. Follow her on Twitter @elyssalopz.