What’s eating Chowking

To the Chowking crew at the new Pioneer branch, he was just another customer. And that suited Chowking Food Corp. president Rufino dela Rosa, who ordered the fish fillet with tausi or salted black beans.

By the end of the meal, dela Rosa had texted his impressions to Hongkong chefs Tommy Che and Wah Kwai Chan at the Chowking main commissary. On the positive side for customers, the serving portion was overly large; on the negative side, the fish fillet was too salty and too breaded.

The problem of serving portion was easy to solve. Within the day, all the store managers of Chowking’s 170 outlets were told to reduce the serving portion through their company-provided cellphones. "Texting is power in managing a restaurant in this country," dela Rosa said. Reworking the taste of the fish fillet took a little longer. Although the recipe had already been test marketed and approved, Che and Chan went back to the kitchen. The fish fillet that is now sold in all Chowking outlets is cooked with less salt and with egg instead of flour for breading.

Top priority

"First thing in the morning, I ask myself how else I can delight my customer," dela Rosa said. "I know I should say that my people are my most important asset but I just can’t say it. For me, my top priority are my customers because they can go elsewhere with their business if they don’t like what I’m offering them. Without my customers, my business–and everything that goes with it such as the salaries of my people– will suffer."

To keep customers happy, Chowking regularly asks customers to evaluate the food, service, and cleanliness or FSC of the store. Handling complaints is part of the job of the two-man public relations group headed by Ever Espanol.

With her cellphone always on hand, Espanol visits the different outlets. She talks to customers as well as with the store managers on ways to keep customers happy. Espanol recalls the suspension of a management trainee as the most severe punishment taken so far by management on staff because of a customer complaint.

"The customer called me up at our head office. She ordered fried chicken and was told by the trainee the dish was not available because the chicken was still frozen," Espanol said. It was the trainee’s job to check inventory and to follow up on deliveries.

Adjustment period

Right now, Chowking is in the process of moving its head office in Taft Ave. to the Jollibee Center along ADB Ave. The move is like a homecoming for dela Rosa, who was chief financial officer of Jollibee Foods Corp. for 12 years prior to Chowking.

"When Jollibee bought Chowking, Tony Tan Caktiong asked me if I wanted the job of turning it around," dela Rosa said. Tan’s offer was not a purely sentimental decision or a loyalty payback.

As Jollibee’s CFO, dela Rosa was involved in negotiating the P600-million stock swap agreement with Robert Kuan and his Chowking partner, the Jollibee chairman. He understood the expectations of Jollibee investors for a positive economic value added or anything higher than the cost of equity of 11 percent plus the risk value of seven percent.

His entrepreneurial experience in owning a Bulacan-based bakery and construction business was also considered an asset.

Dela Rosa, however, had his initial reservations. Chowking’s sales was flat in 1999 at P2.083 billion from the previous year’s P2.15 billion. Although Chowking didn’t really have a close competitor in the Oriental fastfood business, customer perception was low. Only 50 of the company’s outlets were company owned.

On the positive side, Chowking had an intact store chain. It also now had the financial clout of Jollibee, the country’s largest fastfood business with annual sales last year of about P16 billion. As a wholly owned subsidiary of Jollibee, Chowking did not need to borrow money from outside.

"The first year or the entire 2000 was a learning experience for me and for the four Jollibee managers I brought with me. People’s initial perception of a CFO is one who is risk-averse and a slow decision-maker," dela Rosa said. "On my own part, it was a change of mindset from being controlled by numbers to being the controller of events. It was a liberating change," he said.

Meeting targets

In its first year under the Jollibee umbrella, Chowking generated sales of P2.4 billon. With sales for the first quarter of this year 80 percent higher than the year ago level, Chowking is expected to easily hit this year’s sales target of P3.6 billion.

Chowking’s sales this year will contribute about 10 percent to the overall financial performance of Jollibee, up from three percent last year.

This year’s sales will be powered by an internal campaign among outlets to hit at least P55,000 in sales a day. Under "Breakthrough 55 plus 10", outlets which have already hit the P55,000 a day target are given a 10% plus target.

The ultimate target is for each outlet to hit daily sales of P70,000.

"Each store is given creative leeway in generating additional sales," Espanol said. A case in point is the new Greenbelt, Makati outlet, which does not have bikes to do take-out deliveries. Store manager Nilo Ang has gone around this problem by marketing Chowking among employees of Greenbelt stores. Food deliveries are done by foot within 30 minutes, not a bad time record considering that dine-in orders are served within 10 minutes of the order.

The old and the new

This year, Chowking intends to open 24 new stores and to relocate about six stores to high-visibility areas such as malls. "As in any fastfood business, the three most important factors are location, location and location," dela Rosa said.

Although a Jollibee subsidiary, Chowking does not always follow its mother company into a new area. Chowking has a Pioneer branch; Jollibee does not. In the US West Coast, Chowking has four outlets (all established before the change in ownership last year) compared to Jollibee’s two.

Over a four-year period ending 2004, Chowking also intends to renovate all its outlets at the cost of between P7 million and P8 million a store, approximately the cost of buying a Chowking franchise.

In all of the 10 outlets renovated last year, the dominant red color associated with a Chinese restaurant was toned down. "We wanted to de-emphasize our being a Chinese fastfood company and emphasize our being an Oriental fastfood company. Sure, we still the dumplings and the noodles associated with a Chinese restaurant but we also have Filipino food favorites such as boneless milkfish (bangus) with pickled vegetables (atchara) and our Filipino breakfast choices," dela Rosa said.

Drawing on her Jollibee experience, Chowking planning and design manager Em Pamatian has made sure the frontage behind the order counter is wide enough to comfortably hold eight picture panels of what’s on the menu.

Although Chowking’s market are young adults, the ordering of Chinese food remains an intimidating endeavor for Filipinos. Putting up the menu in pictures helps speed up the ordering process.

Placing a maximum of 32 food items on the menu also helps. "People get confused when given too many choices. For this reason, we have to retire one food item when we introduce a new one," dela Rosa said.

The ideal kitchen put together by restaurant systems manager Ana Areopagita, another former Jollibee hire, is big enough to hold a cooking area and a 10-freezer storage area for semi-cooked food delivered from the commissary.

Aside from the main commissary, there is a satellite depot to serve Metro Manila stores. Visayas and Mindanao outlets are each served by two commissaries that centralize food purchases and bring down the cost of purchase.

This year, the 36 outlets targeted for renovation will all carry the new crisper look for the eating area and a more efficient storage area for the kitchen.

Positive EVA

Of Chowking’s 170 outlets, only 50 are company owned. The job of business development and franchising manager Chito Galvez is to create a more balanced mix of franchised and company-owned outlets that would bring in better returns for Chowking investors.

In the short-term, franchising is the quickest way to expand with the least amount of money from the company. The return to investors of franchising is, however, nothing compared to the returns of a company-owned outlet.

Under a franchise agreement, Chowking gets upfront a P1 million franchise fee and a percentage of monthly sales, equivalent to a six percent royalty on gross sales plus another four percent to pay for the company’s advertising campaign year-round. Until last year, advertising expense included the maintenance of a Philippine Basketball League team.

In a company-owned outlet, 100 percent of revenues generated goes to Chowking’s coffers.

Always on guard

Dela Rosa finishes his day with another Chowking dinner, usually in a store on the way home to a condominium unit near the Jollibee head office. "I like eating Chowking," he said. On the few times that he didn’t go to a Chowking outlet for breakfast, lunch or dinner in the past year, he could be found eating at Jollibee.

"It’s important to be number one," dela Rosa said. "It’s important to be always running scared that my customers might spend their money elsewhere if I don’t give them what they want. It’s important that their favorite food they ordered yesterday tastes exactly the same today.

A couple of months back, Chowking management met to tackle the problem of rice consistency. Because cavans of rice come in different varieties and are sold are different times after harvest and from different parts of the country and Asia, the amount of water needed to cook rice also varies from sack to sack.

To provide consistency, management decided to provide all outlets with a small rice cooker, which can cook rice enough for one person. It is now a company policy that the store cook determines the amount of water to be used by his assistants for each cavan by first cooking a small amount of rice in the rice cooker.

"When your market leader and constantly on your toes, the others who come after you–be they local or foreign competitors–will have to go into niche-selling to stay alive," he said.

Dela Rosa knows what he’s talking about. He’s learned a few things from his 12 years at Jollibee.