A milestone in Lingayen

Since its soft opening last month, the Chowking store has become a landmark in Lingayen, Pangasinan. At night, the well-lit corner store is now a popular meeting place for young adults.

"We were surprised by the first month turnout, which was 80% over our projected sales," said Chowking Food Corp. president Rufino de la Rosa. "We didn’t think the market was ready for us but we wanted to explore the idea and be there when the economy improved."

Lingayen is Chowking Food’s third store in Pangasinan and 200th store nationwide. The store will be formally opened this week, to be quickly followed by five other stores next week.

Last year, Chowking Food, a wholly owned subsidiary of Jollibee Food Corp. since 2000, opened 18 branches, 50% of these in the provinces. Sales grew by 48% during the same year as the impact of the Jollibee buy-in sank in. Because of this higher revenue base, sales in 2002 is targeted to grow by a slower 25%.

A main component this year’s sales strategy is to gradually increase the number of company-owned stores like Lingayen, which currently account for 40% of total stores, to 50%.

"Company-owned stores bring in more money for Chowking Food because we don’t have to share the profits with somebody else," de la Rosa said. "At the same time, we realize that we need partners who know the local market better than we do."

Franchisee support

The Chowking franchise is a 10-year contract which can be renewed for another 10 years. Right now, the investment for the first 10-year contract is between P7 million and P10 million.

As a rule, business development and franchise head Chito Galvez actively looks for store sites. When a new site is identified, franchisees in nearby Chowking stores are give the opportunity to buy the franchise. "This is not a right of a franchisee. It’s a courtesy we extend to them because it’s important for us to maintain a wholesome relationship with our franchisees. We don’t want our partners to feel left out or to feel that we are eating into their market and openly competing with them," de la Rosa said.

If the offer is turned down, the company turns to its waiting list of potential franchisees. The selection is based on a first come, first served basis among entrepreneurs living near the identified store site.

In its 13 years of franchising, the company has had only one store that closed shop. The company does a lot a hand-holding. "We will do everything to make the store viable. In this particular case, the store couldn’t bring in enough customers because of its poor location," de la Rosa said.

Under the Chowking Food set-up, an area manager supervises five to 10 stores. When a turnaround plan is needed, these area managers serve as pro bono consultants.

Franchisees also hold quarterly meetings with Chowking Food management where new developments, best practices and new products are discussed. They are also the only ones in the food industry which do not see the need for a franchisees’ association.

Because of its strong relationship with its franchisees, the company was recognized by the Department of Trade and Industry and the Philippine Franchise Association as the most outstanding Philippine franchise for 2001.

Provincial quirks

Unlike Jollibee’s kiddie market, Chowking, is a harder sell in the provinces because its natural market, the young office worker, traditionally goes home for lunch and after work. Adults in the provinces also prefer seafood to meat.

In the 10 provinces with significant Muslim populations, further adjustments must be made in the menu, which does not go over 36 items. Because Muslims consider pork unclean, chicken soup is used in the noodle dishes instead of pork. Chicken is also used in siopao. Halal chicken (which means the chicken did not suffer unduly when it was killed) is purchased in the market of Muslim Mindanao.

The rest of the food requirements are supplied by the main commissary in Muntinlupa. Despite the distance from Metro Manila, Chowking’s prices are uniform anywhere in the country as the higher cost of freight borne by provincial stores is offset by cheaper labor.

"Logistics is crucial in our business," said de la Rosa. "There are constraints to having a central commissary–time, which can result in spoilage, and the size of the store, which can affect inventory."

Each store carry a three-day buffer stock in case deliveries are late or there is an upsurge in customers. For Chowking Food, the second option is probably the more likely reason. – MJGrey