Crossroads

At the intersection of technology, finance and the Pacific Rim.

Thursday, March 05, 2009

Alan Yau is a Chinese born British businessman who has been one of the leading restaraunteurs in to the country. He recently spoke to the FT about his new venture, which is investing and building out a fast food chain in China. The business model he defined as follows (taken directly from the article:

Value Proposition: Convenience, breadth of product, unique

The "first generation" Chinese restaurant model is three things, Mr Yau explains, while staff in Yauatcha's open kitchen prepare for the weekday lunch crowd. First, avoid competition by moving yourself to the farthest location in the country in the hope that no one else will open a Chinese restaurant; have the biggest menu with everything under the sun; and open as late as possible.

Cyclicality: Subject to economic cycles; recession is a good time to invest.

He believes that with recession returning, his timing is perfect for another try at a Chinese fast-food venture. "It has got [me] back to the first project, which I was not able to get off the ground because I wasn't intuitive enough and at that point I didn't know how to come up with a workable proposition in relation to Chinese fast food," he says.

Factors of Production: must be scaleable across many units.

What I wanted to do was to have something that was much more sustainable as a business model but which would yield you a better margin. And to have a business proposition that was scalable. That's it," Mr Yau says.....Mr Yau admits he was naive when he started Wagamama (his prior restaurant which he sold), too focused on the creative side of the business and not enough on how to "make a product much more of a formula, to make it into a square box" to allow it to expand easily.

Mode of Sales: Not mentioned--what is the marketing strategy?

Global or Local? Partially both

But why China, and not Britain, where he is already working on a new boutique Milanese bakery restaurant, Princi, in Soho? Mr Yau answers that China offers far greater potential, given not just its size but the speed at which a restaurant business can be rolled out there. He points out that it took KFC, the US chicken chain, 10 years to open 2,000 outlets.
"On that basis, I don't need to go anywhere else. In terms of territorial expansion I can take it to the US as a 'secondary expansion'. From the financial point of view, by the time we get out of the current global downturn I think it would be a hugely exciting for us to be listed in Shanghai too," he says.

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