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Following is the transcript of a CNBC interview with Yenn Wong, Founder and CEO of JIA Group. The interview will play out in CNBC's latest episode of Managing Asia on 20 April 2018, 5.00PM SG/HK time.
All references must be sourced to a "CNBC Interview'.
Interviewed by Christine Tan, Anchor, CNBC.
Christine Tan (CT): So Yenn, you're known here in Hong Kong for your entrepreneurial flair when it comes to opening new restaurants, your dining venues have literally changed the F&B landscape in the city. Did you ever think you would be this successful?
Yenn Wong: Absolutely not. I actually started with hotels where my dad gave me an opportunity to do a job in Causeway Bay. That's where I started. And then from there I think I fell in love with the hospitality business and then we found the opportunity to open our first restaurant 208.
I think it was very difficult when I started. I had nightmares every night because I didn't know what to expect and honestly I didn't really have the experience. So with 208 we used the philosophy of thinking out of the box, understanding the consumer gaps and being creative with how we present our food with our design and our spaces. And I guess we used the same philosophy for the rest of our expansion of our restaurants and here we are - 10 restaurants.
CT: Well let's rewind a little bit. How did you actually stumble into the restaurant business?
Yenn Wong: Actually we saw the location first and when I first saw it, it was at the wrong side of Hollywood Road. It was very quiet, there weren't any restaurants and the space that we had was an old cold meat storage. So it was dingy and dark and we didn't have lights to look at.
CT: Did you not think of the risk you were taking back then?
Yenn Wong: Definitely. But then when I saw the area, you know a lot of design studios had moved in, a lot of nonprofits.
CT: You could see the potential?
Yenn Wong: Yes that's right. I think there was a lot of potential. We saw a lot of creative people moving towards that that area. We saw a lot of people moving there because of high rental and I thought that to do something of a neighborhood restaurant might be quite interesting and might actually do well for us.
CT: Do you remember the first day you opened for business? What was it like?
Yenn Wong: We were actually selling Neapolitana pizza, and at that time nobody really knew what Neapolitana pizza was. So some people said "Oh you know your pizza is a bit soggy. How come it's not crispy, maybe because it's your first day at business," and we had to wait for a while but now it seems like people only want to eat Neapolitana pizza!
CT: So whether its 208, Duddell's, or Chachawan, you have a knack of opening your restaurants in very quiet neighborhoods. Why? Is it simply to keep rents low?
Yenn Wong: I think rental is a big problem in Hong Kong for sure. And I think when we look at locations sometimes we go for interesting locations that are not as busy. Yes, we get a pretty good rental rate for it and then we feel that we can put more resources with the design or with the quality back to our customers. And we feel like if we deliver this level of quality to all customers, they will keep coming back.
CT: You also opened a Thai restaurant called Chachawan but what was missing on that menu was a popular dish, Tom Yum Soup. Were you trying to be different?
Yenn Wong: Oh for sure. Definitely. I think with F&B it's just such a crowded landscape, and in order to be successful I think we do have to think out of the box. I think we do have to be creative in how we how we present our concept. So when we think about this Thai restaurant we thought that everyone in Hong Kong only talks about Tom Yum soup or Pad Thai, but you know what, I personally love the Isaan cuisine which is the Northern Thai cuisine.
In Northern Thai cuisine there's no noodles and there are no curries, and yeah, there's no Tom Yum soup. So when we first introduced it we really wanted to portray the true blue Isaan cuisine. We feel like being too generic Thai is just not interesting in Hong Kong. So we went into a very narrow scope of the cuisine and actually it became very, very well received. People love it and I think that people do like that they are being educated in the more in-depth parts of Thai cuisine and not just the general sense of it.
CT: Let's talk about Rhoda because it's a dining concept you've introduced to cater to the socially responsible diner. How do you spot this trend and does it require you to really outsource and think differently about how you source your ingredients?
Yenn Wong: I think as a company we do want to try to move in that direction. But I think with this situation it was working with the chef that has actually been working with us for a while and then we wanted to create this opportunity for him so we did this restaurant together. And he has a strong passion for sustainability, so if sourcing is difficult I would say that it's not particularly difficult. But yes sometimes we would just buy a whole hog and do a whole hog day. We'll use every part of the pig and not just throw away things that we don't normally use. So you use every part like the pig's ears, the pig's nose, the cheeks and everything so that we don't have any wastage at all, but sometimes the wastage comes if we don't sell enough of that dish - but we try to manage it as much as possible with different promotions and all that.
CT: So this market of the socially responsible diner, how big a market is it?
Yenn Wong: I think it's a growing market. Currently I feel like customers are very passionate about it but I definitely think it will be something that will grow in the future. So we are thinking a bit about going towards the future right now.
CT: How much of what you do is based on gut feel?
Yenn Wong: Quite a bit actually. I think you need to have instincts. It is a very software heavy business as well so I think instincts play a big part.
CT: So it's a lot of observing people, what they eat, what they want, and trying to figure out how to deliver it to them?
Yenn Wong: Yeah, and also I think to see what people are looking for in the market.
CT: How long does it typically take for a new restaurant to break even? Give me an idea.
Yenn Wong: Operationally, for us we always aim for one to three months because it is a very competitive and very, very difficult market in Hong Kong. So with the investments that we put in, we need to have time to make back the investments with the short leases that we have, so operationally breaking even is quite short for us.
CT: So investment-wise? How long does it take for you to break even?
Yenn Wong: I think it really depends on the scale of the restaurant. It could be 12 months to never.
Yenn Wong: Yes of course.
CT: Some restaurants never make money?
Yenn Wong: It's possible because you know; it is a very high risk business. You could make your money back within a year when you're doing really well or you could be bleeding operationally and you don't make any money back.
CT: You have 10 different restaurant brands under the JIA Group. All of them are making money at this point?
Yenn Wong: Yes.
CT: You recently listed JIA Group on the GEM market in Hong Kong which means it puts you under more financial scrutiny. Does it mean that if the restaurant is not doing well, you will have to take quick action to close down the restaurant?
Yenn Wong: I think it's not just about listing the company. For us to be listed on the GEM board is sort of a stepping stone for our vision for expansion. But I think it's also an acknowledgment of the financial success we have for the past few years. I think like in any business if it's not doing well, we do have to consider a Plan B or the next steps going forward. It may not necessarily be having to close it down quickly but we have to act quickly whether or not we're listed because this is what it is, this is the F&B industry.
CT: Well since you've started the F&B business have you had to close down any restaurants?
Yenn Wong: Uh, we had to sell Fish School because it wasn't doing well.
CT: Why was it not doing well? What could you have done better?
Yenn Wong: I think with Fish School we had a big ambition. It was also about sustainability and we wanted to introduce fresh live seafood in Hong Kong but cooked in a Western technique. I think the challenge that we had was that fresh live seafood in Hong Kong is actually very costly to bring in even though it's local seafood. And I think the perception from our customers and the way they see the value of it is not really how we see it and I think that's a bit of a difference in that.
CT: So far when you look at all your 10 different restaurant brands under the JIA Group, last year you made something like 30 million U.S. dollars. How do you expect to do this year?
Yenn Wong: We are generally quite conservative. We're hoping to have a growth of 10 to 20 percent, and I think that would be quite good for us. We don't want to be too aggressive because I feel like at this stage we are in a good financial situation and we want to grow organically but also cautiously to make sure that we don't fall into the trap of overexpansion and spreading ourselves too thin.
CT: Revenue-wise you're growing pretty nicely. But profit wise it's a little bit tough because you have to deal with issues like high rentals, labor costs. What are you doing to put a lid on these costs?
Yenn Wong: I think for us we are constantly trying to improve our operations and we do that every year. So I think it would be really interesting from now onwards to see if we can have any backend technology that can help us to make ourselves more efficient.
CT: So you're talking about automation?
Yenn Wong: Automation of backend systems you know, maybe the way that we calculate our food cost, the way that we can merge HR and daily sales reports and loyalty programs and marketing initiatives all together. Um, maybe you know the way that we do payments; there are a lot of things that we can think about. And I think also with the future concepts we are seriously thinking about how we could do concepts that could build better efficiency and profitability for us.
CT: So Yenn, we're here at Duddell's, how busy does this kitchen get every night?
Yenn Wong: It gets really, really busy. We can serve up to 1,000 guests a day so now it's 4.30, they're cooking for the staff and also prepping for tonight's customers' special requests, lots of celebrations.
CT: You're Singaporean. You've also actually had a hand in opening a couple of restaurants in Singapore which you actually closed down to concentrate on the Hong Kong market. Is the F&B market here in this city more vibrant?
Yenn Wong: I wouldn't say it's more vibrant. I think it was a personal decision that I decided to focus on Hong Kong because I have two children, two young children. But I think in Hong Kong definitely the market is buzzing. There's a government statistic on spending of 20 billion Hong Kong dollars last year which is a 30 per cent increase from the year before, so Hong Kong itself is a very vibrant market for us.
CT: But having said that, the Hong Kong market is also very competitive, isn't it also a little bit saturated as a result?
Yenn Wong: It is very saturated, there's so many restaurants opening every year, there's so many closing every year.
CT: So how do you stand out in such a saturated market? What do you have to do?
Yenn Wong: Think out of the box. Be creative with how you want to present it. We are normally quite authentic with our cuisines but we use creativity with our spaces, with the way we present concepts, with our ambience and all that, so that's how we do it.
CT: Well when you open a new restaurant in a new location obviously a lot of investment is involved. To what extent have you been able to maintain a stable rental from your landlords, just to make sure that you are able to get good returns in the near term?
Yenn Wong: Well I think initially it was very difficult obviously because we didn't have anything to show or any background. So it was a little bit more difficult the first few years but as you can see we opened in slightly quieter areas and we got a pretty good rental arrangement for that, so subsequently obviously we also opened the restaurants in landmark or in pacific place.
CT: But have you been able to lock in good rentals? For more than the two year period that you're talking about?
Yenn Wong: Yes. So how we do that is when people see results, and they see that oh you know actually this time my tenant could bring me more foothold, more traffic. They can bring me more turnover rent. If I work with them and give them a better deal, I might actually get a better deal myself. So this is the way that we negotiate with them and we managed to get longer leases, we managed to get better rental rates and we get a bit more stability from that.
CT: Are landlords in Hong Kong easy to deal with?
Yenn Wong: They are like the toughest people to deal with. There's always a joke saying that like Hong Kong is being controlled by the landlords. And I sometimes think it's also quite true. So it is very difficult dealing with landlords so we also pick which landlords we want to work and deal with.
CT: With rentals going up, how price sensitive are your customers?
Yenn Wong: Uh, depending on the concept. But I would say that our customers should be price sensitive. I don't think we should increase prices whenever our landlord increases our prices. But I think what we normally try to do is adjust within the operations. We make small adjustments but at the same time even though it looks like rental is a big problem, with the retail business that's coming down quite a bit it actually give us a lot of opportunities to negotiate better rentals for ourselves because we technically are the F&B restaurants that can build footholds and can build volume and then we can negotiate a good deal too.
CT: What are your margins like at the end of the day?
Yenn Wong: I think I'll be very happy if we see a 10 percent.
CT: What are you doing now?
Yenn Wong: Uh, a little bit below that.
Yenn Wong: Around there. Mmm.
CT: You recently opened Duddell's in London. How's that coming along? Any teething problems?
Yenn Wong: Oh plenty (laughs).
CT: Like what?
Yenn Wong: Basically I think opening a restaurant overseas that you're not familiar with there will always be some cultural differences. There'll be a lot of technical issues and also being unfamiliar with the licensing and the process it takes a bit longer, and because in London, Duddell's is actually in a listed property. So we have a lot that we have to go through like the heritage planning board before we can progress or process with what we want to do. So it's that kind of challenges and of course with the ingredients it's actually not that easy to manage as well. For example we get fresh live chicken in Hong Kong and we only get frozen chicken in London. We don't get fresh seafood in London.
CT: Does it affect the taste of your food?
Yenn Wong: It does, it does make a difference. You know in Cantonese cuisine ingredients play a very big part but then having said that we have the most amazing Irish duck in London. So we give and take with what we can get over there and then we make the best out of it.
CT: What's your next big move overseas?
Yenn Wong: We are thinking about it. I'll keep you posted (laughs).
CT: Given Hong Kong's close proximity to China, you're not even in China yet. Why is that? What's holding you back?
Yenn Wong: I think China is an entirely different market altogether. I've actually spent some time in China before and it's not as easy as you think. The rules are very different, the culture is very, very different, it's an entirely different market.
CT: You sound scared?
Yenn Wong: It's very scary to be honest and I feel you have to spend a substantial amount of time in China if you want to do really well in China
CT: So you're not ready yet?
Yenn Wong: I'm definitely not ready yet.
CT: Today, JIA Group the company you founded has 10 different restaurant brands under its umbrella. These restaurants have won many awards, and you yourself as an entrepreneur have also won many accolades. What would you say is the secret ingredient to creating a successful F&B business?
Yenn Wong: I don't know if there is a secret ingredient but I think that it's very important to think of it as a business. A lot of people think running an F&B business or running a restaurant is fun or glamorous, but it's not really that. You have to put in a lot of commitment and hard work.
And for us I think we, other than being very creative with the way that we present our concepts, there's a lot of homework that we do. We do a very detailed feasibility study; we know exactly who our target market is.
Basically it's quite a technical process and we look through all that before we decide whether we want to go into this new concept and invest the amount of money to develop something new.
CT: Do you ever run out of ideas?
Yenn Wong: Oh definitely, all the time. Sometimes I just sit there and just like OK, like I have no idea, my brain is just not thinking at all. So I mean for me travelling is a big part of helping me to look at other people's businesses to learn from people, to experience the cultures and that gives me a lot of inspiration. Not exactly to copy their concepts but to bring it back to what we can do locally in Hong Kong.
CT: What are you working on next?
Yenn Wong: I think we are always thinking about a lot of things but hopefully we might do something quite casual and fun and hopefully it might be something from my hometown Singapore.
CT: When can we expect that to happen?
Yenn Wong: This year hopefully.
CT: When it comes to naming your restaurants, you have very interesting names. Duddell's, 22 Ships, Chachawan, Rhoda. How do you go about picking a name for your restaurant? Does it come naturally to you?
Yenn Wong: No. Honestly I feel like names are the most difficult part of opening a restaurant, and a lot of times we don't have a name until three weeks before the opening because I just couldn't think of the right name. So I mean with naming, it's important that it is easy to pronounce, it's easy to remember and it's something that would not sound stupid after five years of opening, so it really depends.
Like Chachawan is a very interesting story, we could not think of the right name and we didn't want it to be too Thai or too long. So when I was in Bangkok like looking at all the food and the ingredients and sourcing for items, my driver's name was Chachawan
CT: So you named a restaurant after him?
Yenn Wong: Yes I did.
CT: Does he know that?
Yenn Wong: I was almost going to put his family's portrait in my restaurant, yes he does. And he was so happy that I named the restaurant after him but I thought it was catchy, it was fun and people will remember it. And that's how we came up with the name. It's quite random I know but again it's down to whatever clicks at that point of time with all the considerations that I talked about.
CT: Let's talk about your background. You're from Singapore and your father is in the construction business. How much of his entrepreneurial instinct have you inherited?
Yenn Wong: I think quite a lot. I think basically when I was young I followed my father to a lot of construction sites. And I had the experience of seeing something built from scratch to something very beautiful. And I love the process of that, and I use a lot of that experience, that growing up process into what I'm doing right now. And my Dad being an entrepreneur himself has always encouraged us to be one too.
CT: What's the most important thing he's told you about doing business?
Yenn Wong: He always taught me that I should always be responsible. I should be responsible to myself, responsible to my staff, responsible to my customers, responsible to what I'm doing. He wants me to understand the value of hard work. It's very important to spend a lot of time, to be really committed to something that you do and not have to give up halfway, and if we make a mistake, we just move on. You know he always said don't dwell on the mistake. And of course he also taught me to respect other people, to basically treat others how I like to be treated, and I took this to heart, to where I am today.
CT: What kind of a boss are you? How actively are you involved in the day to day running of your 10 different restaurant brands?
Yenn Wong: Well, as an entrepreneur I'm actually quite anal. Hahaha, I'm a little bit of a control freak. But I really try to empower my staff to also have the entrepreneurial spirit, to also think of the business like it's their own, and to be able to make decisions and think of the way that we run the business the way that I do to enhance our business values and our brand.
CT: So you try not to breathe down their necks too often?
Yenn Wong: Not really because it's 10 restaurants, we serve up to 3,000 customers a day. It's very important that they themselves would execute the restaurant the way that I would.
CT: Your husband is also in the F&B business but he has his own food company. So what do you guys talk about at home?
Yenn Wong: We talk about everything. You know, we talk about how our day went, we talk about…
CT: Do you compete with each other? On who does better?
Yenn Wong: Eh, (laughs) we support each other respectfully and we share our problems sometimes on how our day went, or we talk about how demanding customers can be, but I would say that we support each other more than we compete with each other.
CT: With both of you in the F&B business, are you both good cooks as well?
Yenn Wong: We try. We definitely try.
CT: Who's the better cook?
Yenn Wong: I think he is a better cook but I'm a more organized cook. So I have to prep everything for him and he does the actual cooking.
CT: So you're the sous chef?
Yenn Wong: Yes I'm the sous chef unfortunately.
CT: And finally with JIA Group, 10 different restaurant brands, a couple more you're adding to your list later this year. What's your ambition for this company in the next three to five years? Where do you see yourself?
Yenn Wong: I think I would really love to be able to bring our home-grown brands that we've created and that style of hospitality to many key cities around the world. And I think it's our philosophy especially today where everyone communicates through technology, with their phones and with their computers, I think we are providing a social platform where they can actually bond together over food and have a proper face to face interaction, whether it's a celebration or a business negotiation or whether it is just a gossip session. We would love to be able to do more of that.
CT: So you want JIA Group to be a truly global F&B company?
Yenn Wong: That's coming from our own home grown creative concepts.
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