Throughout its history, Fair has sought to be innovative in both the development and presentation of its fast food products. Fair was the first fast food chain in Hong Kong to introduce traditional clay pot rice and rice burger. It was also the first to bundle its products to provide customers with set-dinner and set-lunch.
Business owner profile
Loh kok cheng, 53 years old, is an original local hongkongness. When he was 17 years old, he had been to UK and America to study hotel-catering management until 1981; he came back to Hong Kong and worked in a food manufacturing industry. Before establishing Fair fast food in 1991, Mr.Loh had over 10 years' experiences in the food industry. Upon that, he made a decision on starting his own small business and loaned from the bank, even families and friends. At the beginning of the Fair fast food restaurant started operating, it has used to face a lot of issues due to lack of operating experiences, such as poor working conditions and employee relations, lack of team, snags in production, unnecessary movement of materials, and so on. Even then, he did not give up and spent a considerable amount of expenses on hiring outside experts to help him until nowadays, he has become a successful entrepreneur.
SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a way to analyze a company's or a department's position in the market in relation to its competitors. The goal is to identify all the major factors affecting competitiveness before constructing a business strategy. (Www.computerworld.com)
*Strengths
Long history & well-known
Fair fast food had 12 years history in Hong Kong fast food industry since the first Fair fast food restaurant was established in December 1991. It is well known as serving mainly Chinese food and its menu is frequently changed with seasonal favorites. Despite its Chinese predominance, Fair's menu is enriched by the adoption of Western dishes that have been carefully redesigned to suit local tastes in order to enhance its attractiveness. In Hong Kong, Chinese fast food restaurants can be counted on the fingers; Fair fast food is one of the most popular Chinese fast food restaurants.
Skilled labor and management
The first Fair fast food restaurant was established in December 1991 with the total amount of the employees was 57. Decade development, the total amount of the employees has increased to 300. "Training is an investment,” said Mr. Lee, manager of marketing department of Fair fast food restaurant”, we do provide training to new employees conducted by outlet managers. Even management staff, we do frequently provide academic courses to them so that they may acquire more skills, knowledge and ability to contribute to our company.” Further, most of the Fair fast food restaurant management staff are experienced and educated. Thus, it can be seen that Fair fast food restaurant sufficiently concentrates on employees' development. Besides that, Fair fast food restaurant often hires outside trainers or experts to observe and evaluate job performance of the employees.
Economies of scale
Economies of scale are achieved primarily through the size of operations. Large businesses have the potential to operate at lower unit costs. Fair fast food, as a large-scale plant, is cheaper to produce, and they yield lower operating costs per unit of output. Although the most substantial gains of Fair fast food are usually seen in producing food, benefits of scale can be achieved in marketing, sales, distribution, administration, R&D, and service. The cost of raw materials and shipping can also be reduced through economies of scale.
Outstanding food menu design
Fair fast good's menus are designed around four time segments, namely Breakfast, Lunch, Afternoon Tea and Dinner. Products offered in each segment are different and are priced differently taking into account the eating and spending habits of its customers. Several of the menu items allow a choice of sauces and side dishes. The menu is reviewed and changed, where deemed necessary, on a weekly basis. Some items rotate twice a week. In addition, menus are changed seasonally. Typically, dishes that are able to hold their temperature longer, such as hotpot and clay pot rice, are served in winter months in addition to those items that are served all year round. Most seasonal specialties are presented in specially designed utensils to enhance their appeals and thus their perceived value to the customers.
*Weaknesses
Copycat of food recipe
Café de Coral Group is the largest publicly listed Chinese Fast Food restaurant group in the world with over 340 outlets in Asia Pacific region, locally in Hong Kong headquarters; Café de Coral is the market leader of the fast food sector for over three decades (www.cafedecoral.com). Thus, it can be seen Café de Coral Group is the most competitive rival of Fair fast food restaurant. Even though the food menu design of Fair fast food restaurant is outstanding, it is not difficult to observe and compare that the food menu design of Fair fast food restaurant and Café de Coral are quiet similar no matter either on styles, or recipes. Moreover, Fair fast food often launches the similar new products or menus after Café de Coral. Therefore, Fair fast food always gives the customers the images that it is a copycat; always copy the food recipe either from café de carol.
Insufficient food quality control
There is negative news published by Hong Kong Sing Tao Daily on 24th July 2002, a customer found a razor blade in rice when she is having lunch in the Fair fast food restaurant. After the even, the woman complained for compensations from Consumer Council of Hong Kong. During that period, Fair fast food has suffered sales pelting and given a deep negative impression to the customers.
Suffering from financial instability
For the six months ended 30 September 2002, the Fair fast food recorded a turnover of HK$776000 a decrease of 9% from the turnover of HK$847000 recorded in the last corresponding period (Refer to appendix). According to the answers of interview question, the net loss of Fair fast food restaurants has been keeping pelting from 7.9 million losses in March 1996, until 7 million losses in March 2002; the average rate of negative growth is 28%. (Refer to appendix)
Opportunities
Increased "Not cooking" young couples
Hong Kong is a thriving, prosperous, and busy seaport; therefore, most of the hongkongness have their special lifestyle as usually the young couples seldom cook at home after work or overtime job due to weariness or time. According to the figures provided by Hong Kong statistic department, the number of households in 1997 is 1 .941 million, 2.115 million in 2001, and 2.170 million in 2002, the growth rate of households is 2.6% in the following years. Therefore, this implicates when the higher the growth rate of households, the more opportunities for Fair fast food to manage and compete with other rivals in the future.
Economic downturn
Refers to appendix table A, Hong Kong's GNP in the third quarter of 2003 was estimated at $324.1 billion at current market prices, down by 1.9% from a year earlier. Total factor income inflow into Hong Kong, estimated at $80.9 billion in the third quarter of 2003 and equivalent to 25.4% of GDP in that quarter, and decreased by 12.7% from a year earlier. At the same time, total factor income outflow, estimated at $75.3 billion in the third quarter of 2003 and equivalent to 23.6% of GDP in that quarter, recorded a decrease of 13.4% from a year earlier. Taking the inflow and outflow together, a net external factor income inflow of $5.6 billion was recorded in the third quarter of 2003. (www.info.gov.com.hk) This implicates that during economic downturn period, the bargaining power of buyers is very weak due to lower income earned, and they prefer shifting from traditional Cantonese restaurants to fast food restaurants.
Food preference of younger and teenagers
Most have the younger and teenagers like fast food very much it is due to not only convenience but also make them felt another lifestyle. Hong Kong is an impacted area, according to the figures provided by statistic department of Hong Kong, the number of teenagers under 15 years old is 1.094 million in 2002, and the population growth rate is 0.9%. (Refer to appendix) This implicates that the younger and teenagers are the main customers of the Fair fast food, the more the younger and teenagers, the higher the population growth rate, the more opportunities for the Fair fast food to develop.
Ascendant location
Fair fast food consists of 11 branches, which are mainly distributed in Colon and some are in Hong Kong Island. Colon is one of the most important financial and trade centers in Hong Kong. (Refer to appendix) According to the figures of population density by area provided by statistic department of Hong Kong, the population density in Colon is 43,220 per square km. This implicates that the higher the population density, the more people consume, and the more opportunities for the Fair fast food to develop.
Hong Kong is an attractive traveling city
With the onset of the economic recession in 1997/1998 the restaurant trade was adversely affected as money become tight, disposable income was reined in and tourism dropped off. However, value for money caterers such as the fast-food chains have found themselves still in business, albeit with a more demanding customer base.
With the upturn in the economy in 1999 and 2000, the restaurant trade has gained some momentum, helped by a growth in visitor arrivals in 2000. Hong Kong remains one of the most densely packed countries in terms of restaurants with approximately one restaurant for every 700 citizens (www.chinaonline.com).
*Threats
Natural disaster
In 1998, restaurant receipts declined significantly over the previous year by 4.1%. This was expected given the poor performance of the Hong Kong economy in 1998 and the combined effects of the tourist slump, chicken flu in January 1998, and SARS from 2002 until today. The economic situation worsened abruptly from mid-March with the onset of the severe acute respiratory syndrome (SARS) outbreak, with inbound tourism and local consumer spending particularly hard hit (www.hongkong.org). Based on the news from yahoo.com, Hong Kong Financial Secretary Antony Leung said SARS affected tourism and local consumption, resulting in the revision of Hong Kong's GDP forecast for this year from 3% to 1.5%. "SARS has exerted pressure on the deflation front," he said. "As a result the CPI is now revised downwards from originally negative 1.5% to now negative 2.5%" (finance.yahoo.com).
Keen competition in catering industry
Fast food and organized catering is nothing new to Hong Kong. The most competitive rival is Café de Coral Group, which offers special food packages at super low price. The fast-food industry emerged in its recognizable form in the late 1960s with the formation of the Café de Coral chain offering low priced hot Chinese food. The strategy was simple, organize the vendor system, and move it indoors to well light comfortable Cafeteria type establishments with improved hygiene and standard pricing. The Café de Coral chain was also the first to offer both traditional Cantonese fare and western-inspired dishes such as chicken wings, ribs and Oval tine drinks that had long been popular in the Colony with its British influence (chinaonline.site.yahoo.net).
American fast food arrived in 1975 with McDonald. While this was the first systematized burger chain, this form of food was familiar through western restaurants; also the British fish & chip shops. Since the late 1970s, the number of fast food and organized chain restaurants in Hong Kong has multiplied. The 1980s saw Hong Kong adopt the vogue for family restaurants such as Pizza Hut and the market was further boosted by the growth in disposable income amongst younger consumers, a core customer group (www.chinaonline.com). This implicates that the increased competitors will make the potential customers shift to your rivals.
Enlightening obtained from interview and analysis
Fair fast food restaurant is principally engaged in operating a chain of fast food restaurants in Hong Kong The first Fair fast food restaurant was established in December 1991, registered capital of the time was HK$5 millions and the total amount of the employees was 57. The second restaurant was opened five years later in 1996; the total amount of the staff at that time has been increased to 86. Fair expanded rapidly since then growing from 5 restaurants to 11 in 1998, serving over 10,000 customers daily. The fast-food industry emerged in its recognizable form in the late 1960s with the formation of the Café de Coral Group chain offering low priced hot Chinese food. Fair fast food restaurant, has been established as a small industry in 1991 and surviving till today that can be defined as a successful business.
Through the interview and analysis of the Fair fast food restaurant, therefore the main reasons that the Fair fast food has been successfully operating due to some basic rules they are following:
Automation
A self-activating operation or control of a process, equipment, or system, and is the totality of mechanical and electronic techniques and equipment used to achieve such operation or control. Even though the equipment might be very expensive, it is a way of cost saving in long-term plan.
Fast
Acting, moving, or capable of moving quickly, swift, and accomplished in relatively little time: it is expeditious, which combines the senses of rapidity and efficiency. Furthermore, use of paper products and plastic wraps keeps labor costs down: pre-sliced cheese, packs of jellies and ketchup while getting the customer to do the work. A limited menu restricted to items with a short preparation time would make fast service possible and would also be useful in streamlining operations.
Utilization of proper resources
Utilization of time-saving equipment, like microwave and post mix beverage dispensers; labor-saving equipment like ware washers, automatic potato peelers and automatic coffee brewers'; and self-service devices or methods to reduce labor overhead like vending machines, cafeteria systems, buffet tables
At the beginning of the Fair fast food restaurant started operating, it has used to face a lot of issues due to lack of operating experiences, such as poor working conditions and employee relations, lack of team, snags in production, unnecessary movement of materials, and so on. Even then, the Fair fast food restaurant hires the outside expert to analyze the issues it is facing and excogitate the survival strategies to cope with the other fast-food industries.
Management Concentrates on maintaining quality and safety of the food product
Safety of food is a basic requirement of food quality. "Food safety" implies absence or acceptable and safe levels of contaminants, adulterants, naturally occurring toxins, or any other substance that may make food injurious to health on an acute or chronic basis. (www.fao.org) The philosophy that the Fair fast food restaurant always mentioned, food quality can be considered as a complex characteristic of food that determines its value or acceptability to consumers. Besides safety, quality attributes include: nutritional value; organoleptic properties such as appearance, color, texture, taste; and functional properties. In order to capture the market shares, the Fair fast food restaurant firstly concentrates on maintaining quality and safety of food product and gives a good image to the customers.
It accelerated store openings in hard economic times
The economic downturn of 1997 and 1998 adversely affected most sectors of the Hong Kong economy as consumers encountered inflation, job insecurity, and unemployment, often for the first time in a generation. However, many of these reversionary conditions have turned out to be to the benefit of the fast food and organized restaurant chains with retail rents falling, consumers seeking value for money and cheaper establishments as opposed to independent restaurants. The fast-food chains are actually expanding. During this period, the Fair fast food expanded rapidly and since then growing from 5 restaurants to 11 in 1998, while serving over 10,000 customers daily.
It is heaviest advertiser
At the beginning of the Fair fast food established, it has recognized the importance and immense influence of adverting. They frequently made advertisement through different Medias so that it captures the different interests of different segments in the market. Refers to the answers of the interview questions, Fair fast food has spent almost 1 million on advertising during the first 5 years.
Conclusion
In conclusion, the reasons why the Fair fast food restaurant may develop from a small industry till today's sweeping industry are, the business owner of the Fair fast food restaurant understands the difference between the features of his business and the benefits it provides. For instance, the customer will be able to conveniently choose their outstanding food menus that are designed around four time segments, and also are priced differently taking into account the eating and spending habits of its customers. Secondly, Mr. Lee determines the target market to increasing "Not cooking" young couples and teenagers and launches the right product at the right timing. Besides that, the management philosophy of Fair fast food restaurant is main reason to access and survive in such a cutthroat market environment.
