A reader pointed out to me that I did not cover in Part II about what I mentioned in Part I, which is how having co-founders would affect the culture if it’s not aligned or managed properly.
It all starts with the mindset of individuals on how things should be done. In our case, we know that food quality and service are always important, hence the underlying foundation of everything we do revolves around that. We only ship out new product if the product is good, and the pace of our growth is much reliant on how we can maintain our quality and service.
Once the fundamental culture is establish (which is the easy part), then there are the multiple small cultures like the magnitude of hunger for sales, the pace of execution of ideas, the frequency of relationship building and networking which could dictate how the rest of the team perform. That’s culture, and it is always a progressive process to align, breakdown and realign again to move forward.
Every stage of growth will require a level up of experience, mindset and alignment, and it is through challenging times that we will experience it. We just have to step back sometimes and see it from a third party point of view on how the company is doing and then move on from there (with no emotions attached).
*** Back to Part III ***
I meet a lot of entrepreneurs who always say follow they wanna do this because they are passionate about this and that. A classic example is people who open cafes always start from claiming that they are passionate about coffee. Few years down the road, they wanna sell of their business. I’m like what?!! Or some of them close down?
So is passion really all enough to really venture into the business? Or is that the words we tell people and ourselves because that’s just what the norm of the answer is.
To me, pure passion is overrated, because when you understand how important it is to build a sustainability business is to keep the passion burning, then you will not say you will just do it solely for passion.
Sadly, that’s how the world works, and we just have to learn how to play around the rules of the game. When we accept that sustainability is required through proper planning and the hunger to sell, then we will become responsible towards everything and everyone, rather than brushing it off saying it’s not important and claiming that it’s just the passion.
Part III is about the tough times that we went through because of the failure of planning and not having a more aggressive approach in selling.
“If you fail to plan, then be prepared to plan to fail”
These words has never been so true until we faced our toughest time. I learnt this when I was still studying in university, after I left university, and yet I never felt the magnitude of importance when come to planning until the shit hits the fan.
Being complacent with life back then when I was 23, 24 when we were raking money so easily with people lining up the door has blinded me to plan for the future. Things changed so fast in today’s world that you have to keep your eye on to the ball. Momentum breeds on momentum.
And this mainly comes from the mindset of mine of fearing to plan because at the end I may just set a goal which is too big to achieve or I will just self sabotage the goal. When I learn more about myself, and understanding how my mind and fear work, that’s when things started to change.
Blaming on external factors is always an easy way out, the reality is that that we lack strategy.
That’s a fact that if you want to start a business, you just have to own up to it.
So what actually happen back in the days? Why a business had all media talking with 600 burgers a day ran into such tough challenges? It just seems ok from the outside but just similar to any businesses from the outside, what you see from the outside and what you know in the reality is really different.
Chung Lynn from Nando’s told me before that running 1 store and 2 stores will be very different, and from 2 to 4 stores will be even more different. We know to a certain extent that it will be different, but we didn’t know how different the fundamental of the business will be once you expand.
We opened our centralised kitchen in Q1 2013, to cope with production of our Seapark outlet (which was doing 600 for a night shift), before opening our OUG location in Q3 in the same year. Things were still doing pretty decently well, till we closed SeaPark for renovation of downstairs and upstairs while we launched OUG.
When both stores were opened we were doing more burgers collectively but averagely burgers in both store dropped. It was great that our central kitchen was opened so that we can produce more, but it was over the couple of months after that collectively the percentage of incremental volume from opening an additional store was not 100%.
So in pure math terms, if we are doing 600 a day, we should be doing 1200 of both stores, but in reality things just didn’t go that way. We did not account for the drop in volume collectively when we did our budgeting and because of that, incremental of revenues were not incremental of cost to support both.
We had a heavy top headcount, which meant that we had too many full timers being hired in the office, but not enough traction to utilise such big team.
In short, we were below capacity of what we could have accommodated and revenue were just not coming large enough collectively to cover our cost. So on some months we make money, on some months we lose money.
We lack strategy to boost sales in both stores, but more importantly our fundamentals of an F&B business is not ideal. You see, when we run with one outlet and our production is being run in the same location, our cost is being maximised across all verticals. And we can always have the option to close once a week, as we are neither top heavy nor have heavy commitments of full time wages. But as we expand, cost goes up but our revenue may not go up by the similar percentages.
If we were to turn back time, we would have to craft out a solid strategy on how to open up 3 additional stores and its timeline before opening our centralised kitchen. If we didn’t then it would be better to just stuck with one outlet. What’s more challenging is that our store managers work 5 days a week, instead of the norm of 6 days a week, and our store only opens 6 days a week.
As you scale for F&B, a lot of things which you would have done for one store would unfortunately have to change, as it’s just business fundamentals. Adapt or die. Which is why when people say opening more chains is better, I beg to differ. Better is always relative, it’s the bottom line that counts. It took us 3 years to finally open 7 days a week and that moved itself just changed everything. Imagine if one day’s sale is 3,000 on the low end per store, 4 stores would mean 12,000. And one month it would mean extra 36,000 of sale by just opening one store across the board. That every bit helped even though the margins may not be as high.
On the down side, the price we got to pay is lesser bonding time which usually we use our Mondays for, but at this stage, it was going down entirely so partial sacrifice, with the first Monday of the month being our geek outing day. And I’m glad we chose the latter.
And that was why we know we just needed to fill up capacity for all the staff hired for production and management, which makes the 3rd and 4th location necessary. There were moments when we were lost on how to go and fund raise for our third location and in the end we just resort to take private loans (not from banks) to give it one last push. That’s when we open our third location at Bandar Sunway end 2014 and then Cyberjaya right after in May 2015. At the end of the day, it’s unfortunately a business that thrive on volume, similarly like airlines. It’s a volume game. If we want to scale, we got to be ready to pay the price.
It was through this downturn, that I learnt the importance of planning. It’s better to have a plan than not to have one, at least you have a direction, instead of moving fast without a direction.
There’s always a question on but where do we start? How do I know whether what I plan is achievable? What should I be planning for? When we plan, we will never know what will happen, but it all starts from doing 2 things
- Setting a goal that you want, try small then go bigger. From daily sales of 1k to 1.3k for example, that’s a small goal, but it’s practicing that goal setting step that is essential.
- Break down every strategy into very small steps on how you need to hit the goals
One example now that we practice now is setting sales goal for the year and bonus scheme as well as coming up with a proper budget based on our cost structure. Once we do all these, we will then know what are the sales targets we need to achieve monthly, by store.
Besides, it took me 3 years to see the importance of budgeting, because it’s not something I like doing when I was younger because to me things always change. But budgeting has taught me to use it as a guideline to know what are the sales needed to hit for our own cost structure and not treat it as a tool that may cause rigidity.
The best lesson I learn from my trip to [email protected] (under my other startup Ops Ninja) last year was to start with the end in mind and then reverse engineer from there. It was something so simple, yet so hard to see. If you could draft out your end goal in mind, a lot of things can fall in place really clearly. In this case, if we know how much is the cost gonna be as we scale, then we would know how much revenue we would need to hit in order to be sustainable.
Also, by doing the reverse engineering method you will then be able to plan out for the hiring as well. This would help you to dictate what kind of function to hire and when to hire. Every industry is different and every stage of business is different. From my experience, as mentioned previously is to hire for sales and operations first and then accounts and HR will come much later. But this is different if you are doing big scale cross country fast growth like how K-Fit does, where they would hire heads of multiple functions because their directions were clear. With proper planning, you would also be able to figure out how you can use certain technology tools to automate or simplify processes so that you wouldn’t have to hire so many headcount.
Note for F&B business wannabes – again, sometimes doing an outlet is better than doing more outlets. You will require a very detailed expansion forecasting plan to move from one location to multiple location, because there’s a lot of extra expenses require such as extra management head count.
Make sure do your cost structure properly and then figure out how much money is needed for your expansion and then do what it takes to get there.
If you think getting a franchise will get you rich, think again. If you really want to go and take a franchise, go sit at their outlet and do the math on how many people actually walk through the door, and not believe whatever numbers the franchisor gives you. This is because I have seen so many being affected and they just close down in the end. Or even better, go SSM and print out their annual report, it’s as simple as that.
It’s just perception vs reality when people look out for F&B business to invest in. That is why we are refraining from franchising because the amount of people who can execute a myBurgerLab outlet properly really low and we rather maintain our special experience for our customers. Sometimes it’s easy to forget that success is built over a number of years and not just an overnight thing, so be patient and plan it out 🙂
6. Sell, Sell, Sell
If you want to start a business, you have to start from selling.
If you don’t like to sell, you just can’t do it. Everyone sells. People sell themselves when they apply for a job. Students sell themselves when they apply for scholarships. A mom sells cakes to fund for her family living if she has to.
Everyone can sell, it’s just whether the result meets your target. Good or bad result again is relative, relative to each individual’s goals.
Selling in one location and selling in multiple locations is so different, with different demographics, different consumer behaviour, different city development structure are all factors of how well one can sell achieve the targets.
I personally don’t like sitting back and hope for customers to walk through the door. This is what I know I set my mind to it before we open. I like to be busy. Fortunately for us, when we open on the first day, the customers were just pouring in. When we looked back it was timing of a social media boom period that we capitalised on and also our tasting sessions at the Red Bean Bag.
Selling goes beyond marketing, especially what we all learn in universities with the so called 4 Ps. Those are theory, but in reality it’s much much tougher. Which is why I always encourage whoever who wants to open a F&B to go and work in a F&B place first so you will understand consumer behaviour better.
My friend Han King once shared with me that he goes to supermarket and stand on body and personal care aisle to observe how consumer shop and how they make a decision on which brands to purchase. That really taught me a lot in respecting consumer behaviour as a lot of it starts from understanding the behaviour of all type of consumer groups from the ground level.
Our OUG consumer behave very differently from our SeaPark customers. They come in bigger groups, families mainly and thankfully our location is a bigger location to accommodate such demographic. Otherwise our sales will very much be affected even more.
As you start your business you will learn that there are too factors that affect a customer decision making at different points in time, from long queues, to convenience, to special treatment, to fear of losing out, to peer recommendation, to peer pressure, to many many more. I’m always astonish on different customers make their decision and I learnt a lot of this from cashiering at the counter for almost 2 years.
One big lesson learnt was when we got our first phone number (after 3 freaking years) that people could actually contact us. Previously people just contact us online through social media or email, but when we got our phone number, we realised 3 things. People actually google about us and there were so many more customers we missed out just because a lot of them do not know when we open and where we are exactly located. The last thing we realised was sometimes customers really want to come to eat before we close but because they don’t know if they can make it in time, they decided not to come. But with the phone number, now they can call us to place an order before we close our kitchen so that they can still enjoy our burgers when they arrive.
It was really not funny on how much of opportunities we have missed out. When everyone is trending about social media marketing, for us it was just a simple phone number. Selling is not just about what you sell, or how you sell but also what channels you are selling your products through. Having extra channels means you get to reach out to customers who behave differently.
What made us took it to the next step with a mobile phone channel was the inspiration from startups like BeMalas and Helpr, where we provide convenience to customers who want to “BeMalas” to Whatsapp in their orders at least 1 hour prior (only applicable for non peak time) to preorder their burgers. This helps us to fulfil our downtime capacity. This behaviour is not uncommon as I see my dad always do it back in my hometown where he will call his usual restaurant and order fried rice so that he can just go and collect it after 10 minutes.
(*Note we sometimes do reject orders through Whatsapp if the store is like super busy, so you would still have to walk in).
We even launched our non heavily publicised delivery service through Whatsapp to test out the feasibility of the delivery market and how to go about coping it operationally as the orders scale. The experience has been pretty fruitful.
Many people see our social media as a case study, but we have a lot of sale funnel beneath the surface that we work with because we know social media cannot be the sole bread and butter. This goes similarly to many businesses. We always keep an eye out of how different verticals do their sales channel, be it AirAsia, Tesco, Hilton, Apple, McDonalds, there are many lessons to be learnt from these seasoned guys.
One piece of advice to learn is that selling just doesn’t start with the sales and marketing team, but the operation team are also the sales people. Sales and Marketing converts customers to come, while the operation teams are the one who convert them to be local returning customers. Both functions have to work hand in hand in order to build a kick ass sales team. In our case it’s our geeks, our store managers who walk the talk when it comes to food quality and customer service. Without them, no matter how kick ass our social media marketing is, it wouldn’t work.
All these are just lessons that we learnt throughout our journey. And it all starts with the hunger to sell, if you want to make it, you will do whatever it takes and explore whatever it takes. 🙂
010-3695275 and say hi to our lovely Evan who will handle your request 🙂
P.S. Our 4th year Anniversary is next month and we are fundraising RM 70,000 in total to build a house with Epic Homes. Head on to this event page to find out more details on how you can contribute 🙂