Chopsticks (Chinese) restaurant in Christchurch

Citation

Hwa Ang, M. (2003), "Chopsticks (Chinese) restaurant in Christchurch", British Food Journal, Vol. 105 No. 1/2. https://doi.org/10.1108/bfj.2003.070105aab.004

Chopsticks (Chinese) restaurant in Christchurch

Situation summary

Chopsticks is a successful restaurant offering Malaysian-Chinese cuisine in Christchurch. The food outlet has managed to grow its loyal customer base, and revenue has steadily increased, even in a highly saturated and mature market. A problem, however, is that 70 percent of the revenue comes from peak periods on Friday, Saturday and Sunday from 6 p.m. to 8 p.m., while business is especially slow in the afternoons.

The environment

Rivalry in the industry is considered intense, as there are over 1,000 food outlets serving a population of just over 300,000 in Christchurch. Most food outlets are concentrated in highly populated areas such as the central city and prominent suburbs, within a short driving distance of one another. Moreover, the food industry is seen to be highly profitable and hence attractive, especially to immigrants with little formal qualifications and limited spoken English.

There are four levels of competition for Chopsticks. The first, which poses the biggest threat to Chopsticks, consists of other Chinese and Asian restaurants, particularly those offering medium priced meals, such as Yummy Chinese Cuisine, FooSan teahouse, and Jade Garden Restaurant. In the Christchurch area, there are approximately 90 outlets listed as Asian restaurants, of which 25 are Chinese. The second level of competition consists of other restaurants and cafes. The third comprises fast food outlets, such as McDonald's, KFC, Pizza Hut and the local fish and chip and takeaway shops. The fourth level of competition is home cooking, also a substitute for the products and services offered by Chopsticks. Level of household income is also a potential threat to Chopsticks; if income is low, people are less likely to eat out, as this is considered to be a luxury.

In spite of this, opportunities exist for the entrepreneur who is intelligent enough to cater to the changing needs of consumers. Society is constantly on the move and there is a need for quicker and faster services. Services like home delivery of food, ready to eat packaged meals and even ready to assemble packages for wholesale to retail outlets.

Furthermore, local restaurants are simply not utilising the technology available to them such as the Internet to gain leverage over competitors. All these and more are options available for restaurants like Chopsticks.

The Chinese culture

Being a minority group in a foreign country, most of the immigrants have maintained close networks with one another and have taken extra interest in looking after each other. This can not be more true for the Chinese community of Christchurch, where the cultural understanding of "I scratch your back, you scratch mine" applies. This is evident in the way business is conducted by the Chinese restaurants in Christchurch, rivalry among them can only be termed as "friendly". Aggressive marketing tactics such as substantial price cuttings are not socially acceptable in this group as they are frowned upon by the other restaurant owners. This type of strategy is seen to be non-beneficial in the long term to everyone, as it would force restaurants to become more competitive through similar price cuts or costly differentiation strategies.

Maintaining positive relations with one another is of high importance to the Chinese. One of the reasons for this is knowledge sharing, substantial amounts of information can be shared informally through friends having a drink with one another. Valuable information such as prices of raw materials like meat and vegetables, and which suppliers offer the best deals can be discussed. Other industry related news like current performances, new competitors and up and coming regulations and trends can all be exchanged through simple conversation. Also, in times of shortages, negotiations can be made between friends to share resources. such as Chinese vegetables and fish in the winter season.

On a more personal note, is the important concept of "face" embedded in the Chinese culture. Generally speaking, most Chinese, especially those of the older generation, place high importance in being liked, admired and respected by one another and this involves acting in accordance with the rules set by society and meeting its expectations.

The business

Chopsticks is a restaurant serving Malaysian-Chinese cuisine. It operates six and a half days a week from 11 a.m. until 10 pm, with a two and a half hour break from 2.30 p.m. to 5 p.m. every day except Monday, when business begins at 5 p.m.

The enterprise was founded by three immigrants from Malaysia in 1999. All three partners are experienced chefs in their home country, in addition to having work experience in various restaurants like the former Shangri-La and Parkroyals' Yamagen sushi and tepanyaki restaurant in Christchurch.

The philosophy of the partners was simple. They believed that there was a need for good quality food at an affordable price and they set out to meet the need. The owners had very little knowledge regarding management in Western terms but they had a lot of experience and knew what worked well in the past, as well as a supportive network of family and friends.

Chopsticks is successful because of the following factors: service, ample parking and value for money dishes, averaging $10 per dish. Another element contributing to their success is the food, which is catered to the tastes of their target market. There is special emphasis placed on the use of natural herbs and spices as well as the use of the high quality raw materials. Chopsticks is well known for its accentuated flavours. It may be said that the two most important elements contributing to the success of Chopsticks are its location and food. Chopsticks is located in Fendalton, which is a prime suburb in the north-west of Christchurch and only five minutes drive from the University of Canterbury. According to the 1996 census, families living in the hills and in the north-west of Christchurch have high family incomes. In addition, results also showed that the Asian population clustered in the north-west of Christchurch. Moreover, there are only a total of four restaurants in the Fendalton, and Chopsticks has the advantage of being the only Chinese restaurant in the vicinity. In spite of the above, this is also the reason why there is very little business during lunch times. It is simply too far away from the work centres and many people find it inconvenient to go. Also, Chinese people prefer to eat dim sums, consisting of small pastries and steamed buns, for lunch as opposed to the noodles, rices and other mains offered by Chopsticks.

Most of the revenue stems from repeat purchases from loyal customers. New customers are acquired mostly through positive word-of-mouth from existing customers. The only form of advertising undertaken by the restaurant is through occasional adverts placed in the local Chinese newspaper.

Approximately 60 per cent of their customers are middle- to high-income Europeans, with the remainder consisting mainly of Asians. Their non-Asian customers tend to lean toward active middle aged couples and families, whereas their Asian customers are usually family groups. Even though the restaurant is situated near the university, most students tend to go to Yummy Chinese Cuisine which is situated in the middle of the area that includes the university, teachers college and several high schools. Many students prefer lower priced Asian restaurants like the Khmer Noodle House.

The people

T.H. Ang is one of the partners in this restaurant, he is the head chef at Chopsticks and is responsible for managing as well as purchasing inventory. He is in his late 40s and is married with four children, two of which work as a waitress and waiter at Chopsticks. He values hard work and is willing to work long hours to save money for an early retirement. He would like to see Chopsticks operating at its maximum capacity.

K.S. Ang is the brother of T.H. Ang and is in his early 40s; his responsibilities include food preparation as well as co-managing the finances. Unlike his brother he has a young family and is willing to sacrifice income by taking time off to spend with them.

P.K. Chan is in his mid-40s and is responsible for everything else outside the kitchen such as hiring waitresses and dealing with customers. He shares the same values as K.S. Ang, for he is also comfortable with the current performance of Chopsticks and wishes to take more time off to spend with his family.

This is a high risk venture for all three partners as they are the sole income providers of their family, a stable income is of high importance to them and they describe themselves as risk adverse. Furthermore, because of their age and experience, it is very difficult for them to find jobs as they are over-qualified for most restaurants in Christchurch.

The problem

Just as they are the strengths of the restaurant they are also one of the weaknesses. Their conflicting objectives make it difficult to implement a solution for the problem. Yet this problem should be addressed. Chopsticks is incurring high fixed costs in terms of both rent and operational expenses like electricity, phone and salaries. On peak nights the restaurant has trouble handling the huge influx of customers that come through. Chopsticks runs the risk of alienating both existing and potential customers because it has to frequently turn away people who do not have reservations. Also, waiting times can sometimes be as long as 20 minutes to half an hour, this exceeds the restaurants aim of waiting times no longer than 15 minutes. This causes a build up of takeout customers who wait in front of the counter, these people often block the entrance and exit of the restaurant, causing the restaurant to seem cluttered and stifling.

As a result of the long waiting times, customer complaints are inevitable. Chopsticks often have to resort to discounts, vouchers as well as free dishes and drinks to pacify unsatisfied customers, for negative word-of-mouth could be detrimental to the future of the business.

Assignment

1. 1.

   Write a marketing plan.

2. 2.

   Would the differing objectives of the owners influence your recommendation(s)? How? Why?

3. 3.

   Are the partners of Chopsticks managing their business effectively?

Mei Hwa Ang University of Canterbury, Christchurch, New Zealand