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Business Advice

Take scientific approach, say Wang Cafe entrepreneurs

Operations and management aspects of F&B business need to be dealt with in methodical ways, they share.
January 7, 2013
By: Teo Hoong Chen
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Take scientific approach, say Wang Cafe entrepreneurs

FOOD and beverage (F&B) entrepreneurs should adopt a scientific approach to managing their operations, rather than rely on "gut feel" for everything from determining pricing to choosing a location, according to Steven Tan and Yap Chee Wee - the duo who built up the Wang Cafe chain and later sold it for a profit.

Lamenting that many entrepreneurs behind F&B businesses tend to be guided by passion and creativity, they acknowledged that this should be limited to developing products and business concepts.

The operational and management aspects should be dealt with in organised and methodical ways, say the duo.

"Many F&B entrepreneurs don't even track their expenditure and earnings; they only look at their bank balances at the end of the month," said Mr Yap. According to Mr Tan, such entrepreneurs will find it difficult to identify problem areas, such as excessively high costs.

The duo certainly know what they are talking about. In late 2006, they bought coffee and kaya toast chain Wang Jiao. Rebranding it Wang Cafe, they turned it around and grew it from four outlets to 30.

In 2010, the pair then sold it off profitably for an undisclosed amount. When they were running Wang Cafe, Mr Yap revealed that he and Mr Tan instituted numerous standard operating procedures (or SOPs) for consistency, even down to instructing staff exactly how many spoons of sugar to use for coffee. And he attributed this precise approach to their success.

"Most entrepreneurs don't believe in the importance of this, or can't be bothered," said Mr Yap.

Now the two entrepreneurs want to share their knowledge and experiences with others, by setting up iFi Academy to provide training, consultancy and investment services to small F&B entrepreneurs.

iFi stands for "inspiring fearless innovation", epitomising the spirit that they want to inculcate in the people they coach.

Since its inception in 2012, the academy has helped to train rank-and-file F&B employees and managers through its offerings of a certificate course and a diploma course. This niche stems from their days in Wang Cafe, during which they developed courses for Wang Cafe employees with support from the Workforce Development Agency.

iFi also acts as a consultant to turn struggling F&B operations around. Mr Yap observes that F&B entrepreneurs are a hardy bunch who do not give up easily - many would rather look for help than close shop. This is where iFi hopes to play a role in.

Mr Tan has also published a book, distilling their approach to managing Wang Cafe into what is termed the "iFi PROFIT Model". PROFIT stands for Pricing, Recruitment, Operations, Freebies, Infrastructure and Targets.

In the book, titled Secrets to Managing a Successful Food & Beverage Business, the model serves as a framework on various aspects of F&B businesses.

For instance, under the infrastructure section of the model, Mr Tan explains how to take a scientific approach to selecting outlet locations. Some of the steps include mapping the surrounding areas, and calculating a profitable rental cost - which he estimates should be no more than 30 per cent of revenue.

Such guidelines are based on Mr Tan's hands-on experimentation at Wang Cafe, as well as his experience as an F&B consultant prior to that.

Having been an F&B entrepreneur himself, what did Mr Yap find most difficult in managing Wang Cafe?

While daily operations did not stump him, recruiting and retaining staff proved to be a challenge. "Building the right team needed time," said Mr Yap.

Looking back on his five years at Wang Cafe, Mr Yap mused: "It was hard work."

teohgcn@sph.com.sg

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