THE GOURMET AS AN ENTREPRENEUR A STUDY ON THE WESTERN RESTAURANT INDUSTRY IN HONG KONG by CHENG YIU MING, EDDIE (If I �� MBA PROJECT REPORT： Presented to The Graduate School In partial fulfilment of the Requirement for the Degree of MASTER OF BUSINESS ADMINISTRATION THREE-YEAR MBA PROGRAMME THE CHINESE UNIVERSITY OF HONG KONG May 1991 DR. ROBERT CSR WESTOOOD (Advisor) 32 So 5 4 \ 叙If、I i , \ > d — s . / , . 1 ^ . • I nM -uu - I ../ - . - ！.\ ..、 . •• . , 1•1 • ABSTRACT The restaurant industry is one industry in Hong Kong that has rarely been studied in the academic sense in the past. With the growing internationalization of Hong Kong, a new breed of restaurant has emerged in Hong Kong. These are the authentic western restaurants. This type of restaurant by definition is very different from the traditional Chinese restaurant that Hong Kong has been so famous for. It is also quite different from the localized "home-grown" western restaurant which have been the standard bearers in the past 2 0 to 30 years. We are beginning to see the emergence and a gradual proliferation of this type of restaurant. It is therefore high time for us to conduct a study on this type of restaurant. By type of ownership, restaurants in Hong Kong can be segregated into three distinct types. Those owned by hotels, those owned by conglomerates and those that are run privately, with the latter group being the target group of our study. As independent restaurateurs, these people are by definition entrepreneurs. How then do they measure individually, and as a group, on entrepreneurial tendency ？ We believe that since they are involved with cooking which many consider to be an art form, they may be » 參 • 111 quite different from the other entrepreneurs in a conventional sense. The research study is composed of four separate stages. Stage one is literature search, stage two is visits to the restaurants, stage three is in-depth interviews and stage four is conducting of a survey on selected restaurateurs. The purpose of the interviews are to get an understanding on the running of the restaurants, their problems, concerns, opportunities and out-look for the future. The questionnaire is to measure the entrepreneurial tendency for the group of selected restaurateurs. Some of the problem areas unearthed through the interviews are : competition, high rental, employee turn- over and supplies. There exist different ways that the restaurants could use to counter each of these areas, some of the present and future opportunities open to the restaurants include : catering, lunch box and lunch delivery, franchising and vertical integration. The interviews also reveal that the success factors listed by the restaurateurs which include : food, service, location and ambience, show a very close tie to that of the four Ps of marketing. We can then assume that marketing is being practiced by the restaurants although the restaurateurs may not be fully aware of it. iv In line with our hypothesis, the survey result indicates that the restaurateurs are indeed different from the conventional entrepreneurs. They generally score lower than other entrepreneurs. It is also found that Chinese tend to score higher than Frenchman. We conclude that while restaurateurs tend to score lower than your regular entrepreneurs, this score result however, in no way relates to their success as restaura- teurs .In short, entrepreneurial traits are not all that important in the management and running of a restaurant. V TABLE OF CONTENTS ABSTRACT ii TABLE OF CONTENTS v LIST OF TABLES viii ACKNOWLEDGEMENTS ix Chapter I. INTRODUCTION 1 Definition 2 Definition of a 'Western' restaurant 2 Definition by type of ownership .... 4 Definition of ‘entrepreneur‘ and ‘entrepreneurship‘ 4 Objectives of the paper 6 II. METHODOLOGY 9 Research design 9 Level of research target 11 Population frame 12 The interviews 14 The survey 14 Research Limitation 14 III. HISTORY OF WESTERN RESTAURANT INDUSTRY IN HONG KONG 19 IV. RESEARCH RESULT AND ANALYSIS I � MOTIVES, PROBLEMS AND OPPORTUNITIES 23 vi Motives behind starting a restaurant 2 3 The background of the owner/operator 24 Interest or hobby for the owner/ operator 24 Treating the restaurant business as an art form 2 5 Problems and Opportunities 25 Competition 25 Rent 26 Employee turn-over 2 7 Supplies 29 Some of the ways to counter these problem areas 3 0 Competition 3 0 Rent 20 Employee、turn-over 31 Supplies 32 Opportunities 3 3 Catering 3 3 Lunch box and lunch delivery 34 Franchising 3 5 Vertical integration 3 6 V. RESEARCH RESULT AND ANALYSIS 11 � MARKETING AND SUCCESS FACTORS FOR A WESTERN RESTAURANT 37 Determining factors for success according to the restaurateurs 37 The four Ps of Marketing in the western restaurant industry ••••• 3 8 Product 33 vii Price 40 Place 41 Promotion 43 VI. RESEARCH RESULT AND ANALYSIS III : RESTAURANT AND ENTREPRENEURIAL TRAITS 44 Contents of the questionnaire 44 Interpretation of survey result 45 VII. MINI CASE STUDIES 50 USA Deli 51 California 54 Cafe de Paris 57 Amigo 60 VIII. CONCLUSION 65 Paper summary 65 Recommendations for a restaurateur ••• 67 NOTES 71 APPENDIX , 72 BIBLIOGRAPHY 80 • I » Vlll LIST OF TABLES Table 1 BREAKDOWN OF WESTERN RESTAURANT IN THE GUIDE BOOK BY TYPE OF OWNERSHIP 13 Table 2 LIST OF RESTAURANTS INTERVIEWED 17 Table 3 BREAKDOWN OF SCORE AND THEIR INTERPRETATION 45 Table 4 BREAKDOWN OF TEST SCORE BY SECTION 47 ix ACKNOWLEDGEMENTS I am indebted to my advisor, Dr. Robert Ian Westwood, whose advice and guidance has proven to be invaluable during the course of the research study as well as the writing of this research paper. I am also grateful to all the restaurant owners and operators who have agreed to be interviewed, In particular I would like to thank Mr. Ringo Sham of Lalique at the Royal Garden for his introduction into the hotel restaurant business, Mr. Maurice Gardett of Cafe de Paris, Mr. William Leung of USA Deli, Ms Karin Joffe of California, Mr. Francis Pinto and Mr. Michel Emeric of La Rose Noire, Mr. Peter Lok of Amigo, Mr. Y. M. Chan of Au Trou Normand, Mr. Danny Chung of Valentino and Leonardo, Mr. Perry Fong of La Toison d'Or, Mr. W. Y. Leung of La Taverna, Mr. Ringo Tse of Stanley's French restaurant and Mr. Ernest Ruckendorfer of Mozart Stub,n for the time they spent in introducing their restaurants and expressing their opinions on the western restaurant industry in Hong Kong. X Special thanks must also go to Mr. Maurice Gardett, Mr. Peter Lok, Mr. Michel Emeric and Mr. William Leung for filling out and returning the questionnaires which helped to complete the second stage of the research. I must also express my heart-felt gratitude to Ms. Connie Sar and Ms. MaryAnn Lee of SAP Asia in Singapore for their generous help in formatting and printing of the various draft versions of this document while I was in Singapore on business. Special credit should also be given to Mr. Anthony Lau for his time and help in producing the final version of this paper. Without the assistance of the above mentioned people, this paper would not have been possible. Finally I have to give credit to my wife Ms. Rovie Kwong for her "positive non-interference" with the work of this research paper. Her patience and under- standing is highly appreciated. 1 CHAPTER I INTRODUCTION "Restaurants for the people in the 80is what theatres were for the people in the 60's" is a line out of the 1989 hit comedy "When Harry met Sally. ” It goes to show the growing importance that people in the U.S. are attaching to the restaurant industry. This phenomenon is not only true in the U.S. but can easily be said about the local Hong Kong scene. With the general rise in educational level and living standards coupled with the recent brain drain issue, the middle to upper-middle class in Hong Kong are getting more and more affluent compared with say a decade ago. Other than working harder to earn their keep this group of people are also demanding and taking more reward for their hard work. They are spending more on luxury items, designers' labels etc. They are taking longer vacation and travelling to further and more exotic places. As a result of this nouveau riche and yearning to enjoy phenomenon - one of the industries that is having a direct and positive impact is no doubt the restaurant industry. 2 Unlike the theatres where people go and sit quietly to watch a performance or a movie, a restaurant is a place where people can unwind after a hard day's work in the office. It is a place where people can relax and talk to friends over a glass of wine, have a sumptuous meal and all the time being pampered by waiters and waitresses who are eager to serve and please. It is a place where one can go home afterwards feeling totally relaxed and good about the experience. Definition As this paper is about the 'Western' food restaurant and its relationship to entrepreneurship, there are a couple of definitions that need to be delineated before we begin. Firstly, in order to narrow down on the scope of this paper we need to restrict our subject, restaurant, to that of a particular genre. Secondly, as there are many different definition for entrepreneur we have to be specific about our own definition. Definition of a 'western' restaurant The restaurants that we have been talking about above are obviously not the Chinese restaurants that are so abundant in Hong Kong but rather the western food restaurants that are gaining popularity in Hong Kong as a result of more exposure to the western cultures through more travel and education.