A Chinese restaurant company has enjoyed skyrocketing growth in the past more than three years since its inception, all the while many of its competitors lament of slowdown or even contraction in sales. Its founder is hotly pursued by MBA schools and conference organizers for lectures so that the general wonder and fervour can be somewhat abated.
His?business?started?from?an?outlet?of?a?dozen?square?meters?and?ten?staff?in?August?2012.?Now?he?has?45?outlets,?directly?owned,?and?a?labour?force?of?1,500?people,?in?Beijing?and?Shanghai.?"During?the?past?three?and?a?half?years?my?business?grew?at?a?compound?annual?growth?rate?of?485?percent,"?said?he,?now?34.?"At?this?speed,?I?should?become?the?No.?1?player?in?the?Chinese?food?service?industry?in?five?to?ten?years'?time."
The?restaurant's?name?is?Huang?Taiji?(黃太吉),?which?sounded?exactly?as?the?venerable?name?for?the?second?emperor?of?Qing?Dynasty,?the?restaurateur?being?a?native?of?Harbin?in?Northeast?China,?the?cradle?for?the?Qing?Dynasty.?He?is?He?Chang?(赫暢),?boasting?nearly?a?decade's?working?experience?in?Baidu,?Google,?Quna'er?and?some?digital?advertising?companies?before?venturing?into?a?totally?new?industry,?but?the?philosophies?he?has?learned?and?refined?in?these?Internet-related?companies?cry?out?loud?in?how?he?has?chosen?to?enter?this?industry?and?the?way?he?runs?it.
“We?are?so?grateful?for?the?times,?which?has?given?us?such?an?opportunity?of?launching?a?modest?tidal?wave?in?the?general?transformation?of?the?food?service?industry?from?the?lowly?grassroots?level,?and?we?are?honoured?to?be?a?pioneer?in?this."
His?success?can?be?credited?to?a?bundle?of?at?least?five?tricks?as?follows.
1)?Blue?sea.First,?he?cut?into?the?market?with?an?absolutely?blue?sea?product.?He?chose?to?produce?and?serve?a?rather?obscure?food?product,?a?classic?blue?sea?product.?It?is?not?easy?to?explain?what?his?obscure?Chinese?snack?is?exactly?in?proper?English?even.?Youdao?Dictionary?translates?the?product?as?"Chinese?hamburgers".?Named?Jianbing?Guozi?(煎餅馃子),?it?is?a?thin?mung?bean?flour-based?pancake?with?eggs,?shreds?of?green?onion?and?some?sauce?spread?out?and?simmered?on?a?big?flat?oven,?wrapped?up?and?served?steaming?hot,?usually?by?migrant?people?from?rural?areas,?most?commonly?in?Northern?China.
When?he?opened?his?restaurant?in?a?prime?office?building?of?Jianwai?SOHO?in?Beijing's?Central?Business?District,?it?created?a?sensation?among?the?tens?of?hundreds?of?white-collar?professionals?in?that?area.?Consumers?had?to?queue?up?long?outside?its?restaurant?as?it?were?an?Apple?store.?By?the?end?of?that?year,?sales?amounted?to?five?million?yuan?cumulatively.
2)?Social?media.?As?an?IT?guru,?he?naturally?understands?the?power?of?social?media,?so?he?has?conducted?aggressive?and?effective?social?media?campaigns?for?his?restaurant,?and?thus?developed?tens?of?thousands?of?followers?online,?who?are?glued?to?what?he?has?to?say?and?offer.?Sometimes?he?drives?his?Daimler?Benz?car?to?deliver?the?snack?but?has?made?it?a?point?of?sharing?this?highly?pompous?experience?on?his?Weibo?account.?A?consumer?forwarding?his?Weibo?message?to?ten?people?is?awarded?with?a?free?boiled?egg,?on?the?spot.
3)?Preference?for?light?assets.Foreseeing?the?potential?limit?in?growth?of?Huang?Taiji?focusing?only?on?that?pancake?and?some?supplementary?products,?in?2014?he?incubated?and?created?new?brands:?Newton?(牛燉),?Big?Yellow?Bee?(大黃瘋),?among?others,?each?sub-brand?focusing?on?a?different?core?food?product?or?meal.?In?2015?he?also?made?equity?investment?into?another?almost?equally?legendary?restaurant?brand,?"Jiaoge?Yazi"?(Meaning?"calling?over?a?duck"?叫個鴨子).
4)?Online?delivery?and?platform.?Then?he?deliberated?that?online?delivery?is?the?way?for?fast?growth?and?introduced?a?meal?ordering?platform,?in?the?likes?of?Eleme,?Meituan?Waimai?and?many?others,?but?stood?apart?from?them?by?being?more?selective?in?the?kinds?of?products?to?place?on?his?platform.?He?terms?his?model?as?"Internet+Product",?while?all?other?platform?competitors?followed?the?"Internet+Restaurant"?model,?serving?only?as?an?extended?arm?of?restaurants,?paying?no?care?to?what?meals?it?receives?orders?for.?While?selling?his?own?products,?he?also?signs?up?other?restaurants?onto?his?platform,?which,?on?the?one?hand,?helps?bring?down?the?cost?of?operating?this?platform,?on?the?other?hand,?brings?over?lucrative?rental-like?service?fees?from?the?various?star?food?or?meal?products?it?receives?orders?and?delivers?on?behalf?of?their?respective?restaurants.?Thanks?to?this?strategy,?his?company,?with?the?latest?valuation?standing?at?CNY?2?billion?(USD?300?million),?became?cash?positive?in?June?last?year?when?online?sales?rose?to?55.7?percent?of?its?overall?sales.?In?January?2016?the?ratio?had?further?expanded?to?70?percent.
The?reason?he?wanted?to?start?online?delivery?results?from?the?opportunities?mobile?Internet?is?bringing?about?as?he?sees?it.?Internet?enables?simplification?of?the?process?of?transaction?to?the?extent?that?many?intermediary?links?can?be?foregone,?which?makes?reshufflling?and?reconstituting?the?cost?structure?possible?and?much?gainful.?In?his?typical?He?Chang-ism,?he?urges?"immovable?assets?going?mobile",?which?means?that?consumers?can?now?be?encouraged?to?make?transaction?and?consumption?at?their?own?homes?or?offices,?rather?than?in?his?physical?outlets,?but?meanwhile,?the?physical?outlets?will?have?to?take?on?some?supportive?functions?for?the?online?channel?in?view?of?the?role?change.?In?the?traditional?way,?he?would?have?to?add?more?and?more?physical?outlets?to?push?out?its?sales?boundary,?but?the?corresponding?cost?of?rent?and?manning?them?can?be?prohibitively?high.
Some?of?Huang?Taiji's?restaurant?outlets?are?equipped?with?kitchens?as?shown?above,?to?put?final?touches?to?semi-processed?food?from?external?and?contracted?central?kitchen?operations?in?the?up-stream,?into?final?products?for?both?in-store?consumption?and?deliveries?to?both?their?sisterly?outlets?without?such?kitchens?and?more?importantly,?the?online?channel.
He?chaffed?at?the?industry's?obsession?with?O2O,?or?Online?to?Offline.?"O2O?is?in?fact?a?very?old?concept?in?China.?Do?you?remeber?where?you?booked?your?hotel?and?air?tickets?from?en?years?ago??Do?you?remember?when?you?booked?your?film?ticket?and?even?selected?your?seats?in?a?cinema?three?years?ago??Do?you?remember?how?you?hailed?a?taxi?a?year?ago?"?he?challenged,?attending?an?online?seminar?via?WeChat?from?his?smart?phone?with?as?more?than?100?people?glued?to?their?phones?worldwide?recently,?while?he?was?in?Sydney?in?preparation?for?opening?his?first?overseas?restaurant?there.
He?Chang?(in?the?middle)?posing?in?a?Syney?tennis?match?in?January?2016,?stealing?a?moment?for?his?sport?passion,?away?from?all?the?hassles?of?preparing?for?the?opening?of?his?first?ever?overseas?outlet,?in?Sydney.
He?added?that?Ctrip,Gewaraand?Didi?as?used?in?the?above?three?cases?were?all?some?form?of?an?O2O?business,?but?these?companies?have?all?conducted?their?businesses?differently?from?the?traditional?companies?at?least?in?one?fundamental?aspect,?in?that?they?started?their?businesses?and?enjoyed?their?fast?growth?by?way?of?reverse?engineering?that?tackles?consumers'?pain?pionts?head-on?with?the?bold,?and?not?to?mention?innovative,?use?of?mobile?Internet?technologies.?He?Chang's?progress?from?a?restaurant?to?a?chain?to?an?online?delivery?company?and?further?on?an?online?delivery?platform?of?star?food?and?meal?products?from?the?general?restaurant?industry,?is?exactly?the?culmination?of?this?strategy.
5)?The?necessity?of?specialty?division?and?sharing.?For?his?own?company's?products,?he?outsourced?the?production?of?the?first?few?steps?to?other?companies?specializing?in?central?kitchens.?He?also?has?around?a?dozen?outlets?that?are?larger?than?the?"standard?and?usual?ones"?and?are?thus?equipped?with?their?smaller?kitchens?to?put?the?final?touches?on?the?semi-finished?products?transported?over?from?the?third-party?upstream?central?kitchens,?selling?the?final?products?directly?to?consumers?while?also?delivering?the?final?products?to?their?sisterly?outlets?without?their?own?kitchens.?The?outlets?with?kitchens,?he?calls?factory?outlets.
He?stressed?the?importance?of?sharing?and?utilizing?resources?of?third-parties.?Therefore,?cold?chain?storage,?transport?and?deliveries?are?shared?by?his?own?facilities?as?well?as?third-party?ones.
In?the?middle?is?the?poster?distributed?in?the?online?conference?via?WeChat,?just?before?He?Chang's?turn?came?for?his?speech?in?the?late?night?of?27?January.
To?sum?up,?Huang?Taiji?impressed?me?by?its?scalability?and?a?self-willingness?to?upgrade?itself?against?all?odds?to?reach?out?to?ever?better?and?longer-term?market?opportunities.?It?is?easy?to?go?from?one?standalone?restaurant?to?a?chain?of?a?few?dozen,?but?the?difficulty?and?complexity?increases?steeply?when?a?chain?restaurant?wants?to?transform?into?an?online?delivery?company,?and?even?more?so?to?an?online?booking?and?delivery?platform.
Many?restaurant?companies?have?got?stuck?in?one?way?after?settling?down,?only?to?make?some?minor?tinkering,?if?at?all,?afterwards,?denying,?downplaying?and?even?resisting?the?tides?and?trends?of?the?market?as?if?ostrasizing?were?the?way?to?immortality.?Huang?Taiji's?proactiveness?and?resolve?to?change?and?iterate,?in?He?Chang's?words,?"to?launch?revolutions?against?myself",?which?involves?exerting?beyond?its?comfort?zone?and?is?no?doubt?painful,?is?probably?the?most?important?gene?for?its?success,?underlying?whatever?gimmick?it?has?taken.
