CHOWKING:  FOOD  AT  P30  OR  LESS

MANILA, December 5, 2004 (STAR) By Margaret Jao-Grey - Two weeks ago, Chowking Food Corp. began offering plain congee at P15 and plain noodles at P24 in all its stores nationwide, which should reach 300 by the end of 2004.

"Anything less than P30 will move the market. In difficult times, brand is power but the affordability factor also becomes an issue," said chief executive officer Rufino dela Rosa. "What we have done is de-couple value meals. This way, there is no shame in ordering just plain congee because the customer might have some other dish or viand to add to the congee once he/she finds a table."

Affordability has played a role in Chowking’s total sales last year, which saw total sales grow by 25% compared to the 10% rise registered in 2002. During that same period, same store growth in 2003 went up by 10%.

This year, the company expects to generate P7.3 billion in sales.

Smaller Sizes

Chowking implemented its version of sachet marketing or smaller-sized menu versions in March 2003, when it introduced the merienda size for a bowl of congee at half the P60 price of a regular bowl.

Today, the halo-halo dessert comes in two sizes–the smaller one called petite being P10 cheaper than the P39-regular size. So do toppings, with the sub-pack cheaper by P13 than the P59 price of regular size.

"Affordability is now the name of the game. Before, affordability was less important than delicious taste and menu variety. Based on our focus group discussions, the price of a regular meal is now considered too expensive for day-to-day dining," said dela Rosa.

Government data shows the Filipino’s purchasing power has been declining since 1997, which recorded a 10% growth. This year alone, electricity rates went up by 30%.

"It is important to understand the market, which is not growing as fast as it used to. It is important for customers to differentiate us from other players, for customers to choose Chowking. We have to do this without reducing our profitability," said dela Rosa.

Two major factors currently limit growth in the restaurant/hospitality industry. One, there are just too many players in the market. This year, more than 100 outlets, including 50 from Chowking alone, have or will open in an industry that is expected to grow by only 5% . Two, cell phone users, particularly teen-agers and young adults, prefer to spend their limited resources on prepaid cards rather than food.

Efficiencies

Hand-in-hand with giving the market what it wants, Chowking has focused on keeping costs down while making more efficient use of its workforce.

At the commissary, the company negotiates with suppliers for the best prices. The company’s two major come-ons are that it is a long-term partner and that it pays in cash. Delivery from the commissary to the stores are entirely handled by independent truckers, who sit down and negotiate with the company every time there is an increase in gasoline prices.

At the store level, the company has come up with multiple switches to manage its electricity usage. Similarly, it has put up variable controls worth P30,000 per store for the kitchen’s exhaust system. Because wok cooking is done in high temperatures, woks are kept in tip-top condition and cooking temperatures are managed.

Because labor accounts for 14% of the company’s total costs, programs have been implemented to increase the volume of production without increasing labor. On an aggregate business, there are 600 working at the commissary while there are an average of 50 people (in two work shifts)–including seven cooks– in each of the company’s stores.

"We have been able to manage our margins through efficiencies and higher sales," said dela Rosa.

Proof of that is the long list of applicants for a Chowking franchise.


Reported by: Sol Jose Vanzi

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