Although the business is barely three years old, Mr Chiang Zhan Xiang, founder and owner of pizza outlet Pezzo, has his sights set on expanding regionally and into China. In the third of a four-part series, he tells Chong Koh Ping how he plans to scale the food business.
Q How did you get started?
A Pezzo was started in late 2012... because if someone wanted to have pizza, you have only two options. You either dial for delivery and wait for one hour for soggy pizza or you go to a restaurant to pay $30, $40 or more.
Pizza by the slice, which is what we sell, is not a new concept. It's very prevalent in the United States, where you can see it at every corner. In Singapore, we thought that it was an interesting thing to do.
We started with a stall in Ion Orchard, and it did very well. This first stall told us that selling pizza by the slice was a very viable model.
And operating pizza kiosks in the malls is a very suitable model for us. It is relatively smaller, and manpower needs are not that punitive. We still need people, but not as many as in a restaurant.
We grew pretty rapidly. In the past 30-odd months, we opened one stall every month.
Q You have some other brands other than Pezzo. What prompted you to diversify?
A Some time in the beginning of last year, I realised that saturation point was coming. I could open up to 35 to 40 stalls maximum.
So we did a couple of things. The first thing we did was to look into new brands. We operate well in the food-kiosk format, and it is something we are very comfortable doing - starting a new brand or working with others to launch new brands using the food-kiosk model. And we understand the market.
So this year, we launched another two brands - Stuff'd and Crave. Stuff'd is modelled after a very successful US brand called Chipotle, and sells kebabs and burritos. Crave is a partnership with Selera Rasa Nasi Lemak from Adam Road.
We are opening eight to nine stalls for Stuff'd by the end of this year. As for the nasi lemak, we started only about two months ago. We will open another three to four stalls by year end.
In Singapore, we are very much focused on the food-kiosk business. We are always looking for partners who either have a very good idea that we can quickly launch and scale up or people who are already in the food-kiosk business but don't have access to the kind of infrastructure to grow.
We want to be food-kiosk experts and we can manage a few more brands, up to maybe six or so.
Q How about expanding beyond Singapore?
A That's the second thrust of our business. We have a great opportunity to bring "slices" to the masses. It's the same story as in Singapore. It's all about accessibility.
Pizza is a fairly universal product that people accept. In Malaysia, we have about 25 stalls since we ventured there about a year ago.
Our focus market is the holy grail - China. It's a single, huge, fairly homogeneous market.
ASEAN is an interesting place, but, as a small company, navigating different cultures, languages and business environments can be quite crazy. Malaysia is like a low-hanging fruit for many Singapore companies. So, we're there, and we will continue to grow there. All our brands are halal, so we have great opportunities to expand into neighbouring countries. But all these will require partnerships as these are not easy markets to operate in.
Frankly, not many Singapore food and beverage companies have survived the test of the markets.
Q What do you intend to do to withstand the test?
A The magic is in partnerships. We need to get a good partner, have our goals aligned and grow the brand together. In overseas markets, it's about market access. We have spent six months in West Malaysia on our own and only had limited access. We don't know people and they don't know about us and our products. We have only two stalls in West Malaysia, compared with 23 in East Malaysia where we have a strong partner. The pace of growth is very different, and that taught us a very good lesson.
We also have partners in the Philippines and Myanmar, where we give them franchises since these are markets that are fairly difficult for us to operate in ourselves.
My takeaway from going overseas is that Singapore companies don't understand scaling yet. Yes, I have 30 stalls in Singapore. It's an okay size. But compared with overseas, it's actually very small. So the mentality is very different.
I was told that if one wants to go into China, if you're not prepared to open at least one stall a week or even one stall a day, you're out.
Our market size hasn't exposed us to that level of competition. It's competitive in the price sense, the high rental, and the availability of manpower. But not in terms of size. We are also trying to learn that.
Q What is your China strategy?
A We like the south quite a bit. People spend quite a lot on food and beauty, and population density is fairly high. Conditions there are quite similar to what we have in Singapore. There are shopping malls with high traffic of shoppers.
We're starting out in Shenzhen in the first quarter of next year in the form of a joint venture.
Eventually half of our revenue will be from Singapore and the other half from overseas markets such as China.
In Singapore, our stalls are in the shopping malls and we will do the same for China. But we will take our products to places where a lot of people gather. So for China, we could also venture into streets or universities. We will have to try.
Q Where do you see this business in the next five years?
A We have the opportunity to take it to an exciting size. And when we get there, it will be a platform for many other things.
Growth allows you to solve a lot more problems. Some people say solve problems first before you grow.
I find that growth allows you to have a bit more buffer that will allow you to solve issues that will come.
As an entrepreneur, I like doing new stuff. But only when you're of a certain size, then you can get to explore new things, with a bit more confidence and resources.
This article was first published on Dec 2, 2015.
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