How to Excel in the Restaurant Business
"There has to be a deep passion for serving the Filipino diner." That's 18-year industry veteran and race car enthusiast/triathlete Raymund Magdaluyo's raison d'etre and what someone who would want to enter the restaurant business would need. Raymund, who heads several restaurant groups, has opened hundreds of stores, closed down many more, and yet he keeps going. He has been around since the 15-year-old crowd started going to Dencio's for drinks and he is still around now that the same crowd has started choosing Tipsy Pig or Locavore for their night-outs.
Raymund believes, "It's all about categories, how do you push it, where do you bring it." He has perfected the category of seafood dining with both high and mass-market options. Red Crab, priced at a higher price point of P4,000 per head, "is all about seafood bonding, how seafood dining can enhance bonding in the group." Seafood Island is priced at a more affordable P400 per head and offers a more accessible price point to a wider range of diners with more than 40 stores nationwide. When popular US trends like eating seafood out of buckets or plastic bags came in, he said, "I am not threatened by fads, fads like Ramen, and that kind of seafood. There can only be so many brands in the category before it oversaturates. It is not sustainable."
This year, Raymund, along with celebrity Marvin Agustin, his partner from his Japanese restaurant endeavors, officially launched Excello Restaurant Management Group. "Marvin and I, we have paid enough tuition fees, our learnings on what not to do, we are very bullish about all these new brands." Raymund admits that they are excited with the role Excello will play in the industry, "we feel and want the Philippines to be second only to Singapore. Kami ni Erwan, partner ko sa ibang chain, sabi namin, we want the Philippines to set the tone, we have more than enough brains, not just us, to come up with good concepts. The excellence and success of our friends like Moments Group, the Raintree Group, inspires us to do and perform better in our groups."
Of Wolfgang's Steakhouse, which Excello brought to Resorts World Manila in 2016, he says, "this level steakhouse, there are very few, we are sure we are on the top. If you go to Singapore, we are pretty much up there in terms of ambiance." At 80 USD per person, "we offer the best value for money and we are okay with 150 customers a day. The Philippines needs a steakhouse like this, especially those who go to the casino: after winning or losing, or after playing in the stock market. It's something that a growing economy like the Philippines needs especially because it is lifestyle and for the ladies who lunch."
He shares the three things that contributed to the success of the New York-based Wolfgang's Steakhouse in the Philippine setting. First, they offer double day-off to boost productivity. A waiter's take home pay in Wolfgang's, Raymund shares, "can range from 30,000 to 50,000 pesos net a month, which they make through incentives, service charges and hitting their quota per table like [reaching] 2 million in sales per month." Raymund's belief is to "attract the best, because it is what they will get if they work in Singapore or Saudi Arabia." In Wolfgang's Steakhouse in New York a waiter brings home 100,000 to 150,000 USD per year. He also believes in good training, sending his waiters and staff to train in Japan, where Wolfgang's also has branches, and to New York, where the original Wolfgang's Steakhouse is. The training is crucial, because one time, a group of Americans who dined at the restaurant remarked that "in the Philippines, why does everybody want to be a boss, nagtataka sila na everybody wants to be in a suit." They also commented on the apple pie not being up to scratch, even though to Raymund, it was already good.
He says, to them, "the waiters in Wolfgang's in the US, the food is second nature, they eat what they serve, they know the wines, the steak, the food. Dito, hindi automatic, we have to find a way to approximate the level of service and take home pay." In New York and elsewhere, the waiters at Wolfgang's Steakhouse explain every menu item to you, what went into it and what goes well with it. In order to be consistent with what New York is offering, he had to elevate the level of the waiter in terms of pay and training. "We try to mirror and match all the roles as well, like our dining manager, our partners, our staff are reflections of the ones in New York." Raymund also makes sure to expose the restaurant staff to different kinds of restaurants for them to have benchmarks, even bringing them to bars. "The most important position here is a waiter, especially because the founder is a waiter."
Must-tries: New York Sirloin Steak, 600g and the Porterhouse for Two, 1kg.
Wolfgang's Steakhouse will open its second Philippine branch at the BGC Stock Exchange, between 5th and 3rd avenues, beside Shangri-La at The Fort.
Armed with the success of Wolfgang's Steakhouse, Excello partnered with WDI Group, a publicly listed 45-year-old company with 250 different global concepts, with rights to Tim Ho Wan for the whole of Europe and North America and Tony Roma's worldwide, just to name a few.
WDI Group is a resource partner, not an investing partner. Raymund recalls how, working with another local partner, "one of their brands opened here, Capricciosa in Greenbelt 3 and it didn't do well. But Marvin and I thought, based on the fact that they have the Asia Pacific rights for a lot of other brands, okay. Tapos sabi nila, why don't we partner with you? They have the rights for Eggs and Things, a concept that started in Hawaii, and got big in Japan. We wanted that and we were supposed to do that first but we had trademark issues, a common problem where a local group registered the name in bad faith."
WDI has several Sarabeth's in Japan, "and they have good relationships with Sarabeth's, gustong-gusto namin si Sarabeth's, so why don't we prioritize. WDI said no problem, but Sara and Bill have to meet you first. WDI said you can have any of our concepts but with Sarabeth's, the owners wanna like who they are gonna work with." Raymund and Marvin met Sara and Bill Levine in October 2016 and he shares, "Sara is straight to the point. When she met a Taiwan group before, she told them I don't think I can work with you." But the couple liked what Raymund and Marvin had to say, and the partnership kicked off, without the pair even having to show their business plans and forecasts. After dinner in Sarabeth's Chelsea Market, the three partners were even toured around the factory where Sarabeth's makes their jams, the following day.
Now, Sarabeth's is targeting to open in two locations in 2017, the first one being a retail space in SM Megamall Upper Ground Floor that will be converted to Sarabeth's. Raymund isn't one to mince words as well and he says he is confident of what Sarabeth's can offer to the Philippine market. "They have lasted through all those crises in the States. It's a successful brand and a delicious restaurant."
Their dishes are, as Raymund would describe it, "wholesome, simple, elegant, classic wherever you go, it is the same thing, it is not just about a chef and how he plates, it's that practice and skill level you are able to get. For Sarabeth's, when they expanded to Taiwan, they found a pastry chef partner loved by Sara and she allowed them to create their own line of desserts as part of the menu." Sarabeth's will be a success, because "it is classic but relevant, as we try to stay away from hipster, farm to table, that ship has sailed, and we are going back to basics."
GEN KOREAN BBQ
Another brand that Excello is bringing in is Gen Korean BBQ, a super concept from California started by Jae Chang and David Kim. Funnily enough, former celebrity Geneva Cruz, now based in the States, claims that her favorite restaurant is Gen Korean BBQ. Raymund says the concept is basically ihaw-ihaw at 20 USD per person in a giant cook and order all-you-can Korean BBQ.
"Here we will try to sell at a comparable price and replicate their style. Their marketing is organic, where they only spend a thousand dollars per store for marketing through Facebook ads and putting up a Facebook page a month before they open a location."
They are also strong in Yelp reviews, with the menu basically offering 20 items for lunch and 37 items for dinner. When Gen Korean BBQ opens here, it will be the first location outside California, where about 50% of the diners are Filipino. There are 14 branches there and even with an average waiting time of 2-5 hours to get in, it's a full-house everywhere. Gen Korean BBQ will take over a spot that Banzai—one of Raymund and Marvin's closed properties—used to occupy.
BEST PRACTICES FOR EXCELLO
Raymund still remembers what opening restaurants 10 to 15 years ago felt like, "but the game has changed a lot since. We have been bringing in a lot of young people to help us, like our partner Leina, as the customers now are different from years ago. It's about good synergies now, in running a restaurant."
Leina Bolinas is 23 years old but is a managing partner who used to be Raymund's student in Ateneo. Raymund shares that while everyone wants to target millennials, that isn't his concern, because they are the present customers, and the reason why he has people like Leina on his team.
"The average age of a spending customer now is 24 in the Philippines while in Japan it's 42. The economy is booming, there is so much competition and duplication so we need to choose the categories which we bring in. I owe it to the group to ensure sustainability. Like with Japanese in the late 90's, there were maybe 30 to 40 well-performing brands, now for Ramen concepts alone there are 30 to 40, so mahirap siya na category."
He isn't fixated with bringing in Michelin-starred chefs or restaurants because the brands he has, "the people behind these brands, they are so passionate and find ways to elevate their brands more, to give more to the guests. While it may be that they are chef-based restaurants, they have found a way to replicate these brands, expanding them. They have mastered that, so that even if you are in Asia, you are experiencing the best food that they could offer and you don't even have to be in Manhattan to experience the New York ambiance."
Whenever they bring in a new brand or concept, they treat it as a branch, versus bringing in the franchise, even though technically, that is what it is. "Kami ni Marvin, ni Leina, eto maganda, if may problema kami, accountable din sila. Yes, it is our problem, pero we consider ourselves a branch nila, so we have to handle it the same way they would." Raymund acknowledges that, "a lot of the key success factors can't be bought by money. It is a good industry to be in, but you build a lot of intangibles. Food ultimately is taste and preference."
For Pinoys, a lot of the food is muscle memory. With Italian cuisie, they remember a certain kind of flavor and the same goes for Spanish and Japanese food. By bringing in brands like Wolfgang's Steakhouse, Sarabeth's, Gen Korean BBQ, and more, Raymund hopes to once again elevate the taste and flavors that the Pinoy muscle is used to. "New York preferred tastes are not natural to the Filipino taste. Our staff and we, have to learn and unlearn."
His secret, his real secret to lasting this long is encapsulated in two words: team and relationships. "The same team has been with me since the start, baon ko sila, since Sumo Sam days. Ang joke ko nga rin is 18 years na ako nagpapaapi sa landlords. Sa South East Asia, yung mallification idea kasi is may clustering, na sometimes you pay the mall 5% more because of the natural traffic they bring you. All the leasing assistants kausap ko noon, they are now all AVPs. That is why I am in 100% of all Ayala Malls outside Metro Manila. They know that when they have asked us to sign for spaces before, without even seeing it, we signed. I leverage on my relationships there for Excello now. I have been in Nuvali since the start, for example. Now in Resorts World, how many are under my group here, dami na. It's about genuine relationships."
He has one more secret, "I am really a good organizational man. My strength is building teams from zero, from ground up." He has also learned to not open too many outlets per concept, keeping it to three for now, for Wolfgang's Steakhouse, Sarabeth's, and Gen Korean BBQ. The Philippines is still a maturing economy and in terms of locations, "conservative kami, dapat prime, prime kasi we have spent a long time in business and learned lessons. We have opened and closed enough stores. So kami ni Marvs careful and prudent. We are still aggressive pero more discerning in a location. If we opened a concept at the Conrad, it would have to be a prime location and we'd have to get the best deal possible. It's a dark horse but I think it's a good location."
Marvin chimes in, "During the time when everybody was bringing in a lot of Japanese concepts like Ramen, Raymund said let's bring in American brands now, the total opposite, let us not go with what they are doing. That is how Raymund thinks. Now, everybody wants to bring in from the United States, so Raymund sets the trend." Raymund explains and commits, "We want to bring in more, not just American, we are talking to a brand from Madrid, we are talking with the French Chamber, this is a good start."