Financial Adviser: 5 Business Lessons Everyone Can Learn from Restaurant Tycoon Rikki Dee, Founder of FooDee Global Concepts
Enrico “Rikki” Dee has been an entrepreneur all his life, having been involved in a variety of businesses, from toys to fashion garments, but it was in the food industry that he found his true passion.
Dee started his food business in the early 1980s as a sideline for his wife while he was working in the family business. He set up a small eatery in Makati that served estero-style Chinese food, which was very similar to the dishes served in Binondo.
Over time, the shop grew into a restaurant that became famous for its specialty dish: fish head soup. Chin Chin restaurant, which Dee named after his son, Chino, quickly gained a reputation for its quality and affordability, and a loyal customer base.
Dee's journey to success started when one of his regular customers, business tycoon Henry Sy Sr., fell in love with his fish head soup. Sy was so impressed with the quality of the dish that he invited Dee to open an outlet at the food court of his first mall, SM City North EDSA.
Taking this opportunity, Dee launched Chin's Express, which quickly became a popular spot in the food court. The success of Chin’s Express led Dee to add two more brands, Handaan and Inihaw Express, to expand his food outlets as the mall industry boomed in the 1990s.
Dee’s passion in the food business did not stop in the food court. With his over 30 years of experience and knowledge in the business, Dee also began to diversify his interests by creating an impressive portfolio of brands in the food industry under FooDee Global Concepts.
Today, FooDee Global Concepts is one of the largest multi-brand restaurant operators in the country that offer a wide range of cuisines and price points, from Michelin-starred restaurants to homegrown, budget-friendly brands with over 178 restaurants.
Some of its most popular brands include Mesa, Tim Ho Wan, Kam’s Roast, Hawker Chan, IlaoIlao, Sunnies Café and Pound Flaterrie.
How was Dee able to take his food court operation and grow it into a multi-concept restaurant business? What lessons about business values and principles can we learn from him?
Here are five business lessons every entrepreneur can learn from the founder of FooDee Global Concepts, Enrico “Rikki” Dee:
1| Know when to trust your gut and when to follow reason
Taking the time to analyze a business situation and considering the facts and data before making a decision can yield better outcomes in the long run.
But there are times when trusting your gut or intuition can help you make fast and effective decisions when you are faced with complex situations.
When Dee makes a decision about opening new stores, he always balances data with intuition. He uses past experiences based on data available to evaluate his options.
“First, dapat una yung concept mo,” Dee says. “Sino ba ang target market mo? Anong price point ba ang target mo dito? And then identify sino kalaban mo? So first, where do you want to position yourself?
“If I open this store how many will come? There’s no science to that, so you just get foot traffic of the mall, but you’re only one of the tenants in the mall. What we do is we also look sa dynamics dun sa mall, tingnan mo ilan Chinese restaurants, meron bang competitors, or pag wala, okey tayo dyan, the mall provides you the traffic count, pero kami tumitingin sa profile ng tao.
“Even global brands, it’s a hit and miss eh, pero the elimination round of failing, 50 percent is done na, kasi tested na yung brand and elsewhere in the world it worked, so 50% of the failure is guaranteed na hindi ka na mag-fail. The rest is up to you. Unlike a homegrown brand, like a startup brand is hard because you have to eliminate everything and the negativity to put up one store.
“What I always explain, restaurant is low capex, high return, no salvage value, no future value. If you close it down because its losing, you should consider yourself lucky if you could recover at least one million pesos, because all of it is already junk.
“Like Tim Ho wan, for instance, it’s a guarantee, supposed to be, but not all sales are the same, so the day that you open, you still rely on luck.
“Every time we open, sometimes malakas sa una, tapos di na ma-sustain. Yung iba naman start mahina and then mature, so it’s different but there’s always an opportunity.”
2| Know how to manage your costs and increase your profits
Cost management is an essential tool to help you determine how much you should charge for your goods and services. Setting pricing too low will not yield any profits, while setting it too high could cause customers to stay away. It is important that you have the right cost management strategies in place to ensure that the prices are fair to both the business and its customers.
Dee does not rely on market pricing where you adjust your cost based on your competitor’s price. He follows a cost-plus pricing strategy where a fixed percentage of profit is added on top of its production cost to stay ahead of the competition.
“We do check competitors’ pricing all the time,” Dee says. “When we started, we told ourselves na ito yung market share natin. Pag nag increase ka ng price, hindi naman sabay-sabay nag increase yung mga competitors.
“Kung tingnan mo lahat ng competitors, yung iba kaka increase pa lang ng price and yung iba di pa nag increase, so we cannot base it there. We have to make money, so cost plus how much standard margin, that’s what we do. If they will follow or they will not follow, it’s up to them.
“Kami may mandate, our food cost is 35 percent so you are allowed to do up to 38 percent variance, that’s it. Hindi ka puede sagutin ng operations head mo na ‘Sir, matakaw ung kasi iba.’ Dapat same lagi ang cost.
“Pag sa pricing, hindi pwede yan gumastos ng more than P400. Pag pumunta yan ng P400 magbu-buffet na yan. Kailangan yung kinakain mo na below P400, sulit ka na.”
“I am always cost-conscious. Sometimes people say ‘uy ang lakas ng benta, pero yung presyo ang baba, how do they do that? Sometimes, it’s a volume game. Kami we would rather stick to our bottom line, considering naman yung value that we give, everything is sulit, value for money, wallet-friendly.”
3| Know how to make your business financially sustainable
Achieving sustainable success for your business doesn't just mean financial stability, it means creating operational efficiencies and a good relationship between you and your customers.
It means understanding the needs of your customers and creating a reliable product or service that meets their needs. It also means having a plan in place. Whether you’re just starting out or looking to expand, it’s important to set goals and create a strategy to reach them.
Dee understands that for his business to remain competitive and achieve its long-term goal, it must maintain a high level of performance to meet customer expectations and support their growth.
“Do we have mga failed opening, failed na walang tao na pumasok, half expected?” Dee says. “Yes. Okay. Meron ba kami stores na nagsara? Marami. Pero hindi galing sa opening, kasi we always come out strong sa opening. Pero yung sustainability after two years, three years, that’s the problem.
“Was it mismanaged? Was the concept passe? Was the food not for the people? Wrong target market? Wrong location? There are a lot of issues also. That problem of sustainability, that’s no longer dictated by marketing. That’s dictated by the consumer if your product is acceptable or not.
“Ako ngayon, I just want to make sure that before I leave the group, it will be in good hands and would be sustainable in the next few decades. The fundamentals are there, the structure and foundation.
“In fact, I am taking the pandemic crisis as a good opportunity. It was like a war. It was like what my parents were telling me. In my lifetime, I never thought that I would experience it.
“It was like ‘Good for you guys, at an early stage, you experienced it because you were prepared for this kind of disturbances in your business.’ And what kept us afloat? Cash. We were not leveraged. We can sleep, so what we did we went to the beach house.”
4| Know how to take risk to expand and diversify
Diversification can be a great way to create a sense of stability within your company, but you need to take new risks in exploring different markets and building new products.
With the right strategies, diversifying your offerings can be a great way to ensure your business’s longevity.
When Dee was turning 50 years old, he was already planning to retire from the business, but he realized that if he would do that, he might be sending the wrong message to his children.
“I wouldn’t be expanding my business without my children,” he says. “If my kids chose to become professionals, I could just sell all my businesses but I would be sending the wrong signal if I stop.
“When I turned 50, sabi ko, I wanted to retire. I will slow down na because I started to work early, but my kids were starting pa lang, they were in their mid-20s and late 20s, so sabi ko I will be sending the wrong signal to them. I went back and expanded the business after 50.
“I expanded when I was 50 because the pie was going to get smaller If I don’t expand. This is my pie but I have to share the pie with you, with the four of you. Liliit ako so I have to expand, so once you expand the pie, then eventually whatever business you create will be yours.
“Alam ko my children will help me, tapos yung pera ko na savings ko lahat, yung pang retirement ko I put back in the business. Mesa then was very small, mga 10 stores pa lang, so sabi ko, reverse, pour everything I have and this is the best time to train them while they are still young so we work together side by side.
“I have four alphas—two boys and two girls. All alphas. They cannot work together, so I set up different business units for each of them. The challenge is the size of the company that they are going to handle. Luckily, my second son was able to level up immediately so equal na yung retail business nya sa panganay ko on the size of the business. Ang tinanggal ko lang sa kanila yung no brainer, yung real estate. If I involved them in the real estate, tatamarin lang mag trabaho yan, you know why? Kasi it’s rental only.”
5| Know how to prepare for the next generation
An important part of developing a successful family business successor is teaching the children the values that will support their success. Values such as hard work, integrity, persistence, and empathy are essential components of a successful business.
Family businesses should also be aware of the signals they are sending to their children. If parents only talk about the successes of the business, children may develop a naive view of the realities of running a successful business. Conversely, if parents complain about the business, children may develop a negative outlook.
To avoid these extremes, it is important for family business owners to take a balanced approach when discussing the highs and lows of running a business with their children.
Dee started the groundwork of developing his children at an early age. He would always discuss business matters with his wife in front of his children during dinner, while indirectly instilling in them the right entrepreneurial values.
“My dream is for my kids to be better off than me in whatever they do, so parang pag ano yung iniwan ko sa anak ko, dapat eventually maging mas malaki yun,” he says. “Doon lang ako natatakot pag hindi nagtrabaho because my greatest fear is my third generation.
“Because I was able to do what I wanted for my kids kaya up to today, kinukulit ko pa yung mga kids ko, ’Do not spoil your kids, do not spoil your kids, because you were not spoiled. This is why today you are where you are.’ Gusto ko nga katabi ko sila para I will always be able to guide them.
“I have seen a lot, the 60s family, the richest family in the 60s, where are they now? They were the rich people of the 80s but nawala na. Kaya sabi ko sila na yan, I did it my way na.
“I think the training was okay, siguro unconsciously, when they were growing up, I imparted them about businesses that prepared them to go into business themselves. Pag nag-store opening kami, they would say ‘Naku, andami naman makikita ni daddy.’ Makulit ako. If I see something, I will tell you ‘why is this done like this?’
“Sometimes I play good cop bad cop ng wife ko just to bring out their motivations di ba? I required them to do masters, walang sumunod. Sabi nila, ‘Dad, we are not studious, you know that. Let us work rather than do masters.’
“So sabi ko sa kanila ito lang guiding principles ko: ‘You have to do better. You have to be better than me because you have more fundamentals than me.’ I always tell my kids I would rather inherit a business than inherit money because money is passive, while business is progressive.”
Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice [email protected] or follow him on Twitter @henryong888