Financial Adviser: 5 Business Lessons During the Pandemic Every Entrepreneur Can Learn from The French Baker Founder Johnlu Koa

Who is Johnlu Koa

Johnlu Koa started at a very young age in business. He was only 22 years old when he put up his bakery business in his small unit apartment with only eight people.

He was supplying bread products to SM Supermarket while teaching Strategic Marketing as an assistant professor at the University of the Philippines.

One day, Koa received an invitation from SM to open a shop at SM City North Edsa, which was then emerging as the largest mall in the country.

Koa grabbed the opportunity and opened his first bakery café shop called The French Baker in an 89-square meter size location. The business proved to be a huge success as he recovered his investment in only eight months.

Encouraged by the success of the first French Baker outlet, Koa expanded more branches as mall traffic increased over the years.

Today, The French Baker is the largest European-style bakery café chain store in the country with a total of 63 outlets supported by over 600 employees.

Koa also brought the master franchise of Taiwan-based bubble tea chain Chatime to the Philippines and has grown the global brand to 75 outlets prior to the onset of the pandemic.

Despite the challenges brought about by the health crisis, Koa and his team continue to innovate and grow the business.

Here are the five business lessons every entrepreneur can learn from the founder of The French Baker, Jonhlu Koa:

1| Find ways to diversify sources of cash flow

The coronavirus pandemic has underscored the need for businesses to limit their risks by expanding their product offerings that cater to different market segments.

The French Baker created new products to make it less susceptible to disruptions caused by frequent lockdowns. By diversifying, Koa was able to elevate his products and meet the needs of his customers’ needs during the crisis.

“Initially, surviving the pandemic meant having to deal with the sudden depletion of working capital due to severe sales disruption. This was addressed by infusing fresh capital to allay fears of employees and suppliers alike,” Koa says

“Later on, innovation had to come in the form of major changes in our corporate strategy,” he adds. “Despite our industry being considered as ‘essential,’ it was clear that we needed to diversify our traditional source of cash flow from mall-based income to other sources of revenues.

“We kept our core employees intact while we searched for new market segments. We focused on wholesale customers by offering competitive prices and relying on business volume as long as contribution margined remain viable.

“Of course this was also the time to introduce new products as markets are always eager to try something new.”

2| Find new opportunities in the new normal

There is opportunity in crisis.

Koa took the crisis as a time to re-examine his business to make sure that his organization is agile and adaptable to the changing retail environment.

“Challenges include physical, financial, emotional, psychological and regulatory as we move from lockdown to lockdown,” Koa says. “Uncertainty is certainly the crux of this crisis that weighs down heavily on optimism and early recovery.

“On the opportunities side, we look at existing markets especially those locations that have very strong French Baker consumer franchise in terms of brand awareness and value.

“We have introduced an array of new products such as gluten-free, artisan rye sourdough, vegetarian siopao, tortilla wraps, and Korean cream cheese buns.

“We also took time off to focus on training and retraining of our bakery and restaurant crew. We’ve so far been able to build up an impressive list of new menu products in anticipation of the economy’s reopening in the near future.

“The nexus of our survival strategy hinges on our ability to improve on productivity and the ability to identify new market segments such as tapping on to online markets, looking at the needs of other QSR brands that needed supply solutions due to import disruptions caused by port congestion and the like.

“Basically, this is an import substitution business model for bakery products that offer substantial benefits in terms of reliability and cost efficiency.”

3| Find an emotional connection with customers

Customers don't just buy a product or a service; they also buy the experience that goes along with your brand.

 “You can pirate a product but you cannot a pirate an experience,” Koa says. “You can pirate a person but you cannot pirate an experience that resides within the four walls of your store because the owners’ value system may differ from yours.

“Would you put a silver pot on a table? Some owners will say no then you will have a different experience. Will you use silverware as a display? Will you use expensive crystal to put a light inside? Will you put nice marble on the wall?”

4| Find a business opportunity and turn it into a reality

A business idea is just an idea until you start executing it and putting it into action. Executing a business needs a well-thought-out strategy that is aligned with your core values.

“Five years before tea became such a big thing, I already knew it was coming,” Koa says. “In fact, I was so sure that I asked Nestea to develop it. I asked them why, for 15 years, they were doing the same lemon tea.

“I was asking for white tea, green tea, red tea, black tea and they did not do anything. And then I saw Chatime from Taiwan in Hong Kong. I pitched to (the Chatime people) and they came and saw me and they gave it to me.

“What did I pitch to them? I promised them the moment you give me the brand, I will open stores from north to west of EDSA, which I did in the first two years.

Contrary to the belief that fresh tea business is only applicable to the Chinese tea-drinking market, it is also applicable to other markets like here in the Philippines because it is an alternative beverage to coffee. And if the popularity of frappuccinos is any indication, it would be successful as well.

“This is where my teaching comes in handy,” he says. “What is your basic strategy? You should understand your core strategy.”

5| Find yourself prepared for the future

There is a saying that it is better to be prepared for an opportunity and not have one than to have an opportunity and not be prepared.

If you want to make things happen in the future, you need to build yourself up.

“Remember I did my homework,” Koa says. “I prepared myself well to meet my future opportunity. I was a good student and good student leader. I was good in teaching. My business is all about teaching. I teach my team the methods, the skills and the knowledge. It’s not easy to put them together.

“If you prepare well to meet your opportunity, you are bound to succeed. If you just stumbled upon an opportunity and you just learned how to take advantage of it, you would most probably not make it because it would take too long for you to learn what it takes to win.

“Winning should start on the first day, not on the 100th day when you have already blamed everybody. On the first day you should already win. This is the SM way. Look at all the possibilities.”

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