Mr. pizza: the emerging Chinese pizza market
Checking in with the World of Pizza, this time we look at one of the largest markets in the world: China. You might be surprised how the county's 1.8 billion residents are taking to pizza.
In the past 15 years, pizza has been a very popular western food in China. Today, you can find famous American pizzerias such as Pizza Hut, Domino's and Papa John's there. They are everywhere in the major cities of China. Every day pizzerias in the United States try to increase their sales and try to figure out how to save labor and food costs to increase revenues. Take a moment to think about this - China's population is close to 1.4 billion. Think about how profitable pizza operators would be if every resident of China ate one pizza a week. At most Pizza Huts in China, you can almost guarantee a 30-minute to an hour wait for a seat at dinnertime and on weekends. Pizza Hut is the biggest and most successful international company in China so far. Even though Pizza Hut is the industry leader, there are many other local Chinese pizzerias that are very successful and unique. Their distinction from the larger chains is their own recipes that create popular demand. Good service and hospitality also contribute to success. An example of increased popularity has been Mr. Pizza.
The average ratings given to Mr. Pizza by popular websites and newspapers lately has been four stars. Their pizza is known for having a light taste and being different from most of the heavy and greasy pizzas typically found. This has been the pizza of choice due to the Chinese customer's eating habits. Mr. Pizza provides a hand-tossed dough and is guaranteed 100 percent fresh!
According to Mr. Pizza's CEO Huh Jun, "Now we have six shops in Beijing and one shop in Zhongguancun, which will open around September 1st. Most of our shops are relatively big and have 100 to 250 seats because in China, delivery is not popular yet and most pizza consumption is done at the shop. But, I am thinking of a better and faster delivery service with a scooter while the other competitors are using bicycles for delivery."
Success comes with great experience
Huh Jun was born in 1960 in Seoul Korea. "My major while in college was dairy technology and I have MS degree from Chungang University in Seoul. After I finished my master's course, I joined the Lotte group (the food giant in Korea) in the planning dept. I worked for Lotte for several years. In the beginning of 1996, one of my friends asked me if I would be interested in China and he introduced me to a gentleman who was going to build a dairy factory in Shanghai with a $7 million (USD) investment. At that time, it was my dream to build a nice dairy factory by myself and I made up my mind right away to help him. After I finished building the factory and training people, I couldn't fathom any reason to stay with that company since I had done everything I could do for them. At that time, an American guy called me and asked me to help his confectionery business in Shenyang. He is the oldest son of the owner of the Shawnee Inn Pennsylvania. I moved to Shenyang and worked for the company (Shawnee Cowboy Foods Co., Ltd.) as a plant manager at the beginning and finally as a general manager. But business was not so great and it was one of the toughest periods of my life. Finally, I suggested to the chairman to give up the business. Right after I finished the whole procedure of bankruptcy in the beginning of 2002, I got a proposal from the owner of Mr. Pizza in Korea and I moved to Beijing and took over my current seat. The first time I met the chairman of Mr. Pizza, I said I am not a suitable person who can run the restaurant business even though I have had much experience in running food manufacturing companies in China. But, I said, if he really wanted me to run his business in China, I can't guarantee any great success of the business like he has done in Korea, but, what I could promise was that I will always do my best not to fail."
"I am very open minded and relatively westernized," Huh Jun said. "I like most sports and wild life. I studied in the U.S. for a technical training course of confectionery as well. There is a big difference between the dairy and pizza business. When I worked for the dairy company, I was more focused on technical matters rather than marketing. In addition to the technical side, I have paid more attention to service, location and other things like interior design etc. However, almost 10 years of experience in a manufacturing company helps me to understand the way of thinking and the real lifestyle of Chinese people. Not only is the basic understanding of food technology helping me a lot when I am trying to develop a new product, but also many Chinese friends who are still working for dairy and food business in China are giving me lots of good ideas and information."
Opening a Store in China
"Actually, I was not here when we (Mr. Pizza) first came to China, but as far as I know, since 1999, the pizza market in Korea has gotten tough and we realized that it would be more difficult to create new customers in Korea. When there was an economic crisis in Korea, many people were laid off because of the structural adjustment of Korean companies. They wanted to have more stable jobs with small investments. The fast food business was one of the most attractive alternatives for them. There were lots of new small restaurants during 1998 and 2000, and of course it was a great chance for us to increase our shops. With more new shops appearing, the business is getting tougher in the long run because there are too many choices to the fixed number of customers." Huh said. "And China was the most attractive place for the new investment. If we could find success in China, we would also be able to extend our market to the other Asian countries easily. We do believe that the Chinese market will be the largest market in the world and if we can be the leader of the Chinese market, we will be the leader of the world pizza market."
We are different and We are Special
"We are totally different from our competitors in dough making and cooking," Huh said. "I think that's the reason why Mr. Pizza is the only Korean pizza maker who is competing with Pizza Hut and Domino's in Korea. In fact, Pizza Hut has around 350 shops, Domino's has around 240 shops and we have 230 shops in Korea. We are growing more than 20 percent annually whereas Pizza Hut is only around 10 percent. We strongly emphasize the taste and texture of dough. Every shop in this company shows the customer the dough tossing in the kitchen. Sometimes we do a dough tossing show. The best selling pizza is Potato pizza and the price of a 10-inch is about seven dollars. Our main customers are 20 to 35 years old, white, office ladies and university school students. But I am expecting the age of our customers will be much lower soon. The number of orders totally depends on the location of the shop and the time of the week and weekend."
"In China, most of the Chinese customers haven't tried pizza and they can hardly judge which one is better between ours and our competitors. In addition to the taste of the products, I am more focused on service attitude. Secondly, I am trying to make a very strong and stable company. I am not hiring any managers or staff from the outside. The shop managers of my company start as part-time at each shop and I am so proud of it."
Management and Training
I think my job as CEO of the company is to make the staff happy. If the staff is not happy, they can never show the customer a smile. I think the CEO is not merely a chief executive officer; he should be a chief encouragement officer, especially for our business. I am pretty sure that the various kinds of training gives the staff some self-improving opportunities and is very important. I am trying to be the one who makes my staff feel comfortable. I am trying not to point out any of their mistakes right away. Basically, I am visiting my shops at least two times a week and I am trying to be the one who can be warmly welcomed by my staff," Huh Jun said. "The restaurant business in China is very new and there are not too many suitable young people here. I think, the major role of Beijing's Mr. Pizza is to train the people, show the potential franchisee business model and set up the raw material for not only the other areas of China, but also for the other Asian markets and finally for the rest of the world."