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I am very happy with my most recent trip to Shanghai during the PMQ Shanghai Pizza Pavilion event last December. I wrote many stories about pizzerias in Shanghai before, but I always see and hear more incredible stories every time I go back. Shanghai and Beijing have the best markets for pizza in China; many international chains and domestic brands began in these areas. In recent years, Shanghai and Beijing have claimed the top positions on the list of economic and international cities of the world. Shanghai’s GDP in 2006 was $128.8 billion (US dollars), 12% higher than the previous year. Import and export volumes were $186.3 billion (US) in 2005; and contracted foreign investment was $13.8 billion (US) in 2005.
Tony Hao is the owner of OK Pizza. Tony started his first location at the end of 2005 and already had four outlets by the end of 2006. “Shanghai’s economic growth is very fast and I believe the Western food restaurant business has great potential here. I came back from Hong Kong, trying to find my position and destiny in my hometown. I have some very good experience in hospitality and restaurant management and the pizza business was just right for me. I have a very good feeling about what I am doing now,” Tony said. “Pizza has become a popular food in China, especially in Shanghai, and it is very well accepted by modern Shanghainese. More and more foreign people have moved to Shanghai to study and work. Their involvement helps to create a kind of international culture in the city. Chinese love food and they love to eat. Food is one of the most important traditional cultures in our life. Today, Chinese not only continue be loyal to Chinese food, but they also like to try many different kinds of new foods, concepts and international cuisines. You can find pizza, pastas, tacos, sushi, hamburgers, and crepes… all kinds of new foreign foods here. McDonald’s, KFC, Starbuck’s, and Pizza Huts are everywhere in the city and they have had great success and continue to expand their businesses in China.”
The Pizza and Stores
OK Pizza offers 14 different styles of pizza on their menu and they also serve salad, soup, sandwiches, pasta and combination plates. “Most of our pizzas are pan style, but our pizzas are very unique compared with others. We use some different toppings and have our secret recipe sauce to help create a different regional taste. We also have other things like our famous Man-Han Feast pizza, Brazil BBQ pizza and incoming Buddha Delight pizza, which is a special vegetarian pizza with seafood flavor and our homemade XO sauce,” Tony said.
“Our dining areas are typically very small, and usually have four to six tables, so most of our sales come from delivery. At our busiest location, 80% of sales are from delivery orders. Our highest daily sales record was RMB10, 000 (US$1,283). We only have four tables in that location, so you can see, people are waiting in long lines just to get their carryout orders. It’s amazing that we are that busy, especially in the summer time,” Tony said. “We are very busy on weekends and as is typical, pretty slow on Mondays and Tuesdays.”
Poster Marketing
OK Pizza also won the 2006 Most Popular Restaurant title on a Shanghai TV station. They have created a lot of beautiful pizza posters and use them to decorate their dinning area. The posters include images of the Man-Han Feast pizza, Korean Kim Chi pizza and the Italian sausage pizza poster, etc. “We make new posters with each new menu offering to help promote our new pizzas or for special events. During the World Cup, we had the Brazil BBQ Pizza and had a special pizza poster created to help bring awareness to it. These posters bring a lot of customer attention to items we want to focus on and promote and are very helpful with sales,” Tony said.
The OK Pizza Cards
OK Pizza also offers OK Pizza Cards to their customers. It’s more like a gift card where you can pay different amounts and buy the Gold Card, Silver card and/or the Platinum card. Customers can pay for orders with the card when they visit the store or when ordering delivery and they can even pay online. “A lot of parents like to buy the card for their kids. That way they can make sure the kids can only spend money on the food instead of giving them cash and not knowing what they will spend it on,” Tony said.
Locations
“Just like other businesses, location is very important to us. Shanghai’s real estate is going up everyday and the rent is very expensive,” Tony said. “Right now all of our restaurants are located in densely populated areas. These places are surrounded by many new, large apartment buildings. The people who live there have good income and our pizza is an affordable meal to them. Another good thing about this kind of location is that it makes delivery much easier.”
Shanghai residents’ disposable income reached RMB 18,645 (US $2,390) and consumption reached RMB 13, 773 (US $1,765) in 2005. On food, Shanghai residents’ spending reached RMB 4,940 (US $633) per capita according to National Bureau of Statistics of China. “A nine-inch cheese pizza costs RMB 15 (US $1.92) in our restaurant and the most expensive pizza is Man Han Feast pizza, which is a 12-inch pizza, which we charge RMB 78 (US $10).”
“We have three company stores and one franchised store and also have two more locations we are preparing to open in the early part of next year. Responding to the fast business growth, we are going to set up a model store with a 200 square meter dining area. The competition hasn’t gotten very serious yet, but I know that the time is coming soon. We don’t really need to always be compared with Pizza Hut or Papa John’s as long as we can keep our good food and good service. It will be much easier for us and other small chains and independents if we can have more services and choices. The cost and consistency of food and equipment problems are headaches right now to most of us.”
Shanghai will host the World Expo in 2010, which is the biggest event besides the 2008 Beijing Summer Olympics in China, which takes place in three years. The Exposition will be the first registered World Exposition in a developing country, which gives great expectations and optimism to China’s future development.
Thinking about China? To explore this incredible market and business opportunities, go to China with PMQ’s Pizza Pavilion at FHC China 2007 in Shanghai. For detailed information, please contact Weihua Watson at weihua@pmq.com or visit the PMQ Chinese website at www.pmq.cn.