Tsui Wah, which celebrates its 50th anniversary this year, is seen as Hong Kong’s definitive fast food joint. But to sustain that messaging in China’s competitive restaurant market is no easy task. John Yang, Chief Financial Officer of Tsui Wah Holdings, tells Jemelyn Yadao about the cha chaan teng’s expansion and life as a super-multitasker
Photography by Anthony Tung
Every lunch break involved heading to Central’s Wellington Street and ordering a signature dish from Tsui Wah for John Yang, then a junior auditor. Nowadays, he is helping the Hong Kong-listed cha chaan teng ensure the quality of its beloved basics, such as crispy bun with sweet condensed milk and beef brisket curry, is even better than it was back when he was a young diner.
“We need to use the same ingredients in all restaurants. We can’t pretend,” says Yang, Chief Financial Officer of Tsui Wah Holdings. “For example, we use sea salt, which is healthier but costs more than normal salt, and we use cooking oil from Holland, which is more than double the price of other oils. For food costs, the rule is not to compromise on the quality.”
Like most CFOs, Yang, a member of the Hong Kong Institute of CPAs, is focused on financial analysis and balancing growth with profitability. But unlike most, for the past three years until now, Yang has had to do the numbers work at night, and put on his chief executive officer-hat during the day.
In 2014, two years after he joined Tsui Wah as CFO, he was appointed CEO (Mainland China) yet still kept his finance role. “Those years were tough – 70 percent of my time was focused on China, and 30 percent on Hong Kong – but I learned a lot,” he recalls. “It was two-shift work – All the PRC restaurants are open in the daytime, so I had to monitor the operations, deal with suppliers and contractors, because we had new branches opening. At night-time, I went back to the financials.”
With the appointment of a new group CEO this year, Yang is back to being a CFO entirely, allowing him to focus on navigating future projects, including mergers and acquisitions. Having experienced such an unusual working arrangement, Yang says that differences between a CFO and a CEO are clearer than ever.
“A CFO role is more conservative, a CEO role is more aggressive and involves taking more risks. But I learned that the differences are more than that, and I had to struggle with these differences,” he says. “While a CFO’s financial background can help a CFO become a CEO, the difference is the business itself and it takes time to learn an industry – three years, according to Chinese people. Managing people and stocks is an art.”
Yang, fluent in Putonghua, worked in Shanghai as the company’s Mainland CEO from 2014 to 2016, tasked with expanding the Hong Kong restaurant’s network in the country to increase market penetration. However, amid the Chinese government’s austerity and anti-corruption campaigns and the country’s economic slowdown, Tsui Wah was seeing a changing, competitive landscape.
“At that time, we saw tenants going for more restaurants, and less retail stores. When I joined the group, less than 20 percent of a mall was operated by restaurants. Now, it is around 50 percent,” says Yang. “The competition had changed, and I had to manage that change. I had to control costs and achieve growth and profit goals. If I took an aggressive approach, the expenditure would get worse.”
Tsui Wah chose eastern China as its springboard for growth before moving to southern China, which was an unusual strategy at the time, Yang notes. “Other operators would start from southern China, then Shanghai, but our board members and chairman had studied the China market carefully. We started in Shanghai because it was the city that was most similar to Hong Kong at the time, and the cha chaan teng is unique to Hong Kong. It also easily accepts foreign things, such as our fusion cuisine,” Yang explains.
“A CFO role is more conservative, a CEO role is more aggressive and involves taking more risks.”
Tsui Wah has gone from having four branches in the tier-one city in 2012 to 21 in China today. “It was a good place to build the brand,” says Yang. Shanghai is home to the company’s central kitchen, which supplies cities around the delta, he adds.
Mall landlords then invited Tsui Wah to open new shops in the second-tier city of Wuhan – a place for first-class opportunities, as Yang discovered. “When it opened, it made bigger-than-we-expected profits. Second-tier consumers had easily accepted our brand. We assumed that we would just break even and use the shop to train people before we moved to the coastal cities,” he says. “After expansion to Wuhan, we started our expansion in Guangzhou and Shenzhen as we saw an improved market even though the competition is fierce. Last year, we opened in Nanjing and Wuxi.”
The chain raised the price of most of its menu items by HK$1-3 in February. This came amid a tough restaurant environment, says Yang.
“Most of our restaurants have not changed prices for more than one year, but the major cost to us now is labour costs, which keep increasing and prices need to change to reflect labour costs. Other operators are facing similar issues,” he says, adding that the company continues to strictly minimize or control other costs. “In previous years, China used to have an advantage with lower labour costs. But costs have been increasing by around 10 percent yearly.”
Despite the challenges, Yang is more mindful about the company’s next stage of growth and the need to meet rising consumer standards.“When those big food safety scandals in the Mainland happened, it was easy for Hong Kong companies, which tend to be more cautious, to expand their business there. But now the value of food safety and branding has picked up among Chinese companies. They’re reaching higher standards. So we need new ways to attract people,” he says.
“The group founders didn’t know much about the capital market so I was responsible for talking with investors and working with a team of different professionals to get the company listed.”
One way to scale up is the use of more technology. “We’re at a stage where we enjoy strong brand recognition, but we need to invest more capital into certain areas – such as our central kitchen, information technology systems and skills training – as there is a higher threshold rate of return,” he says.
The company is currently enhancing the functions of its central kitchen, says Yang, which he refers to as its “secret recipe place.” “It’s a mix of automation and manual handling,” he explains. “We rely heavily on the research and development team to make sure all products that come out are of consistent quality.”
Yang firmly believes that the secret to success is persistent and steady growth. “Different operators have different views, but we’ve been very consistent for the last 50 years and now we’re in people’s minds. I would say that it’s more difficult for a fast-growing company in China’s dining industry to persist but we are doing our best.”
Path to progress
In 2012, Yang helped Tsui Wah become Hong Kong’s only publicly listed cha chaan teng. “This was the most memorable time for me. The group founders didn’t know much about the capital market so I was responsible for talking with investors and working with a team of different professionals to get the company listed,” he says.
Yang’s previous work experience in China made him the right fit for steering the restaurant’s expansion across the border. Before joining the food and beverage industry, the City University of Hong Kong graduate worked at KPMG for over a decade as an auditor – eight years in the Hong Kong office, and three years in Beijing. He values how partners and seniors at the firm constantly taught and challenged him. “If no one challenges you, you can’t progress,” he says. “Junior staff learn so much in three years at a Big Four.”
After getting his HKICPA qualification, Yang took the Chinese Institute of Certified Public Accountants exam in China. “Hong Kong people cannot sign the local financial reports. Even though I knew I could do it myself, I needed to ask someone else to sign it so I was determined to take the exam.”
In 2011, he decided to return home to be with his family, and received a job offer from a Hong Kong restaurant group that was looking to get listed but the plan was suspended. A month later, an interesting visitor came into his office. “The job opening at Tsui Wah was referred to me by my previous boss, Mr. Chan, then the Tsui Wah CEO came to my office and interviewed me. They are very open. It was funny,” he says. “After doing well in the second interview with Tsui Wah Chairman Mr. Lee, I decided to move to this group.”
Yang is still shocked that he’s working for his favourite lunch spot. “I really treasure this brand. To some locals, it represents the place to eat after a night out in Lan Kwai Fong, to others it’s a place for the family to get together,” he says. “To me, it’s a mixed-baby – some food is Western, some is Asian. It represents Hong Kong as a new Chinese experience and Chinese pride.” ◆
Tsui Wah started in Mong Kok in 1967 as an “ice cafe” or bing sutt, which offers a more limited selection of food than a cha chaan teng. It now has 64 outlets in Hong Kong, Mainland China and Macau. It plans to have a 130 eateries by 2022, according to The Standard.