Theme 3: Competitors

4.2.3 Theme 3: Competitors

The entries of enormous number of foreign foodservice firms have stirred the competition in Malaysian foodservice scene. They are not only competing among the similar segments of foodservice, but also with local players in foodservice industry. In the interview with its CFO, she preferred to compete in café segment:

We found there‟re too many fast food restaurants but lack of casual dining especially in Malaysia. Even though we produce cake, we don‟t want to be known as “cake shop”. We want to be known as “café” in which we can offer various cakes as well as other fusion food.

Firm B wanted to avoid offering fast food concept as there were too many well- established international players in the market such as KFC, McDonald‟s, A&W, etc. It was able to differentiate itself from international competitors in terms of food and

ambience offered to its customers (Top 10 Malaysia, 2011, May). In the interview with its CFO, she described the competition among foodservice firms in Malaysia:

…If we talk about food, anybody can be our competitor. If we read newspaper today, there is an advertisement of Pizza Hut offering 50% discount for pizza, spaghetti, and drinks…All restaurants now try to offer breakfast, lunch, dinner, and tea break, included us. Subway also offers sandwiches for breakfast. Even

„kopitiams‟ (local coffee shops) also have half-boiled egg and toasted bread for breakfast. Foreign restaurants also offer breakfast, KFC offers coffee and nasi lemak (coconut-cream rice); McDonald‟s offers scrambled egg, sausages, waffle and hash brown with RM5. There are very innovative and trendy. We‟ve to find niche for ourselves since there are many food competitors. In the past 5 years, Mong Kok Coffee Shop and Kim Gary were very popular, but now they‟re gradually disappeared. People nowadays prefer cozy ambience with Wi-Fi (Wireless Fidelity). They like to add thrill and fun into it.

Since many international fast food restaurants are offering breakfast in local scene, Firm B has to follow this trend. She cited certain foodservice firms such as Mong Kok Coffee Shop and Kim Gary which were not kept an eye on the current trend had lost their market. New generation of people like to have the concept of fun, casual, and excitement when they are dining. In this case, she admitted that the role models of foreign foodservice firms in Malaysia affect the way of local foodservice firms in operating their business. In the following interview, she agreed that particular approaches of the operation of international foodservice firms were adopted by Firm B:

Yes, foreign foodservice firms are our role models in the sense of market, the system and infrastructure, and the passion of these companies (foreign foodservice firms) to go overseas. For example, many companies (foreign foodservice firms) like to go to China as it‟s a big market. We also have the same target.

She further elaborated the role models of foreign foodservice firms in Malaysia:

It‟s not the foreign foodservice firms influencing our operation, but we look at how they grow. [Foreign] Firms are more customer oriented, customers are always right, they know their choice. As a local operator, we‟ve to benchmark them and be innovative. We don‟t have to be follower, we can be initiator. We‟re the first mover. In fact, we‟re the first café chain in Malaysia before [The] Coffee Bean [&

Tea Leaf] and Starbucks which also offer alfresco concept. Of course, we‟ve to

knowledge about restaurant brands in overseas. They tasted many types of drinks and food internationally. [However,] We concern about the service provided and also customer comments just like other foodservice firms, KFC, McDonald‟s, A&W, Délifrance, etc.

Instead, it was found that Firm B had never replicated the operation or concept of any foreign foodservice firm in Malaysia. Firm B was inspired by their focus on customer service. Customers nowadays are more knowledgeable because they have been traveling overseas frequently and experience dining in the international restaurants.

Therefore, they know which brand is good and able to offer high quality of service.

Ironically, Firm B was able to influence foreign foodservice firms in Malaysia as described as its CFO:

Délifrance, after being taken over by Singaporean [firm] last 2 years ago, it improves its service by offering table service like us. They also extend their menu with lamb chop, spaghetti, and other pasta items. Restaurant like KFC copied our color. We started with red and white. They use these 2 colors in their restaurant design and offer the same ambience like us. They also have the cake painted on the wall and also the placement of mirror on the wall. It also offers coffee and spaghetti like us. Like [The] Coffee Bean [& Tea Leaf], initially, it offers only coffee and maybe sandwiches. Now they copy from us by offering food like spaghetti.

Starbucks offer muffin and croissant like us, but it‟s expensive. If you buy only breakfast in Starbucks, it‟s like you‟re having a lunch or dinner in “Firm B”.

She found that foreign foodservice firms duplicated the concept of Firm B in terms of menu, interior design, and ambience. Délifrance extended its menu resembled Firm B‟s while KFC revamped its interior similar to Firm B‟s ambience. Likewise, The Coffee Bean & Tea Leaf and Starbucks were offering pastries on a par with Firm B alongside with its contemporary ambience.

In terms of price, Firm B seems to be in advantage. The interview with its CFO confirmed the advantages of offering adaptive food and affordable price:

The secret of our success is to combine fusion food available in Southeast Asian region with our popular pastries and cakes. The price we offer is more affordable.

That‟s why many franchisees are attracted to partner with us.

Firm B extends its menu to more than 20 types of fusion food such as Tom Yam, variety of noodles, and rice which are popular in the Southeast Asian region in addition to its core product, cakes. The prices for cakes and light meals are about 15 to 20% lower than its competitors, such as Starbucks and Gloria Jean‟s (McIntyre, 2008, January 24, &

Nicholas, 2010, April 9). Besides the price, its CFO also recognized other differences between Firm B with its competitors:

Firms like Starbucks and [The] Coffee Bean [& Tea Leaf] may have similar concept like us, but their main product is coffee, but ours is cake. Alexis, even though it offers cake like us, it‟s very expensive. Dôme also offers the same concept with some cake items, but we‟ve more variety. Délifrance offers bakeries but mostly only bread, croissant items, spaghetti, and tarts, but not cake.

Apparently, The Coffee Bean & Tea Leaf, Starbucks, Dôme, and Délifrance are its close competitors. Even with certain similarities, Firm B is able to be differentiated with its close competitors in terms of price and main product offered.

With the advent of many foreign foodservice firms, there are possibilities that the local foodservice firms take advantage to learn from the international well-known brands.

However, Firm B denied any replication from foreign foodservice firms. Instead, its CFO appraised how Firm B kept renovating its café in order to update the operation in Malaysia:

We‟re not copying from foreign foodservice firms, but we‟re traveling and looking around. We follow the trend like Starbucks. Within these 14 years of operation in Malaysia, we innovate to suit to the trend. Every 3 years we‟ll change. For example, in the past, we used wooden chair, now we use rattan chair, which is more comfortable. In the past, we used bluish color for our ambience, now we change with white and red. Different colors will be rotated for at least every 3 years. We also used white table in the past, now we are using brown and black table.

Foreign foodservice firms were very adaptive to the current trend in doing business.

This gave ideas for Firm B to react to the trend like Starbucks. She analyzed how foreign foodservice firm‟s reaction influenced her decision to react to the external environment changes:

Foreign restaurant reacts very fast to the current situation. McDonald‟s for example, always goes along with economic situation. When the petrol price increases, its meal price is very competitive. That‟s why during economic downturn, we offered RM10 per meal on average as competitive as the price of other foreign restaurants. We also react quickly to the local taste…Restaurant like KFC offers big portion of food in a pail for family, which now McDonald‟s is replicating. However, we cannot offer big portion of food for family. In China, the situation is different because a family may be three or four people: a father, a mother, and a kid, and maybe a grandparent. In Malaysia, we may have a family up to ten members. That‟s why we can‟t offer big portion…Even though we don‟t offer many choices for kids, we can make smaller portion for them.

The entry of foreign foodservice firms has been influencing the way of Firm B to adjust to the changes of industry and economy. In this case, foreign foodservice firms have set themselves as role models for Firm B. In spite of being competitors, they are mutual learning in order to enhance their brand image worldwide.