SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN

FOUNDATION IN NATURAL BUILD ENVIRONMENT

REPORT TITTLE: RESEARCH ASSIGNMENT REPORT (CHICKEN RICE SHOP)

NAME ID NO.

KOK KA SHING 0323553

PUI CHUN SHIAN 0323470

CRYSLYN TAN ZHIA LYN 0324249

KIMBERLEY FAY BERNARD LO 0324237

ADAM WONG 0322520

RANDALL MARTIN GUSTAF 0323276

PRINCIPLE OF ECONOMICS (ECN30205)

LECTURER: MS. TAY SHIR MEN

SUBMISSION DATE : 19th JANUARY 2016

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Table of Contents

Title Page No.Cover Page 1

Table of Contents 2

Key Summary 3

Research Report

1. Brief Biography of The Business- Brief Description of the Business- Similarities and Differences of Both

Businesses

2. Comparative Analysis- Number of Competitors - Brief Description of Competitors - Competition Strategies - Obstacles Faced by New Firms- Nature of the Market- Comparative Analysis Summary

Table - Conclusion

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10

Recommendation 17

Appendices 19

References 34

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Key Summary

For this assignment, we were asked to form groups of 5-6 people by our lecturer to collect data and then produce a report of two similar businesses in different geographical locations. The aim of this assignment is to study which business among the two is more successful in terms of revenue, commercially and competitively. We decided to go with chicken rice restaurants as it is a favourite among Malaysians. The two chicken rice businesses that we choose were Kar Heong Restaurant situated in SS14, Petaling Jaya and Singapore Chicken Rice in Kuching, Sarawak. Lastly, we went to the two locations to conduct and interview to collect more information about their businesses to write our report.

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Brief Description of Kar Heong Restaurant

Kar Heong Restaurant one of the famous restaurant known for preparing on of its main products which is chicken rice. They are located at 60, Jalan SS 14/2, Ss 14, 47500 Subang Jaya, Selangor, Malaysia. Through the interview that we have conducted, we got to know that their restaurant runs under a family business that has been ongoing for 10 years since the year 2006. The founder of the business Mr. Tan Eng Aik. His motive to start this business is to make a living because at that period of time the economy was at a recession hence, Mr.Tan feels that starting his own business is much better and more profiatable compared to working for others.

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Kar Heong currently has 3 branches which are located in SS4, Setia Alam and SS14 which is the main branch. According to the owner, each branch has approximately has 20 employees. Their main products are Chicken Rice as well as Ipoh Hor Fun Soup. The restaurant is known to be always packed with customers regardless of their age. According to our interviewee, Aunty Helen, she stated that they do not have any development as they strive to maintain the taste of the food according to their original recipe to keep hold of their loyal customers.

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Brief Description of Singapore Chicken Rice

Singapore Chicken Rice is the one of the largest chicken rice industry in East-Malaysia. The founders of the business are Mr.Jimmy Tan, Mr.Johnson Tan who are brothers in the business and Mr. William. It was the founded in the year 1987 with its first branch located in Jalan Song Thian Cheok, Kuching, Sarawak, Malaysia. The main motive of starting the business was because they wanted to enter the business of chicken rice due to its popularity amongst the community. The main headquarters is located at Lot 7488-7489,Ground Floor.Block 16,Taman Timberland, 3 rd Mile,93200, Kuching,Sarawak,Mlayasia. Singapore Chicken Rice currently has 52 branches inclusive of 12 franchises all around East-Malaysia. There are 20 employees that can be found in each branch.

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The main products provided by Singapore Chicken Rice are their chicken rice which has two different flavour consists of roasted and steam chicken rice. During peak hours Singapore Chicken Rice is packed with customers of different age range. Their business’ most recent development is ‘Value-Meal Restaurant’, this concept enables them to reduce the cost of their product without jeopardising the quality of it. Singapore Chicken Rice also reduced the volume of each drink, for example from 450ml to 350ml, which save the cost price of their product. The prices of all items were increased last year due to the implementation of GST. The company targets to release at least one product monthly, but it is based on the approval of the Director’s Team, or their so called ‘In-House Team’. Until the quality of the food is accepted, the release of the product will be delayed.

Similarities and Differences of Chong Kok Kopitiam & Tous Les Jours

SIMILARITIES

Restaurant Kar Heong Similarities Singapore Chicken Rice

Reasonable and affordable Prices Reasonable and affordable

Advertised using newspapers Advertising Media

Advertised using newspapers

High Shop cleanliness High

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Chicken Rice Main product Chicken Rice

DIFFERENCES

Kar Heong Restaurant Differences Singapore Chicken Rice

One Number of founders Three

Selangor Location Kuching

3 Number of shops 52

To work for the family’s expenses

What prompted them to start the business?

At that period of time, there was a

recession so starting a business was more

profitable than

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working as an employer

20 workers Employees per shop 10 workers

Monday to Friday

9.00am-9.00pm

Saturday and Sunday

9.00am-8.30pm

Business Hour Monday to Sunday

10.00am-10.00pm

Approximately RM500k

Annual Revenue Approximately RM1.8 mil

More than 100 customers per day

Number of Customers More than 200 customers per day

They want to leave it to the future generation

Future Plan They want to go international

No Halal Yes

Comparative Analysis between Kar Heong Restaurant and Singapore Chicken Rice

I. Number of Competitors

Kar Heong Restaurant does have multiple competitors within their area but those competitors are not in the chicken rice industry. The interviewee they do not focus on their competitors and instead emphasizes quality of their food by maintaining the originality taste of their recipe.

As for Singapore Chicken Rice, they only have 1 main competitor which is SugarBun. . Sugarbun is a company that specializes in selling fried chicken, but also side dishes such as chicken mushroom soup, ‘nasi lemak’ and many others. Sugarbun can be said to be one of the famous fast food restaurant in Kuching

II. Brief Bios of Competitors

a) Kar Heong Restaurant has 0 competitors

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b) Singapore Chicken Rice has 1 competitor

1. SugarBun

Sugarbun is a company that specializes in selling fried chicken, but also side dishes such as chicken mushroom soup, ‘nasi lemak’ and many others. Sugarbun can be said to be one of the famous fast food restaurant in Kuching.

III. Competition Strategies

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IV. Obstacles Faced by New Firms

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Kar Heong Restaurant Name of Shop Singapore Chicken Rice

Maintaining the quality of their food. According to the interviewee, she said that they do not really focus on

their competitions and instead they try to maintain

or Improve the originality taste of their recipe.

How do the businesses compete with their

competitors?

Singapore Chicken Rice also introduced another concept

which is the ‘Value-Meal Restaurant’. This concept reduces the cost of their

products. For example, they reduce the volume for each drinks such as from 450ml

to 350ml.

Besides that, Singapore Chicken Rice also

introduced new concepts which provides different variety of food such as

Vietnam, Thai and Indian food. This attracts different

social groups of people which consists of students,

adults, elder citizen and many more others.

Kar Heong Restaurant Name of Shop Singapore Chicken Rice

Kar Heong Restaurant is located in ss14. The rental expense in

that any area in Selangor would actually reduce the revenue of the business, which then cause

problems in earning more profit.

The parking space is also limited at that location. It is usually very packed with cars and it

may cause jams and inconvenience for others

especially during peak hours.

Obstacles faced by new businesses who wish to

enter their markets today? Are they easy or difficult to overcome?

As stated by the interviewee, chicken rice is a common and famous food in East Malaysia. There are many other chicken rice business in Kuching which will increase the competition

rates, which in turn reduces the profitability of the business.

Since the business has franchises, it is hard to keep the

reputation of the business intact. To maintain the reputation,

more expenses will be required to provide trainings and other services which will also reduce the amount of profit earned.

V. Nature of the Market

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Kar Heong Restaurant Name of Shop Singapore Chicken Rice

Perfectly competitive as the location suggests that there are

many shops selling food and beverages around. The prices

do not affect much because it is already very reasonable and

affordable

The demand of the customers are looked into, for example: -

taste and quality, price and affordability.

What is the nature of the market?

Very oligopoly due to the food types sold. There are actually a variety of foods with different kinds of styles such as oriental

and western.

The proximity of the locals to the shop plays an important role to regulate their routine there as a

lunch and dinner spot.

Comparative Analysis Summary Table

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Competitive Traits Kar Heong Chicken Rice Restaurant ( Subang Jaya)

Singapore Chicken Rice (Kuching)

1. Number of Competitors

10-20 Less than 5

2. Barrier to Entry Weak barrier to entry.

Entering the market of foods and bevarages in Subang Jaya is easy due to a few factors:

1. Low rental fee.2. Less competitors

around the area.3. Subang Jaya, SS14 is

a busy area.4. Not much choices of

foods around there.

Strong barrier to entry.

Entering the market of foods and beverages in Kuching is difficult due to few factors:

1. High rental fees at certain areas.

2. Kuching is a small city.

3. Many variety of foods.

3. Differentiated or Standardized Products

Standardized products Differentiated products

4. Pricing Power Price taker. They have the feeble valuing power in light of the fact that the organizations have no capacity to charge a higher cost than the business sector cost irrationally. This will make alternate clients to swing to different contenders.

Price taker. They have the feeble valuing power in light of the fact that the organizations have no capacity to charge a higher cost than the business sector cost irrationally. This will make alternate clients to swing to different contenders..

5. Other Characteristics Kar Heong Chicken Rice Restaurant focuses on a few dishes. For example roasted chicken, steam

Singapore Chicken Rice has a variety of dishes with a fusion of both oriental and western style. For example,

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chicken, roasted pork, barbeque pork. They also selling Ipoh ‘Hor Fun’ and other side dishes.

chicken rice, Cantonese ‘Kueh Tiaw’, Sandwiches, Chicken chop rice and others.

6. Verdict Perfect Competition Oligopoly

Conclusion

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Based on our analysis, Singapore Chicken Rice is more successful because it has more branches. It is also known widely in Malaysia compared to Kar Heong Restaurant. Besides that, Singapore Chicken Rice has expanded throughout the whole East Malaysia while Kar Heong Restaurant has only expanded into 3 branches which are all within that small area. Singapore Chicken Rice has also 12 franchises and is pursuing to expand till it is internationally recognised while Kar Heong Restaurant does not have any franchises and currently is not planning on expanding anytime soon. Since Singapore Chicken Rice has branches in the whole of East Malaysia, the number of customers visiting Singapore Chicken Rice is definitely greater than Kar Heong Restaurant. Singapore Chicken Rice is also more hi-tech than Kar Heong Restaurant because they use computerized cashier equipment.

Recommendation

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1. Kar Heong Restaurant

Kitchen Upgrade

The owner of Kar Heong Restaurant should expand their kitchen as it currently has not enough space for all their ingredients storage and also for the workers to work more comfortably and more efficiently. Besides that, they should also upgrade the kitchen equipment’s as it is also quite old. The kitchen utensils should also be changed as some of them are very old and dirty.

Advertisements and promotions

They should have more advertisements to attract more customers and in return could also increase their revenue and also popularity around the area and also other places. Not only that, they could also have some promotions like a lunch hour special to reel in more customers like students and also workers around the area as they would be looking for cheap and tasty food to eat.

2. Singapore Chicken Rice

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Customer Service

They should improve on their customer service quality as there are some reviews on the internet saying that the service quality is bad and this could ruin their reputation as they are also a franchise. They should provide proper training to the new staffs so that they know how the restaurant operates. Not only that, they should also train the old staff as well to update their knowledge on how to serve customers better.

Food Quality

They should also provide training to the chefs cooking in the restaurants as there are also complaints about the food quality being not consistent all the time. Besides that, they should also hire more locals to be the chefs instead of foreigners. This is because locals understand our culture more that the foreigners.

Appendices

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Appendix 1: Interview Questions

Intro

1. Can you introduce yourself, your name, job position, office phone number?2. When was the business started?

Details

3. Who are the key founders?4. How many branches are there?5. How many franchise are not franchise?6. Why the founder want to start the business?7. So in this business, what is the main product and other services?8. Can you give an example of Ala’ carte?9. How much capital is required to start this business?10. What knowledge do you need to start this business?11. Who are your customers, for example their age group, income and education info?12. What is the business annual revenue figure?13. So, is there any recent development in your business? 14. Who are your top 3 competitors?15. Then what strategies you have to compete with your competitors?16. How big is your market share as well?17. So is it easy or difficult to enter this kind of business?18. How often do you release the new product? 19. So what was the latest product of business?20. Do have any idea of your next new product?21. How do you set your prices?22. Is it going to be better if you set your price lower?23. So does the pricing of your product actually affect your customer and competitors?24. Where was the first branch?25. When your business first started, was it a hawker store or a restaurant?26. How long that the company take to open another branch? 27. Which branch do you think is the most successful?28. How long have you been working?

Appendix 2: Interview Questions and Answers

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Kar Heong Restaurant

1) What is your name?

Ms. Helen

2) What is your position in the business?

There is no specific position disregarding the normal workers because the company is run based on a family business

3) When was the branch opened?

2006

4) Who started the business?

Her brother in law (Mr Tan)

5) What’s the purpose of this business?

Because, way back in time, the economy was bad and this business was to support the family’s earnings for them to have a comfortable living.

6) How many branches do you have currently?

3

7) Estimate the number of workers per branch?

We have around 13 to 14 workers for the other branches, 20 for the main branch which is in SS14.

8) Where are the other branch located other than SS14?

SS4 and Setia Alam. They all hold the same name ‘Kar Heong’

9) What do you sell in this business?

Ipoh chicken rice and Ipoh kuew teow.

10) Who are your customers?

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We have all types of customers, but only to those who can eat non-halal foods as our foods have pork. We’ll have mostly students during the weekdays and families during the weekends.

11) What are you working hours?

Weekends 9 am to 8.30 pmWeekdays 9 am to 9 pm

12) What is your annual profit?

More than 500k ringgits

13) Has the business invested on improvements for the company?

Not much, because we don’t want to expand the family’s business too quickly as we want to focus more on quality rather than quantity.

14) Do you compete with any other business? Rivals or some sort?

We don’t really care about our competitors because we’d rather focus more on the quality of our products and to worry about competition.

15) What is the necessary knowledge to start this business?

You have to know basic hospitality skills, basic accounting for those handling the cash flow and good understanding of cooking skills for the cooks.

16) Is the barrier of entry for the business high or low?

It’s was reasonable but not really hard to overcome.

17) Where was the first location for this business?

SS19. We didn’t have a shop but we started out as a hawker stall.

18) What was the first products you sold?

Ipoh Kuew Teow.

19) How was the performance of your shop back then?

It didn’t perform well at first because of the lack of customers. After a while, loyal

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customers started to come bit by bit. This could be said for the foreigners and local celebrities.

20) How do you set the price for your products?

The prices of foods are set 30% more than the price of the materials used to make the products.

21) Will the price increase if there is any form of inflation?

Yes, because if inflation occurs, prices of the materials needed increases too.

22) Are you satisfied and happy with the business?

If my customers are happy, that makes us happy too.

23) How long did it take for the business to upgrade from a hawker stall to a lot shop?

2 years

24) Back then when your business just started, did you face any difficulties?

Yes definitely. It was very hard to gain the workforce because employing people was hard at the time and all of the family members were to do the hard labor.

25) Do you consider your business to be successful?

I can’t say we’re fully successful but we are stable in terms in profit gains.

Singapore Chicken Rice

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1) Hi, can you introduce yourself, your name, job position, office phone number?

Welcome to Asia Office, my name is Michael Sim, so I am the General Manager while in charge of the operation department. So, our office business contact number is 0823322, this is our hunting line actually.

2) When was the business started?

SCR was started in the year of 1987

3) Who are the key founders?

Initially, I will say that they are a group of Kuching businessman, shared with so called Johorian. So this guy can lead the Kuching team in the year of 1987.

4) How many branches are there?

If including all of the scale out programme, I would say inclusive franchising more or less about 52 outlets.

5) How many franchise are not franchise?

This thing I will update with the person in charge. There’s around 12 outlets few months ago from Sarawak. So from that figure you minus out, it should be around 40. But according to the programme that I mentioned earlier, January next year maybe will stand against the market scenario.

6) What was the motive of the founders to start the business?

The founder as far as we understands. He realized that chicken rice is a very common food. Whoever in this market regardless of religions can accepts it and secondly, chicken rice food is the most popular food in Kuching.

7) So in this business, what is the main product and other services?

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SCR is known as our signature dishes, so one is chicken and second is rice. And the other one, we known as Ala’ carte.

8) Can you give an example of Ala’ carte?

Our side dishes we categorized in noodles items like mee and kuey tiow. Thirdly are western items. And of course not forgetting some Ala’ carte vegetables, beancurd. This one also considered as Ala’ carte.

9) How much capital is required to start this business?

According to our planning, I would say we have a badge mark our standard. To be more appropriate, I would say that a unit of shop lot with 2,400 sq ft, that may require a capital RM350, 000 minimum.

10) What knowledge do you need to start this business?

The important thing is our Five Departmental Functions. Investors must know how to run this five department. Number one is the kitchen. Number two, is brainstorm. Number three, is the chicken stalk. Number four, is the casher counter. Number five, is the management team. They are the five areas.

11) Who are your customers, for example their age group, income and education info?

In the early stage since 1997 until the late 90’s. SCR for cast for family actually concept because as you can see our slogan or take this as our families based restaurant. During the late 90’s, we noticed the youngster coming up. They go for more fusion style. Meaning that the table wear, the colouring and even the food, some western mixed with oriented style. So lately, the express group more on the youngsters. Two different group of people

12) What is the business annual revenue figure?

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We have our own target, talking about every restaurant, should be able to achieve monthly sales of 150 thousand. Due to the falling down of market, our monthly sales slightly dropped down 20 to 30 percent.

13) So, is there any recent development in SCR?

Yes, we have. We’ve done it two to three months ago, we called it the valued meal restaurant. Meaning that we try to bring down our cost, our per head without being interrupted. Lower down our manpower. Secondly, we review our drinks volume. For examples, from 400ml we go down to 320ml. This is important for cost saving.

14) Obviously your business have a lot of competitors. So who are your top 3 competitors?

In Kuching, we do carry up this survey like SugarBun they have the equivalent compared to the international food like KFC or MCD they have different concept and menu. I would say not many competitor at the same of the level but I would say now the market trend is going down I can see that the consumers our royal customer they swift their choices to ‘kopitiam’ standard. That is very true. They move down to cheaper source of food.

15) Then what strategies you have to compete with your competitors?

First, we have to bring down our operation cost, by minimizing unnecessary manpower. We try to improve our staff productivity, mean that we improve our food quality to regain our most wanted market during this difficult time.

16) How big is your market share as well?

This is a very grey area, Kuching population hardly to reach 1 million, mean that people at the city during daytime I would say is around 330 thousand, from that populations is very hard to justify. There’s a lot of people they go home for lunch and dinner. Is not easy to justify the figure.

17) So is it easy or difficult to enter this kind of business?

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I would say the very competitive and the problem we are facing now. In the area of businesses I would say it’s a very good industry. As long as you can solve your human resource problem.

18) How often do you release the new product?

We target every month at least one new product. WE might also delay the new product to the following month until the quality is accepted by the eight house team.

19) So what was the latest product of SCR?

This month we taking about promotion, there’s isn’t any new product because the school is reopening and Chinses New Year soon. New product only launch during big season most of the times.

20) So, you do have any idea of your next new product?

Yes, we are still waiting for our R&D department to submit the list and we going to have our food taste.

21) How do you set yours prices?

It is a standard formula to set our prizing. Regardless what products the costing worth it out let’s say it RM 5 we go for RM10 to RM10.50. That is our selling price.

22) Is it going to be better if you set your price lower?

It goes in both ways, number one you need to know the item they are selling. Let’s say you are buying low material Rm2.50, so if you’re looking for 50% profit it is going to be RM 6. That is the right way to do business, we are not doing charity.

23) So does the pricing of your product actually affect your customer and competitors?

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Yes, definitely our customer feel that is too high, not worth to eat, it may affect our entire business restaurant. Sometime I do commend on other restaurant, I commend to the coffee shop boss. At the same time, people feel that it is worth to eat. People feel it’s clean and delicious.

24) Where was the first branch?

In 1987 it started in Jalan Song Heng Chok.

25) When SCR first started, was it a hawker store or a restaurant?

It was a coffee shop without air conditioning selling chicken rice.

26) How long that the company take to open another branch?

Within two years they open another branch.

27) Which branch do you think is the most successful?

At the time, it is very hard to justify because the crowd always moves around.

28) Previously there was a Singapore Chicken Rice at Jalan Song but it has changed to a shop called Singapore food Street, is that one of your new strategies?

Yes, we provide more variety of food such as Thai food, Indian Food and Vietnam food.

29) Would you say it is a success?

It is still on going, but currently we are earning profit.

30) How long have you been working?

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I’ve been here 8 years

Appendix

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This appendix includes a compilation of interview documents and photos of the two coffee shops showing the contrast between the olden day and modern day coffee shop. It also includes information of their respective competitors that were recorded in the process of investigating, analysing and comparing both businesses.

A. Kar Heong Restaurant

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Exterior of Kar Heong Restaurant

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Interior/Ground Floor

Interior/First Floor

Exterior View of Kitchen

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Variety of Food Served

B. Singapore Chicken Rice

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Exterior view of Singapore Chicken Rice

Interior View

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Main Type of Food Served

Variety of Food Served

Reference

Boon Chuan (2013). Retrieved From Website. http://tummyfull.blogspot.my/2013/04/kar-heong-restaurant-ss14-subang-jaya.html

HUNGRY GO WHERE (24 November 2014). Best chicken rice in Klang Valley. The Malaysian Insider. Retrieved From Website

http://www.investopedia.com/terms/p/perfectcompetition.asp

Jack Wong (30 August 2010). Singapore Chicken Rice to set up 15 outlets in M'sia. The Star Online. Retrieved From Website

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Jack Wong (28 May 2012). SCR Corp to go regional with franchise. The Star Online. Retrieved From Website

Jimmy Tan, personal communication. 4 January 2016

Richard G.Lipsey and K.Alec Chrystal (1999). Principle of Economics. United Kingdom: Oxford University Press; 9th Revised edition

SCR Corp to expand in Sabah and Indonesia. The Star Online. Retrieved From Website

Thomas Sowell (2014). Basic Economics. United States: Basic Books; Fifth Edition

Yvonne Tuah (22 July 2013). SCR targets 100 outlets by year 2018. Borneo Post Online. Retrieved From Website

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