Podcast food China

Podcast transcript #9: the keys to success in opening a food business in China

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Find here the full transcript of China paradigm episode 9. Learn more about Florent Bonnefoy’s story in China and find all the details and additional links below.

Matthieu: I’m today with Florent Bonnefoy, founder of Bonnefoy + Partners since last year. He started his food business company in China last year in 2017, in May 2017.  And you have been in the food business for like 10 years, or even maybe more. And then in China, only in China, you are going to tell us exactly. You have been working for the prestigious Michelin Guide in China. You have launched it. You have worked on it. You have launched it. And now, you have created your own food business in China advising entrepreneurs, advising companies on how to start, develop, and manage their food-related business. It’s an interesting thing because you don’t say only food business in China, but food-related business in China on your presentation.

I understood Greater China because I feel you are also, involved in Hong Kong. I would say even Asia because I read that you had been operating in Singapore as well. You have done in Singapore. So it’s very, very interesting to have you in our China podcast. I feel that so many people are interested in China’s food industry. So many people are interested in cafes, restaurants in China, and all these food-related businesses and health field as well. This is such a topic that I think it would raise a lot of interest among our audience. Thank you very much for being with us for this episode of China Paradigm, the China business podcast that reveals entrepreneurs in China secrets.

Florent: Thank you, Matthieu. It’s a pleasure to be with you today and to be able to share with your audience my experience related to the food industry in China.

Mathieu: First question. How do you get a Michelin Star?

Florent: Well, so as you mentioned, I worked for the Michelin Guide in China for 10 years. And I launched the first edition of the Shanghai Guide. So I did many things when I was at Michelin, but my key responsibility was to establish a strategy and a roadmap for Michelin’s business growth in Greater China.

So when it comes to stars, I know that a lot of people have these questions and say why this restaurant has one star or two stars, or this one has three stars. Actually, there are five criteria. And everybody can find those criteria. It’s static knowledge. Basically, of course, the quality of the products is very important. And then the technique. So it’s about the chef and how he’s mastering the technique. And then, you have also a question of creativity. So how is the chef inputting his personality into the food?

So if you take a very simple staple in China, Dim Sum, for example. So if you have very good shrimps, then the technique is very good. So your shrimp dumpling, the technique is good. It’s not too moist. The texture is nice.

Then how a chef would make a difference by adding a little something to that dumpling that will make it different from other very good shrimp dumplings.

Then, we have a fourth criterion which is actually an economic criterion. So it’s value for money. This is a very important criterion.

And the last criterion, which is very important, is actually consistency. So it means consistency all the time, but also consistency over the menu. So you cannot have…. and we have a lot of restaurants in Asia which are actually very famous for one item. And because that item is a dish, they do it perfectly. But then, the rest of the menu is just okay.

And actually, for the Michelin Guide in China, you cannot have this kind of inconsistency. You need to have consistency over the menu. Of course, the menu, no matter which dish and inspector, so the famous guys who are going to the restaurants to taste them. No matter which dish they will choose, actually the dish would be good. So it’s really important.

So if I repeat this, it’s quality of ingredients, technique (so, actually expertise of the chef), then you have creativity (so innovation), the personality of the chef, consistency, and the value for money.

Matthieu: What’s the business model of Michelin Guide? How do you then make money? Is it the guide only or are there other revenue streams?

Florent: So, the business model has been shifting actually. So it went from a traditional publishing business model. So as you mentioned, selling the guide was the main source of revenue for the guide to something that is much more based on sponsorship and events.

Matthieu: So the event you mentioned in your presentation sent to me, Food Forward 2017 is actually very much in line with what you just said. It’s an event. You mentioned like 30 million views and 800,000 engagements. Could you tell us more about it?

Florent: Well, I said Food Forward happened last year in June, end of June, beginning of July. So it’s an event that was created by Michelin and by Ideo. Ideo is a business consultancy, an American food consultancy.  So it was cooperating together. And actually, the goal of that day was really to try to tackle a few issues that we had seen as very important about the food industry in China.

So the issues we identified were, first, the status of the chefs. So as you can imagine, in China, actually being a chef is not something that is quite glorious. And until now, I mean in a traditional Chinese family, if you ask many Chinese chefs, younger ones actually, if you tell your parents, “Oh, I want to become a chef,” usually they will try to ask you not to do that. Maybe, try to be a lawyer or a doctor.

And it’s not like in Europe or in the US where being a chef is kind of really cool and popular. So we identified that problem. There is a topic here that seems to be very important, and we wanted to have people talk about it.

The other one was also another topic about fine dining in China and also trends in Chinese cuisine industry. Chinese cuisine is diverse. When people tell me, “Oh, I don’t like Chinese cuisine,” I’m like, “Okay, but you can always find one cuisine in China that would be suitable to your taste.” I mean, there are so many different types of cuisines tastes. So, the event was also trying to see why Chinese cuisine, maybe, is not that popular in the US or Europe. Or why is it not that popular in the US and Europe?

So we invited different chefs coming in from the food industry in China, historians, and researchers. And so the event was really about trying to tackle those topics. So Food Forward was a one-day conference, basically. As you mentioned, what was important for us is okay, we don’t want it to be only an offline event. And we also want it to be an online event because otherwise the impact… I mean the impact had to be more important.

So we had sponsors, for sure. We, of course, used the Michelin Guide. The Michelin Guide has always had a presence, a digital presence, for a long time till now. We grew it over time. That took us about four years. And it’s really organic growth. The thing is you can imagine that the Michelin Guide coming to China was a big event in 2016.

So at that time, all our digital accounts, WeChat or Weibo…. of course, we had like a lot of fans. We needed them to go to purchase fans or to grow with us. Actually, it was very organic growth.

Matthieu: How many?

Florent Bonnefoy: I can’t remember now. Yeah. It’s still 100,000 or…..

Matthieu: Purely organic?

Florent Bonnefoy: Yeah, purely organic. And I am sure it’s more now. Of course, for Food Forward,  we used those accounts. But also, we partnered with these different platforms which are doing live streaming. And so that’s, of course, better. So you could follow the conference, of course, live. And that brought a lot of audiences. So you can see the resource.

Matthieu: Number of views, yeah. I repeat. So you got like 30 million views and 800,000 engagements. I guess engagement is tweets and people reacting to what you’re saying.

Florent: Yes.

Matthieu: Is that engagement?

You mentioned the diversity of Chinese cuisine. We usually talk about eight cuisines in China. I feel you would say that they are much more than this. What’s your takeaway on this?

Florent Bonnefoy: Well, actually, if you talk to Chinese chefs and if you talk to a few people who are doing food research, they tend to say that now those eight cuisines is an expression. Actually, it’s been changing over time. So, maybe, 50 years ago, those eight cuisines were a little bit different. You have a large variety of cuisines in China.

The provinces around Shanghai, so what we call Jiangnan region, those cuisines have a lot of elements in common, but just one of them is actually considered as one of the eight cuisines. So, it is very diverse. I would say there are more than just eight types of cuisines in China. For example, if you go to more remote places in China, for example, Xinjiang, where actually you have Uyghur cuisine, it’s very different from what you can find in the south of China.

Then, Hunan cuisine, the spices of Hunan cuisines are also very different from the spices of Sichuanese cuisines. Some of them are not considered as one of the eight great cuisines of China.

Matthieu: We see some clients with a lot of sensory research. We support them in tasting the product to taste-test. Do you feel that the different cuisines in China….. you talked about Hunan, which is spicy? You talked about Uyghurs which is Muslim, and they actually like more sugar. But actually, we found out in some research. Do you feel people favor different kinds of cuisines in China? Would some population favor sugar or some population favor more spicy food? And then, when you have a concept from the West, you may consider more Mexican food, for instance, in the places where people like spicy food, or a place where you have more sugar, pastries in places where people like sugar. What’s your view on this, on the difference of tastes?

Florent Bonnefoy: This is a very interesting question and a very important one. It’s a commonplace to sit. China is very big. So the food market in China is very big, and people are very different from one market to another one. So if you take Shanghai and if you take the major cities in China, people in Shanghai, people in Guangzhou, people in Beijing, or Hong Kong, they are all different, and their tastes are all different.

And yes, in some regions….. and there is something very interesting that happened. I’ve been living in China for 12 years now, but all my experience in China…..  I mean, actually, I have lived in China for longer. So the first time I came to China was in 1999. And then, I studied in Beijing in 2002.

So at that time, actually, the Chinese consumers were traveling less. So, for example, when you’re in Beijing, the kind of food you could find in Beijing was basically Dongbei food, so Dongbei food from the northeastern province and Beijing food… a little bit of Cantonese but not well-executed. And that’s it. And maybe, Sichuanese. And in Shanghai, it was much more like Shanghainese cuisine and cuisines from the nearby provinces. And in Guangzhou, in Canton, people were mainly eating Cantonese food.

And for example, they couldn’t have spicy food. It turns out that ten years later, or let’s say now when I go to Guangzhou or Canton to see my friends, now there is a trend for spicy foods. So we used to say Cantonese people can’t eat spicy foods. And now, they are all about spicy foods.

In Shanghai, you have a population of people who are traveling a lot, and now they’re curious. So, there is a lot of diversity in terms of restaurants in China, because you can cater to those people. So for example, you were talking about Mexican restaurants wanting to open in China.

Do you want that Mexican restaurant to go to a place where people love spicy food? I’m not sure. You have to go to a place where you know, that people would accept and be interested in foreign cuisine because they wouldn’t have this… It’s not because it’s spicy that you would necessarily need to go to a spicy region, but it’s just more like… okay, this is a type of cuisine that would be maybe better perceived in a place where they already know about foreign cuisines. So you have to know your market basically and understand really who the people and what their habits are. It’s a very, very interesting question.

Matthieu: So we just talked about creating a new concept. Should we stick to the existing taste of the population or make them discover new tastes? You said that basically, the discovery process is very strong in the food industry in China. People may be interested in overseas or foreign businesses in China or new concepts. So even in a place where they don’t eat spicy foods, they may actually be interested in eating spicy foods, like Guangzhou.

Talking about the food industry in China and how to start a food business in China, how to run a restaurant in China, for you, what would be the key success factors and the key failure factors you have to watch very carefully?

Florent Bonnefoy: Well, of course, first of all, the food has to be good. I mean, you cannot come here and try with something just okay. The food concept must be very, very strong. So I’ve been to restaurants with different concepts and think that is unique. Also, there is a kind of… I would say, in China, fun is also very important.

Matthieu: How do you make fun?

Florent Bonnefoy: Fun is being playful. I would say playfully. So you have a few examples of people who really, really understand the market here. One is Paul Pairet. So he’s in fine dining. So Paul Pairet is a local French chef. Of course, he was trained in France, and he has extensive experience in Asia. His project really started in Shanghai. And I think he’s one of the foreign chefs in China who really understand the Chinese market. All of his concepts, be it Mr. and Mrs. Bund or Ultraviolet or The Chop Chop Club which is not close, but they all have something that is really unique and also playful. And it’s working very well here. And that’s what made him very successful.

Podcast food China

Matthieu: Could you be more specific on some key examples of why you would call a place playful?

Florent Bonnefoy: Well, for example, if you take The Chop Chop club, I think one thing that was working very well with the Chinese is the fact that for The Chop Chop Club, which was a barbecue place, you had large screens that were announcing when the piece of meat was ready. So basically, they were grilling and roasting a big piece of meat or a bigger piece of fish. And so, in order to order, you had to…. it was a little bit like a market or a marketplace. So you had to actually look at the screen, and then you would order according to the time, but maybe you would not get the food. I mean it was very playful, and people really enjoyed that, the stress of ‘Am I going to get that meat?”, “Am I going to get that dish or not?”.

Matthieu: To topic. To the topic of conversation on the table.

Florent: It was so playful. It would be the atmosphere, the general environment of the restaurant, but also, the menu was…. he designed a very extensive menu which is not something you usually do for a French restaurant, but which is something that you do in China. If you look at Chinese menus in Chinese restaurants, they are extensive. It’s like you have a large range of choice. And actually, he made it on purpose in order to make people comfortable and say, “Oh yeah. We can choose a lot of things”. It was very clever.

Mr. and Mrs. Bund started its food business in China 10 years ago, and it’s still here in a very competitive place which is the Bund in Shanghai. And it’s doing very well.

Matthieu: So you said good food, to be unique, to be playful.

Florent Bonnefoy: Location is very important. Once you have your concept and actually, location, can influence the concept and vice versa. So those are the two things that would make your restaurant successful. If you have a good concept, but not in the right location, then probably, business won’t be good. If you have a good location, but a concept that is a week, it’s the same. You’re not going to make it. So it’s really very, very important. Those two factors are very important.

Then a last critical factor which actually, is also sometimes overlooked is some people would think, “Okay, we have very good food. Our concept is quite strong”. But they overlook marketing. And actually, you need to sustain awareness in the midst of a lot of noise. It may be harder in China because people are constantly solicited. And the attention span is actually quite short. So marketing is still very important.

I would also say by marketing, also traditional public relations. And so, working with magazines, working with journalists and food critics is also quite important. On top of this, there is also KOLs in China which are important. But I would say traditional PR is very important to still be on top of the news, to always bring something new, and that people keep thinking about you.

Matthieu: You were talking about playful. You gave an example. I feel now food is very connected to the phone. People take so many pictures of food. Have you found some concept which could make it more playful or some marketing which would make it more playful for the experience? Also, for the marketing, would you have some examples of someone who has been able to leverage the fact that people are automatically by themselves without any instruction taking pictures of anything they eat as soon as it looks good?

Florent Bonnefoy: Well, what you are mentioning here is a global trend. So food has to be instagramable, meaning that, basically, you kind of have… plating has become very important. So you cannot have dishes that are good but don’t look that good, but that’s important now to have something that would be looking very, very good. You cannot neglect that aspect. And I know that chefs, for example, there is a trend in force now for some chefs who now refuse that people are kind of phobic. They don’t like people to take pictures of their food.

Matthieu: That can never happen in China.

Florent: Sorry.

Matthieu: That could never be in China, right?

Florent Bonnefoy: I think, currently, no, but who knows? I mean you can have a very strong chef. It’s always a question of the personality of someone who says, “No, I don’t want people to take pictures of my food.” And maybe that would actually be a good PR campaign. It would attract that attention for sure. And it’s true that in China, the testing that people do is take out their phone and take a picture of the food. I do that all the time because I trend. I have to, but also, I was doing way before. It is very important.

The food looking good is still not the most important factor, but it is important. You cannot overlook it. I can’t remember what article I saw. So I think it was in…. maybe, it was in Time out. And the journalist was leaving, so she made a compilation of all the worst-looking food she saw. Actually, some of the pictures were really… I mean you could see like a bird.

So you need to pay attention to these kinds of things because it can be very absolutely negative for your food business in China.

Matthieu: I see. You were mentioning this very successful foreign chef in China, who started Mr. and Mrs. Bund. Everyone who has been in Shanghai, even actually for a short time, should know it, it’s very successful and famous. But at the same time, you said that he created a concept that he closed. So you see some very successful people in the food industry in China who are still running restaurants in China and still closing them. And that’s something I see so much. It’s that a lot of concepts are opened and closed.

Why is it so? Why is a restaurant such a difficult business compared to other businesses where they could stay in business for 10, 15 years? A restaurant which has been in business for 10 years is pretty rare. I mean, especially in China. What’s your analysis on this in terms of cost structure? Is it the rent? Is it the people? Is the fact that the population and tastes are changing in China? What’s your analysis on it?

Florent Bonnefoy: Well, there are many different factors that can be. You can have a good concept. You can have all the factors I just mentioned that will make you successful. For example, if your landlord decides to raise the rent or your investor is not paying anymore. There are different factors that could lead to your business closing.

For sure, it’s a very difficult environment. It’s a very difficult business. Now, having good food is not all. Actually, it’s not everything. You can’t think that just having good food will do the job. You need strong marketing and communication. For sure, that’s very important.

In the case of people who are trying to import brands, famous brands, or famous persons, essentially, people are sometimes rushing and they expect because the brand is famous in Europe or the US, they would expect, “Oh okay, we would be famous in China as well.” Actually, they often rush. And if they have investors coming to them and maybe throwing a lot of money to them…. and then they don’t really do the due diligence. That is a very important thing to do before you launch any type of concept in China because you cannot just say, okay, I’m famous, let’s say, in the UK or France. Then I’ll be famous in China.

Matthieu: Would you have some examples of companies which retreated? I don’t know if you think about the case of Cole for instance, which entered China as a bakery and then retreated.

Florent: I don’t want to name names, but I would say you have two very striking examples of people in the food business in China. I won’t name names.

Matthieu: I understand.


Florent Bonnefoy: 
One very famous French brand that launched in Beijing, with a lot of PR, six or seven years ago. They launched in a mall in Beijing next to the CBD. And so the market was not there yet. And so they were selling a lot of refined food, refined European food. And the market was not there yet. And they had to withdraw within less than one year. And it happens. It happens. But now, they want to come back to the Chinese food market. And actually, it’s very difficult because all their investors remember that seven years ago, they tried to enter Beijing and that they failed.

And now, actually, there could be a market for them in China, really because people’s habits have changed and the demand for refined foods has, of course, grown exponentially. So it’s difficult for them to find investors now because investors in China remember that kind of experience they had in Beijing.

Matthieu: Interesting. When you say good food, does it mean good ingredients? Does it mean it should be imported?

Florent Bonnefoy: For sure, it means good ingredients. Yeah.

Matthieu: Does that mean it should be imported? That’s actually my question. Do you feel that good food in China and mainland China is necessarily imported food, imported ingredients?

Florent Bonnefoy: No, it depends on the type of food you’re doing. For sure, for Chinese cuisines, you have a lot of new ingredients in China. And now, you have people producing ingredients and really going for quality. Of course, agriculture and the food industry in China have a lot of crises. But I also think because, by people’s demand, people want healthier food. Actually, now in the past years, there have been a lot of efforts in order to actually produce more qualitative and better ingredients.

So you have, now, entrepreneurs and people really wanting to do that. So good ingredients don’t necessarily mean imported ingredients. You have here also…. actually, a lot of foreign chefs in China work with local ingredients. And some of the local ingredients are very good.

Matthieu: How do they make sure? How do they make sure the ingredient is good? You know there is a concern about pollution. You know there’s concern about healthy food and meat as well. It could be anything which is grown or also from the meat. There is a concern with coming from China. And a lot of concerns of consumers are that they go to a fine dining place and they’re not sure the price they pay is really corresponding to very, very good ingredients because there’s always this concern and skepticism about what you have on your plate in China. Is it local? How do you react to this? You seem less skeptical than the average consumer.


Florent Bonnefoy: 
No, what I would say is, of course, you cannot be sure 100% that the same as you would be in Europe. You cannot be sure 100% what you eat here, actually. The only organic trend in China is taking off really quickly. The Chinese government is also putting a lot of efforts into that. Now, for sure, you cannot be sure 100%, but I would say it’s the same in a lot of other places.

Matthieu: Interesting. Okay. Okay. And when you open a restaurant in China, would you have some best practices in order to select your ingredients? Should you have special channels or should you have special tips to make sure when it’s imported, it’s a way of ensuring you have…

Florent Bonnefoy: Yeah, the problem with importing foodstuff, of course…. so if we’re talking about foreign chefs in China, they need imported ingredients. Some ingredients, you cannot find in China because they cannot be imported in China.

Matthieu: For instance?

Florient Bonnefoy: Some beef from Japan is not authorized in China. I mean you have quite a few ingredients that are not available in China. So you need to find ways to replace those ingredients.

So if you can’t work with Japanese beef, then you work with Australian beef. For example, some of the truffles are not authorized in China, so they have to replace with other kinds of truffles, It’s this type of ingredients.

Chefs usually… I mean, when you start off with ingredients, the best thing to do is to go…. especially when you are in a market like China, if you are a foreigner chef in China, the best thing to do is to go around, meet chefs, meet other restaurant owners and ask them. Okay?

And you would tell me, why would they give you there….. and some of them, they won’t. But usually, you would find a lot of solidarity within the community because everybody knows that the F & B business is a hard one if you are a foreigner wanting to do an F & B business in China. And there is a kind of ‘Okay, yeah, I’m going to help you.’ So I know a lot of foreign chefs in China, actually very famous ones, who actually came here in China and they asked the other chefs, and they found some really goodwilling chefs and people who helped them.

So I would say yes, when you run a restaurant in China, first try to meet people and see how you can get ahead on that. Community.

Matthieu: Yeah. You’re helping companies and entrepreneurs in China to start, develop, and manage their food-related business. So it’s not necessarily restaurants. For those who would be interested in interacting with you, what kind of services, what do you work on? Do you work more on basically the sourcing points of ingredients, on the marketing, on the PR, or the concept? How do you work with your clients?

Florent Bonnefoy: We work on three elements. One is a concept. So, we have existing restaurants to refine that concept. So it goes from the consumer experience, quality of the foods, quality of the cooking, and also, I must say general consumer experience. Then we also develop concepts. So I work in the hospitality industry with hoteliers and property developers. And so, we help them to find the right concepts for their properties. So this is one thing.

The second one, we work on marketing. So once you have a good concept, you need to have good marketing. So we work on that.

Matthieu: When you talk about property development, you are talking about modern department stores, right? You don’t talk about…

Florent Bonnefoy: Resorts. So yeah, it could be malls.


Matthieu: 
Okay.

Florent Bonnefoy: So, hotels basically. When a property developer brings in a hotel brand, we will also help them to find the right, good concept for their hotel.

Matthieu: Okay. Okay. What do you feel is the minimum investment to open a restaurant in China? What is the minimum investment?

Florent Bonnefoy: That question all depends on the location, the city you want.

Matthieu: Oh you feel it’s the location.

Florent Bonnefoy: Location.

Matthieu: Okay.

Florent Bonnefoy: It’s the kind of restaurant you want to develop. Is it more like global? It has a lot of different factors. There is no minimum or maximum. It depends.

Matthieu: In terms of location, what prices do you see? In China, we talk about the per day per square meter. So there are some ranges for offices. I guess there are some ranges for restaurants as well. Some will be expensive like ¥30 per day per square may be expensive; ¥10 per day per square meter may be cheap. What is the range you have in mind?

Florent Bonnefoy: It’s also very valid. If you go to a place like Guangzhou, Guangzhou is actually less expensive than Shanghai. Or If you go to Hong Kong…. okay, if you are in Hong Kong in Central, for very, very small spaces like less than 60m² to 70m², you already have rent sometimes going over HK$100,000 for a month which is already €10,000 euros. So you need to sell a lot of menus when you have this kind of prices. Hong Kong is a very difficult market to that extent, which makes it very difficult. Even though it’s a very sophisticated market and you have a lot of diversity, you can have different types of concepts.

It’s now, in China, one of the most diverse dining scenes, but it’s a very difficult one.

Matthieu: Are you based in Beijing or Shanghai?

Florent Bonnefoy: Shanghai.

Matthieu: Shanghai. So in Shanghai, what would be the range you would feel expensive and the range you would feel is actually a very good deal? I mean I understand that it depends on location. For instance, if you are in Bund, it’s different. For instance, Bund, what do we talk about in terms of pricing and what do we talk about when we talk about other places? If you have some branches, or at the same ideas with Shanghai compared to Changsha, compared to other cities in China, to give a sense to the audience of how expensive rent can be in China.

Florent Bonnefoy: Well, for the same type of…. so basically, restaurants are bigger in Mainland China than in Hong Kong. If you based on 100 square meters, then you will have places where it’s about ¥30,000 to ¥50,000, which seems to be acceptable on that market.

Matthieu: Okay. Okay. When you rent a place, do you need to put a deposit? Do you have some constraints? Do you need to get a commitment for one year, two years?

Florent Bonnefoy: You need to pay a deposit.

Matthieu: Deposit. Okay. I see. Good. Thank you very much for your time.

Florent Bonnefoy: Thank you. I hope it was interesting enough.

Matthieu: Very instructive. I guess the audience and anyone interested in food business would have directions; directions on where to investigate and where to be good at. Being playful is a very interesting topic. So thank you very much. I hope you enjoyed it.

Florent: Yeah. Thank you. Yeah, sure.


China paradigm is a China business podcast sponsored by Daxue Consulting where we interview successful entrepreneurs about their businesses in China. You can access all available episodes from the China paradigm Youtube page.

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