China Paradigm transcript #103: Running a crepe restaurant in Shanghai in a post-coronavirus context
Find here the China Paradigm 103. In this interview, Philippe Ricard the founder of La Creperie and La Cabane restaurants exposes the story of his restaurants in Asia and tells us about the challenges of running a crepe restaurant in Shanghai during the coronavirus outbreak.
Full transcript below:
Welcome to China Paradigm, a show powered by Daxue Consulting where we interview season entrepreneurs and experienced managers in China about their business and experience in the country.
Matthieu David: Hi everyone. I am Matthieu David, the founder of Daxue Consulting and its’ podcast, China Paradigm. Joining me today is Philippe Ricard, the founder and still CEO of the restaurant called La Creperie. For those who have lived in Shanghai and now, in Hong Kong, and Vietnam as well, they all know La Creperie. That’s kind of the restaurant which we can call an institution because they have been in place for 13 years and, you know, when a restaurant becomes an institution when other restaurants around them have changed, when the Greek restaurants become French restaurants in front of you and all the restaurants are closing and opening again and they have different names, but they are still here. That is why I am calling those restaurants an institution and I went yesterday to your place in Dong Ping Lu to check the reopening a restaurant after the Coronavirus’s crisis. The restaurant, but also the people inside and how the place was. It is still the same; very nice lighting, very nice environment, a lot of decoration, music just at the right level in terms of volume and very welcoming staff. The only difference I could see is that change in opening hours and the fact that you insist on the fact that everyone has a green code in Shanghai, that they have this green card code. Anyway, I am not going into too much detail. Thanks for being with us. I am very happy to have you here and as I said before, La Creperie is for me a little bit like a well-known place like Starbucks because I can tell someone, “Let’s go to La Creperie.” I don’t have to send the address; I don’t have to tell them where it is. They know it and that’s why I am calling it an institution. Thanks for being with us again, Philippe and so what is the situation of the restaurants now?
Philippe Ricard: Thank you for all the nice words about La Creperie. It’s true that we’ve been in Shanghai for more than 13 years. It is also pleasant to hear that we are kind of an institution. At least we try to really do our best to always provide quality in terms of products and service that is very stable, and I think that’s what we have been recognized for and I think this is what makes us successful today in running a crepe restaurant in Shanghai. I am not here to pretend to be something that we are not like fine dining, but what we try to do is to provide a food experience, as we say to our customers. It goes to a lot of details like the music, like the small salt and pepper you would find on the tables and so that’s what we are trying to do. We are trying to make people travel when they come to our restaurant with the food and the environment.
Matthieu David: Could you tell us now, more about the number of restaurants you have? I didn’t say precisely how many restaurants you have and what kinds of restaurants you have. As far as I understand, you have your first one in Shanghai; two with this specificity of crepes, which is like small pancakes, for people who know French food and for people who don’t know, I will explain. It is very light pancakes from Britany, and you can eat them for breakfast, lunch, and dinner inside different ingredients. You have two of them; one is in Dong Ping Lu, one is in the city center and you have La Cabane, which is more kind of food from the Alps if I understand correctly, with fondue and so on and then you have one in Hong Kong and one in Vietnam as well. Is that correct?
Philippe Ricard: Yes, that’s right. Three restaurants in Shanghai and two La Creperie and La Cabane, which is like a restaurant that specializes in food from Savoy; so, the French Alps. We have one restaurant in Hong Kong now. We had two and we had to close one last January, but we were kicked out by the building because they were renovating the whole thing. So, we are now looking for some new opportunities. Other, we have one restaurant in the city, but that has been open already for many years. We opened in December 2008.
Matthieu David: And you are living in Hong Kong?
Philippe Ricard: Yes. In fact, I’ve been based in Shanghai for 14 years. I have been in Hong Kong for two years. It is also nice to see the city from the inside.
Matthieu David: Today is the 20th of April 2020 and everyone is thinking about one thing, which is the crisis sparked by the virus and the first businesses which have been impacted are restaurants, coffee shops, places where you have to go to consume something, even though you can deliver more and more. I got some statistics. If we look at the restaurants in China, it is about two-thirds of them that were closed and about coffee shops, it is about 80% (learn more about the post-lockdown situation for restaurants in China). The right statistic is I think 85 or 88%. Anyway, it is massive. That has lasted for some time, for weeks, and even when you went back, I understood form actually what your restaurants’ information that you open only for lunch or only for dinner. How was the situation for you, more in detail? How has it been financially speaking, because I believe that what happened to you can very instructive for people currently in the West? In France, Europe in the U.S; they have to know how to react, what to do when reopening a restaurant after the Coronavirus’s crisis, and how to soften the loss maybe with online delivery or maybe by readjusting and doing different things (learn more about the delivery sector during the outbreak in China)?
Philippe Ricard: Yes indeed. It has been a terrible time. Mostly for restaurants, it has been a really challenging time to find ways to survive, but I think somehow we are lucky because our restaurant has been in Shanghai for so many years. So, we have a cash flow that helps us to survive this time. Also, we have a good team and I am very happy and proud of them because when the time came when we had to close and to shut down the restaurant for a few weeks, it was not easy and until we started again, they all agreed, for example, to risk the time they would be working on the salary that they would get in proportion and this is something that helps our business. So, it is everybody’s effort that makes the difference in the end. This is something that is going to help us to rebuild and to face the situation.
Matthieu David: What was your first reaction when you knew you had to close down? Was it that you would you go to contact someone to see how you could deliver more food, was it that you would send an e-mail to all your past clients? I am not sure if it would be possible to contact them all on WeChat or whatever to tell them, “We can deliver to you” or you had to close down the whole kitchen? What were your first actions?
Philippe Ricard: In fact, we didn’t have a choice. We had to close everything. The kitchen had to be closed. We couldn’t do any delivery for a long time and then finally, when we could reopen the restaurant after the Coronavirus’s crisis , that is one of the main changes that we decided to operate, is that we wanted to push even more the delivery because that is one way to also increase our sales and making possible the fact that we are going to cover all the fixed costs, I would say. It’s working. We have done the same in others, where we faced the same situation and where delivery is becoming more and more popular. There are many restaurants I know who didn’t do deliveries before who has started to do it now. In La Creperie we have always been very cautious with delivery because we wanted to make sure that we keep quality in our products that is really at the highest and when you do deliveries, sometimes when you do control, it means that at the end at the customer’s place, it could be different, but we are taking this time to rework our recipes, our presentation, our packaging to make sure that the product at the end is still the same. The feedback we get at the moment is very good. So, we are going to push even more this possibility of delivery.
Matthieu David: Actually, very interesting to see how you thought about deliveries, not only by delivering just the product you eat but also the packaging and surroundings. Would you mind sharing how you could actually give a similar experience to people who go to your restaurant because they don’t only go to your restaurant for your food? There’s such a beautiful environment. When you go to La Creperie, you feel Brittany. When you go to La Cabane, you feel you are in the French Alps. You have paintings and you feel you are in the French Alps. Have you thought about how to convey still this feeling in some way, also through delivery?
Philippe Ricard: That’s a very good question. That is very challenging when running a crepe restaurant in Shanghai. I don’t know honestly how I could make this option, but I think that is part of the deal when you go to the restaurant you come for a real experience, and I am not sure we could find a way to make it the same at your place. What we do I beside delivery, if the people really want to have the full experience is that we do catering and it means that we can go to a person’s place with our machines and a chef and then we would make the crepes at their place.
Matthieu David: This is new or post-virus?
Philippe Ricard: It is not new, but this is something that we have been doing in the past sometimes, and now we are also pushing it, let’s say because of some people like the city experience and of course we are not going to do it for one or two people. That would be too costly for them, I guess, but if there is a group offer of let’s say 30, 40 people gathering, which becomes possible now I think it’s something that many people could be interested in because what the people like is that they can order on the spot and we do the crepes on the spot in front of them and so there is like illumination. So, if there is like a birthday party, for example, or any kind of celebrations, people would be very happy and then t is not only a question of serving the food there, but we can also allow the people to try to make the crepes, which is also fun. The people really enjoy that.
Matthieu David: True. So, we talked about the time during the crisis and you had a spot where you can compare three different locations; Shanghai, Hong Kong, HCMC and how do you feel the crisis was managed differently from different cities and what tips do you get from those cities that could be useful for people now in Europe or in the U.S while looking at the time when people will come back or things will go to a new normal because we know it’s not going to go back to normal. There is a new normal.
Philippe Ricard: Yeah, I think that is a very complicated question to answer. I think the visibility today on the market is still not clear. The markets are different between Hong Kong and Shanghai, even in terms of response from governments on the restrictions. In Shanghai, it’s been very effective because we had to shut down. In Hong Kong, we didn’t have to shut down, but we can still do deliveres and takeaways. In Hong Kong, we didn’t have to shut down. We could have some customers come in, but of course many just didn’t want to go out. So, the business was very little. Now, in Hong Kong, the restriction makes it that we cannot have more than 50% of our restaurant full. So, it means that 50% of the tables are unoccupied and so it makes the business very complicated because of course, the sales are still not high enough to cover all the costs.
Matthieu David: How many people do you need in your restaurant to cover the costs or to be two-thirds full or what is the level?
Philippe Ricard: I think it’s that we need to be almost full because the cost is so high for the rent. In Hong Kong, if you don’t have a business that is really working very well, it is very hard to adapt and to keep alive, so you need to be good at rent negotiation in China. So, yes so, we just hope that it is going to come back soon. There is a good sign and there are good signs. Last weekend, for example, and this weekend it was very good. We had many people come in and so it shows that we are in the right direction. We just hope that there won’t be a whole new wave of cases coming after reopening a restaurant after the Coronavirus’s crisis . That’s always the risk. We have to live with it. In Shanghai, we see that it’s already one step ahead, compared to Hong Kong. From the feedback I have because I have in fact, not been to Shanghai for several weeks now, but the feedback from my team shows that more and more people are coming back to the reopening the restaurant after the Coronavirus’s crisis . People are willing to react and enjoy it a bit more. They feel less at risk. I understood also that the westerners maybe are keener on going out than the locals who are more cautious. We believe that it’s going to come back probably not as like a big after a crisis, but probably something more progressive, but it is coming back. I think there is a trend and I am not so convinced like many people are saying, “Well, things would be very different.” I think most of the things will be the same as before because people have a tendency to forget about the problems, which is a good thing because there are so many problems happening. If we have to remember all of them all the time, that would be terrible. So, I think in a country like China where the economy is still good at developing where I think everybody is still enjoying a better life the following year. I think things will come back to what it was before. That is my opinion. Of course, there will be some little changes happening, but it is not going to affect the global change in the economy of the country. Of course, there are problems, but China is strong. It is not going to be a big problem, in the long run, let’s say.
Matthieu David: You make me feel that China is following a V curve like when it is down and coming up and Hong Kong is like a W curb because it had problems two months ago, then things went back. I was in Hong Kong a year and a half ago and things were pretty okay, actually. People were going to the gym and everything, like normal and then now it is still more strict again. So, indeed we see a few different perspectives from Hong Kong as well as China. I’d like to go back to the beginning because that is not the first crisis you went through when running a crepe restaurant in Shanghai. In 2008, just as you started actually. 2010 was not that good either. So, you went through different crises, but I would like to go to the start. You had no experience in the restaurant in 2007 and you actually worked before in optics and glasses. Would you mind telling us what was in your mind at the beginning to running a crepe restaurant in Shanghai? Was it opportunistic, was it something you planned for some time and then you were able to put everything together? How was the beginning?
Philippe Ricard: In fact, yes, I am not from the business at the beginning. I was in the optical business. I was sent by my company in France to open a subsidiary in Shanghai in 2004. I was in charge of all the regions of Asia Pacific and so some subsidiaries and some distributors. In fact, I was even before that, I was traveling a lot because I was a director of this company. I think at some point in time, I wanted to stop traveling so much and still meet people because this is what I love and one of the ideas I had was that maybe I should just settle in Shanghai, stop traveling all around and make a business where the people will come to me and rather than me going to see them. I studied different projects and very naturally I would say, one that really popped up was running a crepe restaurant in Shanghai because I am originally from Brittany and Brittany is the region in France where we do all these kinds of crepes and I knew at that time there were a lot of people missing this food in Shanghai. So, I decided to change my life. I went on to be a new entrepreneur, but I did it with knowing a lot of people already in Shanghai who could really support me in running a crepe restaurant in Shanghai. I think that is something that was really important at that time because I had already been in Shanghai for several years. So, I had some network. I had already opened a business and so I knew how to do it, but yeah after I had two neighbors and that was also quite a challenge, but it was really a passion and since then I never give up on this.
Matthieu David: What are the other ideas you were looking at and how did you compare to them?
Philippe Ricard: Well, the first idea I had was to open a bakery because at that time there were not so many people talking about bakeries; French bakeries and I learned that there was probably at the time a big French baker coming to Shanghai with big money and the will to invest and develop. So, a few people I knew at that time told me, “Maybe it’s not a good idea right now because it would be too competitive for you.” I decided to quit even though my grandfather was a baker. It was not easy to forget that idea. Then I had the second idea, which was to open a fine grocery. So, in fact, there was also no fine grocery in China at that time. So, I went to France to find a lot of products, but also there I had some friends in the logistics and they told me, “Well Philippe it is not easy to import products in China. Many times, they will be stuck in the past tense and then if you have perishable goods, then for sure it is very dangerous. You have a big risk that you are going to lose everything.” The rules change very often too. So, finally, I decided to also give up on that project. So, the shared project was La Creperie and I said, “Okay I am not giving up on this one. I am going to go to the end of running a crepe restaurant in Shanghai.” That was the beginning of that story.
Matthieu David: Got it and how did it evolve, the businesses from 2007 until now? I see a couple of evolutions in your sector and tell me if I am correct or not. One is clients, many foreigners, many French who maybe have two-thirds of Chinese now. I went to your restaurant yesterday at Dong Ping Lu and I think it was like a strong half of Chinese. You have 4/5 people eating alone, actually and Chinese and then you have two or three couples of friends eating, and you have a French family. So, it was quite mixed, but it was a strong half of Chinese people. La Cabane was similar; strong half or two-thirds of Chinese. I believe that is one and the second element is that when we talk about 2008, we all think about the crisis, but in China, for food and beverage, it was another crisis. When this scandal happened in China, then China became much stricter on food and food safety, controlling much more. That started in 2008 and that’s another evolution as well on how to running a crepe restaurant in Shanghai to have a much stricter rule than in the beginning (learn more about the 2008 food crisis). Can you tell us your perception of what is the evolution of running a crepe restaurant in Shanghai from 2007 up until now?
Philippe Ricard: Yes, it’s true that there has been ups and downs because of the crisis, but I think what our strengths were, was that we were able to adapt quite quickly to our environment because we remained a small business. So even I opened all the restaurants, I try to manage my business with a lot of flexibility in trying to adapt very fast. I think that’s the main key. I have also tried to do all the time is we are always focusing on quality and quality is not about only the things that you see in the surveys or in your dish. It is also what is behind in terms of process and in terms of groups, in terms of knowledge of our staff, of training. I think it is very, very important that all the things that the customer doesn’t see are also very well organized and controlled when running a crepe restaurant in Shanghai. I think this is very important for me because I come from a background and a big experience in Johnsons & Johnsons, for example. It is very house oriented. It is a company with a lot of ethics, and I think this is something that for me is very important. It is not only superficial. I think what we try to do is even in the back office, I would say, in the kitchen everything we do, we try to make it very clean, we try to make it well done as probably what a customer is expecting it to be. So, after I was also lucky to have people with me who are very strong, who are very competent, who are in different fields and that, of course, is helping a lot for the scaling up a restaurant chain in Asia. It is not Philippe alone. It is Philippe and his team. Without a strong team, it would be also very difficult to scale up a restaurant chain in Asia.
Matthieu David: How have the clients evolved? Is it true to say that it was mainly foreigners and now it is much more mixed with Chinese and what is the perception of your restaurants towards Chinese because I am not sure if it is very well known La Cabane from Brittany is in China, right? So, you have to talk about it to explain it. What image do they have of your restaurant?
Philippe Ricard: I think we have a very good mix now of customers; foreigners and locals in every city where we work and it’s really true in Shanghai. At the very beginning yes, we had mostly French people come in and then more and more foreigners and then locals. We can even see now that in one of the restaurants it is like 50/50 maybe. It took some time for sure to make the people know about our products, but I think with the time I think we were able to gain more confidence, more I’d say people get to know our place from friends. There are many, for example, French families or French companies who are bringing their staff or their friends to our place and that makes our place more known from the locals. That’s for sure. Something that I really enjoy is that when they come to our restaurant, we have a big map on the wall and many people; whether they are from Brittany or they would know Brittany because they go there for their holidays in France, they love to show to their Chinese friends, “Oh, this is Brittany.” They tell a lot of stories about it and it is really nice because this is why I opened this restaurant. There is a big culture behind it and there are many stories to tell about this region of Brittany and the culture.
Matthieu David: You found something in your box to deliver and it came with a map to Brittany. Another question I had is, I feel that the scaling up a restaurant chain in Asia is not easy, but you did it with three restaurants and actually, you did it internationally with Vietnam and Hong Kong. How do you scale up a restaurant chain in Asia because I feel you need to restart again? You need to find new clients; you need to find a new place. The only thing you get from your experience in Shanghai is intuition, you have the sourcing of food and material because also one thing that people may not know if they have not been in your restaurant, it is very well decorated and since I know the restaurant; the chairs are the same. They are the same style. I believe you have to replace some of them, but that’s such a style and as you said, the paper is very Brittany and so on. So, you have those assets, but that’s it. You don’t have more skill. When you sell a product, you can sell it everywhere. You just have to export it to go through the borders and so how do you scale up a restaurant chain in Asia? What is the use of scaling?
Philippe Ricard: Yes, there are many people who told me in the past, “Philippe, why don’t you centralize a certain number of services or open central kitchens” or this kind of thing, but I have never been much into this because I think it increases the cost a lot and before you do this, I think you need to have a lot of restaurants open to making it really efficient. I think when you work in different countries it is even more difficult. So, we don’t make much savings because of the scale, I would say. We have to restart a bit from scratch; everything in every restaurant or every city. We are quite strong anyway at controlling our cost. The experience from the first restaurants is at first, rent negotiation in China, for our products, with our suppliers and we know also better where we can get the quality we need. We sell a lot of cider; apple cider because this is the main drink in our restaurant. I have suppliers in France from whom I order directly because of the volume that we do; we are bound to get some good prices. So, that is one thing you can do.
Matthieu David: I’d like to stop on one thing. You said you learned how to do rent negotiation in China. I think that’s a topic that would interest a lot of people. How do you negotiate with a landlord in Shanghai? To give a bit of an idea, we did some research on the cost of renting restaurants and when we look at another restaurant; an Italian restaurant, it is about 88 000 NMB for 100 square meters, per month and it represents something like 16-20% of the revenues. That is something I have and it’s about 15-20% of the revenues in the rent and that is much more than New York, for instance, but on the other hand, the labor cost is lower. Could you tell us how you do rent negotiation in China? Do you sign a contract for 10 years or is it stable with an increase every year or what is the way of negotiating?
Philippe Ricard: I think it’s a very complex strategy to get the best from the landlords. It will depend a lot on the locations and on the size of the place. One chance we have is that we have quite a unique concept and so it happens also regularly that some locations are asking us to come or if we are competing with some other restaurants or other shops, other brands; we have them because first, we are not new on the market. We have some experience and we can show that our business is profitable and then it means that we can pay our rent. Also, we are stable in the timing. So, that is what some landlords are looking for because we are not a challenge for them. We don’t pay late. They don’t need to find another tenant. We can show this. Also, I think I have also a background from business and so, of course, one of my duties, when I was in other companies, was to negotiate and so I have probably some skills from that experience. For every landlord it would be a different rent negotiation in China, I guess.
Matthieu David: Did you get a discount because of the crisis (learn about the government measures during the oubreak)?
Philippe Ricard: With some of them I would say, yes. With some of them, not that easy, but yes globally, we can manage.
Matthieu David: I interviewed a lawyer in another podcast we have called Daxue Talks. It’s another format where he told me that some people got one month rent for free when they were renting through the government or places owned by the government like for the month of February it was for free. Offices got a 20-30% discount on their rent for the rest of the year. So, is it something similar you are experiencing lie one month for free, one month, or lower rent for the rest of the year?
Philippe Ricard: Yes, in fact, again it depends on the locations. There are locations where we could get one month free. There are locations who say they will give something, but we are still waiting. Some gave some detail about what they would offer. We are still negotiating and still waiting for some feedback on this. We got some confirmation already, but we need more. I think it is very, very important. I think that the fight is everywhere the same for the tenants. If the economy, the environment is falling apart for some time, all the tenants need some support from their landlords because it is just impossible to survive, otherwise. In Hong Kong, we were lucky to have some subsidies from the government also, and so that is really helpful.
Matthieu David: Was money given to you, was a loan given to you? What was it?
Philippe Ricard: It was money given by the government in a very short time after the application It was really, really good. We were also lucky to have someone like Li Ka-shing, who is one of the richest men in Hong Kong who was also helping at some point in time the F&B business (learn more on how Li Ka-shing has helped the local F&B industry). So that is really good for us. Every small thing is welcome. In Shanghai, I know we also have some support from the government with postponing some payments. I guess they are also pushing the landlords to give some support and it is true that as the government in China is controlling a lot of real estates, then it is also quite easy for them to push it. So yes, we need all this help, for sure.
Matthieu David: You mentioned something I am very interested in. You said that some department stores and malls are asking you to join. They are calling you because you have been the place for some time, and they recognize you as a brand? So, that is something I had the feeling you have built a brand. What was your idea of building this brand? It was structured in your mind, initially or it came, it happened naturally that it was recognized as a brand?
Philippe Ricard: No, it came after. I think what I really wanted at the beginning was to build my restaurant and really enjoy the contact with all my customers. Many of them have become friends. That is what I really had in mind at the time, to enjoy the work, even becoming a waiter, a bartender. All the jokes in the restaurant, I just didn’t touch on the kitchen too much because I think it was better to have a real pro to take care of it. I was so much interested in being on the floor and talking with my customers and that is where I wanted to be. After I think it came quite naturally later on that I developed from the time when I opened the second restaurant in 2010 in Hong Kong. We were very successful from the beginning, there. Then we decided to open another one. Then one more and then it is true with the fact that I really wanted something different from one restaurant to another in terms of the image because I wanted the people to experience the same thing. I wanted them to really feel like they go to Brittany when they come to our place. So, of course, I tried to design a lot of things that would make the people travel and feel the same, even if they are in Shanghai or in Hong Kong and that’s the way naturally the bone came together.
Matthieu David: Did you get the trademark La Creperie in all those countries? I believe when something has lasted for some time and you are successful, you get copied with a similar name or the same name.
Philippe Ricard: Yes, La Creperie is a registered trademark. To copy is not only a question of making crepes. It is a full concept. I think people can easily recognize if it is a real one or a fake one because there are many details that people can see when they are in the restaurant and it is true that when they come to Shanghai or Hong Kong or the other, they would immediately feel the same spirit. They will see the quality of the dish. There are some brown, some ciders that we use and that is where we have some exclusivity and I think it is easy to recognize our brand.
Matthieu David: When you opened in Vietnam was it because you had someone over there who maybe worked with you in Shanghai and had to go to Vietnam or is it because you had the idea that the French community was big enough to start also in Vietnam? What was in your mind because it is far and complicated to run a crepe restaurant in Shanghai and in other locations. You have three countries to manage. You have different legislations, too. It is a very different way of managing the business.
Philippe Ricard: Yes, that’s right. I think I developed my business a lot at the beginning with opportunities, meaning that I had someone coming to my restaurant in Shanghai who loved La Creperie in Shanghai and he was not living in Shanghai. He lived in France, but his wife was Vietnamese. He had a son in the F&B business in France. Then he told me, “Okay Philippe, you know I love your restaurant. My wife and my kid would love to go back to Vietnam to work there and so do you think we could do something together?” That’s the way we approached that market. We made the study and thought, yes, indeed there were a lot of French people living there (learn more about our market research methods in China). It as a dynamic city. So, we thought it could be great. There is good potential in that city.
Matthieu David: What stopped you from franchising because that is a bit of what you did in Vietnam sort of franchising with your branding. When you do a franchise, you bring the branding. You bring the sourcing very often and the way to easily decorate your restaurant.
Philippe Ricard: Yes, so far it has been a kind of franchise. It works like a franchise even though I have some shares in every restaurant. I think what is important for me is beyond the franchise system is although the process that goes with that, I try to bring also in all my restaurants and that is something that is very important for me, is that every restaurant, even its… you can recognize La Creperie. They all have their own soul brought by their team, their manager, by the partners because I don’t want to just make a copy and paste. I think it is… I see the soul of the restaurant and that is very important. We are not fast food; we are not fine dining. We are a bit in the middle. We are a traditional restaurant and I think the contact with the manager or the team or the chef with the customers is very important. It creates a relationship that we love.
Matthieu David: Because you invested money and time into it, even if you may share the equity, what would convince you if someone comes to you to give him your branding, give him your knowledge and actually give him some money to start as well?
Philippe Ricard: There are several things which are important. I think the main point to scale up a restaurant chain in Asia is, to feel good with the person I have in front of me. When you start a business, it is going to be for many years. So, the money is, of course, important, but it is far from being everything. Money comes and goes. The person you have in front of you is going to stay there for a while and he is not going to change that much. So, it’s super important for me to have someone I can talk with, with very open and easy to talk to. Not everything is positive, I would say in business life and so there are some very complicated decisions to take sometimes and we need to be able to talk about them so we can move on in good conditions.
Matthieu David: You are talking about personalities. You talk a lot about the personality, but what makes you believe that a business plan is going to work, that it is going to be successful at some point, I understand that it may be for years, but at some point, it has to be successful otherwise it’s a waste of time and money. Do you come up with numbers, do you do research on how many French people are in the city? What would you look at? What are your criteria?
Philippe Ricard: I would say now it depends on where I am open. There are places that I know quite well because I have been living in this place for many years, like Shanghai or Hong Kong. Saigon, I know also a bit less. So, of course, we need a study and we need to understand what is going on in the district, in the city, but I think it is like marketing. You can put on the paper a lot of things about what’s going on. On marketing, it just helps you ask a lot of questions for the market study, but it could also bring you to the time where there is no end to these questions. I mean, also because the answer is changing all the time. So, I think for me now, what is very important is to have a good knowledge of what is happening, but also not to think too much long term to scaling up a restaurant chain in Asia. I think it is very important today to control the fixed cost because you never know. The virus, the protest in Hong Kong; you don’t know what is going to happen in 3, 4 years from today. If you were not able to control your fixed cost, then it is going to kill you, for sure. Today the main idea I keep in my mind from this experience, having inner flexibility in your business to be able to survive the bad times.
Matthieu David: We are close to one hour of talking. You have sustained for one hour. Before we started, we were saying how long do you have to survive. It is like already an hour. You have survived. I have a few questions I ask in the talk, usually. The first one is about the books; the books which have inspired you in business as an entrepreneur. Would you mind sharing a few resources? It could be a book and it could be also other sources like newspapers or others like blogs.
Philippe Ricard: Okay it is a bit difficult for me to talk about some specific books or reviews. In fact, I try to diversify a lot of the things I read. So, it’s, of course, there is part of the business, but business is mostly about the economy. I would say what is happening; like for sure today I think everybody is focusing on when is the COVID going to disappear so we can finally come back to normal life? Even for this, I mean I try to follow different sources to compare to get a better understanding. For example, I read something on the Washington Post. I would read some notes from the government and I would also read some articles from different newspapers; non-diplomatic even. I get also a lot of insight from my Chinese wife. I don’t read Chinese, so she can then help me with that. It is good to have different points of view.
Matthieu David: Do you work together with your wife?
Philippe Ricard: No, she is not working in the restaurant. So yes, I think it is good also to escape from work. It is also something I love to do is to really read some what we call in France like travel experience from different people around the world. That’s for me important. That is what I like to do in my restaurants. I also need it myself.
Matthieu David: I see you are really from Brittany. People from Brittany love to travel all over the world. They are the strongest community of French all over the world. I would like to end with two last questions, but I will ask them at the same time. What success have you witnessed in China and what failure have you witnessed in China? Not about yourself, but about what you have seen that was surprising to you? Why I am asking this question is because when you look at the success which was surprising, very often you give an idea of what is changing. It’s a signal of a bigger picture of something that is changing. I arrived in China a few years ago and people were paying cash when they get deliveries and now it is like, middle ages. You pay with WeChat and Alipay. That is a success I would not have expected. What about you? What success or failure did you see that you did not expect?
Philippe Ricard: I think there is one thing that I could mention. It was in 2010, during the international expo (learn more about the 2010 expo in China). I experienced that time in Shanghai and I must say that I was very impressed with the way China is able to organize events and make very successful experiences for people. I think this event had a lot of Shanghai to really open. It was already open to foreigners, but I think at that time it made it even more open. For me, I mean I would think I would speak more globally. I think I am very amazed by the way China is moving on. It is very fast. Of course, nothing is perfect anywhere, even in France. I think the way that they are doing it in China is incredible. Managing one billion, 300 million people is certainly not the simplest thing, but they do it. Everybody is moving. We all know that there might be some big challenges ahead for them because of the economy, but still, I think they have this power to build and this power to bounce back, which is very strong. I think that is what I like in China. There is this dynamic. People are very different here in China or even mini Hong Kong or Vietnam. Everybody has their specificities and for me, I am almost more international than French today because I have been living here a lot and traveling a lot. Of course, I love my routes, but I love to see the difference between the countries, the people and I see everybody is doing well in China, compared to all the problems that we are facing and I think China is particularly doing well when we look at all the problems they have to face because of such a big community.
Matthieu David: What do you think about when you shave in the morning because a journalist asked him before and he said, “I am thinking of 1.4 billion feet which are going to touch the ground” and indeed the massive amount of people is something which has been managed. You talked about success, but what about the failure? Some way Paul came with a lot of money and means and didn’t succeed (learn more about the failure of Paul in China). What about a failure in China which has surprised you?
Philippe Ricard: I would say there has been a lot of success and failures. Of course, along the road. In my own company I opened, but I also closed some restaurants.
Matthieu David: How many did you close?
Philippe Ricard: I closed two restaurants for different reasons. One in Taiwan several years ago. It was too early for the market. For the restaurant industry, location is the key point.
Matthieu David: In Taipei?
Philippe Ricard: In Taipei, that’s right. Hong Kong I would say is we had to close, but we had no choice because we were kicked out of the building. Yeah, failure is part of the business. I mean, I think if you don’t lose anything at some point in time, you are very lucky. I don’t many people top who it doesn’t happen. If I need to say one example that I have in mind, then of course it is one that everybody had in mind in Shanghai is the baker. I would not talk about the reason for his failure, but that was a very tough time after a big success for many years. Nobody could have expected this.
Matthieu David: Yeah indeed, to the people who don’t know; Fahen was a very, very successful bakery and it was shut down again it seems from E-chain things and it brought a lot of doubt into the community about managing a business in Shanghai and it was very successful before. Actually, no other case happened since then, that massive and that talked about. Thanks, Philippe, for your time. I hope that things are going to go back to ‘normal’ or new normal as people are using now when we are getting out of this virus. I hope you enjoyed it. I did and I hope everyone enjoyed listening.
Philippe Ricard: Yes, it was very interesting. It was nice to talk to you. Hopefully, your words will help others and I wish all the best to everyone to cross the crisis.
Matthieu David: Thanks, everyone. Bye-bye.
Philippe Ricard: Take care.