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12 Outlets And Counting ... [2012.02.09]

Entrepreneur ventures into fast food in China

by Lynda Hong Ee Lyn

Chris Tay

SINGAPORE - "Fail fast" - this is the motto Mr Chris Tay gave his employees when he started Cloud 9, a quick-service restaurant chain modelled after McDonald's and KFC. The difference, however, is that the cafe is serving Taiwanese fare in China.

It was July 2010 when he set up the venture under his company, YPX Cayman Holdings. Before that, he had worked for four years at Yoshinoya Beijing and at Chinese fried chicken joint Dico's, where he learned the ropes of running a fast food business.

Mr Tay's first attempt at running a food business, however, was during the mid-1990s when he operated the Billy Bombers restaurant. But he eventually sold it to the then-listed Heshe Holdings after a bad spate of publicity over poor customer service.

With Cloud 9, the entrepreneur is hoping to rise up after a series of failures, with big plans of setting up 220 outlets in China by 2015 - and even having a Taiwan or New York listing.

While that may be a long way to go, Cloud 9 has managed to expand up to 12 outlets in two years. This year, the company aims to open 42 outlets and increase its turnover to S$42 million from S$32.1 million.

Mr Tay is banking on Cloud 9's ability to simplify the food preparation process into fewer than five steps. This will be done by having an outsourced central kitchen where staff are trained to prepare the food faster while keeping their freshness. Cloud 9's target is to transport food from kitchen to outlet within three hours.

"Any chain operator will tell you that growth is very reliant on how many qualified people you can get or train to manage them. Not just the amount of capital you have," Mr Tay said.

He believes a quick setup pace for outlets and staff training will lower the cost of operations by at least 40 per cent compared to more established Chinese fast food restaurants in China. At the moment, each Cloud 9 outlet requires about S$200,000 to set up.

While Western fast food chains such as KFC and McDonald's have successfully implemented efficient food production systems worldwide, Mr Tay observes that Chinese cuisine is still trying to find a right formula. This means performing continuous research and development to improve Cloud 9's menu, which has been changed three times since its inception in 2010.

For now, the business is still riding on a high with support from global venture capital firms.

They include Qiming Ventures, Hotung Investment and Mitsui Global Investment, as well as renowned entrepreneurs such as former DBS Bank and Singapore Airlines chairman Koh Boon Hwee, and NASDAQ-listed 51Job.com founders, Mr Norman Lui and Mr Michael Feng Yunlei.

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