As we usually talk about retail transformation based on the observation of changes within the retail space of goods such as fashion, cosmetics, cars, this time we have decided to investigate changes in the retail landscape in the Food & Beverage industry. F&B is one of the most profitable industries and it needs a constant differentiation because of its intrinsic relationship with culture.
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Retail in Asia has met Joseph Hsu, President of Outback Steakhouse for Greater China, responsible for leading the brand’s overall rebranding and business in the area. A globally-experienced executive, with significant expertise in the food & beverage, retail and consumer sectors, Joseph leads Outback’s business expansion strategies and is driving the innovation of the brand and its restaurant concepts in Hong Kong and Mainland China.
Since taking up his position in 2015, he has been responsible for Outback’s accelerated development in China as well as implementing fresh new store concepts and menu innovations in both markets, doubling regional store counts and revenues in 2017.
Mr. Hsu graduated with a Bachelor of Arts (B.A.) in English and European Literature from the National Taiwan University and received his M.B.A. in Marketing at Columbia University’s Columbia Business School. While speaking with him, we have realized that his studies in English and European Literature provide his with a different perspective on business strategies, and at the same time enable him to follow the rebranding procedure in the design field based on the its knowledge of arts and culture.
Retail in Asia has asked Joseph to talk about the changes in food appreciation in China and Hong Kong, the development of the new Outback’s retail concept, restaurant design, and challenges in the HR management.
RiA: Outback has delighted Chinese palates since 1999. Have you seen any change in customers’ demand over time and across cities in different tiers?
Joseph : We have been in China for a few years. At the beginning American casual dining was a very new concept in many different parts of the world. As things continue to progress, especially as the speed of change is much faster than ten years ago, there are different kinds of retail concepts and dining experiences. Especially, independent restaurants are pushing all the innovations and changes towards customers’ expectations and demands.
In the context of Hong Kong, the big change is in areas such as Kowloon and the New Territories. Our brand has been growing with this development based on the construction of new shopping malls, housing and a growing number of solid middle-class customers.
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RiA: How about differences between Hong Kong and China?
Joseph : Hong Kong and China are different. We have been in Hong Kong for 18 years, we arrived in China couple of years ago. Also, in HK, since it was under the British influence, Western dining is much better entrenched in consumers’ daily habits. But in China, even though the fast food culture is dominant among the Western food, casual dining is a very new concept, and it will take a lot of time in educating customers to this new experience.
RiA: Do you think it is due to China’s very strong culinary culture, which makes difficult for people to engage with something different?
Joseph : Hong Kong also has a very strong culinary culture. I think in China, the new generation is very open and hungry for different types of cuisines. We have also started to see a blossoming various culinary styles in China such as Korean and Western. I think that if tier-1 cities are less conservative, tier 2 and 3-cities still have a long way to go.
Western food is fairly new and young but it grows very fast. At the beginning there were very few options with highly localized menu, but now Western food is growing to meet the demands of Chinese customers who have travelled abroad and are ready to consume other types of food.
RiA: Who are your customers in China and Hong Kong? Do you localize the menus or are you actually taking a role in educating palates to new flavours?
Joseph : Our customers in Hong Kong are middle class, although our customer’s profile is expanding into different demographics. In China, I would say our customers are upper-middle class, and slightly younger, because of the one-child policy, their spending power is relatively stronger than the older adults.
In Hong Kong, we are a trusted brand. We are very proud to say that in our restaurant we do everything from scratch. We prepare all food in-house to ensure the quality. In the US, it is now a trend for restaurants to emphasize that everything is made from scratch, for us it has always been like that.
RiA: Why and how did you change your business model from a traditional steakhouse to a Western casual dining restaurant?
Joseph : We have seen a fast change in the F&B industry in the past five years. I joined the company in 2015 and during my first visit, I immediately felt that it was a strong brand in quality. However, both menu and design were old-fashioned.
Then we made some bold changes, which can be observed in our recent opened Yoho. Certainly, we cannot change our menu every day, however what happens in fashion seems to have pervaded customers’ mindset and this expectation permeates into dining as well as part of shopping experience. So, we tried to build a rhetoric of newness through fresh and changing ingredients and dishes, and the design of the outlets.
We want to be an unchained chain of restaurants, so each restaurant respects the design concept but at the same time has a unique feature based on the location and the customer profile.
RiA: What are the pillars of the Outback design you will find in all the outlets and what are the ones you twist to localize the ambience?
Joseph : The new design in Hong Kong has been experimented in the Moko mall and received a great success. Then we applied this particular design to all the other new openings. The pillar of our design is contemporary abstract aboriginal arts, a unique art form from Australia combined with very bright colours and very contemporary feelings.
There are three components, which are consistent in every store: the stencil column at the backside with post-industrial design and a message; the cow at the entrance introducing different parts of the meat; and a blackboard.
The design of Yoho, our recently opened outlet in Hong Kong is a very good example of how the design is localized. Sun Hung Kai gave us a bigger space in the shopping mall, and even a patio. In Hong Kong, space is a huge constraints, and designers need to sort out ways of optimizing it. We got the patio, but on exchange we had to function as attraction for an all-day dining experience in order to drive traffic to the mall and keep people inside.
Conveniently situated in YOHO MALL, the newly-launched 4,000-square-feet restaurant
with 200 seats offers its customers a unique Outback country experience. The new design highlights include: “Ayers Rock” open café area, inspired by the shape of Ayers Rock (also known as Uluru), which is an impressive natural landmark in Outback, Australia. It is Outback’s first open café area in Hong Kong; Boomerang pendant lights are inspired by te distinctive weapon first used by Australia’s indigenous Aborigine people for hunting, and is now popular for outdoor sports and leisure; Australian Windmill ornaments, which resemble the traditional windmills which are scattered all over Australia with long spinning blades for pumping water.
RiA: Why Australia is always a huge component in the new outlets?
Joseph : Australia is a part of our brand. The focus lies in the central portion of Australia and it symbolizes the lay back culture, wildlife, and nature. Outback is related to our brand story, and it is always present, but often revamped with a new design, such as lighting, plants to reflect the topography and the weather in the area.
RiA: Since you target young consumers, did you implement any digital solutions?
Joseph : In terms of digital solutions, we launched the digital version of our established loyalty program. Consumers can use the app to collect points when they dine in the store and then use the points to exchange for coupons. They can choose the type of coupons and use them immediately in the store.
At the same time, we also use social media for our marketing activities. There are lots of social media in HK, among them, Facebook is very useful. Before we open a new store, we launch a campaign to draw people’s attention on the new location, or whenever we have news to announce such as new product or special menu launch, we communicate it through social media. It is also a very good two way communications channel in which to engage and deliver message to our customers but also receive feedback from them.
RiA: Do you face any challenge in terms of HR and recruitment?
Joseph : The whole retail industry is facing the same challenge. I think one important thing at Outback is that most people embrace the unique culture and incentive scheme. We want to make sure that all staff develops an ownership mindset.
All restaurants hire a manager and increase his/her salary if the business goes well. At Outback, we call branch managers ‘managing partners’ and we treat them as business partners. In our rewarding system, managing partners can mindset and we show it by putting their name at the entrance so that the managing partner becomes a reference point for the clientele.
Our HR policy is about retention of talents and we have managing partners in Hong Kong who have been with us for more than 15 years.
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Joseph’s perspective on the changes in the F&B industry in China and Hong Kong can be summarized in few points. Firstly, the fact that for any product, the most challenging parts to educate the customer to a new need; secondly, the fast-face change in demand visible in the fashion industry permeates different aspects of life and consumption, and F&B needs to adapt to. The use of seasonal menu, changes in the retail concept, and event and initiatives are useful to build the rhetoric of newness needed in the market; Thirdly, retail concept and restaurant design play an important role in the attraction of new customers, but also the retention of loyal customers. The secret is to innovate by keeping the DNA of the brand alive; Fourthly, employees are a great resource, that’s why calling them ‘managing partners’ sets up the ownership mindset needed to boost the retention of talents.