A Secret Recipe in China
Shanghai’s hygiene bureau objected when Scott Minoie tried to build an open kitchen in his first Element Fresh restaurant nearly a decade ago, saying it would be unsightly: “too foreign.” But the Boston native persuaded officials to let him press ahead, confident that Chinese consumers, concerned with food safety, would appreciate a Western-style bistro that lets diners see their laffa-bread salads and raspberry smoothies while they’re being made. Now he has a chain of 11 restaurants. Sales are on track to hit $30 million this year, up 40% from last year, according to Element Fresh’s managing partner, Frank Rasche. The chain’s profit margin hovered between 10% and 15% last year, he says. They plan to open about 40 more outlets in China by 2015.
Mr. Minoie’s success contrasts with the experiences of a string of big Western restaurant chains that have failed here. Applebee’s, Outback Steakhouse and California Pizza Kitchen, for example, have found that brand recognition and experience in other markets can get lost in translation in China. In addition to designing around the open kitchen, Mr. Minoie (pronounced MEN-oy) has focused on healthy food, kept a close eye on the local competition and trained waiters and waitresses along American lines.
“To succeed here, you have to look at people’s habits and act as they would,” says the 38-year-old, who has scant restaurant experience outside this country. “Chinese shoppers go to the market every day to buy fresh produce, this is an audience that can always taste the difference.” China’s growing middle class of diners remains enticing to Western restaurateurs. The country’s restaurant industry, including fast-food and sit-down restaurants, is smaller than that of the U.S. but growing faster. Restaurant revenue increased 16% to $340 billion in China last year, but rose just 1%, to $570 billion, in the U.S., according to U.S. consulting firm AlixPartners. In the U.S., some dining chains are struggling to keep afloat in the sluggish economy. Perkins & Marie Callender’s Inc. filed for Chapter 11 bankruptcy protection in June. That means that some global chains are determined to operate in China despite past missteps.