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      MK Restaurant: Branding of Thai-Style Hotpot The restaurant industry is one of the most...

  
  
MK Restaurant: Branding of Thai-Style Hotpot
The restaurant industry is one of the most competitive in Thailand. With a large number of players ranging from restaurants in five-star hotels, global fast-food chains to small stalls along the streets and everything in between, the Thais are spoiled for choice. In addition, as the world becomes globalized, consumers are familiar with international dishes and would not hesitate to try new offerings from the other side of the globe. As a result, all players in the industry have to constantly find ways to attract and retain consumers amid the intense competition and high threat of new entrants.
In the midst of extreme competition, a Thai brand—MK Restaurant—is able to stand out among the players with the highest market share in the restaurant industry. From its humble beginnings in 1986, MK Restaurant Co. Ltd. has made itself a household name for
Thai suki (Thai-style Hotpot) through innovation and continuous improvement.
INDUSTRY OVERVIEW
In 2013, the consumer foodservice industry in Thailand generated total sales valued at 703.7 billion baht (US$21.4 billion), and is expected to grow to 788.5 billion baht (US$24 billion) by 2015. The industry comprises several types of service providers including full-service restaurants, fast food outlets, 100 percent home delivery, and street stalls/kiosks.
Sales at full-service restaurants contributed 22.1 percent of total value of the foodservice industry in Thailand in 2013. Due to the fragmented nature of the full-service restaurant business, all players have single digit market share. MK Restaurants Company Limited was the market leader in 2013 with 9.9 percent market share, followed by Thai Beverage PCL with 3.6 percent.
THE COMPANY
If one were to ask about the best place to eat hotpot (suki) in Thailand, the name that will come to many people's minds is MK Restaurant. Its high level of brand equity is reflected through several recognitions it has received over the years. For example, it was listed as one of the top 20 Top-of-Mind Thai brands in a research conducted by Young & Rubicam as well as named Thailand's Most Admired Restaurant in BrandAge magazine's survey of Thailand's Most Admired Brands in 2008.
HUMBLE BEGINNINGS
The first MK restaurant was initially opened as a full-service Thai restaurant in 1962 in Siam Square, Bangkok. Its founder was a Hong Kong Chinese, Makong King Yee, the inspiration for the restaurant's name. Soon afterwards, King Yee sold the business to her chef, Tongkam Mekto, in order to relocate to the United States with her family. Under the leadership of Mekto—or “Aunty Tongkam” as she was known to her customers—the restaurant grew in popularity due to her cooking ability as well as “Thai-style hospitality.”
In 1984, frequent diner Samrit Chirathivat—late founder of the Central Group, a Thai family- owned conglomerate—proposed opening an MK restaurant in his newly opened department store to Mekto. With this opportunity, MK restaurant branched out under the name “Green MK” in Central Plaza Ladprao.
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A major turning point for the restaurant came in 1986 when Chirathivat offered Mekto another space for lease under two conditions. First, the space must be used to operate
a suki restaurant. Second, gas stoves must not be used (cooking with gas was the norm in most restaurants). After much deliberation with her daughter and son-in-law, Yupin and Rit Thirakomen, respectively, the family joined forces and was determined to make
the suki restaurant a success.
Rit Thirakomen, current managing director of MK Restaurant Co. Ltd. and a trained electrical engineer, spearheaded the search for a substitute for gas as the main cooking fuel. He experimented with several types of electric pot and found that the one with the highest output power was an imported 1,200-watt pot from Japan. Nonetheless, it took 10 minutes to boil water, much slower than the gas stove that was capable of bringing water to a boil in four to five minutes. Thirakomen came up with a simple yet effective solution: boiling soup at 70°C prior to serving. Then the electric pot would take only five minutes to bring the soup to a boil.
Armed with this newfound technique, the family established its first suki restaurant under the name MK Suki, which was later changed to MK Restaurant to reflect its wide range of offerings. Being the first suki restaurant to use the electric pot, MK Restaurant was known as a
“safe” suki restaurant and was able to attract a high volume of diners within a short period of time. Despite the existence of several renowned suki restaurants such as Coca Suki and Canton Suki, MK Restaurant quickly surpassed its competitors.
RECIPE FOR SUCCESS
MK Restaurant's initial success was due to the use of the electric pot and its delicious dipping sauce. To sustain its position as a leader, however, is a much more difficult task. The recipe for success of the restaurant, according to Thirakomen, is the constant desire to exceed customer expectation. The foundation of MK's sustainable edge can be divided into three phases, which are discussed next.
Search for Solutions: QCQS
During the first seven years of its establishment, the focus of the business was on solving typical teething problems. The main problematic areas Thirakomen aimed to solve were reflected in its QCQS principle: Quickness, Cleanliness, Quality, and Service.
Quickness refers to the aim to improve speed of service. Although MK Restaurant is not a fast- food business, it is necessary to provide quick service as customers will get upset and leave the restaurant if the service is slow. Slow service was a problem that plagued the restaurant outlets in the early stage. Thirakomen found that the cause of this problem stemmed from the long process servers took to write down orders and relay them to the kitchen. Under this system, customer orders were greatly delayed during peak hours. As such, an order form was designed with food items listed in the same order as they were arranged in the kitchen. This sped up the overall process as servers could check off listed items ordered right away while the kitchen staff was able to spend less time in picking out orders. Furthermore, condo-inspired serving plates were designed to minimize time spent on plate arrangement and to free up dining table-top space.
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Operating to the highest possible standard with emphasis on cleanliness, Thirakomen went beyond the norms practiced by other restaurants at the time. For instance, a color-coded wiping cloth system was put in place whereby guidelines were given with regard to how the cloth should be used and cleaned. Furthermore, he increased the number of cutting boards in each restaurant and ensured that each of them was cleaned and rinsed with boiling water after every use.
Quality of food, especially in terms of freshness, was another area he improved on. In its early stage, the restaurant faced inconsistency in the level of food freshness. Thirakomen identified two factors—refrigerator and “food chain”—as the main drive behind the level of food freshness. First, he turned his attention to the restaurant's refrigerators. At the time, most restaurants used refrigerators with a cooling coil system whereby cooling could be affected, resulting in inconsistent temperatures. Thirakomen replaced these with no-frost refrigerators and implemented the FIFO (first in, first out) method, meaning that foods were used in the order they were delivered to the restaurant.
Next, traveling time of food products between suppliers and customers was carefully analyzed. As suppliers delivered their products at midnight, the restaurant wasted a total of 14 hours, eight hours waiting for employees whose shift began at 8.00 a.m. and six hours in preparation, before the products could be stored in refrigerators. To solve this problem, Thirakomen moved the workers from the morning shift to the midnight shift so that the preparation process could start as soon as the supplies arrived. By morning, all products were delivered to each outlet ready to be served.
Service was another area in need of improvement. The initial problem faced by the restaurant was misdelivery of orders. In response to the problem, a training program was initiated along with efforts to tackle other mistakes made by servers.
The QCQS principle is still in use today and forms the basis for further improvement. With the groundwork laid, MK grew slowly but steadily with the opening of 14 additional outlets.
Search for Structure: Global Standard
From 1994 to 2000, global standards were used as benchmarks for the restaurant's management leading to changes in the company's accounting system, logistics activities, and human resource management.
Outsourcing was used in areas that MK Restaurant did not have expertise in, such as marketing research. Marketing research companies were employed to evaluate its service level.
A structured training program and training institution were put in place. Additionally, Standard Operating Procedure (SOP) and balanced scorecard system were used to evaluate the performance of all outlets. Through this standardization, all employees could be moved freely from outlet to outlet while customers were assured of a consistent experience no matter which MK Restaurant outlet they visited.
By the end of this stage in 2000, a total of 75 outlets of MK Restaurant had been established across the country. The large number of outlets allowed the company to achieve economies of scale resulting in cost reductions. The savings were passed on to customers.
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Search for Top-of-Mind Position
The solid foundation laid earlier enabled MK Restaurant to grow rapidly without compromising its quality. With a well-structured system already in place, Thirakomen asked himself how MK Restaurant could further exceed customer expectations. He found his answer from customers' comments that MK Restaurant's hotpots offer a wide variety of vegetables, which reflected a rising health consciousness among the Thais. He aimed to position the restaurant as a place for healthy food under the concept “Our dream is to make the Thais healthy.”
Thirakomen started to look into ways to improve the nutritional content and safety of food MK Restaurant served. A major overhaul was required. To ensure food safety, MK Restaurant made changes to the food preparation technique and cooking system. It set up a laboratory to systematically test its food products for chemical residues and installed automatic vegetable washers. Its foods were all free from monosodium glutamate and other preservatives. Meanwhile, contract farming arrangements were created along with negotiations to minimize usage of chemical treatments.
MK Restaurant was able to achieve its goal of making the Thais healthier by communicating the importance of eating healthy food. Through cooperation with Mahidol University, the nutritional values of all its food items were calculated. To effectively convey the information, the nutritional values of the food items and calories consumed by each customer were instantly calculated and stated on every receipt. Furthermore, MK Restaurant worked with the Nutrition Division of the Ministry of Public Health to introduce menus with high nutritional value such as the Healthy Vegetable Set and Healthy Mushroom Set.
By the end of 2010, the company had 320 MK suki outlets.
MARKETING MIX
MK Restaurant's marketing mix has been one of the key drivers for its success over the last 25 years.
Product and Service
Food at MK Restaurants outlets is primarily a mixture of Thai and Chinese cuisine. Up to 50 menus featuring a wide variety of fresh meats, noodles, and vegetables are available for customers to choose from. These items are then cooked in a clear stock boiled in an electric pot and eaten with a dipping sauce. Apart from the main menu of Thai-style suki, the restaurant is also renowned for other menus including roasted duck, roasted pork, rice, and dim sum that are available throughout the day.
Its great customer service is also the restaurant's strong selling point. The staff welcomes diners with the legendary Thai hospitality and provides speedy and efficient services.
Attention to food safety was the basis for its initial growth and food safety continues to be the main priority in all the outlets. The electric pots are constantly up-dated to make them easy and safe for people of all ages to use. Also, an earth leakage circuit breaker is installed under every table to prevent electric leakage. In addition, to make the place safe for children, tempered glass is used while rough edges are removed from tables and seats.
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Price
The restaurant offers value-for-money food and services to its customers. Its ability to offer high-quality products at affordable prices stems mainly from bulk purchases. To serve more than three million customers a day, it orders several tons of food supplies daily.
Place
MK Restaurant outlets are scattered throughout Thailand. Most of them are located in departmental stores, major discount stores, and community malls as this enable the outlets to leverage their abilities to draw in traffic and the facilities such as parking spaces.
Promotion
The main promotional tool of MK restaurant are television commercials, as its target market covers a wide range of people. A new commercial is released every year that reflects each differentiating factor that makes MK Restaurant stands out from the crowd. The commercials included one that compared its staff's training process to military training, and another that featured a child reporter telling a story of how MK Restaurant wanted Thai kids to eat more vegetables. Then there was its award-winning commercial, portraying different groups of people—both young and old—singing a catchy jingle “What should we eat? Let's go to MK.”
BRANDING
Several expressions have been associated with MK Restaurant which further strengthen its brand image. Some of them are family, healthy food, and innovation.
MK Restaurant brands itself as a family restaurant. Being a place where family members or groups of friends can enjoy the process of making and eating suki together is the inspiration behind its tagline “The moment of warmth.” Thirakomen believes that MK Restaurant is more than just a restaurant; it is also a place that brings people closer together over a shared meal.
MK Restaurant as a place for healthy food has been constantly emphasized through its television commercials as well as its menus. This further enhances its image as a family restaurant where everyone can enjoy good food.
MK Restaurant is well known for continuously innovating to stay ahead of competition. From its beginnings as the first suki restaurant to use electric pots, the restaurant has come a long way. The restaurant has been a leader in bringing the latest technology and refreshing ideas to the industry. On the technology front, it was one of the first restaurants in Thailand to use PDAs (personal digital assistants) in order taking. Also, it recently announced that Thai-made robots will be used in its outlets to handle repetitive tasks as well as entertain customers.
With regard to new ideas, the restaurant introduced “dancing sessions” developed from the morning exercise sessions for its staff. The staff dances to upbeat tunes in the restaurant every hour, and in so doing lights up the atmosphere and entertains customers of all ages. Aside from providing entertainment, the activity further enhances its image as a healthy restaurant.
GROWTH STRATEGIES
Thirakomen is constantly looking for ways to sustain the growth of MK Restaurant Co. Ltd. The strategies employed are market penetration, market development, and product development.
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Market Penetration
Due to its casual ambience and image as a family restaurant, MK Restaurant was not able to attract (1) customers looking for luxury dining experiences and (2) teenagers. MK Gold Restaurant and MK Trendi were established in response to these unmet demands. MK Gold Restaurant's luxurious decorations and kitchenware, first-class service, and use of premium ingredients have enabled it to attract customers with high spending power and it is now a popular venue for business dining. On average, its customers spend 300 baht per person as compared to 200 baht per person at the original MK Restaurant. Noting the high profitability of the restaurant, the company plans to open at least one new outlet every year.
To cater to teenagers, MK Trendi was opened in Siam Square. Unlike the original MK Restaurant, MK Trendi is decorated with graphic prints and bold colors. Furthermore, the music, kitchenware, and uniform of its staff differ from the original MK Restaurant. However, the menus are kept in the same price range as MK Restaurant. Unlike MK Gold Restaurant, MK Trendi has no long-term expansion plan. Rather, it aims to attract new customers in hope of changing their perception and turning them into regular customers of the original MK Restaurant.
Market Development
Once MK Restaurant was firmly established, Thirakomen started to explore opportunities to expand the business abroad. All the local outlets were wholly owned by MK Restaurant Co. Ltd., but Thirakomen had a different plan for overseas expansion. He felt that collaboration with a strong partner abroad and licensing it as the master franchisee would enable MK Restaurant to leverage the partner's market expertise as well as minimize risk. Through this strategy, MK Restaurant joined forces with Plenus Co. Ltd.—a Japanese restaurant chain operator—and opened 16 MK Restaurant outlets in Japan. In addition, MK Restaurant opened its first outlet in Vietnam in 2010 through its master franchise partner, Gigate Corporation.
Product Development
Two full-service chain restaurants were also developed under the umbrella of MK Restaurant Co. Ltd. The company purchased local franchise rights to a Japanese restaurant chain—Yayoi (known for serving “hot and quick” Japanese food)—from its partner, Plenus Co. Ltd., for 10 years. The chain grew rapidly and as of 2010, 47 outlets had been opened across Thailand. Thirakomen also saw opportunities in a premium full-service Thai restaurant called Le S'iam. Thus, two Le S'iam outlets were introduced with an aim to attract international customers. It was reported that the two brands contributed to 10 percent of the group's overall revenue in 2009.
CONCLUSION
From MK Restaurant's humble beginnings in 1962 as a small Thai restaurant, the company has grown from strength to strength. The relentless search for new ways to exceed customer expectations and a commitment to innovation have enabled the company to excel in its homeland as well as abroad. In 2013, MK Restaurants had 381 outlets all over Thailand, 35 branches in Japan, 4 branches in Vietnam, 2 branches in Singapore, and one branch in Indonesia. In 2013 it achieved total revenue of 14.24 billion baht (US$433.5 million) and net profits of 2.04 billion baht (US$62 million).
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Questions
1. What are the characteristics of the food service market in Thailand? What are the key trends and major challenges?


4. What are the marketing mixes of MK Restaurant? Are the marketing mixes appropriate in supporting the marketing strategies? What changes to the marketing mixes would you propose?
5. What marketing metrics would you suggest for MK Restaurant to track its performance? How would you design a marketing dashboard for the restaurant? What marketing research should MK Restaurant carry out to develop appropriate strategies and to improve its performance?


Homework Answers

Answer #1

Answer for Q1.

Characteristics of Food service industry in Thailand

a. It would provide several services like full- service restaurants,fast food outlets, 100%home delivery and street stalls.

b.Rapid growth in the food services its shows the revenue in 2013 was 21$ billions,expected 24$billion in 2015.

c. The share of full service restaurants contributed 22.1% in the total.

Key trends and major challenges

a.In the Globalaised market, consumers are familiar with international dishes and would not hesitate to new offerings.

b.It would results all prayers in the industry have to constantly find new ways to attract and retained consumers.

c.inteseve competition and high threats of new entrents.

Answer for Q2.

Marketing mixesfor MK restaurant.

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