Firm starts afresh and tastes success: Select Group

Managing director Vincent Tan says that Select Group will have nine stores across four brands in Kuala Lumpur by the year end. The restaurant chain operator is working with IE to grow in South-east Asia.
Managing director Vincent Tan says that Select Group will have nine stores across four brands in Kuala Lumpur by the year end. The restaurant chain operator is working with IE to grow in South-east Asia.PHOTO: NURIA LING FOR THE STRAITS TIMES

A painful and expensive experience expanding in China meant that Select Group had to return home and rethink its strategy and ambitions overseas. Xin Yun finds out how it picked itself up and intensified market research to enter new markets again.

More than a decade ago, Select Group attempted to break into the Chinese market - and failed. But it simply dusted itself off and embarked on a fresh strategy.

Back in 2005, the restaurant chain operator and caterer felt it was time to break out of Singapore's saturated market.

It decided to expand into China, by taking its institutional catering business there. However, things did not go quite as planned.


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"We went because we knew our customers were there, and opened a central kitchen to cater to them, but it did not work out as we didn't spend enough time studying the market," said managing director Vincent Tan.

The firm had a successful business operating staff canteens in Singapore, but found that the model did not take off well in China, as workers there did not have as much spending power.

As this was "a very local business", and lacked the necessary network of contacts, it was not feasible, Mr Tan said.

After a painful experience, and the realisation that its business model from Singapore did not translate well in China, the firm decided to turn its focus back home.

For the next five years, the firm expanded into the local food retail scene and introduced new brands to the Singapore market, such as Hong Kong Sheng Kee Dessert in 2010. Once that foundation was solidified, it was time to entertain the thought of going into new markets again.

And this time, the firm made sure to start off on the right foot, with help from IE Singapore.

"Once the brands matured and the team was more ready, we chose Malaysia as it was closer to home. With IE's help, we did a market study," Mr Tan recounted.

IE introduced consultants to Select and embarked on an intensive nine-month study of consumers in Malaysia.

Mr Tan said it was the first time the firm did such a comprehensive study, detailing consumer demographics, preferences, spending power and market competitors. "After the study, we understood the Malaysian culture well, and we also had senior executives willing to travel there to grow the business."

The study also led to the firm deciding on its business model in Malaysia, which was to make its own investments there instead of adopting a franchise or joint venture model, but it has not ruled those out for future expansion plans.

Select chose to start with Hong Kong Sheng Kee Dessert, as part of a strategy to take a range of non- halal brands into the Malaysian market after spotting an opportunity there.

And, as the study found, Kuala Lumpur was the ideal market, with more Chinese and non-Muslims living in the city.

IE also referred Select to property developers and listing agencies for the best locations to set up shop.

One year on, the firm now has three Hong Kong Sheng Kee Dessert outlets in Kuala Lumpur, and one Pho Street outlet, which sells Vietnamese cuisine.

And after gaining familiarity with the market, Select is on a path of aggressive expansion. Mr Tan said that by the year end, Select will have nine stores across four brands in Kuala Lumpur, including Ipoh Lou Yau Bean Sprouts Chicken and Hill Street Coffee Shop, as well as 10 Sheng Kee outlets by next year.

The firm also plans to open a foodcourt in the integrated development Empire City @ Damansara KL next year, with the aim of getting Singapore names on board.

IE introduced tenants and connected Select to food and beverage brands to build that cluster of Singapore companies.

To support its expansion plans, Select has set up back-end operations, including a central kitchen, to support its multiple F&B outlets. This has reduced supply chain complications and increased its competitiveness, enabling it to potentially explore other channels, such as catering, at an opportune time.

As it is now, Select's revenue has been growing at about 15 per cent each year in the last five years.

Mr Tan said the second attempt at entering a new market was much easier with IE's support. "It's so much better compared with the first time we went to China, where we went because our customers did. We didn't spend enough time studying the market.

"When we decided to go to Malaysia, IE was the first organisation we engaged. They have an office there, and as long as you reach out to them, they will provide ready assistance."

Apart from expanding in neighbouring Malaysia, Select extends its ambitions to South-east Asia, and is working with IE too.

Mr Tan said: "We are now exploring Indonesia, Cambodia and Myanmar, and are likely to adopt the same way of entering the market, but are identifying the characteristics of that local market first."

Find out more about other companies that have transformed their business overseas and how IE can help - http://www.iesingapore.gov.sg/Assistance

A version of this article appeared in the print edition of The Straits Times on July 20, 2016, with the headline 'Firm starts afresh and tastes success'. Print Edition | Subscribe