Ya Kun Kaya Toast is a Singapore chain of mass market, nostalgic ambience cafe selling toasts, coffee as well as soft boiled eggs. Founded by Loi Ah Koon in 1944, they have over fifty outlets across six countries now. It is a local icon of Singapore, known for their traditional identity and people-centric corporate culture. Ya Kun’s first overseas branch is in Jakarta in 2003. Some of the countries it had expanded to is China, South Korea and the Philippines. From 2010 to 2016, Ya Kun’s revenue have steadily increased by 10 to 15% on a yearly basis. (Ya Kun Kaya Toast, wikipedia)
Based on the key findings stated in Enterprise Singapore, the current population of 5.7 million people in the Singapore market is too small, causing the domestic market to be limited. In order for a local company to grow, they have to go global. Therefore, we will perform a research on why Singapore companies should go overseas. We will be looking at 3 critical factors, namely franchising, local government support and leadership to ensure success for Singapore companies going overseas. According to professor Lai Choi Heng, when Ya Kun first ventured into Indonesia in 2004, a country-wide study by International Enterprise Singapore (IE Singapore) was carried out. It was found out that the Indonesian consumers are ready to accept Ya Kun’s product offerings, also according to the IE Singapore website, both SMEs and large enterprises saw an increase in the overseas revenue’s contribution to the total revenue, which means that globalising is a must. (Enterprise Singapore)
1.3 Scope and limitations:
This research examines the reason why Singapore companies should venture overseas by highlighting on Ya Kun’s success outside of Singapore. The critical factors that this research aims to analyse are ‘local government support’, ‘franchises’ and ‘ leadership’. Ya Kun’s fame and popularity in Singapore will not be focused on for this research, instead we will look at its activities overseas.
The limitations that we have faced in this research are a lack of information of Ya Kun’s activity in other countries and also the lack of information in various key factors such as the cost for expanding overseas and the paperwork required for companies to branch out overseas.
1.4 Sources and method of collection:
We have gathered information mostly from the internet, but we do have some speeches, blogs and news report. Below are some of the websites from different sources:
Asia one (website)
BBC news (news report)
Ya Kun (official website)
Speech by Mr Gan Kim Yong, Minister of state for education and manpower
KEES AND BIANCA ZEN (blog)
2. Findings and analysis
Taken from Ya Kun’s official website. Fig.1(top) and Fig.2(bottom) shows the locations that Ya Kun have expanded to overseas.
Above is a map which shows the regions that Ya Kun have expanded to outside of Singapore. Ya Kun had expanded to different parts of Asia.
2.1 Success factors:
The founder of Ya Kun, Loi Ah Koon, has dedicated so much for his little shop when he just started. To serve his first customer on time, he would rather sleep on the bench of his shop than this bed. After Loi Ah Koon died of colon cancer, his son wanted to continue his father’s legacy as he thought that it would be a waste to let Ya Kun collapse. Now, Ya Kun is widely known in Singapore and they are slowly making their way overseas with more than 100 outlets in 9 different countries. There are many factors that lead Ya Kun to what they are today and the three critical factors are leadership, franchising and local government support. (Ya Kun history, Ya Kun official website)
Fig.3 shows the sales for Ya Kun in South Korea, Thailand and China for 2015-2017.
After Loi Ah Koon passed on, his youngest son decided to take over the business and expand the brand that includes brand franchising. Ya Kun Coffee Stall became Ya Kun (S) Pte. Ltd. and Ya Kun International was even launched to handle the management of the franchising system for Ya Kun. Ya Kun’s first franchise opened at Robinson Point in September 2001. With supporters from different countries, Ya Kun has become more globally known. The franchise was able to penetrate the market rapidly due the the success of this strategy. Within 4 years of franchising, it made up for 20% of its net profit before tax as well as being half of its business. (Ya Kun’s success story, asiaone)
From a 2013 news report, there are 44 outlets in Singapore, 14 of which are franchises. Ya Kun went into franchising in 2000, which results in them winning Franchisee of the year award in 2012. For example, one of its success story would be Beard Papa, who Ya Kun get from Japan in 2015. When Mr Loi applied a grant from the Singaporean government, it allowed him to probe into franchising opportunities which resulted in more than 400 potential franchisee owners in six months. For example, Ya Kun’s sales have been increasing with little fluctuations in South Korea, Thailand and China as shown in the graph above. Although Ya Kun has expanded overseas, they still remain uniquely Singaporean, grilling bread and using socks for their coffee. (Firm raises a toast to successful model; Yasmine Yahya talks to Ya Kun Kaya Toast, which has taken the humble snack all over Asia by entrusting its brand to franchisees, LexisNexis).
Fig.4 shows the total revenue growth in Yakun’s overseas revenue from 2015 to 2017.
In a short span of 3 years, it can be seen from the graph above that Ya Kun has undeniably good sales, and have been increasing ever since. This report aims to show Ya Kun unstoppable growth under the guidance of executive chairman, Adrin Loi.
Adrin Loi oversaw the expansion of the company from a single outlet to a chain with more than 50 outlets worldwide. In a interview with Business Times, Adrin Loi shares that even though Ya Kun have a rich heritage and history that helps them to strive to be the market leader in the industry, he still insist that Ya Kun stays innovative while he himself stays true to his own business principles. (A toast to success, Business Times)
The 62 years old Singaporean makes sure that Ya Kun’s menu comprises of Asian delight which are savoury to their consumers while ensuring that food are healthy and hygienically prepared. Wholemeal breads were also introduced in 2016 in order to cater to health-conscious customers who wanted healthier food. This shows that Ya Kun ensures that customers care for their customers and they can always look forward to new products.
Adrin Loi also stated that Ya Kun follows under his philosophy whereby they do everything honestly and not make unnecessary mistakes. Ya Kun’s management board makes sure that their compromised principle stays as their top priority when developing the brand and would rather sacrifice business opportunities in order for Ya Kun to continue improving.
Outside of brand and food product, Adrin Loi explained that proper manpower management is a key factor to a company’s growth. He believes that they are the true assets of the company and always give them tender loving care but may also firm and fair. Being concerned about employees’ families, always sharing his knowledge, trusting and working with them together in times of crisis are just a few examples of what he does as he sets a good example on how to be a leader.
It is no surprise that Ya Kun have went from a small coffee stall at Telok Ayer Basin to having 64 branches in Singapore while they can also be found in Indonesia, Taiwan, and the Philippines, and many other countries since Ya Kun have a amazing leader and entrepreneur in the management board who have a resilient mind and humble spirit. “Nothing ventured, nothing gained”.
With the example of Adrin Loi, we strongly believe that a critical factor for Singapore companies to successfully venture overseas is a good leadership in the company. Only with a good leadership can the company advance in the correct direction and ensures that the entire company shares the same mindset and strive towards the same goal.
In Ya Kun’s example, Adrin Loi is a wonderful leader who ensures that Ya Kun ventured overseas while ensuring that the image of the brand remains the same even overseas which enabled Ya Kun to remain successful over borders. He worked with consultants from the Spring Singapore to conduct studies on the potential of Ya Kun which encouraged him to move Ya Kun into franchising in 2000. Within 18 years, Ya Kun have opened up more than 50 other outlets locally and globally and have a consistent increasing revenue.
Other companies that wants to venture overseas should be led by a good leader who are prepared for any outcome, be it good or bad. Only by doing so can the company always improve, and, in time, achieve success.
2.1.3 Local government support:
According to a 2003 study by Bain & Company, for every successful company, there are probably five others that did not make it. “Without the government’s support, Ya Kun may not have grown this fast and our overseas venture may not have been that smooth,” says Adrin Loi, the company’s Executive Chairman. Local government such as Enterprise Singapore, provides assistance programmes for Ya Kun and other companies that are interested in venturing overseas. Ya Kun was provided with assistance to improve the productivity across all areas of their operation from kitchen automation, workflow redesign to receiving guidance from the government on franchising the business and financial support. In addition, Singapore Tourism Board promoted Ya Kun as a Singapore cultural icon which introduced them to many tourists worldwide resulting in a more successful market across the borders. In 2005, the brand received the highest award in consumer brand excellence when it was recognised as Superbrand. By 2010, Ya Kun has branched out 40 locations in Singapore and 20 international locations including Brunei, Japan, Korea and Taiwan. Below are the awards won by Ya Kun.
Mr Adrin Loi, Executive Chairman of Ya Kun International Pte Ltd Inaugural Recipient of
Spirit of Enterprise Entrepreneurship Award 2010
Singapore Promising Brand Award
Heritage Award Year 2005, it is to award outstanding efforts of Small and Medium Enterprises (SMEs) in Singapore in the promotion of their brands.
Singapore Institute of Food Science and Technology (SIFST) Product Award Year 2005 – 2007, the recipe does not contain preservatives, artificial colourings and flavourings, and only the best and natural ingredients are used.
Hazard Analysis and Critical Control Point (HACCP)
Certification for the manufacturing of the kaya, meaning Ya Kun’s kaya have met the safe standards of HACCP.
One of Singapore’s leading food guide
which awarded Ya Kun with full rating of 3 pairs of chopsticks. Makansutra shares food through their guide, online content and eateries.
Mr Adrin Loi, Executive Chairman of Ya Kun International Pte Ltd Honoree of Spirit of Enterprise Award 2003.
After all the research on Ya Kun and its success overseas, it is concluded that Singapore companies have to venture overseas to attain success as the local market is too small for the companies. Ya Kun have expanded to many countries, and are still intending to expand to other areas.
The franchise strategy has been extremely successful and thanks to that, Ya Kun has gain a lot of recognition and profits from different countries. Strong local government support helps in navigating unfamiliar markets when companies venture overseas. Good leadership is also needed to support the growth of Singapore companies venturing overseas as having a good mindset is important.
After all the findings and analysis of Ya Kun, we have came up with some recommendations to further improve Ya Kun as a whole. Some of these recommendations can be adopted by Yakun.
Expanding the franchise to other countries
Ya Kun can further expand their franchise to countries they have never expanded to, for example, the United States of America. Being able to expand to America gives Ya Kun a bigger chance to upgrade themselves and allow the Americans to know more about Singapore by letting them try the authentic breakfast since Ya Kun is known to be the local icon of Singapore and have been used to promote the country by Singapore Tourism Board. Even when they venture overseas, every part of it remains very Singaporean. For example, the kopi and teh is brewed using traditional pot and sock, and every slice of bread is grilled. The customers can then taste the authenticness of Singapore, wherever Ya Kun expand to.
Increase marketing platforms
Taken from google. Fig.5 shows the facebook page of Ya Kun.
Ya Kun do have a Facebook page but they do not market themselves very much as compared to the others. From Ya Kun’s official website, we have found that they wanted to work on the ‘youths’ segment of the market. As more people, especially the youth, are using social media apps to know more about their surroundings, Ya Kun can make use of this platform to actively promote themselves. Ya Kun can offer discounts and promotions to attract customers and use social media platforms as a way to advertise about promotions and spread awareness around. Besides using social medias to promote themselves and their products, they can create their products to be traditional yet contemporary. They will not lose out on its Singaporean roots, whereas they can also cater to every segment of the market.
Ya Kun can have younger and more popular celebrities, sincere and appropriate for the product that makes a huge impact to endorse their products as more people will be attracted to them. By having celebrities to endorse Ya Kun, they can gain new customers from the celebrities’ fan base. For example, in Korea, due to the vast popularity of K-pop, Ya Kun may consider having a popular K-pop idol to endorse the brand as a way to increase the fame and sales of Ya Kun as a whole in Korea and maybe even in other countries due to the huge fan base of both the idol and also fans of K-pop in general.
Ensure proper leadership in the company
-Send managers for training
Companies that intend to venture overseas should send their managers or any management role for training to equip them with the required skills and mindsets in order for them to oversee the company going over borders as they are to provide the proper guidance to the fellow employees which will result in boosting the team’s morale, ensuring a more motivated manpower in the company. They should also be initiating actions in the company to form plan that are necessary to complete both business goals and ensure good communication between managers and relevant parties.
-Consult a consultant
Firms should hire a consultant if they intend to extend their businesses over the borders as they help to improve the performance and efficiency of it. They help a developing company to settle down quicker by providing good advices and important informations to help a company attain their maximum potential. A consultant also gives the company honest feedback of the firm’s various issues and it is something which the firm definitely have to work on in order to achieve their long-term goals.
In the example of Ya Kun, the company consulted the government’s enterprise agency Spring Singapore to conduct business feasibility studies. The result of the studies prompted Ya Kun to move into franchising in 2000 after ensuring their potential for growth.
Add complementary services
Taken from google. Fig.6 shows the promotion that Ya Kun have.
Besides selling their products as it is, Ya Kun can add complementary services to attract more customers and also to let their current customers stay loyal to their brand. For example, they can give vouchers of $5 for customers who buy above $20. They can also have more 1-for-1 promotions for customers during festive seasons.