Dim Sum has the potential of Sushi

Dim sum, cocktails and tea – ping pong restaurants are the unique take on all three products which make up a distinctive brand launched in early 2005. Hailed by James Horler, La Tasca’s former Chief Executive, as having the potential to succeed both in the UK and in the US, the business is already strategising its global growth. Jean-Michel Orieux, Managing Director sets out the place for dim sum in the branded restaurant market.

“I believe dim sum has the potential of sushi. Within the next ten years ping pong could have the opportunity to become a global premium casual dining brand. But that is not because we plan to be on every street corner; it’s about operating in key locations worldwide.”

ping pong is the conceptualisation of a traditional Chinese tea house serving dim sum as the main food product. The company currently has 11 sites in London. Products are hand-made in a central production unit located in East London and then transported to restaurant premises daily. Restaurant kitchens are therefore smaller, providing more front of house space.

Its first site near Regent Street was trading profitably after four months of opening, whilst group sales are currently 12% up like for like. So what does Jean-Michel make of James Horler’s recent praise?

“It is really encouraging to receive such a statement from James. I think that there are various reasons why the brand has so much potential. ping pong is four years old and from day one we realised that the business needed to be constructed in a way that was scaleable. Operating from a CPU has the benefit of ensuring food consistency and efficiency. We are using fairly high skilled labour as products are hand-made. Our focus has been on the ability to be proactive in terms of product development, as this is important to supporting growth.

“The fact that the brand is scaleable means that it is able to offer value for money in a fairly premium environment. This is what gives us so much potential for developing both in the UK and internationally.”

International growth…
Adopting what he sees as an “aggressive but cautious” approach to growth, Jean-Michel is preparing to launch the first international ping pong site in Dubai at the beginning of 2009. The Middle East is one of three territories being targeted for global expansion, alongside Brazil to launch in June 2009 and the United States, which will open on the east coast in September 2009.
“We are still progressing our UK development but also see the potential in pursuing growth elsewhere. In all three regions we will have total control of the brand – it is important for us that our delivery is on par with the UK. Similarly we will be setting up local production units to supply the region and operate in the same format. We will have to adapt to local market requirements, with the most obvious being the exclusion of pork and alcohol in the Middle East.
“From an early stage we decided to look at international development so I think that gives us some strength. The US is highly affected by the present climate and it is a tough market to penetrate, but conversely there is an opportunity for a premium casual dining brand like ping pong. Brazil is an emerging market with a very strong growth rate, and the Middle East still has huge potential.”

ping pong is preparing to open at Spitalfields in London’s City by the end of the first quarter of 2009 and is aiming to add between four and six sites during the course of next year. Inevitably the economic crisis will keep the team cautious in their plans, but Jean-Michel is clear that the business model is resilient. “In terms of national growth we will be looking towards the end of 2009 and beginning of 2010 to open sites outside London. We were going to do this sooner, but decided last summer to delay this process. Our approach has given us the opportunity to focus on the right priorities – the quality of product, the quality of service and the training and development of our staff. In terms of site development we have carefully selected our new locations enabling us to carry some successful openings over the past two years. “Because of our market positioning, I think we may be less affected than other concepts and will benefit one way or another, so we should be able to maintain those numbers. One of the strengths of the brand is that we can offer a table service experience at a very reasonable price. If the customer doesn’t want to spend too much they don’t need to, but they can if they wish.This can be much more complex to achieve in a more traditional type of offering. Customers can control how much they order and how much they share.”

ping pong takeaway…
In addition to expansion, ping pong has invested a great deal of energy adapting processes to maintain its cost base. The use of its central production kitchen clearly offers benefits in terms of restaurant operations, but what of the other diversification opportunities?

“One of the really exciting new businesses we are launching is ‘ping pong now’ – this is the retail concept; the takeaway version of ping pong. The goal is to launch sites in busy town centres with high footfall, but no potential for a restaurant. It is not about competing with our restaurants, but complementing them. We are looking at residential areas with shopping destinations, or high tourist density such as Gloucester Road, London’s West End and the City. There are opportunities to move into airports and train stations. Food ‘on the go’ has huge potential, and we are launching the concept in the first quarter of next year. In terms of products we are currently fine tuning their development, with the goal being to carry on with the core range but adapted to a takeaway market.”

Asian food remains one of the most popular choices in the eating out market. Brands such as Wagamama and Yo! Sushi have achieved enormous success, with Alan Yau continuing to create new brands. What is the appeal?

“Healthiness and novelty drive interest in Asian brands. The fact is that dim sum is a very old, traditional type of food; the western market doesn’t really know much about it. We are working on the health benefits of ping pong’s products, including a set menu with no saturated fat and the calorie count indicated. This is how we will be moving the business forward.”

The potential for expansion was one of the central attractions towards Jean-Michel taking up the role of Managing Director, and he has now been with the business for about 18 months. Prior to ping pong, he was the Managing Director of Paul UK, having previously worked with the then Conran Restaurant Group.

“The business model is what attracted me. There is a great product with plenty of opportunity for global growth, which Paul had already addressed.”

Sustainable?…
The central kitchen produces more than 42,000 pieces of dim sum daily. With a team of 70 Asian chefs preparing hand-made product, I am interested to hear Jean-Michel’s views on whether the kitchen will be able to manage further UK growth, both in terms of space and the supply of labour.
“At this stage the model we have can sustain growth in the UK and there would be no need to relocate or establish a new unit, as it can be scaled up. Over the past 6-8 months we have begun deconstructing the production process to separate skilled and non-skilled labour.

“What would slow our growth is the ability to attract the right stars and resources to lead our restaurants. Training and human resources are central in our organisation with a team of four working in various development projects to build the operational team.”

It is the business culture and opportunities for development that Jean-Michel believes will be central to the business success. This is both refreshing and interesting given the clear strategy towards increasing efficiency through processes and focusing on innovation. “How we can be resilient and stand apart from competition? Through our ability to evolve the offer to keep the market interested, to maintain our value for money, regardless of increasing food costs and be smart in the way we develop products. Ultimately it is about consistency – this might sound straightforward but we are not talking about a novelty. I believe we actually work in a very simple industry and sometimes make it too difficult. Our goal is give a great experience to customers – hospitality with a capital H. “Are we there? Probably not – there is plenty to do. But by thinking we are not there, and working on it – that is what gives us an edge.”