Hangzhou eatery chain Grandma’s thrives on making customers wait at its chain of 60 outlets across China; One customer claimed online he had queued for three days before finally securing a seat in his local Grandma’s

Hangzhou eatery chain Grandma’s thrives on making customers wait

  • Staff Reporter
  • 2013-03-04

Grandma’s, a chain of eateries founded in Hangzhou in 1998 as a single noodle house, now has 60 outlets across China often crammed with diners or those waiting in long queues for a table.

One customer claimed online he had queued for three days before finally securing a seat in his local Grandma’s, reported the Beijing magazine, China Entrepreneur.

However, for most the wait is well worth it as the restaurant chain’s fare is usually priced at about a third of what it costs for similar food at other restaurants, the magazine said.

Whether in Hangzhou, Shanghai or Beijing, the average bill per customer at a Grandma’s restaurant comes to about 60 yuan (US$9.50), compared with around 80 yuan (US$12.70) at similar restaurants.

Although eateries across the country have been hurt by increasing costs and sliding profits since 2010, Grandma’s has remained strong. It opened a dozen new outlets in 2012 alone, and is expected to open more in 2013.

Founder Wu Guoping told the China Entrepreneur the key to his success lay in his unending drive to look for ways to improve the management of his business.Another element to Grandma’s success, says Wu, is that the restaurant tables, at only 85 centimeters in diameter, are 15 centimeters smaller than those in most at other restaurants, allowing a greater number of tables to fill a restaurants floor space. More tables mean more seats for paying customers.

Also, says Wu, his restaurant outsources much of the primary food processing rather than doing it in-house. This frees-up the kitchens to do the real business of cooking.

Wu says his group of restaurants, which goes through about 3,000 chickens each day, procures its meat from a single supplier who sells each chicken for 4 yuan (US$0.63) below the market price. And sauces bought from another supplier cost Grandma’s 2 yuan (US$0.36) per kilogram cheaper than what it would cost to make in-house, says Wu. “We save on unnecessary costs to keep prices as low as possible,” he explains.

The decor in Grandma’s restaurants is also key, explains Wu. Each restaurant is designed differently, but always with an eye to providing an easy and casual atmosphere.

The model is clearly a winner as the name enjoys a loyal following with many people willing to wait in long queues to be seated.

Wu says his restaurants do not accept reservations and he would rather have patrons wait in line even when seats are available as the appearance of hungry diners gathered outside waiting to eat projects an image of quality and popularity and generates buzz.

To entertain waiting customers, Wu says he is considering building small cinemas outside his outlets, an idea bound to be a hit with customers, said the magazine.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: