Sunday, October 7, 2012

Interview on Chine Information: how we opened a french restaurant in China

David the author of the great website: Chine Information, interviewed us

I think this interview can be interesting if you want to open or a commerce in China.
I will translate for you this interview:

"Two French open a french restaurant in Changsha in China (Interview)

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Deux Français ouvrent un restaurant français à Changsha en Chine (Interview)
Georges at the bar
Alain and Georges are two frenchmen who opened a french restaurant in Changsha (capital of Hunan Province). Chine Informations met them…

Hello ! Can you shortly introduce yourselves to our readers?
Alain : I am 38 years old, I come from Guingamp in Britany. I spent multiply years working abroad, and also on cruise boat.
Georges : J'ai 32 years old, I come from Paris. I have too many degree: one Master Degree in law and a MBA from Germany. I worked as a commercial and two years in China.

Georges, it is not your first try: you already opened two restaurants in the past. How about your first projects, what did you learn from them?
I think that there are many opportunities in China. Chinese people love life and food is their main expense. I opened a first restaurant and it went bankrupt! I rented a commercial space too big and too expensive (modern building, high rent and many expense for the company that administrate the building). Because of all these costs, I had to earn a lot and to put higher prices. This means in order to attract customers willing to pay more that I need a great decoration. But I didn't invest enough for this and the location was not suitable for richer customers and more suitable for university students. The second restaurant was opened 1 year and a half. It worked well: small prices, Chinese customers liked the dishes and interest of Chinese Media (this was before Beijing Olympic Games and at that time Chinese media were looking for some beautiful story involving foreigners, they still are but to less extent). Le second restaurant est resté ouvert 1 an et demi. However there was one thing that we didn't have: the decoration, no decoration at all, bad chairs and tables... Some customers didn't come because of this cheap environment.... Also we offered both western french food and Chinese food. I should have changed all the design and local in order to extend.

Alain, why did you decided to start this adventure and how did you meet Georges ?
Deux Français ouvrent un restaurant français à Changsha en Chine (Interview)
I came to China for the first time in 2006 in Wuhan to see a friend. I told myself that one day I will live in China. In 2010, I decided that I had to go now or never. I searched on the internet the best way to open my restaurant in China and look for some partner since I couldn't do all alone.
I found an article about Georges in China. He was doing the promotion of his book. I read his book and contacted him. I told him about my project to open a restaurant in China. J'avais trouvé un article de Georges qui parlait de son expérience en Chine.

How is your restaurant called? why did you choose this name?
Deux Français ouvrent un restaurant français à Changsha en Chine (Interview)
When you create a company in China, the name is very important. It shows the image and the values. You need positive values; family, happiness, wealth... Also we wanted to use the foreign and french image. We needed to find a french name for foreign customers and a name understandable by Chinese customers. We chose « Louis » because it is a traditionnal french name and many know Louis Vuitton. But this name was already registered. We finaly chose « Leduc » because it is a prestigious name and the Chinese translation 乐都客 is positive : Le = happiness, Dou = all, Ke = customers : a restaurant affordable for all and that brings you happiness !

How long have you been opened and how did you select the opening date ?
We opened one week ago. We weren't ready. We wanted to open on wenesday but the date was not ideal. Chinese people believe in numbers: some dates are positives, others are negatives. We could finaly choose between opening monday or wait until thursday. We prefered to wait even though for us we support cost everyday (rent, salaries...).

Why did you choose Changsha a secondaty city to open your restaurant ?
Georges knows Changsha well since he had several experiences here. It is also the city of his family in law. Changsha in Hunan Capital city and not a secondary city. It is the city of Chairman Mao Zedong and it is the place for important administrative meetings from all over China. The central government gives a lot in order to develop Changsha as a main city in central China. Changsha has already 8 millions inhabitants and should merge with its two neighbours. Many subway lines are being built in Changsha. There is still not french restaurant in Changsha.

What kind of company did you open and why?
We opened a joint-venture: two french and Georges Chinese wife. The best is to register a Chinese company this facilitates a lot the administrative work. It is also more attractive for taxes and costs. But then you should have a Chinese you can trust as you trust your own self!
Deux Français ouvrent un restaurant français à Changsha en Chine (Interview)

How did you find the commercial space? And what are the traps to avoid?
It is not easy. The best is to ask a specialized company who will show you different commercial places for rent. There are many traps:
- rent a place that is not suitable for a restaurant; for instance, you are not authorized to open a restaurant at this place but the owner will swear that there is no problem...
- Before you rent you should make sure the place is not going to be expropriate and destroyed in oder to build a new construction. This is of course a risk if you rent in some older building. Some owner can try to trick you and try to rent even though the place is going to be destroyed in the next 1, 2 years.
- You should check the reevalution of the rent and rent for a long enough time.
- You should check that there is a air pipe for smoke in the kitchen, building one can cost a lot and is not always possible!
- You should look at the overall state of the building: a new building will be expensive. A old building can destroy your image and could be too old (this even means more mouses, rates...).  you should mind the maintenance costs. You should for instance pay for a team of guards, cleaning ladies, air conditionning in corridors if it is a shopping center...
- You should look at the district and what kind of customers you have there. Some street are suitable for take away and very low prices: universities, city center, walking street... Other streets attract richer and different customers: business district, new avenues...
- You should take care of the transfer fee. Most commercial place for rent already have a owner and you should pay a transfer fee to take over the rent. You should take care that the tenant contracted with the real owner and ask for the ownership statement of the owner. You should then find a agreement with the tenant about the transfer fee. This summ can reach 200, 500 thousands according to the place and contract. It sounds important but it is a necessary investment.
We were looking for a location to rent on the first floor in order to be visible and benefit from different revenues: take away sales, customers eating in the restaurant. We needed a smaller surface but enough sitting places. When you rent, the larger the surface, the lower the price/ square meter. However the bigger surface, the more you should invest for decoration, design and daily maintenance. Also with a larger superficie, incoming customer might have the feeling that it is empty and won't like to come in.
Buying a local can be a very good investissement, as long as you have a sufficient budget. This was not our case.
Good deal is often a local that you can divide on two floors -that is what we did- but you should take care that the ceiling is not too low.

What difficulties did you meet for the rent and for the construction work?
The main difficulties have been:
- Collecting all the licence at the different administrations. Georges think that administrations changed a lot since 2006. We had several highly professionnal Chinese working in some administration help use. Still we needed 4 full month to register.
In fact the best way is to start the business is just to open without the licence and at the same time register. Also you should register the company using your own living place. For the final licence you can start paying the rent and spend some money. This way you won't have extra 3, 4 month rental cost in order to wait for all the licence without being able to open.
- Alain found a commerial place to rent end of october, it took time to find a place.
- We wanted to do all legaly in order to avoid problems after the opening. We therefore started construction work only after we gathered all the licence. This was again some extra time and rental costs. Construction work was complicated mainly because of workers going very slowly. Even though we asked a major Chinese decoration company; Even though we were paying the decoration company directly, workers asked for extra money and launched into negotiations: working more slowly on purpose.

Did you encouter any other problems ?
We needed to organize for the cooking, recruit and train. You can never anticipate the number of customers. Sometimes we had many customers coming all at once, sometimes almost none!
Alain is a experience Chef. I knew a little about the customers demand. But Chinese people are special tastes. For instance for steak, most Chinese want it very tender. If the find the meat is too hard they will say it is old meat. They also don't want to eat red meat! However a new pehnomenum is the change of Chinese people taste. Some Chinese people want to eat red meat and not too tender... It is difficult to satisfy all customers as some have western taste and some have Chinese taste!

As for your offer, what customers do you target?
We target the mass market with fair, low prices: young people, families with children. We also hope to attract richer customers who want to discover french food at fair prices.

How do you expect to communicate with local people?
We also hope that word to mouth can work. If the offer is suitable, our price are low, we believe that customers will come back and talk around them.
Internet is also a good way of communication for instance the Chinese facebook: Weibo. Almost young Chinese go on the internet to search for special restaurant and bargain offer! (promotion is very important for Chinese people, so brand willingly put up price in order to later 90% off!). This helps us a lot.
Many Chinese come back from foreign countries and France. They naturaly come to our restaurant and many kept a good memory of their stay in France.
Also we hope that foreigners living not too far away from us will come and thus strenghten the image of our place.

Que peut-t-on trouver par exemple sur la carte ou au menu ?
For the main dishes: you should do clichés steaks, spaghettis, pizzas... It is also possible to have different dishes but you have no guarantee that customers will order it. And since we are a small place you can not prepare too much food.
For entrance: also clichés: snails, goose liver, soups...
Pour deserts : cheese-cake, éclairs, mousses…
Pour drinks : cold and hot coffee, wines, milkshakes…

How did you select the different dishes?
We need to offer the typical french and western dishes expected by Chinese. It means: Pizza, spaghettis, steaks, cheesecakes, tiramisu, french fries. You can also add different dishes. But then don't expect customers to order them straight away. You might have some loss. Also for the dishes you should adapt them all. Cheesecake and Tiramisu in China are not the same as in Europe. Steaks differ a lot as I told you. Sauces are very important. Pizza are also challenging.
Traditionnal Chinese don't want to see any burn bread! no black on the pizza bread! for instance. Pizza bread can be challenging as Chinese people don't have Italian Napolitan pizza taste. 
With cakes and drinks we hope to attract customers outside of lunch and dinner times. 
We also hope to develop a wine offer in the evenings.

What is the average price for a meal in your restaurant? And how did you base your prices?
For our "discovery men" with a drink, spaghetti, entrance or dessert, 35 rmb.
For our "harmonious menu" with a steak, dessert or entrance, a glass of wine, 88 rmb.
We wanted to offer small prices in order to allow the larger number to discover french cuisine. Also the size of our restaurant and our location dosn't allow us to offer too high prices or to expect very rich customers.
We should get enough customers in order to keep some margins. We hope to have seveal incomes: meals, coffee, take away sales. We should change some prices as some are too low and some too high; for example, customers were not satisfied that the goose liver was too cheap! This leads to criticism such as: "it is not real, it is too cheap".

You also import french wine in China? why do you want to do this? Is it not a difficult decision? 
Deux Français ouvrent un restaurant français à Changsha en Chine (Interview)
Georges wants to import a few wines and offer them notably on sale in the restaurant, this could bring us further revenues. France is famous for its gastronomie and wine. It is interesting to associate wine and food. 
In China it is difficult to find good wines at fair prices as taxes are very high (you should double or triple the price of a wine bottle bought in France without taxes!). On the other side, customers want to try fench wine but at low prices. There are many cheats in China: fake wine, mixed wines, wine bought for less than 1 euro in Europe and bottled up in China, wine in powder etc... Import companies also get important margins and abuse consumers.

At this day, is there something you regret and you would have done differently?
For the the outside pannel and the logo, we wanted to look "Chinese" and please Chinese taste, with the red color, the restaurant name in Chinese and a small french name. In fact many customers told us that it was a mistake!
For the inside decoration, we wanted to paint in broken white or yellow. However we had many problems with the decoration team. It is difficult to visualize the final design. We didn't have any 3D plan as was initial said... Also it would have been much better to have a more modern decoration. Our second floor ceiling is a little low. This is due to a mistake from the decoration team. The construction material are of poor quality. Pour la décoration intérieure, nous voulions peindre en blanc cassé ou jaune. We should have avoided napkins on table as you should then wash them and it is more organization and costs.

Do you have final advises for those who would like to open a restaurant business in China?
Beware of Chinese business partner. Know very well Chinese customer tastes. Find out the good price. Offer a different decoration and a maximum confort (that you can not find in Chinese restaurants, except in important chains who invade the market). Be willing to work hard and planify as much as you can.

Do you have anything else to add?
We are very happy to do this project in China. It is a lot of work... It was difficult to organize ourselves at the opening. But we have no regret we do our best in this adventure!
Thanks you for this interview and come to see us at this adress:
Leduc French restaurant
44 Nanhu road Changsha
La Rédaction

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