Last year, after the UAAP basketball finals, our Katipunan store made Php500,000 in just one day—Jorge Concepcion, Shakeys GM (below, 2R)
|PARAÑAQUE CITY, 9 February 2015—The number of US franchise brands that have taken the Philippines by storm are many: Domino’s, Little Caesars, Taco Bell, Popeyes, and so on.
But the others have floundered (Taco Bell at the old Quad Carpark Building used to be packed to the rafters.) or disappeared (Goodbye, Popeyes popcorn shrimp!) while Shakeys, after 40 years, is still going strong.
“We feel that our brand has the legs,” said Shakeys CEO Vicente Gregorio at the business roundtable in Shakeys Aseana City today.
“What we have done is be consistent in providing value for money,” he added.
GM Jorge Concepcion chimed in with some great examples of the kind of value Shakeys provides.
“It is not widely known that we offer freshly brewed Arabica with free refill for only Php55. And it comes with a cookie,” Concepcion said.
“We do not serve our coffee from a thermos. It’s freshly brewed,” the Shakeys GM smiled.
Concepcion also pointed out that Shakeys does not scrimp on quality, especially when the margins can take it.
“In our Caesar’s salad, we use romaine lettuce, not iceberg. The rest use iceberg, but we computed and discovered na puede pala (we could do it), so we made it Romaine,” he said.
Concepcion reported that Shakeys posted an 18% compounded annual growth, on average, for the past 11 years.
Asked how their growth compared to other pizza brands, the GM replied, “We have higher average daily sales per store. Other brands may have more stores, but they certainly don’t sell more than us.”
He also disclosed that while Shakeys is owned by different families, the Prieto family is still the biggest stakeholder.
(From left) Chez Manalaysay, marketing and guest engagement director, Jam Evaristo, PR and events officer, Vic Gregorio, EVP-CEO, Jorge Concepcion, general manager, Koi Castillo, marketing manager
|5 QUESTIONS FOR SHAKEYS CEO VICENTE GREGORIO (pictured above)
China Business: How much does a franchisee shell out for a Shakeys store?
Gregorio: It costs Php15-30 million to put up a store. It takes each store three years to get a return on investment, at the most five years—that’s one of the fastest ROIs in the country.
What are the typical reasons for the failure of a franchise?
Less than five of our branches have relocated and those have been victims of demographic change or traffic flow. Like the one in La Salle, which was a small store. But if we find a good opportunity there, we will open one again.
Does the mother company in the US own shares in Shakeys Philippines?
The US has no shares. Shakeys in the Philippines is owned by International Family Food Services Inc., and it operates independently of the US. We visit from time to time to observe the US stores and exchange ideas.
How many stores does Shakeys US operate?
The Philippines has the biggest concentration of Shakeys branches in the world. So they learn more from us more than we from them. There are 60 stores in the entire US and they’re in the West Coast. The Philippines has over 150 stores in the Philippines. We’re outselling the US. Not only more stores but also more people per store.
How do Shakeys numbers stack up compared to other pizza brands?
From the numbers we see, we may have overtaken other brands. But I'd like to caution you against writing that. We don't know how many stores the other brands have. However, we likely sell more per store.
How They Did It
“Not many food chains have lasted 40 years in the Philippines,” said CEO Gregorio.
Another explanation for the brand's longevity could be that Shakeys extends the quality of its food and ingredients to the quality of its physical stores.
“The norm in the industry is to renovate after five years, but we don’t wait. We renovate when, for instance, a store starts to look old,” Gregorio said.
He pointed out that Shakeys Loyola Heights on Katipunan was just three years into its latest renovation when they renovated it again because “we had a good concept with the bar and arcade games.”
Whether they realize it or not, customers have stuck by the Shakeys brand because their comfort is a big part of the Philippine company's ethos.
“We have our mall stores, but when we put up an individual store, we always make sure that our customers have parking,” Gregorio explained.
“And we actually sacrifice seating just so children will have space to run around,” he said.
Moreover, rather than monitoring the competition, the Shakeys team in the Philippines innovates.
Gregorio said, “We don’t focus on what the others are doing. We set our own direction. We talk about it and ask ourselves, “Would I eat there?” or “Would I buy that?”
Case in point, two distinctly Shakeys products that its fans swear by: thin crust pizza and mojos (Fanatics opt for the garlic dip, ask for three containers full, and get it with a smile.)
Recognizing the desire of its clientele for something a cut above fast food, one more new innovation according to GM Concepcion is: “We’re moving away from fast food into fast casual.”
When China Business half jokingly asked why the Katipunan branch was doing so well, selling half a million pesos when there is an Ateneo-La Salle game at the Loyola Center gym, while the La Salle branch closed, Gregorio gamely replied saying it did not mean that management was composed of Ateneans.
“Our chairman Leo Prieto studied in La Salle,” Gregorio laughed.
Shakeys had 90 company-owned stores and 63 franchises at the end of 2014.