Chen Xingwei: Recipe for success

Ask Chen Xingwei, founder of Babela's Kitchen "What’s cooking?" and you won’t hear a recipe, you’ll hear about the delicious Italian food that his 60 plus restaurants in Shanghai and Beijing are dishing out to the eagerly awaiting masses. Maybe a better question is, "What’s your recipe for success?"

CNNGo: You have opened other restaurants before Babela's Kitchen. Why did you decide to open an Italian restaurant in China?

My first venture in China was Sumo Sushi in the late '90s which I ultimately sold off to the Jackie Chan Group. Moving into Italian cuisine was a logical next step for me. Pizza Hut spent 15 years advertising across China, let’s just say their work lowered the barrier to entry for us.

CNNGo: But Pizza Hut has a 15 year head start, how do you compete?

When we were choosing the locations of our first stores, Pizza Hut had already saved us a lot of time and resources in the selection process. We knew they had done their homework on where to put shops in Shanghai, so we circled in around them, and started opening stores one-by-one, and now Babela's Kitchen has more than forty stores in both Shanghai and Beijing. As we have grown we now compete head-to-head with them, but we beat them on price and selection. It’s fun to go head-to-head with the big guys.

CNNGo: Competing on price we understand, but do local consumers really need more selection?

We think so, and that is how we’ve stayed ahead of our competition. It’s not just about pizza at Babela's Kitchen. We have discovered that Chinese consumers like to choose traditional entrees to go along with their pizza, and we are always testing new toppings that you would never see in the U.S. or Europe. This winter we will launch our new menu featuring a “D.I.Y. Pizza” for RMB 19 [US$2.80] that gives our customers a ton of choices and still leaves us enough room for profit.

CNNGo: Choice is good, but a menu change like that can be very risky, no?

Quite the opposite, Babela's Café, which has 10 stores in Shanghai, has been a great testing ground for us. We launched a dessert drink called “Xian Cao Nai Cha” (Gossip Grass Tea) about a year ago with four possible toppings. Sales went okay. Then my team got the idea to give our customers more choice. I think we offer about 25 options now, and sales are booming. To our surprise very few people choose the original four toppings that we thought were best. Of course there is risk involved, but if there wasn’t, everyone would be doing it already. We like to keep Babela's new and fresh all the time.

CNNGo: With your company's rapid growth over the past three years, there must be a weak spot somewhere. Where is it?

Yes, it's service. Service is very difficult to control in China. There are many factors that play into this, but at the end of the day it comes down to better management of our touch points with the customers: our chefs and servers. The help staff in China are typically migrant workers from outside the major cities that have never been exposed to a menu like ours. So, first they need training, and second they need motivation. Generally speaking service in China is below average, you can see that every time you walk into a typical restaurant here in Shanghai. I get to do the job I love to do everyday, and I want my employees to have that same feeling. One way we are motivating them is with stock options for managers and providing a career track so that a bus-boy can rise to the top and be rewarded with options, salary and a great place to work.