Going global with Sakae Sushi

Parent Apex-Pal aims to grow its other brands too, writes NANDE KHIN

WITH over 30 Sakae Sushi restaurants here and more in the pipeline, parent company Apex-Pal International - which brought conveyor belt sushi to the masses in Singapore - has proven that its business model is not based on a passing fad. The F&B company now wants to show that it can replicate its success overseas, while still expanding locally.

Mr Foo: 'Pitching at the mass market means that we will always have business both in good times and bad.'

'We've always wanted to be a global brand. We want to be the MacDonald's of the sushi world,' said 37-year-old Mr Foo who founded Apex-Pal nine years ago.

And Mr Foo, who has a 60 per cent stake in Apex-Pal, believes that there is enough demand worldwide for healthy Japanese food in a casual setting to support Apex-Pal's global aspirations. He said that with consumers becoming more health-conscious, demand for nutritious food is on the rise and Japanese food with its healthy cooking methods is a natural choice for many.

Apex-Pal has opened wholly owned Sakae Sushi outlets in Malaysia, the Philippines and China, as well as franchised outlets in Indonesia and Thailand. 'Next year, we are heading towards the US and Russia,' said Mr Foo. The company is looking to open two to three Sakae Sushi outlets in Moscow, and another one to two outlets in New York. They will be done as joint ventures.

Apex-Pal also plans to open several more outlets in the region directly and through franchisees. 'We have been getting (franchise and partnership) enquiries from all over, from South Africa, the Middle East,' said Mr Foo.

And although Japanese eateries are now a dime a dozen, Sakae Sushi has differentiated itself through its 'constant innovation'. For example, its main menus are updated every nine months, while its special menus - which may differ from outlet to outlet - are changed twice a month.

It also relies heavily on IT to make sure its food in all its outlets are consistently of the same high quality. 'We are not people-dependent but systems-dependent'. And every week, food samples from all its outlets - including overseas ones - are taste-tasted and lab-tested for the presence of E-coli bacteria. If there are problems with the sample, 'a 'Swat' team will be sent down and nip the problem in the bud', said Mr Foo.

He also pointed out that the market space and positioning of Sakae Sushi is unique. It targets the casual dining crowd by offering affordable Japanese cuisine. By targeting the mass market, Sakae Sushi was able to carve a market space for itself. 'Our lower price items are just $1.90 a plate and three of such plates can be enough for a meal. And this is only as much as a fast food meal,' said Mr Foo.

'Pitching at the mass market means that we will always have business both in good times and bad. In good times, the better-off among the working class will upgrade and eat more often at Sakae Sushi, and in bad times, the bottom tier of the upper class will downgrade to eating more often at Sakae Sushi,' he added.

So confident of its edge over its competitors that it is opening another five Sakae Sushi outlets in Singapore before the year is out. 'The growth potential is still there, although of course it is limited since we only have four million people,' said Mr Foo. He added that it's hard to estimate how many more outlets the Singapore market can support. 'When we first started, we thought we could open a maximum of six to seven in Singapore. Today, we have more than 30, and as always, it's hard to tell how many more the market can take.'

'But every time, we look to open new outlets, we make sure that we won't be cannibalising the customers from our existing outlets by choosing our location carefully and by offering something a bit different with each outlet, and so far we have been successful in doing so,' said Mr Foo.

Apex-Pal is also looking to bring its higher-end Japanese restaurant Hibiki to overseas markets where it has established a firm standing for its Sakae Sushi brand. Hibiki offers higher profit margins, but because it targets the higher end dining crowd, it is also more vulnerable to economic downturns, said Mr Foo.

Another business unit Apex-Pal wants to bring overseas is its catering arm Nouvelle which will support the expansion of Sakae Sushi. Nouvelle does catering - often with the use of its patented portable conveyor belt - for hotels as well as other event organisers. It was set up initially to serve as a central kitchen for the Sakae Sushi outlets. 'With just a few outlets in each overseas market, we can still ship over some essential ingredients directly and have each outlet source for ingredients separately, but as we expand more and open more outlets, we will need a central kitchen and that's where Nouvelle comes in.'

With all its expansion plans, Apex-pal is not ruling out another fund raising exercise in the near future. In May, it raised $3.6 million through a private placement of 14.2 million new ordinary shares at 25.6 cents for working capital needs.

Apex-Pal reported a 25.7 per cent increase in after-tax profit to $2.4 million for the half-year ended June 30, 2006. Its sales were also up 25 per cent to $30.7 million. Shares of Apex-Pal lost 0.5 cents to close at 29.5 cents yesterday.