Here’s a question worth pondering: Why would someone like the CFO of a Singapore F&B business specialising in local snacks be concerned about the rise of the e-commerce site Amazon, whose founder, Jeff Bezos, was named the richest person in history earlier this year? Well, it’s not because Amazon is currently shipping piping hot curry puffs and fried chicken wings to customers (though never say never). However, the rise of Amazon is reshaping the business landscape so much so that it is even affecting cafes, restaurants and snacks vendors.
The internet affects everything, even curry puffs: Song Yeow Chung
According to Song Yeow Chung, ISCA member and chief financial officer, Old Chang Kee Ltd, because people are shopping online more, mall operators are choosing to alter the mix between retail and F&B, opting to increase the number of restaurants and cafes over retail outlets. For Old Chang Kee, this means that it faces more competition in malls because shoppers have so many more options when it comes to grabbing a quick bite.
Dealing with a rapidly-changing environment is one of the many challenges that Mr Song has to deal with in his job. Mr Song, who has been with Old Chang Kee for seven-going-on-eight years, is constantly looking for ways to improve the business. “Purchasing, IT, logistics, production – these are all areas where Finance can have an input,” he noted.
One of the perennial bugbears of businesses in Singapore is the shortage of manpower, and part of Mr Song’s job was to work with the management team to convince the “towkay bosses” that automation was the way to solve this problem, especially along the production line. The decision was made easier because Mr Song could point to government grants to help businesses automate; eventually, the company purchased state-of-the-art machinery from Switzerland to handle the curry puff production. Interestingly though, the curry puffs are still crimped by hand. “Curry puffs are niche and no technology exists to crimp them, so even now, they are crimped by hand,” he said.
Mr Song’s job also consists of helping the company analyse potential revenue-drivers, whether they are from new products or from overseas expansion. The popular nasi lemak curry puff is one example of how Old Chang Kee is trying to add retail excitement and increase same-store sales. “The team came up with the idea a year ago. The success of McDonalds, with its nasi lemak burger, made us more determined to improve our original recipe before we eventually launch it.” The nasi lemak curry puff was introduced in March this year, and the reaction has been overwhelming. “We had to get our production ‘warriors’ to double the production output,” he said.
While a new hit product sounds like something to celebrate, Mr Song and his team also have to ensure that the nasi lemak curry puff would not be a drag on Old Chang Kee’s bottom line. “We have to analyse the cost of the product, and see the response of same-store sales. As it might cannibalise existing products, we need to analyse the net results and see how this will affect margins.”
Like C-suite executives all over the world, Song Yeow Chung, CFO of Old Chang Kee, lies awake and worries about Amazon.
A bigger slice of the pie
Mr Song is involved in the firm’s latest overseas venture – the opening of the flagship Old Chang Kee outlet in London’s Covent Gardens in June this year. The outlet has been in the works for over a year, and Mr Song’s role was to evaluate the business model and decide on the nature of the business relationship. The London store is a joint venture with a former The Straits Times journalist now living in the city. Because it is a joint venture, with both parties sharing revenues and costs, rather than a franchise, Mr Song had to pay extra attention to the commercial terms of the agreement.
While Old Chang Kee outlets can currently be found in Australia, Indonesia and Malaysia, and soon, London, more than 90% of the company’s revenue still comes from Singapore. Expanding overseas is thus very important for the company, which was listed on the Singapore Exchange in 2008. “Ultimately, Singapore is a small market,” noted Mr Song.
However, the company is cautious about overseas expansion and chooses its partners and markets carefully. “We’ve met people who were interested in bringing us to a remote part of Central Asia. They wanted to do a joint venture but we had to turn them down because a lot of the money matters would be left in the hands of the JV partner. We wouldn’t be able to monitor this easily due to the location.”
China is of great interest as a new market. The company had previously tried to expand into China but stepped back due to difficulties in getting good local strategic partners. It has not given up though, and is currently talking to various parties in China about the possibility of opening outlets there.
“As a CFO, you need to consider the higher, macro level, and you must also be able to see how trends will affect the company and industry.”
An appetite for new ideas
Even though the company is in the food industry, it is no slouch when it comes to embracing technology. It moved its enterprise resource planning (ERP) into the cloud four years ago, and is very happy with the move. “You save space and you don’t need to invest in a data centre,” he noted. The company was also an early mover in e-commerce, having partnered with food delivery company Food Panda five years ago. “We were one of the first food operators to work with Food Panda,” he said.
Old Chang Kee is currently looking at e-payments but has decided to wait until the dust has settled and there is a single e-payment platform in Singapore. “A lot of our staff are elderly, so we don’t want to keep changing things.” The CFO believes that a single e-payment solution will emerge within a year or two, and that would be the time for the company to adopt it.
When Mr Song was studying accountancy at the Nanyang Technological University, he did not imagine that he would one day end up being the CFO of a venerable Singapore icon. Admitting that “nobody dreams of being an accountant when you are young”, he said he chose accountancy because of an aptitude for mathematics and economics. He joined Ernst and Young after graduating in 2002 and rose to become Audit Manager by the time he left in 2008. He then joined Chartered Semiconductors Manufacturing as Finance Manager. With two years of commercial experience under his belt, he entered Old Chang Kee as the Group Financial Controller in 2010.
Based on his experience, he believes that curiosity is an important trait for a CFO. He reads widely to keep up with new developments not just in the F&B industry but far outside it. “As a CFO, you need to consider the higher, macro level, and you must also be able to see how trends will affect the company and industry.” That is why Old Chang Kee went with cloud computing and Food Panda relatively early, he explained.
The other important quality of a good CFO is his ability to get the buy-in from the team. “You need to have a clear idea of what you want to achieve, and you need to convince them why it is important.” For young accountants, who are just starting out and are open to different industries, his advice is to head to an accounting firm such as the Big Four. “Join an accounting firm first, get the experience, and dabble in different industries. After a few years of trying out, you will know which industry you want to focus on, then you can move to the commercial side.”
Being an ISCA member gives Mr Song access to the Institute’s many events as well as networking opportunities and training sessions. “As accountants, we need training in accounting, ethics, soft skills and technical updates, and ISCA provides them all.”
This article was first published by the Institute of Singapore Chartered Accountants. To visit the original story, click here
