Wednesday, November 11, 2015

Padang Restaurant Going Global Could be the Next McDonald’s

We all know that The World is Flat because of the great book by Thomas Firedman creating an environment where disruption can come from anywhere. Harvard’s Michael Porter recently stated that “Industry boundaries are expanding, and they can expand even more.  We’re going to see a combination of barriers to entry going up and the opportunity for disruption going up simultaneously.”

One such case just might be the Padang Restaurant.  In the United States and many places around the world consumers looking for food that is affordable, Ready-2-Eat and great tasking think of McDonalds.  

However in Asia some people think that food should be cheap, delicious and is served in big a portion. That is not an easy combination, but it is not impossible. Indonesians, for example, will immediately associate those adjectives with “Nasi Padang” (nickname for food from Padang Restaurant or Restoran Padang).

Many in Indonesia describe ‘Nasi’ Padang as both cheap and delicious and that just might be what it takes to expand a successful global restaurant footprint today and Padang restaurant business model just might have the new restaurant success model.  Padang restaurants appeal to people from various backgrounds. You may find some of their popular menu familiar, with items the ilk of ayam pop and rendang.

Padang restaurant can be found easily all across Indonesia, and they have been expanding abroad although they don’t necessarily come from one restaurant chain thus the concept trumps anyone brand today.  Nevertheless, they share similar business model. An ex-employee at a Padang Restaurant, Sutan Pamenan, and citizen journalist Gus Kajung shared their knowledge on Resto Padang’s management here is what they identify as success clues:

“Financial transparency and profit sharing makes Padang restaurant unique. With that system, investors and/or owners regard their employees as partners. After all, employees are paid based on the restaurant’s profit. Each employee gathers points, which will be accumulated and exchanged with money every 100 days. Highest point is given to the chefs, as they are the decision makers.

Generally, the team consists of capital owners, chefs and assistant chefs (in charge of cooking and planning the grocery shopping), toke (grocery shopping and making financial reports), tukang sanduak (plating food), bahagian tengah (delivering food to customers and sending dirty dishes to the kitchen), dishwashers and cashiers.

Every night, the team counts their income. Based on that day’s income, the chefs will decide what and how much ingredients they will buy the following day.

Then, every 100 days or 3 months, they will count how much net income they can get. Depends on negotiation, investors usually receive 30 percent. The rest is divided based on ‘mato’ or percentage – 25 percent is given to chefs, 20 percent for toke, 15 percent for tukang sanduak, 15 percent for bahagian tengah, 15 percent for dishwashers and 10 percent for cashiers.

On the same day, they will also evaluate the performance of every team member. Everyone is free to speak up their mind. Then, the decision to fire a bad employee is made together, unlike the usual case where the investors and executive board are the decision makers.

The system creates a sense of belonging for each employee, driving them to work even harder for the sake of the restaurant. Besides, their wages are decided by the restaurant’s profit. Thanks to highly motivated workers, Padang restaurants is famous for giving quick service.

This system has indeed been applied since a long time ago, before Western restaurants make their way into Indonesia. Surprisingly, Padang restaurants’ management system is somewhat similar with famous restaurants’ system, such as McDonald’s. McDonald’s has a profit sharing and savings plans that lets employees further build ownership and reinvest in the company.

While McDonald’s sell fast food, Padang restaurants’ products are slow food that are all ready-to-be-served. They are both affordable and somewhat unhealthy – Padang restaurants’ food are cooked with coconut milk thus making it quite high in cholesterol.

In a way, similar to McD, Padang restaurant is a cultural icon. Padang restaurant represents cheap, delicious-but-not-so-healthy big portioned food. It certainly go up head-to-head with McDonald’s, which is the icon of USA, of delicious-but-unhealthy junk food and hang out place, with their 24/7 services and free wifi.

Padang restaurants have a competitive edge on the menu offering as well. One of the usual menu items in Padang restaurants, rendang, has been nominated as world’s most delicious food and is being used as burger’s patty – even by famous brands such as McD and Burger King.

Combined with its managerial system, it can certainly compete globally. There are even Padang restaurants which are successful in various countries such as Singapore, USA and China. With the right support system, Padang restaurants can certainly shine on the global stage.  

Huge array of food served in typical Padang restaurants (Photo credit: GIV/TS),

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