Bounty is one the larger poultry companies in the Philippines. In the roast chicken market its subsidiary, Chooks to Go, rapidly became the absolute number one in the country and is now targeting provincial towns and offshore sales to meet growing demand.
After just five years in business, Chooks to Go has climbed to the number one spot in the Philippines’ roast chicken market. With nearly 1,000 outlets in 479 out of 1,634 cities and towns across the country, Bounty Agro Ventures (BAVI), the owner and operator of the Chooks to Go chain, sees more opportunities for growth, especially in small towns served only by a one-day-a-week market. Company president and general manager Ronald Mascariñas said that Chooks to Go aims to have 1,100 stores by the beginning of 2013, which is more than the combined total number of stores operated by the other four major roast chicken operators. Chooks to Go started in 2007 with ten outlets. After two months, eight of the ten outlets failed due to dismal sales of only five to 20 birds per outlet per day. To break even, each outlet needed to sell at least 30 birds per day. After that rocky start, it turned out that the two stores that thrived had skipped a part of the cooking process that they thought was unnecessary. It turned out that their chicken was really delicious and appreciated by consumers.
After the company streamlined the cooking and logistic process in all of its stores it saw its sales rocketing. Chooks to Go’s roast chicken was so popular that the ovens had to be fired up at four in the morning to serve the long queues of customers that would appear by 8 am. Customers even placed orders a week in advance, making the top stores sell 300 to 400 roast chickens per day. Since then, the novelty of oven-roasted chicken has worn off, and sales have stabilised to near industry volumes per store, the company opened more outlets.
The introduction of a mobile phone based track-and-trace system to monitor the whereabouts of field personnel supervising the stores, generated another 15% increase in sales, Mascariñas said.
To keep pace with growth, Bounty expanded its broiler and breeder operations by 20% every year. Cobb broilers are grown to a processing weight of 1.5 kg to produce dressed chickens with a serving size of 900 grams to 1 kg. The company processes around 200,000 birds per day, about half of which is set aside for Chooks to Go stores and the balance distributed to wet markets, supermarkets and institutional accounts. The target for 2013 is to produce 100 million birds and strengthen Chooks to Go’s presence across the country.
Chooks to Go has overtaken well established rivals such as Andoks, Senior Pedro, and Baliwag. What sets its roast chicken apart from the rest is the taste, which Mascariñas describes as “a bit sweet, like a sweet ham.” The rest of the market offers roast chicken with a salty taste, he added.
Because of its unique taste, Chooks to Go has taken an innovative brand position as the only ready-to-eat chicken that is sold without sauce. The Philippine market has such a strong penchant for eating chicken with sauce, that one could not believe that Chooks to Go’s roast chicken was “delicious even without sauce”. This unique feature however generated a lot of interest among consumers.
For decades the Philippine market was dominated by charcoal-roasted chicken and the market segment for fried chicken was becoming well established. Oven-roasted chicken had been tried before, but it never seemed to catch on. Chooks to Go changed all that.
The company has 23 processing plants across the country, which allows logistical and processing flexibility to match daily orders. On weekends and paydays, orders can surge by 50% or higher compared to a typical day of the week.A cold-chain system delivers fresh products every day. Ahead of peak sales days, stores normally keep more stock on hand, but no more than can be used up in two days. Food safety is constantly monitored and HACCP certification is underway.
Small and profitable operations
Chooks to Go adopted a new approach to marketing roast chicken and processed meat products that focused on take-out customers only. The major advantage of this strategy is its very low overhead and fixed costs. According to Mascariñas in the take-out market it is possible to offer the same kind of product at half the price in a sit-down eatery and it is still profitable because the cost of take-out operations is significantly lower. As a result, Chooks to Go has been expanding with stunning speed. It is geared and organised to open an additional 500 stores in 2013.Instead of competing head-to-head with big players in Metro Manila and other major cities, Chooks to Go has tapped into a niche market in rural areas and small towns. Given the small-to-low capital requirements of opening a new outlet, it has been able to grow rapidly. It is also viable in remote locations where fixed costs are prohibitive for typical fast food operators. A small town environment means reduced competition and often better profits than can be achieved in urban areas. In order to meet local palates the product mix can easily be adjusted. For example, in some areas people prefer to buy chilled dressed chicken during the week and roast chicken on weekends.All broiler farms and processing plants contributing to Chooks to Go are owned and operated by third parties. This frees up valuable working capital for growing the business and investing in new opportunities. It allows the company to own and operate all the stores. Mascariñas: “Constructing a store does not require a great deal of capital. However, operating a thousand company-owned stores is not easy, and it required a major transformation in the way the company is organised. The difficulties are offset by significant advantages, such as full control in managing compliance to operating standards, and a better grip on quality control to ensure consist product quality and food safety.”
Interestingly, a sizable portion of Chooks to Go’s customer base come from the middle to upper-middle classes, even though the marketing strategy was focused on the mass market and the working class as the primary targets.
The company invests heavily in training store personnel and sees the quality of its staff as a key success factor. “We implement rigorous quality control at the plant. However, when the merchandise reaches the store, we are totally dependent on our store crew. That is why it is very important for us that we deploy only properly trained personnel,” said Mascariñas. The company is upgrading its software system to allow the roll-out of new products at a faster rate. “Under the current business model, the possibilities of introducing more products in the future are almost endless,” he added.
Mark Trias, assistant vice-president of business development and key accounts management, said that the company commissions third-party entities to do year-round “mystery shopper” surveys to assess store compliance to operating protocols. The evaluation includes among other things, service quality and store ambience.
The company also hires market research companies to assess how its products and services fare against competitors and to gain insight on the changing needs of consumers. Based on a recent survey, its satisfaction score averaged 7.5 out of a possible 10, a level which is considered to be best-in-class in the food services arena, said Trias.
Driven by the belief that consistency is the key to long-term retail success, the company set up the BAVI Academy, an in-house training team to do training for Chooks To Go personnel in customer service, rotisserie operation, equipment maintenance, and leadership development. It is Trias’s strong believe that training is important for consistent product quality and service.
Chooks to Go runs a call centre and charges a flat rate of 30 pesos per order. The customer service associates take telephone orders and pass them on to the hubs that are closest to the customers. Software calculates and points out the hub that can deliver to a particular customer within the shortest possible time. Presently, there are several hubs servicing the delivery requirements of the entire Metro Manila area.
A full service outlet carries 11 stock keeping units (SKU’s), including chilled dressed chicken, marinated products and more. However, a smaller take-out store may carry fewer SKUs. Recently the company launched a new take-out fried chicken product called “Chix 22”, which consists of 22 pieces of cut chicken in a bucket that sells for 222 pesos.
In the future, Mascariñas said, the company may attempt to replicate its successful venture offshore in the ASEAN region, and is not discounting the franchising option. Meanwhile Bounty has maintained annual growth of 20% fuelled mainly by the expansion of Chooks to Go.
**Source: World Poultry magazine 29. 1