Feature: Top-quality produce the key to 85°C's success

A customer looks at the range of cakes available in a Taipei 85oC store last week. PHOTO: LIAO JHEN-HUI, TAIPEI TIMES

Having expanded to more than 180 outlets within just two years, emerging cafe chain 85°C (美食達人) is now preparing to expand overseas, with stores set to open in Australia next month and the US by the end of the year.

Trumpeting its five-star offerings at low prices, the local brand has performed spectacularly well, with ambitious goals to open 240 stores in Taiwan this year and another 120 stores overseas by 2012.

"It's about more than just transplanting our Taiwan experience into foreign markets. Our lineup of products will be fine-tuned to cater to different eating habits, especially in flavors and the texture of bread," said Wu Cheng-hsueh (吳政學), president and general manager of the company.

The firm has inked a distribution contract with an Australian restauranteur to open its first overseas store in Sydney, which is set to commence operations in the middle of next month.

It also has a 50-50 joint venture with a US conglomerate underway, with plans to start operations in Los Angeles by the end of the year, he said.

As for the China market, Wu appeared more cautious, saying they will cooperate with hypermarkets, such as Carrefour and Far Eastern Geant (愛買吉安), in October for the first stage, giving it more time to observe the market.

"Having been in the food and beverage chain business for so long, 85°C is by far our most successful brand," the 39-year-old Wu added.

With only a junior high school diploma to his name, Wu knew the best way to make money was by starting his own business. So after completing his compulsory military service, he started off by opening barbershops, shoe processing factories and a marble retail business.

Economic downturns forced him to jump into a whole new category, the food and beverage business, by becoming a franchisee and later the vice general-manager at the headquarters of Easy Way International Co (休閒小站), a drinks chain.

Having learned sufficient chain and franchise experience during his six years with Easy Way, Wu and his colleague Martin Wang (王建堯), now 85°C's executive manager in charge of northern Taiwan, created the Hot to Home (熱到家) brand, offering small-sized pizzas at NT$50.

Its short-lived popularity encouraged them to brainstorm their latest business model that integrates coffee, cakes and bakery products.

"My policy is to hire the best professionals in the industry," Wu said.

Former Agora Garden pastry chef Henry Cheng (鄭吉隆) and former Far Eastern Plaza Hotel chef Ni Shih-hao (倪世豪) are among the team, making sure that patrons of 85°C get to enjoy high-quality cakes and bakery items.

Instead of relying on importers to make product selections, the company ships Antigua coffee beans directly from Guatemala to ensure the quality of its coffee, which sells for between NT$35 and NT$60 a cup.

This high-quality, low-price strategy worked well. The company is expected to rake in revenues of over NT$3 billion this year, a big jump from last year's NT$2.4 billion.

Moreover, in an online poll conducted by Yahoo-Kimo Inc (雅虎奇摩) last year to select the nation's most popular coffee chain, long-time champion Starbucks was for the first time squeezed out of the top spot by 85°C.

"We forecast that 270 stores will be the best scale. After that goal is achieved next year, we'll concentrate on adjusting the product lineup to boost single-outlet sales," Wu said.

Beryl Lee (李培芬), secretary-general of the Association of Chain and Franchise Promotion (連鎖加盟促進協會), said 85°C's success comes from its innovation in products and the atmosphere of its stores.

"After publicising its unique policy of offering expensive looking cakes at friendly prices, its stores, all located on corners with brightly lit decor and an open feeling, create a strong visual effect to lure passers-by," she said.

To avoid ending up being another one of Taiwan's fads, Lee said the firm now faces another challenge.

"Just like convenience stores, 85°C has worked hard to lure consumers by showcasing new products, now it has to come up with effective ways to make these loyal customers come back regularly and spend more money on every visit," she said.