Wed, Dec 08, 1999 page18

• Uni-President in fast-food deal

  FRANCHISE After buying a Western-style fast-food chicken chain, 21st Century Quick Service Restaurants, the firm hopes to ease into the Japanese fast-food market

  • By Sharon Chuang / STAFF REPORTER
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  Uni-President Enterprises (2?@) plans to enter the rapidly-expanding Japanese-style fast-food restaurant market following its recent acquisition of 21st Century Quick Ser-vice Restaurants (?G?Q?@世紀炸雞), Vincent Shieh (謝?暩?, vice president of 21st Century told the Taipei Times yesterday.

  Uni-President recently spent NT$142 million to acquire a 75 percent stake in 21st Century Quick Service Restaurants, a Western-style fast-food restaurant chain specializing in chicken dishes.

  Shieh said that following its acquisition by Uni-President, 21st Century plans to open Japanese-style restaurants, while continuing with the Western style restaurants.

  21st Century has yet to generate any profits since its establishment in 1996. The company's sales in 1998 totaled NT$500 million.

  "The fierce competition among the Western-style fast-food operators in Taiwan is one of the reasons that 21st Century wants to diversify into Japanese-style restaurants," said Shieh.

  According to industry sources, the rapid expansion of fast-food restaurants, the lingering effects of the Asian financial crisis, and the 921 earthquake has made 1999 the worst year this decade for Taiwan's Western-style fast-food restaurants.

  But while the Western-style outlets have taken a hit, "Japanese-style fast-food restaurants are getting very popular in Taiwan now," Shieh said.

  Though Shieh refused to reveal more details because "the company is still planning the whole thing," he said that 21st Century will find a Japanese partner to run the Japanese-style restaurants.

  At the same time, 21st Century will also speed up its opening of Western-style restaurants with the help of Uni-President.

  At a rate of 10 restaurant openings per year, 21st Century plans to have opened 60 outlets by 2003.

  When asked if their stores are threatened by 21st Century after the Uni-President acquisition, Joe Chen (3?M富), marketing manager of Tricon Restaurants International, the US company that now owns KFC, said that KFC is already well-established in Taiwan. Therefore it is under no threat whatsoever from 21st Century, he said.

  Uni-President's acquisition of 21st Century is not its first venture into the fast-food business. It previously operated Kentucky Fried Chicken (肯德基) in Taiwan from 1986 to 1996.

  When the 10-year franchise agreement came up for renewal, Uni-President was unable to reach an agreement with Pepsico, the then owner of KFC, and decided to terminate their relationship.

  Shieh said that Uni-President decided not to renew the contract because Pepsico wanted to increase royalties for use of the KFC name, and greater direct influence on store operations. It also required that Uni-President open 20 new outlets each year.

  However, KFC has a different opinion. An official from Tricon Restaurants International, told the Taipei Times in July that Uni-President was a very conservative company, and this outlook was reflected in its development plans.

  He further said that Uni-President had used the expertise it learned from the joint venture to set up another fast-food chain, 21st Century Quick Service Restaurant in 1996.

  "We presume that it was capitalized by Uni-President," he said, though he added that 21st Century's board was not recognized by Uni-President as one of its subsidiaries.

  Even though Uni-President ended its contract with KFC three years ago, it remained obliged not to enter the fast-food business for three years after its contract expired.

  Both Shieh and an official from Uni-President denied that 21st Century had been capitalized by Uni-President, though the largest shareholder of 21st Century before Uni-President's acquisition was Edward Dang (鄧阿華), president of President Securities Corporation (2?@證券), one of Uni-President's subsidiaries.
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