Edgar Sia's Fast-Food Cashout

Phyllis Fang Savage, 06.22.11, 06:00 PM EDT Forbes Asia Magazine dated July 18, 2011 Edgar Sia's cash-out of his fast-food chain, Mang Inasal, makes him this year's youngest lister.

It started in 2003 when smalltown lad Edgar Sia II, then a 26-year-old college dropout, grabbed a tiny spot in the parking lot of a mall, the site of an upcoming food hall. As a frequent customer of McDonald's and KFC, Sia knew what he'd been missing in the fastfood scene: Filipino-style street fare served in a restaurant-type setting. Before long customers were lining up outside Mang Inasal as word spread quickly through Iloilo City about Sia's new eatery. Its charcoal-grilled chicken served with rice wrapped in a banana leaf wasn't like anything on the menus of McDonald's( MCD - news - people ), KFC or even Jollibee, the local burger chain. The flavors were distinctively Filipino, as was the earthy dcor with wooden tables, handmade paper lamps and walls painted in orange, green and yellow. "We really wanted to create a new category in this business, one that wasn't influenced by American food," says Sia, 34, who's often referred to by his nickname, Injap. It's a winning recipe; Mang Inasal's affordable concoctions aimed at Filipino taste buds has made it the country's third-largest fastfood chain after Jollibee and Chowking, both owned by fellow lister Tony Tan Caktiong, whose expanding food empire has made him a billionaire. Sia's eight-year-old barbecue chain, with 380 outlets, has even overtaken McDonald's. And it has lately put him on the road to riches. Last October Jollibee, in a nod to its upstart rival, scooped up 70% of Mang Inasal for $68 million, valuing the outfit at nearly $100 million. The deal earned Sia a spot among the Philippines' wealthiest for the first time this year. With a net worth of $85 million, he's the youngest of the top 40. Sia isn't done yet. He retains a 30% stake in Mang Inasal through Injap Investment, a family holding company in which his brother Ferdinand and sister Rizza also own shares. He and Ferdinand, who heads operations, continue to run the chain and have agreed to a three-year noncompete contract. "Mang Inasal was gaining ground and becoming a competitor to Jollibee. It made sense to acquire it," says Lovell Sarreal, a consumer sector analyst who tracks Jollibee at ATR KimEng Securities, a brokerage firm in Manila. As for Sia, he admits that butting heads with giant competitors wasn't conducive to his chain's long-term future. "How long can an 8-year-old win against a 30-year-old?" he argues, referring to the older Jollibee. He insists that being part of a bigger fold will boost Mang Inasal's fortunes: "Jollibee's operational know-how and our entrepreneurial energy is an unbeatable combination." Mang Inasal, he claims, is on track to reach a total of 425 branches this year and increase revenues by 40% to $186 million. Revenues from Mang Inasal's owned stores contribute 5% to Jollibee's revenues of $1.2 billion, which Sia hopes to double by the end of this year. Born to second-generation Chinese- Japanese-Filipino parents, Sia grew up in Roxas City in Capiz, a small town 280 miles south of Manila. His parents ran a grocery store where Sia worked on weekends as a cashier from the age of 10. He went to the University of St. Agustin in nearby Iloilo City to study architecture but dropped out one year short of graduating. "My mind was always somewhere else," he admits. His wandering mind got fixated on starting his own venture. In quick succession, he opened an express photo shop and a Laundromat. He then took a bank loan to set up a small budget hotel. But broader ambitions of going beyond his provincial

roots got him thinking again. Along came the offer to rent a corner in an upcoming food hall. "The overhead at the time was low so it wasn't that risky," he says. Mang Inasal, which means "Mr. Barbecue" in the local Ilonggo dialect of the western Visayas region, from where Sia hails, almost missed out on its name. When he tapped his father for the $65,000 capital he needed, the elder Sia agreed to the loan but shot down the name, saying it had too many letters. Jollibee and Chowking, the country's biggest chains, had eight letters, an auspicious number, while Mang Inasal had ten. Stumped, Sia hung up but quickly called his father back; Banco de Oro, the Philippines' largest bank, also had ten characters and was doing well. With the help of his wife, Shella, his high school sweetheart, Sia concocted Mang Inasal's distinctive marinade, borrowing from different recipes. "I'm no cook, but I understand Filipino taste buds," he says. Seven months later Mang Inasal was breaking even and he'd even repaid his father. From Iloilo he expanded into his hometown of Roxas City, opening the second outlet. As Mang Inasal grew in the provinces, to 26 outlets, he enlisted Ferdinand, who had graduated from law school, to take charge of operations. Sia focused on expanding the chain's reach, notably into Manila, which he refers to as "the make-orbreak city." Mang Inasal's 2006 debut in Manila was awkwardly timed as it was in the midst of a rice shortage in the country. Sia's response was to offer a value meal of grilled chicken and unlimited rice for the equivalent of $2. This had already become an instant hit in Iloilo and Manila's budget-conscious crowd took to it, too. The all-you-can-eat campaign, which was supposed to last two months, became a permanent item on the menu. Today, Sia says, it's their most popular product. Manila alone has over 100 Mang Inasal outlets; 200,000 customers are served daily nationwide. Aiming to make his chain a national brand, Sia hit the road. He spent a year visiting over 70 cities in all. "Today if we want to expand somewhere, I can say I've been there," he says. (Mang Inasal is present in 68 cities.) To ramp up quickly, Mang Inasal took the less capital-intensive franchising route. Sia offered franchisees a sweeter deal than his competitors, agreeing to a lower fee and being flexible on letting franchisees use outside contractors for the dcor and fittings. Consequently, it cost $190,000 on average to set up an outlet, half the cost of a Jollibee outlet, he claims. Unlike many fast-food chains, where about half of all outlets are company owned, Mang Inasal owns only 8% of theirs. By 2009 Mang Inasal was on a rapid rollout, adding 100 outlets a year. Today the Sia siblings are aiming higher, with an eye on grabbing the No. 2 spot currently occupied by Jollibee-owned Chowking. They plan to grow the chain to 500 outlets by next year. Sia, a father of two, says that the family has put some of their newly acquired fortune to good use. The Sias are building a church in Roxas City and recently donated $500,000 to a new public college in Iloilo. "It's our gift to the cities that embraced Mang Inasal and gave us the confidence to take it places."

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Jollibee Takes a Bite of Mang Inasal Who wouldve thought that a small fast-food kiosk that began with a 250 sq m space in the parking building of Robinsons Place Iloilo seven years ago would turn out to be the one of the countrys leading fast-food chains today? Jollibee did. In what has since become a shining example of Filipino entrepreneurship and the biggest story of the year, in October of this year, fast-food giant Jollibee Foods Corp. announced their plans to acquire 70 percent of Mang Inasal to the tune of P3 billion. And in November, the deal was finally, well, finalized. At present, Mang Inasal has 312 stores nationwide, 28 of which are company-owned while 284 belong to franchisees. Meanwhile, Jollibee has 703 stores in the Philippines, with 37 outside the country. [Read about Jollibee retaining Injap as Mang Inasal president here] According to JFC chair and CEO, Tony Tan Caktiong, Mang Inasal has successfully grown the grilled chicken in the Filipino cuisine segment of the fast food industry. It has been the fastest growing network in the Philippine food service business in the last three years, behind very good tasting food, excellent value, and focused branding. Considering that Mang Inasal has revenues of P2.6 billion a year, with system-wide sales of P3.8 billion, the price tag is spot on. Meanwhile, JFC, which also holds Chowking, Greenwhich, Red Ribbon, and Manong Pepes, made P38.4 billion for the first nine months of 2010, with system-wide sales of P50.8 billion in the same period. Edgar Injap Sia III, the man behind Mang Inasal, was one of Entrepreneur Philippines 10 Outstanding Entrepreneurs for 2009.

Apart from the usual food presentations of multinational food company copycats, Mang Inasal endeavors to adhere to elements that bear a distinctively Pinoy stamp-grilling with charcoal, rice wrapped in banana leaves, a marinade concocted out of local spices and herbs, bamboo sticks for skewers, and the ambiance that encourages kinamot (the ilonggo term in eating with the hands) whenever chicken inasal is served. All these evoke a rush of nostalgia for tradition, culture, and most of all, Home. Mang Inasal is proud to do its share in alleviating the unemployment burden of the country. It is effectively stimulating economic activities in communities where branches are situated. Local suppliers of calamansi, charcoal, banana leaves, sorbeteros, vegetables, fish, bamboo sticks, and other ingredients, as well as LGU's, trisikad (pedicab) drivers, and a host of other enterprises are benefited by the presence of Mang Inasal in their area. Mang Inasal has steadily grown since it offered franchising. Mang Inasal has branches in Bacolod, Iloilo, Roxas, Metro Manila, Cebu, Davao, Kalibo, Tarlac, Boracay, Antique, Mindoro, Batangas, Pampanga, General Santos, Tuguegarao, Iligan, Bulacan, Cavite, Baguio, Laguna, Panabo, Cagayan De Oro, Lucena Surigao, Palawan, Agusan Del Sur, Malabon, Zamboanga Pagadian, Koronadal, Rizal, Pangasinan, Dipolog, La Union, Ozamiz, Kabankalan As of today, Mang Inasal has 423 branches nationwide and counting.

In Mang Inasal, "Pinagsikapan naming laging mabilis, laging masarap, at laging abot-kaya" so that the Pinoy can truly say, "Kumbinsing!"

Mang Inasal owner shares pain of letting go

by Lala Rimando, abs-cbnNEWS.com Posted at 10/24/2010 2:50 AM | Updated as of 10/28/2010 7:00 PM MANILA, Philippines The owner of Mang Inasal Philippines Inc., which was recently sold to giant Jollibee Foods Corp., said letting go of his chicken-based business was painful. In a letter to his Mang Inasal Family, Edgar Injap Sia II expressed deep sadness like a father parting with his child as he hands over the care of the restaurant to the giant conglomerate. Sia, who is in his 30s, founded Mang Inasal on December 2003. In a 250-square meter space in the parking lot of Robinsons Place in Iloilo City, he started to offer the tasty vinegar-marinated chicken served in skewers and paired it with unlimited rice, an almost irresistible come-on. Innovating further, he began offering the menu in the familiar fast food dine-in concept. Business grew by leaps and bounds, conquering markets beyond Visayas, including Metro Manila, the make-it-orbreak-it city. For Mang Inasal's phenomenal growthabout 100 new stores a yearSia was recognized this year as the Small Business Entrepreneur awardee in Ernst & Young's annual search for Entrepreneur Of The Year-Philippines. The same group named Jollibee founder Tony Tan Caktiong as its first awardee in 2004. Caktiong went on to win the World Entrepreneur of the Year title at an awards ceremony in Monte Carlo, Monaco. Currently the 6th largest fastfood chain in the country, Mang Inasal was dubbed by a local magazine, almost prophetically, as "the new Jollibee." Growth was fueled by franchising, which started only in 2005. Of the 303 Mang Inasal branches, only 24 are company owned. Franchise holders of the 279 stores paid P800,000, about the same amount as Sias seed money when he started the business 7 years ago. That Jollibee will be paying P3 billion for a 70% stake in Mang Inasal has made Sia a very successful businessman, according to bloggers and online commentators. The buying price of Jollibee, which courted Sia for the transaction, values the entire Mang Inasal business at P4.3 billion. Not a bad deal for a business that has an estimated annual total revenues of P2.6 billion and system wide sales of P3.8 billion. Since Sias holding company, Injap Investments, will continue to hold on to 30% of Mang Inasal, the Jollibee deal actually valued Sias remaining stake at a staggering P1.3 billion. By the way, Sia already received a P200 million downpayment. Still involved In his letter, however, Sia stressed that the deal will also benefit the intended readers--the employees, franchise holders, and loyal clients. I have full confidence that we will reap the benefits of cost improvement of supplies, greater operational effi ciency, reliable and response-ondemand servicing, and well structured and professionally managed organization. This will mean increased revenue flow, better margins and limitless opportunities for younot to mention better service, better quality and mas sulit food selection for our loyal patrons. He also assured them that, during the turnover process and beyond, their voice will be heard every step of the way. He said two board seats in the new organization have been reserved for him and Ferdinand Sia, the current chief operations officer. Both will also be part of the management committee for the coming years. Global brand

Sia stressed that the deal with Jollibee will strengthen the brand. As the business is on its way to becoming a Global Mang Inasal, Filipinos will be proud, he said. Mang Inasal will have the professional support and vast resource needed to steer the business to the next level, Sia wrote. Knowing that [Jollibees] Tony Tan Caktiong share the values and business principles I have, I know that my VISION of better quality lives for the Pinoy Diners and Pinoy Entrepreneur will live. Growing the business was part of Sias goal when he decided to offer the company to the public early next year. Since 2008, S ia has been ramping up interest in Mang Inasals success story in preparation for a planned Initial Public Offering. Fresh funds from the capital ra ising exercise were supposed to finance further store expansion. The aim was to have 500 outlets by 2012. Before the Jollibee deal, it just opened its 300th outlet at the SM Mall of Asia. Thus, despite the pain and the deep sadness, Sia said he is ecstatic and in high spirits since the future of his 7 -year old childis secured and filled with great optimism. More "little Jollibee's"? It is likely that keen watchers of entrepreneurship have not had the last of Sia's genius or luck. Aside from Sia's remaining 30% stake in Mang Inasal, Sia's Injap Investments also has a stake in Deco's, another up-and-coming food business that serves "batchoy", a soup made of meat stock, noodles, and garnished with local herbs and spices. Batchoy was first started by a young butcher called Deco Guillergan Sr., in 1938 in a carinderia at the La Paz public market in Iloilo City. Sia's Mang Inasal also first flourished in the same city. Just like how Jollibee has grown through brand extensions and numerous acquisitions, Sia has forged a partnership with Guillergan's children. Decoand its "heavily guarded batchoy secret"was eventually folded under Sia's Injap Investments. Deco stores have been slowly expanding to neighboring provinces in Visayas and Metro Manila. Will it be Sia's new "little Jollibee"?

Globe Negostar Edgar Injap J. Sia II, Chairman and CEO of Mang Inasal Philippines Inc., braved the fastfood industry that is dominated by big players and proved that nothing is impossible. He grew Mang Inasal to more than 300 stores in seven years and hopes to reach 500 branches by the end of 2012. Last October 12, the fast growth and aggressive expansion of Mang Inasal nationwide earned Injap an achievement - the Small Business Entrepreneur award at the Entrepreneur Of The Year Philippines 2010. Mang Inasal showed that it can be done. Injap said stick to the plan no matter what and work very hard at it. He strongly believes nothing is impossible and Mang Inasals story is a living proof of this. Contemplating on a business he can expand on a nationwide scale, Injap was offered a space at a discounted rate at Robinsons Place in Iloilo City in 2003, the site of the first Mang Inasal store. He grabbed it and was asked to open up a business that is into food as the site was developed to be a food strip. Keeping his top priority in mind, the nationwide expansion, he saw the opportunity of starting fastfood chicken inasal. Injap borrowed P2 million from his father and another P400,000 to start Mang Inasal and embarked on growing the business to capture and conquer the market. Nine months later, he paid back his father and Mang Inasals expansion was unstoppa ble. Injap said he had planned the growth of the business from the start, drawing up annual targets. But he had to change the 2012 target to 500 from 300 outlets as Mang Inasal achieved this number this year. Today, Jollibee Foods Corporation has made an unsolicited offer to acquire 70% of Mang Inasal for the purchase price of

approximately P3 billion, while Injap Investments, Inc. will retain 30% ownership. The success story of Mang Inasal hopes to inspire Filipino entrepreneurs to dream big and pursue their dreams. Injap is a staunch advocate of Globe Negostar, the program Globe Business spearheaded and initiated early this year to empower entrepreneurs to strive for success through passion and dedication, and enable small and medium-sized enterprises (SME) to grow their businesses using cost-efficient, innovative and relevant information and communication services. Globe congratulates Mang Inasal and Injap Sia on this achievement and we are truly proud that a Globe Negostar continues to make a difference in our society and gain recognition for entrepreneurs, said Manny A. Aligada, Head of Corporate and SME Segments in Globe Business. As the Small Business Entrepreneur winner, Injap encourages SMEs to believe in the Filipinos potential to make a posit ive change in the society and help uplift other peoples lives. With the theme Believe, the Ernst & Young Entrepreneur Of The Y ear celebrates the Filipinos entrepreneurial spirit and recognizes their achievements in developing businesses that contribute to the economy, improve local communities, and impact peoples lives. In 2003, SGV Foundation launched Entrepreneur Of The Year in the Philippines. The program was developed in the U.S. by professional services firm Ernst & Young in 1986, and expanded this in 2001 with the launch of the World Entrepreneur Of The Year awards. At the Entrepreneur Of The Year awards night last October 12 in Makati Shangri-la Hotel, Gabino Abejo, Jr., President and CEO of Abejo Builders Corp., won Young Entrepreneur; Lyndon Tan, President of Basic Necessity Inc., Agribusiness Entrepreneur; Antonio Meloto, Chairman of Gawad Kalinga Community Development Corporation, Social Entrepreneur; Esther Vibal, President of Vibal Publishing, Woman Entrepreneur; and Tennyson Chen, President of Bounty Fresh Food Inc., Master Entrepreneur and Entrepreneur of the Year 2010. The Generics Pharmacy President Benjamin I. Liuson, Globe Negostar, was also a finalist in the Entrepreneur Of The Year Philippines 2010. The Generics Pharmacy is also one of the fastest growing franchise in the Philippines and the biggest drugstore chain in the country. He retailed generics medicines by opening up The Generics Pharmacy outlets all over the country, which are expected to reach 1,000 branches by the end of 2010, making affordable medicines available to Filipino consumers.

Mang Inasal From Start To Success

Hahanap-hanapin mo! says Mang Inasal endorser Mark Bautista. Just one taste and you sure will crave for a Mang Inasal every time. Three cups of ricethats all I can gobble down while eating at Mang Inasals. The very first time I ate at Mang Inasals was in Makati about 3 years ago. Now, theres a Mang Inasal, or should I say many, near our place in Cainta. From its humble beginnings in December 2003 at the Robinsons Mall Carpark Iloilo, Mr. Edgar Sia II has certainly come a long way now that they have almost 300 branches and franchises. This number will no doubt increase in the following years. In addition, Jollibee Foods Corporation had recently acquired 70% of Mang Inasal amounting to P3 billion.

Competition is really tight amongst restaurants, fast-food or not. And the reason Mang Inasal is widely patronized by Filipinos is that the quality of their food and service is almost beyond reproach (of course nobody is perfect), and not to mention the reasonable price for each meal. For just P99 you will get almost half of a chicken, soup, and all the rice you can consume! When you ensure the highest quality of your products, you dont have to find people. They will find you. Thats exactly what Mang Inasal did. With their inasal (beyond any words could express how delicious, sumptuous, satisfying it is), their friendly, quick service, and the dynamic teamwork of its employees, Mang Inasal has reached success and will surely reach more heights in the future. By now, it should be obvious how much I seriously like Mang Inasal, both the food and the service. For decades to come, people will just keep coming back for more. I know I will.