Case Study Setting up a restaurant in Hong Kong: La Napoli

A cross-cultural case study by Peter Sandiford

As he looked at his slightly balding reflection in the mirror, John Clarke really felt that he had lost more of his hair than usual over this project. Amazing how one small part of the Tom Browns Restaurant Group could cause so much trouble. He glanced at the clock 11am. It was 11am on August 15th 1995. There was a board meeting scheduled for 2pm and he needed to get his thoughts together regarding La Napoli restaurant. He had been going over the events of the last few months and preparing his ideas for rectifying the situation, to present to his colleagues.

The early days

John was the Business Development Director for Tom Browns; a well established chain of mid-priced restaurants throughout the Special Administrative Region (SAR) of Hong Kong. Three years earlier Luigi Compio had approached Chris Parkes (Tom Browns CEO) with an attractive proposition to develop a new and prestigious restaurant complex in one of Hong Kongs up-and-coming shopping centres. Compio was an Italian-American chef who was looking for one last project to make his mark in the world of cuisine. He had studied Italian cuisine for many years and was widely acknowledged as an expert in the field, having earned the accolade Master Chef some years earlier.

Compio was a relative newcomer to the SAR having spent most of his career in the USA, with some long research trips to Italy. He had visited Hong Kong a couple of years earlier on holiday with his Vietnamese wife, and soon realised the potential for an authentic Italian restaurant there. He carried out some informal market research, and after sampling the wares of the few Italian restaurants there, decided that there was a considerable gap in the market.

He contacted Tom Browns in search of financial backing, but made it clear at an early stage that he wanted to take the lead in developing the restaurant, stressing his very particular vision for the establishment. His enthusiasm was infectious, and he soon convinced John, and the rest of the Board, of the inevitable success of such a project. The restaurant would not fit naturally with the rest of the chain which was mid-priced, as opposed to Compios plans for a top quality, fine-dining experience to

appeal to the higher end of the market. Tom Browns restaurants were vaguely international in nature, serving a sort of Hong-Kong version of European food, with an emphasis on British styles of service with a Chinese flavour, again very different from a specialist and authentic Italian cuisine. The board saw this as an opportunity to diversify their portfolio and were easily convinced by Compio of the lack of serious competition they would face from what he perceived to be the rather poor existing Italian restaurants.

Setting up the Restaurant

By September 1995 the plans had taken on substance. The lease for La Napoli, as the restaurant would be called, was ready to be signed, and the premises a high visibility space in one of the trendy shopping malls would soon be available for refurbishment. The original team included Compio, two assistant managers (AMs) (one a young American Chinese man, David, the other a more mature Indian man, Ravij, who had worked in Hong Kong for some years), and Hans, a German chef, who had been hired as a consultant to organise purchasing systems.

Later in the planning process, the first week of November to be precise, Peter, an Englishman was appointed as a third AM to assist generally, but who was intended to run the Pasticeria (coffee/cake shop) which would operate next door to La Napoli. At this stage a Chinese head chef, Kin-sheng and Chinese baker, Wai-ming, were also hired. Neither had any experience of Italian cuisine, as it was Compios intention to train them from scratch. At this stage the restaurant was finally being decorated and equipment installed, although there were a number of inevitable delays.

Compio spent a considerable amount of time in some of the nearby department stores making impulse purchases of a variety of rather tasteless decorative objects. He would briskly walk around the store pointing out item after item for the AM who he had picked for that occasion and a shop assistant to put to send back to the restaurant. After each of these excursions he would sit in the restaurant with the AM and point out which things from his resultant pile of objects would be returned in the next taxi (this usually included the majority of the days purchases). On one occasion while walking towards a taxi rank outside the store an aging Chinese doorman approached with a smile and asked Where are you going? so that he could call a taxi for them. Compios reaction shocked Peter (the days AM) as he screamed curses and abuse at the man, making it clear that his destination was of no concern to a mere doorman!! Peter and the rest of the management team had noticed that Compio seemed to be getting more irritable and prone to outbursts of temper, but this seemed a bit extreme even for him!

Staffing the Restaurant

Four weeks before opening the recruitment drive was stepped up, and the kitchen and bakery teams were hired. Waiting staff were also recruited to enable training in service styles and product knowledge to take place. Compio had very clear views on restaurant staffing: He was generally unimpressed by the standard of both service and food quality in the growing number of Western restaurants in Hong Kong. He would strongly criticise what he perceived as surly service, poor product knowledge and inauthentic cuisine. He believed that one way to address this would be to hire staff with little experience who he could mould into his own image. Another added benefit of this would be that he could pay relatively low wages because of this lack of relevant experience! Indeed, Compios view on reward was to pay as little as possible, and he would often verbally abuse his AMs if he felt they had not negotiated strongly enough during interview. It sometimes seemed that He/She would have accepted $X,000 was his favourite refrain. This complaint was particularly irritating for Peter who had very strong views on what he perceived as fairness or equity in rewarding staff. He felt it preferable to pay his workers what they were worth rather than the bare minimum that he could get away with.

During one management meeting Compio enthusiastically explained that he had just found the perfect restaurant hostess, beautiful, keen and most importantly (to him) Italian. Angela started a week after the announcement and seemed to fit into the management team well despite being the only woman working in the restaurant itself (except for Flo, Compios wife).

The Pasticeria was considerably smaller than the restaurant, and only three employees were hired. Peter, who had some experience and qualifications in Hospitality Management was responsible for interviewing and selecting these from a shortlist of applicants who had responded to an advertisement in one of Hong Kongs two main English language newspapers (this was the chosen medium as Compios main criterion for any service staff was ability to speak English as English was an official Hong Kong language. Cantonese, the other official language at the time, was spoken by some, but not all the employees).

A relatively small number of applicants were interviewed, and interestingly only one of these was a local Hong Kong Chinese, most being Phillipino. During one of the interviews Compio came into the room. He interrupted the discussion to exclaim Yes Peter, this is just the sort of person we want in the Pasticeria! She was duly appointed despite her poor spoken English!

So, when the recruiting was over all the non-management staff for the restaurant were men (some could be best described as boys) while all the Pasticeria employees were women.

Training the Staff

Compio had very clear views of training that centred on the quality of the food and drink. He led a number of sessions with all the kitchen staff observing him and the head chef preparing all the menu items, while Peter recorded the ingredients and procedures to prepare costing and guidance documentation. The waiting staff were also involved, and all were talked through and tasted each dish to build product knowledge.

Despite these good intentions regarding training, the actual practice was not so good. For the last two weeks the management team found the demands on their time dealing with the challenges of opening a restaurant business in a country that was foreign to most of them minimised the amount of time available to train their new staff. Many of these problems involved dealing with local bureaucracy. For example, the team could not progress in setting up a liquor license. Other local restaurateurs explained that it was normal practice to pay an informal tax of one or two fines which would be levied after opening before finally granting an official license. However, this was just one more thing that led to outbursts of temper from Compio who was determined to sort out all the paperwork before opening as a point of principle.

Thus, to cut a series of long stories short, more often than not the new waiting staff found themselves simply sitting in the half-finished restaurant, getting bored while their manager and his team rushed around getting more and more stressed.

Final Preparations and the Two Banquets

As the preparations progressed Angela was mainly involved with helping to translate the menu all items were given their authentic Italian names and a brief description in English. She did get rather frustrated from time to time, as Compio would change her contributions with what she described (rather depreciatingly) as American-Italian; she would then correct his efforts, only to find it was back where she had started from the next time she looked. Eventually the menus were ready for printing, the kitchen was fully equipped and the building contractors even finished in dining area.

A week before the grand opening two banquets were held for a number of specially invited guests. The idea was to give all staff a practice run before paying customers appeared. The first was a disaster, making it obvious that most of the staff did not really know what was expected of them. Guests ordered from the normal menus only to experience long waits, waiters who had difficulty communicating in English while often being unable to describe the content of, or translate the Italian names for different dishes. When the food did eventually start to arrive at tables a number of the guests were surprised to find that their meat dishes coming before their antipasti (starters), and soon the relatively small dining tables were groaning under the weight of up to three courses at the same time!

The second banquet was equally problematic and the management team were becoming rather worried about the opening night that was rapidly approaching.

Among the waiting staff, basic product knowledge was obviously problematic, so some remedial training was given in relation to the menu, although time was short and the tasting sessions used earlier could not be repeated. The other key problem with the waiting staff was basic service quality, especially regarding what Compio labelled their lack of initiative, awareness and common sense. He could simply not understand why they would unquestioningly take food out to a table without checking to see if a) it was the dish they had ordered; b) the dish(es) belonged to the appropriate course; c) all the dishes were ready for all the customers at a single table or d) the customers had finished their previous course.

The kitchen staff had their fair share of problems. The bakery staff were having considerable problems with the recipes provided by Compio, and the kitchen had found it difficult to keep up with the orders during both banquets, and Compio had spent most of the two evenings standing in the kitchen vetting orders as they came in, directing the cooking and doing what he considered to be his head chefs job!

Opening the Restaurant

When the opening day finally arrived everyone was rather nervous. It was the second week in January and the New Year rush was pretty much over Less happening to distract the punters! as Compio exclaimed. The event had been widely advertised and, by now, the AMs were rather concerned with the staffs ability to cope with a busy evening.

There was a definite feeling of panic in the air as everyone got ready for the first evening. Everyone was on duty and most of Tom Browns board were in-and-out for most of the day. Compio patrolled his

domain making sure everything was spotless and in order, while the AMs buzzed around nervously in his wake and dealing with the nervous young waiters and bus-boys.

When the doors finally opened at 6pm there was a lull before the first customers arrived, and kitchen and dining area were populated by staff impatiently waiting for their guests. There were a few reservations and even a small number of walk-in customers, but the evening itself was not very busy. As so many staff were working that evening there were no real service problems (Compio and his AMs could almost supervise the taking, preparation and delivery of every order and food). Although there was a certain anti-climax to the evening everyone realised that new restaurants did need time to build their trade and no-one was particularly worried.

The end of the first year of operation

John Clarke sat in his office looking over the books for La Napoli. It had seemed a particularly long year with a number of crises. Staff turnover had been high, and revenue had fallen well short of revenue leading to disappointing profits. Worries did begin to surface after a few weeks when sales remained lower than forecast. Customer numbers did pick up a little, but not as much as the management team had hoped. More importantly, the customers that did come to the restaurant spent less than was needed. Three or four course banquets and expensive wines were not the way their guests chose to eat in La Napoli. The lunchtime crowd were more likely to eat lightly as a break from the busy social demands of posh shopping. Although dining was more leisurely, the clientele still held back from the Italian style of multi-courses and the American ideal of big eating and wine sales revolved around basic house varieties.

Trouble was also brewing around the staffing of the business. Turnover was high amongst the rank-andfile employees, but was dramatic within the management team!

The first significant casualty had been Wai-ming, the Bakery Chef, who had withstood withering criticism and tantrums from Compio for a few weeks before opening, but it soon became too much for him to bear. The problems came to a head over a recipe for traditional cheesecake. After many failed attempts and much shouting (generally taken quietly by the normally mild-mannered chef) it transpired that the recipe itself was the problem, with too many breadcrumbs leaving the deserts too hard. No apology was forthcoming. Compio had confided in the AMs earlier on the same day about his lack of confidence in the chef, and explained that it was his mission to get rid of him, preferably by encouraging his resignation. In the end the plan proved rather problematic; when Wai-ming walked out following the

final outburst, he took the entire bakery staff with him. As this happened during morning baking this left Compio to fill the rather large gap at a moments notice.

It was at this stage that he asked his AMs if they knew of someone who could replace Wai-ming. Peter suggested a friend of his who had a lot of kitchen experience. He invited Karl, a British man who had been born in Hong-Kong, to an informal interview. Although it turned out that Karl had insufficient baking experience, Compio took a liking to him and hired him to act as a temporary stock controller replacing Hans, who was due to leave soon, and Peter, who found himself increasingly busy with his other duties. So, after a brief introduction to the organisation by Hans, Karl took over.

Within a month of losing Wai-ming, Peter had also left after a fiery argument in the office. He had been working long hours in the Pasticeria, as there was no-one else available to supervise the three service employees there. Many mistakes were made with the cash register and he would often be working an hour or two after closing, sometimes not leaving until the restaurant next door closed!

Peter was closely followed by Karl. He soon came across a significant area of difficulty when dealing with stock movements. He was unsure of his area of authority within the restaurant hierarchy when he needed help receiving or issuing stock. The head chef would only lend him a kitchen porter as a favour. Karl sought clarification from Compio, who decided that Karl should be able to call on porters to help him whenever he needed them, thus officially incorporating him in the chain of command.

Karl had also been frustrated by his new boss approach to management. Compios tactic of calling all hands (calling all or most of his staff into work and often seeing them sitting around bored while he was tied up with something or someone else). On one occasion he called all his management team, including Karl, on a Sunday which was their only day off at the time. After sitting around a table smoking and drinking coffee for three hours while Compio was in the office on the telephone, Karl found his boss and asked if he could go, as he had a date with his fiance. Compio exploded We dont care about Sunday! When theres work to be done, theres work to be done! to which Karl pointed out that they were not working. Compio replied angrily if you want to go, then go! So he did. A few days before Peter left, Karl had found another job, so he handed his two-week notice in. He had found that when Peter lost favour, Compio treated him differently after all he was Peters friend! Even after he did leave Compio seemed to be trying to make his life difficult, withholding his last salary payment in the end Compios secretary paid Karl out of petty cash without authorisation!

Kin-sheng, the Head Chef was the next to go, a few weeks later. Compio seemed to lose confidence in his chef soon after opening. On the few shifts that the restaurant became busy, he would often end up in the kitchen keeping an eye on proceedings, and sometimes end up doing the head chefs job of organising and calling away orders. In addition to this, Kin-sheng had never been able to accept Hans regime. As a buying consultant Hans had spent days working through the consumables required to run a busy Italian restaurant, and he sourced a number of preferred suppliers based on the dual criteria of quality and price. Thus, he was rather frustrated when time and again Kin-sheng would order produce from firms that were not on his list. He always justified his actions, referring to emergency situations, shortages among preferred suppliers or in Hong Kong generally. As a result it was only a matter of time before Compio responded to Hans, and later Karl, and dismissed the chef.

David, the American Chinese AM had tried to cultivate friendly and informal relations with the waiting staff, and learned from an early stage to avoid confrontation with Compio. He was a good natured lad with relatively little experience in the restaurant business, but he picked up his duties well. However, as other colleagues and subordinates left he perceived a growing sense of tenseness in the atmosphere, and feared becoming a scapegoat as revenues remained lower than expected and Compio became increasingly irritable (possibly as a result of concern and pressure from John Clarke and the rest of Tom Browns board). David soon started to look around for alternative employment, and by April he handed his notice in. After he did so Compio produced another spectacular outburst, and fired him on the spot he seemed determined to convince himself that he was the only one with the power to decide when employees left, even if it left him temporarily short-handed.

Ravij, the last of Compios original management team lasted a little longer, but only a little. He had also taken a relatively low profile and Compio had contented himself with relatively infrequent outbursts towards him. The other employees assumed this was mainly because Ravij had a way of encouraging his workers, especially the younger ones, to feel a part of a team. His easy and relaxed manner worked particularly well with the young waiters and bus-boys (all of whom were male) who looked to him for a sort of leadership and quiet confidence that wasnt available elsewhere. However, in the end even Ravij had to go, and Compio dismissed him in mid June.

So the only remaining person from the original management team was Compio. None of the replacements seemed to last more than a few weeks. John sat thoughtfully for a moment, he had been going over the facts in his mind for the last few weeks, and time was growing short. He took a deep breath and sipped from his coffee as he considered what he was going to say to the board in the meeting in three hours.