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City operator goes retail: finding the right sense of scale

December 23, 2014

konjaku: continuing on the concept of “city operator”(and moving from Beijing to Shenzhen for a moment): the Di-wu shitang, the dining canteen or cafeteria chain Vanke has been operating in its residential projects, is interesting both as an example of the relation between the large real estate developer and the community it creates, and also as a model of the current ethos of modernization, efficiency, and service.

As for the meaning of the word “community” (社区 shequ) here, I am assuming it refers to the Vanke’s residential projects, which are quite large, and not a government administrative division.

New business model: community dining room: Di-wu shitang (the Fifth Dining Room)

http://www.pansum.com/ch/XinYeTai-SheQuShiTangMoShi-DiWuShiTang-183.shtml

2013-10-10

What is Di-wu shitang? It is different from an eating place at home (1), at school (2), at work (3), or a restaurant in the downtown streets (4), it is a place opened for the residents of a community, therefore “Number 5, “ a fifth type of eating place. Yesterday, when this reporter went to the Di-wu shitang in Shijihua city,that is how Men Ke, the person in charge of the Shenzhen Di-wu shitang food and beverage corporation, answered the question. Since this store opened last year on 12-25, it has been welcomed by the residential community, and at present serves over 1000 customers a day.

res04_attpic_brief res07_attpic_brief

Vanke has over 300 building projects in this country, and to give every one of its residential projects a complete set of services, Vanke Properties has set up the Di-wu shitang food and beverage corporation. Prior to this, Vanke Properties set up a test canteen in 10 places, in Beijing, Shanghai, Guangzhou, Hangzhou, etc. Of these, the one in Hangzhou Liangzhu Culture Village was a considerable success. Taking this as a basis, Vanke began to refine and standardize the model, and produce duplicate versions in various Vanke residential communities. In the 6th month of last year, the first one opened in Vanke city, on 12-25, the second opened in Shijihua city. Di-wu shitang, under the moto, “ Manage for the community, not for the profit” was well-received. At present, there are more than 700 customers a day, and in Vanke’s largest community, Shijihua city in Shenzhen,there are over 1000. Men Ke said their objective is to open ten more branches this year.

res10_attpic_brief

Inside the Di-wu shitang, thus reporter noticed that they were offering more than 20 dishes. Meng Ke said, they have over 300 dishes to select from. The dishes served change daily, and after one month they start over, while altering the menu plan based on which dishes have been most consistently ordered. He said Di-wu shitang’s point of pride is their robot stir-fryer, which uses intelligent control technology to ensure that quantity and quality of a dish is exactly the same each time. This reporter followed Meng Ke into the kitchen, and found two mysterious-looking robot fryers, spinning around as they worked. One of the robots was in the process of cooking a dish of young bamboo shoots and meat. The electronic display screen flashed a series of instructions: add so many grams of oil, add so many grams of meat, add bamboo shoots, then add the flavoring ingredients. When it was just done, the heat source automatically went off, the instruction “done” flashed, and the pan inverted to slide the finished food onto a plate held by a kitchen operator. In color it was fresh and tender-looking, in appearance attractive. The cook in charge of operations said all the stir-fry dishes were done by the robot, according to a set order. The robot can make over 1000 dishes. It’s requirements are very strict. All the raw materials and seasonings need to be prepared beforehand and are sealed in bags, and according to the procedure are added during the cooking process. If the form of the raw materials is inconsistent, if the quantity is insufficient, if a mistake is made in the sequence, the robot shuts down, refusing to work.

Di-wu shitang stir-fry robot

Di-wu shitang stir-fry robot

a stir-fry robot in use

a stir-fry robot in use

This reporter saw there that all the operations were carried out with a high degree of standardization. Swiping the card, fetching a tray, fetching the dish, taking it to go and eat, returning the tray.Meng Ke said their qualiy requirements were very strict, all cooking materials are inspected twice to assure food safety. Although the dining room opens for lunch at 11, there were people lined up in advance to get in. At 12:40 there were no empty seats, and more than 20 people lined up at the window to order. Since it is a “dining room” price is an important element. Here the most expensive dish is just 15 yuan, while most are 9 yuan. Sitting at two tables pushed together,was a group of seven, four elderly persons, one middle aged husband and wife, and one child. The middle aged man recognized me for a reporter, and praised the dining room effusively. He said, for the seven of them they spend a little over 100 yuan ($16), it’s a real savings. The dishes are tasty, and if they eat here, there’s no cooking or washing up. They only wish they had a separate banquet room, if they did, they would have a dinner party there. 1346036502578_000

While this reporter was talking with Meng Ke, frequently people came up to say hello to him. Meng Ke said that although this dining room had not been open for very long, there were already many old customers. Many people come almost every day for both lunch and dinner, therefore they have become friends.Mr Zhu, an elderly man, told this reporter, that he and his wife retired to Shenzhen. Their children work in the city, they do not live together. To make a meal is simple for just the two of them, but, on the other hand, they have to shop, wash and prepare the food, cook it, clean up afterwards, in the end it is a lot of trouble. He said, they realized that because this community dining room exists, it gives them more leisure time [not to have to prepare meals], therefore they have become regular customers.

Shijihua city:

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Vanke operated fresh food market after opening a short time, has to close

With its “neighborhood scale complete set of services” strategy Vanke hopes to break out of the pattern of real estate developments building large scale malls

http://www.bjbusiness.com.cn/site1/bjsb/html/2013-04/23/content_211606.htm?div=-1

Beijing Business Report ( reporters Liqian, Chong Xiaomeng) has reported on the Xingfu jieshi market in the Changyang Penninsula real estate project, which closed barely 50 days after it opened. The reason is that a department office of the Ministry of Reconstruction and Commerce ferreted out that they had not completed the paperwork. Yesterday Vanke responded with their own statement, to the effect that “one of their rivals had tipped off the Ministry office.”

opening day

opening day

The Xingfu Market (Happy Market)in Changyang Penninsula is one of Vanke’s trial ventures to start up businesses in the field of community services. Several months ago on 03-02, the Changyang Penninsula Xifang Market officially opened. Vanke stated that the market would be capable of supplying the vegetable and fresh food requirements of the 7000 plus new residents.

interior

interior

During the several months it was open, the Ministry repeatedly conducted on-the-spot inspections. On 04-19, citing that the paperwork was incomplete, it closed the market, confiscating its electronic scales, and all of its computers and other equipment, forcing it to stay closed until it reorganized

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Yesterday, a Vanke spokesperson told the Beijing Business Report that the independently operated market had been welcomed by community residents. Even though they had experienced this setback, Vanke’s “Neighborhood scale complete set of services” strategy would continue. As for when the market would reopen, the Vanke spokesperson said it was not yet determined.

Besides the Xingfu jieshi market, Vanke has also opened the food service dining room Di-wu Shitang, and a dry-cleaners. Compared to the market, at Di-wu Shitang business is flourishing, the number of residents utilizing it is large. Although this may be the result of differing management practices, it also has much to do with the make-up of the new residents. The majority are young, they do not cook their own meals every day. In terms of fresh food products, they might buy fruit sometimes, but they don’t purchase vegetables regularly. Also, Changyang Penninsula is still in the process of selling units and building new buildings. The percentage of residents is not yet very high. In this situation, a dining cafeteria is bound to show quicker results than a market.

A management consultant: “When the market reopens they can readjust its product display and pricing based on data on the age and standing of current residents. Once Changyang Penninsula reaches 70 to 80 percent capacity, they should no longer have a problem.”

An industry insider opined that Vanke may lack experience in this sort of service business. In the future they may need to take on outside help from an expert at retail. But Vanke has already stated they do not intend to seek outside investment in their markets, but want to run them entirely by themselves, in order to ensure the quality of their product. According to the management consultant, it is difficult to judge whether Vanke, which is used to mobilizing on a grand scale, can adjust to being good at small service businesses. However, many feel that for Vanke to take this fresh approach at redefining their business, will have a positive effect.

As more and more real estate magnets wade into the retail business field, it leads to vigorous development, but as their projects all have a similar orientation, this homogeneity leads to less than optimal results. Data shows that up to the third quarter of last year, the unoccupied space in Beijing shopping malls had reached 11%, exceeding the danger zone of 6%. In the 4th quarter of last year, one of the main commercial complexes in Beijing, the Zhongguancun Shangquan shopping mall, had a vacancy rate of 14%.

Zhongguancun Shangquan shopping mall

Zhongguancun Shangquan shopping mall

At present, these malls and commercial complexes are in a gold-plated zone, therefore for the most part they have nothing to worry about. In general, when real estate developers take their first steps into retail, they neglect business management practices. However, if they can just find a way to make a vivid and dramatic impression, the value of their real estate will once again rise.

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