(G)Old Chang Kee

Old Chang Kee curry puffs sell like hot cakes. Whether they are finger-licking good depends, of course, on your taste buds. There can be no argument about its bottom line, however, which is undoubtedly something to drool over.
According to its 2012 annual report, Old Chang Kee made a gross profit of $46 million on a total revenue of $76.5 million in the 15 months from January 2011 to March 2013. Can a business be more lucrative than this – with profits equivalent to 60 per cent of revenues?
Singapore Press Holdings (SPH), in contrast, a virtual monopoly, reported $71.5 million in profit after taxes on an operating revenue of $282.2 million – profits equivalent to 25 per cent of revenues – in the second quarter ended February 28. Singapore blue chips can be extremely lucrative. DBS reported a net profit of $950 million, which is equivalent to 40 per cent of its total income of $2.3 billion, in its latest quarterly results. SingTel reported a net profit of $868 million – equal to 19 per cent of its revenue ($4.48 billion) during the same period.
But even these government-backed, Temasek companies aren’t as profitable as the popular Singapore snack food chain, Old Chang Kee. No wonder its stock soared on talk of a possible deal because of its successful track record.
Feeding Singaporeans can be rewarding. That’s why a Hougang coffee shop was sold for a record $23.8 million. Hawkers may moan and groan about rising rentals, increasing costs and problems getting workers. But not everyone’s getting their fingers burnt in the food business. Old Chang Kee has proved to be a golden goose.
Unlike the one in the fairy tale, however, there’s no mystery about the antecedents or the success of this golden goose. Old Chang Kee has grown and grown since it was acquired by its current executive chairman, Han Keen Juan, in 1986. The curry puff maker, which started as a small stall in a coffee shop near the then Rex cinema on Mackenzie Road in 1956, is now found all over the island – and cooks up other delicacies, too, including fishballs, chicken wings and chicken nuggets. It has stalls not only in every corner of Singapore but has also set up shop in Australia, China, Malaysia, Indonesia and the Philippines. In fact, it’s one of the world’s 20 best fast food chains, according to the US-based Travel and Leisure Magazine.
Any way you look at it, it’s a success story, but let’s look at the bigger picture. Do hotels, restaurants, coffee shops, food stalls adequately pay their workers? Why are they so dependent on foreign workers? As we just saw, the food business can be highly rewarding. So do the workers deserve a bigger share of the pie? Food and drink stall and kitchen assistants are among the lowest paid workers in Singapore, according to Ministry of Manpower statistics. But any pay rise will eat into the profit margin and may make the bottom line less lip-smacking than the food. Will the employers relish that?

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