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A growing appetite

Select Group is entering the ready-to-eat food business in Singapore and is expanding in Malaysia

"We prefer to go into businesses that will last. We don’t do hit-and-run businesses, and we’re particular on quality." - Vincent Tan, Select Group managing director

VINCENT Tan's eyes light up when the conversation turns to food. "Food is not boring, you can come out with new things every time," says the managing director of food service firm Select Group. "Even with the same brand and same concept, you can innovate to come up with new ideas, new dishes, and new ways of presentation. It never ends." Speaking in Select's newly constructed 200,000-square-foot headquarters in Senoko, three times the size of its previous premises, Mr Tan says he is enjoying his work of running the firm and exploring new markets.

Over the last 25 years, Select has grown from a tiny food delivery outfit started by the Tan brothers to a Catalist-listed firm with almost S$160 million of revenue in 2015 and net profit of more than S$7 million. Select has expanded to become an owner of numerous lifestyle brands, including fine dining restaurant Peach Garden, events catering arm Stamford Catering Services, and dessert chain Hong Kong Sheng Kee Dessert.

Other mass market restaurant chains it runs include Lerk Thai, Pho Street, and Texas Chicken. Select also runs the Chinatown Food Street in Chinatown, the Singapore Food Trail food court by the Singapore Flyer, and the Singapore Food Street and Straits Food Village food courts at Changi Airport.

The Straits Food Village food court, designed by Universal Dining, Select Group's conceptual dining arm, together with Changi Airport Group, recently won the Airport Food Court of the Year Award at the Airport Food & Beverage Conference & Awards 2016. Newly opened in December last year, it offers delectable local delights in an ambient setting reminiscent of a rural fishing village. The innovative food court design was highly commended at the Awards.

This year, the company is on track to be delisted by a vehicle owned by a consortium including Mr Tan, his brother and Temasek Holdings-linked Dymon Asia Private Equity. "We have grown steadily and now have a very strong team to take the company further," he says.

Ready-to-eat expansion and overseas growth

Select Group is now moving into the ready-to-eat meal segment, as well as expanding its Hong Kong Sheng Kee Dessert and Pho Street operations in Malaysia. Select will manufacture packs of curry-based meals and Japanese bento boxes that will cost just S$5 or S$6. They will be distributed at MRT stations, shopping centres and shops. The business can be launched as early as September.

Select has confidence entering the ready-to-eat business as the experience of Japan and Taiwan showed how bento boxes remain popular over decades. Such a trend is not common in Singapore yet. "With the labour crunch and new spending habits, together with a fast-paced environment, there is potential as long as the quality and value is there," he says.

With the new building vastly increasing capacity at its central kitchen, Select can also expand all its food service lines, he adds. For example, there is now room for up to 30 to 40 Hong Kong Sheng Kee Dessert restaurants, from 17 currently. "If we manage our rentals and manpower well, there's still potential to expand in this market. But we must not create too many brands that use a lot of headcount," he says.

Select's strategy will be to operate businesses on both ends of the food market: fine dining, which people will continue to pay for; and mass market quick service restaurants that survive because of high volumes and streamlined costs. "We prefer to go into businesses that will last. We don't do hit-and-run businesses, and we're particular on quality," Mr Tan says.

Lessons learnt

In his 25 years of doing business, Mr Tan has been through his share of scrapes. He began his career in furniture manufacturing, before striking out on his own at the age of 27.

When brother Jack Tan completed his National Service, the brothers began a catering service in 1991 delivering food from their mother's Chinese mixed rice stall in Bedok. "I've always felt in my blood that one day, I will start my own business," he says. "Catering required little capital, and there was also demand for it."

In 1993, the Tan brothers opened their second kitchen, doubling the number of functions they could serve a day from 20 to 40. In 1995, they opened their third kitchen, doubling capacity to 80 functions a day. They then entered the food court business, before beginning to cater to institutions in 2000.

When they listed on the Catalist board at the end of 2004, revenue for the year had grown to above S$40 million, with S$1.4 million of net profit. Yet in the next five years, the company ran into trouble expanding in places like China and Thailand. "A staff cafeteria in Thailand, for example, had very low margins as workers there had very low spending power. Yet we were running with Singapore costs," Mr Tan says.

Select's fortunes began turning around in 2011, as revenues crossed the S$100 million mark. An astute purchase of Peach Garden at the end of 2008, the securing of franchise rights of Texas Chicken in 2009 and getting out of its overseas businesses in 2010 all helped, Mr Tan says. As Select begins to venture abroad once again, Mr Tan says he is careful to study his target market well. Today, it has attracted much franchising interest for its Hong Kong Sheng Kee Dessert business in Malaysia, he says.

Looking ahead, he says Select will continue to grow at a comfortable pace. "Much credit goes to my 1,800 staff for bringing the company to where it is today," he says. Select Group takes training seriously and also has incentive and reward schemes for management, such as overseas retreats, he says. "We want them to work like partners. We are one big family aiming to achieve greater heights."

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