By Khairul Khalid
Sisters Crispy Popiah’s selection of franchisees is important to its success. Besides adequate capital to start the business, its founders cite good attitude and a passion for popiah as critical factors.
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The success of local popiah franchise Sisters Crispy Popiah has emboldened founders Theresa Lim and Mei Lim to grow their business further than they had initially imagined, but they are still very selective when it comes to potential franchisees and business partners.
“We are still very choosy about our franchisees. The franchisees represent our brand. We have a checklist. They have to meet the right criteria. Quality is more important than quantity,” said Theresa Lim.
Other than sound financials, Theresa Lim said that the most important factors for Sisters Crispy Popiah franchisees to succeed are their attitude and passion for the product.
Theresa Lim
“Our advice to potential franchisees is that firstly, they must love our product. Secondly, what is their mission? Why do they want to enter the business? If they just want to make extra money, they won’t go far. You have to put in a lot of effort. It requires dedication,” said Theresa Lim.
Besides supplying the raw material, Sisters Crispy Popiah charges franchise fees of RM30,000. They also charge a service fee of about RM500 monthly to the franchisees.
“Other costs include the kiosk design and construction. Different malls have different requirements. Some malls are quite relaxed on the layout and designs. Some are stringent. if the design is more intricate, it would cost more. We have our associate designers and contractors. We also provide training to the franchisees. We don’t take royalty from franchisees’ sales, as some franchisors do,” said Theresa Lim.
Other than the franchise fees, Theresa Lim said that they would also need to check on a potential franchisee’s financial stability to ensure that they can last in the long run.
“You need to have a good cash flow to sustain the business. In certain locations, when you set up the business will not boom immediately; it will take time. For the first year, we estimate that the franchisee would need at least RM120,000 cash flow monthly to roll for operations and expenses. That includes fees, labour, rental and raw materials and other daily expenses,” said Theresa Lim.
Sisters Crispy Popiah does not supply workers for the franchisees but provides training for them.
“We don’t provide labour, but we give two weeks training to workers. This includes customer service to product knowledge. We prefer the franchisees to get local workers who speak English, Malay or Chinese. But if they have no choice, then they would get foreign workers. It is important that they can at least speak Malay, otherwise they will not be able to explain our popiah to customers,” said Theresa Lim.
The Sisters Crispy Popiah co-founder said that another important factor is that the business owners need to be very hands-on with the business, instead of delegating everything to their workers.
“I don’t like it if a franchisee just invests money and then lets their workers run the store. The outlet owners need to be very involved and hands on. Only then would they know what their customers really want.
“Different locations, different customers. In certain places, you don’t need to push much and the products would just fly off the shelves. In other places, you can shout yourself hoarse all day but business will still be slow. You will only know the market well by being there yourself,” said Theresa Lim.
To stress the point, Theresa Lim said that she is still very hands-on with Sisters Crispy Popiah’s operations, even after more than a decade and having delegated other duties to other members of her family.
“After all these years, we are still very hands-on, even though we have very capable team. For example, we still very involved in the quality control side. Every month, our audit team will go around the outlets to check on quality, cleanliness, presentation, maintenance, safety, product, attire. Everything. It’s a holistic approach to ensure that we don’t compromise on our end product,” said Theresa Lim.
She advised franchisees to adhere strictly to the training provided by Sisters Crispy Popiah to ensure that their businesses are profitable. Small things matter, she said.
“For example, the technique of rolling and cutting is critical. In order not to lose money, the amount of weighed ingredients that you put in is crucial. If you put too much, then you lose a lot of money. That’s where your profit margin is,” said Theresa Lim.
Sisters Crispy Popiah plans to grow its domestic business by targeting to open around six outlets yearly. They have also launched Sisters Kitchen, a full-fledged restaurant serving their popular popiah as well as other local delicacies, at G Tower in KL. At the moment, The Sisters Crispy Popiah kiosk franchise remains their core business.
Theresa Lim said that the franchise is now facing tough market conditions. The weak economy and implementation of the goods and services tax (GST) has hit business hard this year. Sales are down by about 20% to 30%. Cost of goods has increased post-GST, squeezing margins. The bad weather has also affected supplies.
“Eggs and peanuts comprise around 40% of the cost of goods for a popiah. Next would be turnips. The eggs and peanuts are the most costly. Our peanuts are not the normal type we get normal shops. We require a certain quality and specification of peanuts. They don’t have the usual hardness. Sometimes we have to pay double market price per kilogramme compared to market price but we do it to maintain and sustain the quality and appearance of our product,” said Theresa Lim.
She said that the business suffered from the bad floods in the East Coast last year. She even considered purchasing a farm to supply exclusively for the Sisters Crispy Popiah franchise, although she admitted that is still a long way off because the price of land has shot up over the years.
“At one time, for three months we didn’t make any profit at all. The farms were all flooded. Our supplies were limited. We had to pay three times more for raw material but we just can’t afford to compromise on quality. We have to make sure that we deliver on our promise. Our regulars will know the difference if the product differs, even if it is just slightly,” said Theresa Lim.
“We have not gone into East Malaysia yet but plan to expand there soon into major towns. We also want to go into Brunei. Our business is based on volume. That’s why we set up our factory. Our outlets are relatively easy to run. If the franchisees follow standard operating procedure, it’s quite easy and straightforward to manage,” said Theresa Lim.
Plans are also afoot for Sisters Crispy Popiah to expand in international markets. Right now, they have secured a franchisee in Jakarta but the outlet is not launched yet. They are looking for more suitable partners in Indonesia.
But not everything is rosy when a business goes abroad. The sisters first venture outside Malaysia was about seven years ago when they branched out into Singapore with three outlets. Theresa Lim revealed that they had to withdraw from the Singapore market after just six months due to unforeseen problems at their production premises.
“We lost close to RM500,000 from our Singapore venture,” she said.
Although the company declined to reveal its sales figures, a check with the Companies Commission of Malaysia showed that in its financial year ended March 31, 2014, the Sisters Crispy Popiah (M) Sdn Bhd posted revenue of RM3.17 million and losses of RM132,429 after tax.
Nevertheless, Theresa Lim said that these challenges have only strengthened her resolve to expand the Sisters Crispy Popiah brand.
John Roland Goh
“We have sealed a deal in Jakarta. Our partners are waiting for the right time to launch. It is the same concept. We are looking at high-end malls.We are looking also looking at Australia, Scotland and the Netherlands. We have been talking with potential partners in these countries,” said John Roland Goh, chief operating officer (COO) of Sisters Crispy Popiah.
Goh is a family friend who was a banker living in Scotland before the siblings persuaded him to join the company. He is passionate about the product’s potential in foreign markets, especially in Dundee, Scotland where his family lives, but says that their main barrier now is the raw materials.
“There are major hurdles with customs and quarantine. We prefer for raw materials to be flown in from Malaysia. They are quite stringent with importing in raw materials. We would rather use our own turnips, peanuts and other raw materials to maintain our consistency and quality. We are very particular about the texture of our turnips. The quality and taste is different in other countries,” he said.
The COO said that alternatively, if a good supplier could be found, Sisters Crispy Popiah could probably set up a kitchen overseas to prepare the ingredients, instead of importing from Malaysia. Despite the problems, Goh is still upbeat about Sister Crispy Popiah’s international business opportunities.
“Is it cheaper to have a central kitchen in foreign countries? We will have to figure it out. For example, in Australia vegetables are generally cheap but manpower is expensive. Fortunately, our product is not labour intensive. These are some of the issues that we have to consider and overcome before penetrating foreign markets. We are doing comprehensive research, as well as talking to embassies and government agencies to help us out,” said Goh.
Yesterday: Popiah queens rolling them in
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