Sakae Sushi is a restaurant chain from Singapore that specialises in affordable Japanese food served to diners via a kaiten (conveyor belt).1 Since the opening of its first outlet in 1997, the chain boasts over 100 outlets across Singapore, China, India, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, the United States and Japan.2 Sakae Sushi is the brainchild of entrepreneur Douglas Foo.3
Background
In 1996, Douglas Foo set up the company Apex-Pal to enter the garment business trade. However, due to strong competition from low-cost garment factories from China, Foo went in search for a new business model. Eventually, Foo decided to set up a Japanese restaurant that offered quality sushi and other Japanese dishes at affordable prices.4
Foo set up his first sushi outlet, which he named Sakae Sushi (sakae meaning “growth” in Japanese5), in OUB Centre at Raffles Place in 1997 during the the Asian financial crisis.6 It was an immediate success as customers were attracted by Sakae’s affordable and simple price structure. It was also a novelty in Singapore at the time to have dishes served on a conveyor belt.7
Expansion
Sakae’s popularity prompted the opening of a second outlet in the Heeren mall on Orchard Road in 1998, and a third one at Wheelock Place, also in Orchard, the following year.8 Foo had initially planned for six Sakae outlets for the Singapore market, but he soon saw the potential for expansion to suburban areas, and to turn Sakae into a major food franchise – to be “the McDonalds of sushi”.9 The first Sakae heartland outlet was opened in Eastpoint Mall in 2000 and this was followed by the first overseas branch in Indonesia in 2001.10
By 2006, there were 31 Sakae outlets in Singapore and another 12 in Malaysia, Indonesia, Thailand, the Philippines and China. Net profit was S$3.7 million with a revenue of S$51.9 million.11 This spectacular growth had come about without bank borrowings, with Sakae’s expansion financed initially through Foo’s savings, then by earnings and capital gained from the company’s public listing.12 In 2008, Sakae opened its first outlet in the United States at the Chrysler Building in New York.13 Today, there are over 200 Sakae outlets worldwide.14
Sakae expanded by growing the number of company-owned outlets and through franchising. Foo also created a portfolio of brands such as Sakae Teppanyaki, Hei Sushi, Senjyu, Crepes & Cream, Kyo and Nouvelle Events. But Sakae Sushi remains the core of Apex-Pal.15
When the global economic crisis struck in 2008 and Sakae found its margins squeezed by higher prices for commodities such as rice, the company froze wages and cut executive pay but decided against mass staff layoffs. A profit of S$2.3 million in 2007 was followed by a net loss of S$3.8 million in 2008 due to increasing costs of rental, salary and commodities. To counter this, Sakae introduced cost-cutting measures such as sourcing for new food suppliers, minimising waste and tightening other operational practices.16 The company returned to profitability in 2009, posting a S$3.3 million profit on a revenue of S$88.8 million.17
Use of technology
The use of technology in food preparation and serving has been a signature mode of operation for Sakae Sushi.18 To ensure that Sakae’s food is of a consistent quality across the chain, ingredients are prepared at a central kitchen and sushi rice rolling machines are installed in every outlet.19
In Sakae outlets, each table is equipped with a hot-water tap for tea refills and a computerised menu by which diners can view and order items. This electronic ordering system has been patented by Sakae, as has its portable conveyor belt system, which also won Spring Singapore’s Innovation of the Year Award in 2003.20
Public listing
In 2003, Sakae’s parent company Apex-Pal was listed on the Singapore Stock Exchange. Apex-Pal’s food businesses, of which Sakae is the flagship brand, represented over 95 percent of the company’s revenue.21 In August, Apex-Pal’s initial public offering (IPO) set out 16.5 million shares, 836,000 of which were for public investors and the rest for institutional investors, clients and company employees. The former was 916 times subscribed, which made it the highest share subscription rate in Singapore at the time. Overall, the IPO was 47.4 times subscribed.22
The IPO brought in about S$3.4 million, which helped to finance the opening of new Sakae outlets (and other brands within Apex-Pal) and was used as working capital.23 The parent company was renamed Sakae Holdings Ltd in 2010.24
Authors
Alvin Chua & Lim Tin Seng
References
1. Koh, W. (2009). Sakae!: Cooking up a global food business. Singapore: Cengage Learning, p. 66. (Call no.: RSING 338.76164795 KOH)
2. Sakae Holdings Ltd. (2014). Annual report 2014, p. 1. Retrieved 2016, April 13 from Sakae Holdings Ltd website: http://www.sakaeholdings.com/uploads/4/4/3/5/44359049/2014.pdf
3. Koh, W. (2009). Sakae!: Cooking up a global food business. Singapore: Cengage Learning, p. 1. (Call no.: RSING 338.76164795 KOH)
4. Koh, W. (2009). Sakae!: Cooking up a global food business. Singapore: Cengage Learning, pp. 1, 65–66. (Call no.: RSING 338.76164795 KOH)
5. Prystay, C. (2008, March 10). Sushi for all. Forbes Asia. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/
6. Sakae Holdings Ltd. (2015). Overview. Retrieved 2016, April 13 from Sakae Holdings Ltd website: http://www.sakaeholdings.com/overview.html
7. Prystay, C. (2008, March 10). Sushi for all. Forbes Asia. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/; Sakae Sushi – where F&B, tech meet. (2000, October 2). The Business Times, p. 2. Retrieved from NewspaperSG.
8. Elias, R. (1998, December 3). Sushi chain to open at Wheelock Place. The Business Times, p. 3. Retrieved from NewspaperSG.
9. A simple goal – to be the McDonald’s of sushi. (2004, February 9). The Business Times, p. 3; Elias, R. (1998, December 3). Sushi chain to open at Wheelock Place. The Business Times, p. 3. Retrieved from NewspaperSG; Sakae Holdings Ltd. (2016). Milestones. Retrieved 2016, April 13 from Sakae Holdings Ltd website: http://www.sakaeholdings.com/milestones.html
10. Sakae Holdings Ltd. (2016). Milestones. Retrieved from 2016, April 13 Sakae Holdings Ltd website: http://www.sakaeholdings.com/milestones.html
11. Sim, G. (2006, August 21). The interview: Leading in Asia: Chasing big dreams while putting people first. The Wall Street Journal Asia. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/
12. Chuang, P. M. (2004, February 9). It pays to be crazy sometimes. The Business Times, p. 3. Retrieved from NewspaperSG.
13. Prystay, C. (2008, March 10). Sushi for all. Forbes Asia. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/
14. Sakae Holdings Ltd. (2016). Our brands. Retrieved 2016, April 13 from Sakae Holdings Ltd website: http://www.sakaeholdings.com/our-brands.html
15. Prystay, C. (2008, March 10). Sushi for all. Forbes Asia. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/ ; Sakae Holdings Ltd. (2016). Our brands. Retrieved 2016, April 13 from Sakae Holdings Ltd website: http://www.sakaeholdings.com/our-brands.html
16. Yang, H. (2009, April 9). Layoffs not an option for sushi chain boss. The Straits Times, p. 49. Retrieved from NewspaperSG.
17. Apex-Pal International Ltd. (2009). Annual report 2009, pp. 4–5. Retrieved 2016, April 13 from Sakae Holdings Ltd website: http://www.sakaeholdings.com/uploads/4/4/3/5/44359049/2009.pdf
18. Chuang, P. M. (2004, February 9). It pays to be crazy sometimes. The Business Times, p. 3; Sakae Sushi – where F&B, tech meet. (2000, October 2). The Business Times, p. 2. Retrieved from NewspaperSG.
19. Sim, G. (2006, August 21). The interview: Leading in Asia: Chasing big dreams while putting people first. The Wall Street Journal Asia; Prystay, C. (2008, March 10). Sushi for all. Forbes Asia. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/
20. Chuang, P. M. (2004, February 9). It pays to be crazy sometimes. The Business Times, p. 3; Sakae Sushi – where F&B, tech meet. (2000, October 2). The Business Times, p. 2. Retrieved from NewspaperSG.
21. F&B chain Apex-Pal goes for Sesdaq listing. (2003, July 22). The Business Times, p. 7. Retrieved from NewspaperSG.
22. Apex-Pal’s public tranche offer 916 times taken up. (2003, August 28). The Straits Times, p. 15. Retrieved from NewspaperSG.
23. Apex-Pal’s public tranche offer 916 times taken up. (2003, August 28). The Straits Times, p. 15. Retrieved from NewspaperSG.
24. Sakae Holdings Ltd. (2016). Milestones. Retrieved 2016, April 13 from Sakae Holdings Ltd website: http://www.sakaeholdings.com/milestones.html
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