Scaleup Stories with Mac Chung Lynn, Group CEO of Nando’s Malaysia and Singapore

Mac Chung Lynn , Group CEO of Nando’s Malaysia and Singapore with moderator Anand Krishnan, MD of Endeavor Malaysia

On 13 March 2018, Endeavor Malaysia in partnership with WORQ, co-working space held its first edition of Scaleup Stories with Mac Chung Lynn, Founder and Group CEO of Nando’s Malaysia & Singapore, for an intimate fireside chat.

An architecture graduate from the University of Wales, Chung Lynn returned to Malaysia in 1998 to set up the Nando’s franchise around the region. Under her leadership, Nando’s today has grown to 85 restaurants across Malaysia & Singapore, and become a local F&B powerhouse.

Read on for a summarized version of her talk.

We know that you started your professional career as an architect, but how did you get from being an architect into running the Nando’s franchise in Malaysia at the young age of 25?

Growing up I was always good at art and math as well, coming from a family of engineers. Architecture became a natural choice and I was lucky that I could take a science based degree in Architecture from a university in Cardiff.

My first encounter with Nando’s in 1998 while I was still in the UK. Nando’s was not well known in UK, there were only 8 restaurants at that point and it was referred to as that ‘funny’ chicken place in London where I lived.

I got to try Nando’s after a Thai friend of mine recommended it. She said that the chicken went great with thai sticky rice. I was also approached by the Nando’s restaurant staff who dropped a ‘chicken bag’ in my postbox asking me to try Nando’s. Ever since then I always loved the brand.

Then when my dad visited me, I took him to Nando’s and when he tried the chicken he immediately said that he wanted to bring the franchise to Malaysia. I thought that he was absolutely mad.

Our family owns an engineering and construction company and knew nothing about the F&B business. But he said, “Look this chicken is amazing, it even has extra, extra hot sauce. Where can you get chicken like that in Malaysia?”

Within a month, my brother was writing over to the owners at Nando’s and within two, my dad had flown into South Africa. Then in 3 months he said he got the franchise and ask if I would be interested in running the business in Malaysia.

At 25 I had just finished my professional qualifications and didn’t mind coming back to give my dad a hand and so that’s how I got persuaded into coming back and running our first restaurant.

What were the early days like at your first restaurant in Bangsar, Kuala Lumpur?

First of all, you need to understand that Nando’s is different all over the world. It was pretty set up in South Africa and Australia as top-of-line fast food restaurants with small footprints and all takeaway counter service. The UK style on the other hand was more upmarket and they positioned themselves as fast casual instead. It was still counter service, you would basically take your food from the counter and sit down.

When we brought Nando’s in Malaysia, for some odd reason the Headquarters decided to give me a table-service type of restaurant. But at the time, we (including Nando’s owners) were all very young, they never really thought about positioning in Malaysia or anything like that. So they designed me a store which was half counter and half seating, then basically just said, “here’s a table service restaurant for you”.

It was extremely difficult in those days. The whole of Malaysia had grown up with fried chicken (unlike the roasted chicken that we served) and restaurant chains at the time was mainly fast food, meaning you had your food served fast at a lower price. Nando’s was different, we cooked to order and our food was at a higher price point. So it was hard to educate the customers about our product.

As a franchisee how much say did you have in the early days?

In the early days, we had a lot of sway, because global didn’t have the structure to support us. I was very lucky because they seconded a South African employee who ran operations.

He taught me the know-how from how to grill to how to manage people and that really, really helped. My dad also seconded his staff who helped me with financials. So between the three of us, we ran the business as joint partners and friends for two years.

But after two years, the South African headquarters told me that I could no longer run the business in that way. Someone needed to step up to run the business, and so that’s what I did.

I decided to re-position the brand in Malaysia. My background as an architect made it easy to change the restaurant design so I converted it from table service to hosted cockerel, where customers are served at their tables after placing orders at the counter.

This worked really well until we reached a point where we couldn’t cope with the crowd. People were coming into Mid Valley Mall ordering their food, but couldn’t find a place to sit. Meanwhile, their chicken was coming up. So in the end we had to go back to table service.

In those days we didn’t have the restaurant host concept like in the UK. What happens there is that a host meets you at the door, helps you find a seat and then when you are ready to order you go up to the counter. If hosts were around in Malaysia during that time, I think I would not have converted the restaurant back to table service. In fact, Malaysia is one of six countries with Nando’s that actually has table service, the rest of the world are still using hosted cockerel.

At some stage we will revert back to hosted cockerel. In Singapore, we are in the midst of re-positioning ourselves because the casual dining segment is very cluttered and what we’re finding is that we’re not breaking out of it. We’re too expensive, we’re neither here nor there, but Singaporeans are quite price sensitive. Which is why we’re going back to hosted cockerel, so that we can remove service charges and drop our prices.

What gave you the confidence to run a franchise at the young age of 25? And how did you end up opening your second restaurant?

I was really naive at 25, so at the time there was no fear. When I was an architect in the UK, I had already lead a project at age 23 and had built my first building by the time I was 24. The thought of running a restaurant really didn’t seem hard to me at that age, so I just went straight into it. I guess it was a bit of arrogance mixed with naivety and fearlessness.

We didn’t open the second restaurant until our second year. We opened Bangsar first and then we had the Commonwealth games, which was absolutely chaotic because we didn’t have enough staff.

So the whole office literally shut down and everyone worked in the restaurant. My senior accountant was collecting money, my marketing girl was making burgers and I was just doing whatever that needed to be done. It was really fun, but I realized that we needed the structure in place before we could open another restaurant. So the second store opened at the end of our second year in Subang Parade and the following year we had another in Chinatown.

Who did you go to for advice in those days?

Our partnership was split 70% Mac family and 30% South Africans. I credit Mike Denoon-Stevens, Director of Operations at Nando’s South Africa, for having brought me to where I am today. He patiently taught me how to read P&L, Agreements and was one of the key drivers in running the business. To this day I run my business the way that he taught me to.

When you were first starting out did people take you seriously as an entrepreneur? Were there issues with your age or even your gender?

There were probably three times I felt that I wasn’t respected as an entrepreneur. The first time was when we first opened Nando’s. One of the senior executives from our industry came to our restaurant and when I greeted him, he just shook his head and left. I just thought “okay I know I’m new, I don’t know what I’m doing, but never mind”.

The second time was a few years later when I employed the ex-GM of a fast food chain. He was very well known in the operations line. The first thing he said to me was, “You know I’ve never worked for a woman boss before, I don’t know what it’s actually going to be like but I’ll try it I guess”. It’s quite daunting to have people say that to you, because you do wonder if we (women) manage differently.

The third time was our partners, the owner of Nando’s. We’re really good friends and get on well, but they always looked at me as Mac’s daughter even though Mac never played a part in the business. I was the person that built and ran the business and even when I had 50 stores and was opening up stores in Singapore, I was still just Mac’s daughter. Finally what happened was as they put together the global team, they did an assessment of every single head of country and I was one of the few that rated platinum among 2,000 CEOs around the world – it was only then that they started to think that I was more than capable of running the business.

But that’s the tough part, when you start out young, your business partners will always assume that you’re that young 25 year old, even when you have gray hair and wrinkles.

You mentioned your father, he’s a successful corporate figure and runs his own engineering firm. Did you feel like you had something to prove?

No, luckily my dad has always been very supportive. The only thing is that when so much family money has been invested in the business, you know that failure is not an option. So it’s not about proving yourself to other people, but it’s about making sure that you succeed.

So today you have 85 restaurants across Malaysia and Singapore, but how did you think about growth in the early days?

Don’t do what I did when I was young. In the early days when someone gave me a site, I just thought about the number of restaurants that I could open without looking into the finances.

So the first few years, I opened too many restaurants, too fast without the proper structure. We were in random places, where we didn’t fit as a brand and we were not ready to be honest. What I ended up doing in the next two years after, is I had to start consolidating the business, closing the restaurants and getting the business back on track.

After the consolidation exercise we became very strict about business development and how we did our analyses before going into a new site. Now before even thinking about opening up a new restaurant, we make sure to sit in a similar restaurant for at least a week to really understand the customers there and we do a deep analyses of the numbers.

Your family brought the Nando’s franchise into Malaysia and Singapore, but was it ever an option to sub-franchise Nando’s?

There were three reasons why we never went into it.

Firstly, when you have full control over the business you don’t have to worry about convincing your partners to change the business or get their permission to do a new marketing campaign. Now that I’m trying to change things in Singapore, I can go right ahead even though I have to invest the money myself.

Secondly, having full control also means that it is easier to maintain quality and control over the product. We don’t have to worry about someone launching asam laksa peri-peri or different types of food items, because this can happen.

Thirdly, if you think about numbers the average restaurant generally earns about 20% EBITDA, but if you franchised you would only earn 5% royalty so your income is not as high. Of course if you were to sub-franchise out you would have the upfront franchise fee, but that sum would be needed to create a support system for your franchisee.

Having looked at some of our restaurants in the outskirts however, it may make more sense to have an owner operator running our restaurant. If you look at some models like McDonald’s, they do sub-franchise out when its further in the outskirts as it’s difficult to manage and it’s hard to go out and support them.

The sub-franchising option to me is for people who are in it to sell. If that’s for you, you should go in setup the franchise, do an IPO and then sell. But we’re interested in the long term so we prefer greater control.

When your organization doubled in size what types of challenges did you have to contend with?

Challenges were mainly people related and we’ve had to stop and review our structure after every 10 stores.

In 2014, we opened 14 restaurants in one year. We took our best managers and put them into the new restaurants, but what happened to the older restaurants was that the young junior managers didn’t know their customers or trade areas. Pretty soon we were getting negative like for like numbers. Learning from that, it’s actually now a KPI for Nando’s to have a certain percentage of managers in one restaurant for at least a year.

Managers are very important because they understand who the regulars are and they are the ones responsible for doing local restaurant community walks and learning about their local restaurant trade areas. In fact, every time we open a new restaurant, the marketing team and the manager will literally knock on the doors of local offices, schools and invite them over to Nando’s.

How do you deal with turnover and make your people feel a sense of ownership?

This is a hard one, we’ve actually got a lot of turnovers with part-timers, but not with managers. I think it’s because we give our managers a lot of ownership, and when you talk about ownership it all boils down to trust.

In Malaysia, we’re at a stage where we’ve become so big that we have to introduce processes, structures and guidelines. But there is a danger to that. We don’t want to have too many processes for everything, that’s not Nando’s, so instead of SOPs on how to greet and serve customers, we tell our managers to greet our customers as they would guests in their home.

We also address turnover with internal marketing. Our saying is that “It’s the people that make the chicken” so a lot is invested in our people.

How difficult was it to enter Singapore after establishing yourselves in Malaysia?

We had about 50 restaurants in Malaysia when we entered Singapore. It’s a difficult market. This is our 8th year in Singapore and we’ve already had to do two turnarounds in that time. In Singapore, restaurants open ‘big’ because it’s a novelty driven market. When we first opened Nando’s people queued to get in for three months and we had to open our second and third restaurant very quickly in that same year. But the moment the novelty wore off, consumers moved on to the next concept.

What we’ve found hardest though is recruitment. The country has a very low unemployment rate and Singaporeans generally do not want to work in our industry. We have a lot of foreign workers, but the government makes it extremely hard for you to recruit foreigners through salary restrictions and levies. So we’ve now started hiring ex-offenders from Changi Prison to help with recruitment and as a way of giving back to the community.

You also make very small margins in Singapore. Labor is really expensive. In Malaysia, labor costs 18-20% of sales, but in Singapore it’s 25-30%. Rental is another high cost. In Malaysia it’s between 15-17% and in Singapore it’s 30% – so it’s been a tough market to work in.

The other thing about Singapore that has been quite unusual for us is that the heartlands of Singapore has a completely different set of people. The Orchard Road belt people are usually expatriates and people earning SGD 15,000 – 20,000 but in the outskirts the average household income is SGD 5,000. The difference makes it hard for us to operate in this market.

What does the next phase of growth look like in Singapore and in the Southeast Asian region?

We’re in a turnaround phase in Singapore, so we just want to make sure the turnaround works. After which, we’re looking at just one store a year for the time being. We don’t think Singapore can have that many restaurants, 15 at max. Eventually we will need to do a full development plan and it might be a drastic change like having a smaller footprint and opting for more delivery-based orders.

In terms of regional expansion, Nando’s as a brand and business is very conservative. The target for the Group CEO is just to grow our presence and value in each country. After the next 5 years we may look at expanding in more countries.

At present, we have an equal partnership with the owners of Nando’s and the plan is to eventually grow the Malaysian team so that it can eventually serve as a regional hub.

Speaking of partnerships, as a franchisee how does the partnership between you and Nando’s global work?

I’ve been with them for 15 years and I’ve grown along with them. We ran into some difficulties when we talked about legal issues and numbers, but we managed to come out of it. Nevertheless, it’s important to make sure your documentation is always clear.

Operationally, we are great partners and in general we tend to agree on most things. When there are disagreements however, we can let it go and even let the other have their way.

How does Nando’s Malaysia, Singapore and the rest of the world differ in terms of brand personality?

So globally, Nando’s is well known for its tongue-in-cheek ads and Nando’s South Africa even wins awards for their advertisements. They go full on there, in fact if they did what they did in Malaysia they would literally be in jail by now – they make fun of everything and get away with it.

In the UK it is more tame, it’s more about local restaurant marketing and relationship building as well as building big and beautiful restaurants where they spend about GPB 1 million per restaurant.

In Malaysia, we tend to follow South Africa’s tonality. When we first started out we wanted to be like South Africa, but it was hard to get our marketing people to understand what that meant without copying the South Africans wholesale. We had to ask ourselves how to localize the tongue-in-cheek tone.

I’m quite lucky because now my marketing team gets it exactly right. Part of it is because they have that flexibility. Neither I nor my CEO for that matter, actually ever see any of our campaigns before it is released. I only find out when a friend forwards an advert to me.

My marketing team can do whatever they want to do, with just one basic rule – no sex, no religion, no politics and don’t get me in jail.

Your ads and marketing campaigns have really established Nando’s as a local success, why do you think that the Nando’s brand has been such a big hit in Malaysia and to a certain extent in Singapore?

We still struggle to translate that tonality in Singapore because we are not allowed to do as much there. We’re still figuring things out there and have worked with some of the biggest advertising agencies – yet we haven’t found what makes Singaporeans laugh.

I think in Malaysia, our courage to speak up has allowed our voice to resonate with a lot of Malaysians. The other part is that we’ve really gotten to know the community well. Our people do their best to engage with community members even if they don’t speak very well.

Another big success factor was the Nando’s art competition in Malaysia. Until we launched that competition the youth really didn’t understand Nando’s. It was only when we started walking around the universities, telling people what we do through the competition that we started getting a lot more connected to them.

Tell us a bit more about the Nando’s art competition in Malaysia and the work that Nando’s has done in promoting art

Globally, we do a lot of work with social enterprises related to art. Nando’s is basically the largest collector of South African contemporary art. In South Africa, we give out canvases to young budding artists and buy back their artwork. South Africa then sells the artwork to other Nando’s countries. We buy them and put it up on our restaurant’s walls.

As for the competition, a few years back the global team said that they wanted to launch an art program around the world. We started by commissioning young budding artists to do Nando’s inspired artwork. But after a year of doing that I felt like it wasn’t enough and wanted to make it bigger. So I worked with my friend who was a gallery owner and we launched this nationwide art competition.

The competition has become so big in Malaysia that it is now a platform for launching the careers of young budding artists into the bigger, wider world. We get about 900 entries per year and on the competition day, all the galleries in Kuala Lumpur come to pluck out talents from our group of young artists.

The competition furthermore is not just about the prize money, we actually don’t give a lot. More importantly is that if they win, for the whole of next year we provide them with mentoring and coaching to help them put together a collection for a solo exhibition. As a result, a lot of universities have ended up encouraging their students to join the competition and have actually made it a part of their curriculum.

Tell us a bit more about how you incorporated your love of art and architecture into the business.

Nando’s believes in three things, people, product and place.

In terms of place, we really invest in our designers no matter which country we’re in. In my case, I work with my husband who owns an architecture firm and he designs all of our restaurants. In the UK, there’s a design director who vets all of the drawings.

We started out spending a few hundred thousand on our restaurants, but nowadays we spend twice as much per restaurant. It’s a hefty sum to pay for each restaurant, but that’s why we make sure that we really get the right site, because if we relocate it’s a lot to write-off.

Every restaurants has to be individually designed and has to be natural. We use real leather and wood – no laminates or vinyl. It costs quite a lot, but it makes us special in that sense, no one else really invests in that with their restaurants.

Was it hard to step away from day-to-day operations now that you’re Group CEO of Nando’s Malaysia & Singapore?

If you asked me that 7 years ago, I would have said yes. I think I spent all my life trying to prove to everyone that I could do this. But I’ve found that validation and have nothing to prove in that sense.

After about 15 years, I became tired of doing the same things – going to restaurants and nagging people. I can still clear plates and do all of those thing and my husband hates going to Nando’s with me because I can’t sit still and end up managing the restaurant. But you end up running out of ideas on how to innovate your business and motivate people.

So the timing was right and I knew it was a good move to become Group CEO. Singapore already had a GM in place, so it was quite easy, but in Malaysia I ended up recruiting someone who had built 14 restaurants for me.

You are quite a private person and tend to shy away from the public eye, but how do you feel about being a role model to others?

I enjoy being a mentor because it’s one-on-one. In fact I enjoy giving time to young people. They’re not so jaded, they’re energetic and remind you what’s really important in life. It’s been fun I must say and it’s nice to be able to share your experience with them.

If you had the chance to do it all over again, what would you change this time round?

I think I would have listened to my gut feel more. As you’re growing, sometimes you tend to listen to other people even when you know in your guts it’s the wrong decision to make. A lot of times I’ve made mistakes and took the wrong direction because I didn’t listen to my gut feel.

Saying that, if I hadn’t made those mistakes and had those experiences, I wouldn’t be where I am today. I could have done with less mistakes, but it happens and it’s been a good journey.