1.

0 COMPANY BACKGROUND

Secret Recipe was founded in 1997 by Yang Bahagia Dato’ Steven Sim, who is the owner,

founder, Chief Executive Officer and Managing Director of Secret is acknowledge around

Southeast Asia because it promises a value lifestyle proposition of great variety and quality

food at affordable prices. The uncompromising quality of food and desserts using quality

ingredients, coupled with moderate pricing, has created a new lifestyle cult, compromising of

a loyal base of food and cake lovers.

Secret Recipe first outlet is at SS2 Petaling Jaya and then expanded around the

country. Due to the positive feedback from the customers, Steven Sim was inspired to

franchise his business. Up to recent date, Secret Recipe currently have over 300 outlets

operated throughout the region. 40% of this outlet is company-operated and the rest are

franchised out, roughly it is 120 and 180 outlets respectively. It has since evolved to become

one of the fastest growing lifestyle cakes and café chain in the region with over 440 cafe

outlets to date. Secret Recipe Cakes & Cafe concept can be found in prime urban locations

and shopping malls in major cities in the region including Malaysia, Singapore, Indonesia,

Thailand, China, Brunei, Myanmar and Maldives.

A leading and largest café chain in Malaysia, with Halal certification awarded by

Jabatan Kemajuan Islam Malaysia (JAKIM), Secret Recipe is committed to continue to

adhere to the standards of preparation of all food in the restaurant in accordance to the

regulatory guidelines. A large variety of cakes and fusion of foods are served under the brand
name of Secret Recipe. Customers can always enjoy in confidence from more than 20 types

of fusion food, 40 cake creations and pastries, with a flavourful range of ice cream and

beverages offered in all Secret Recipe outlets. The company has registered double digit

growth for the past 5 years. In a period of seven years, Secret Recipe has expanded by over

100 cafes throughout the region. Defying the statistics of an economic crisis, Secret Recipe

continues to register annual growth of 30% for the past three years, while profits saw a 300%

increase in year 2002.

Products and Services

Furthermore, Secret Recipe Cakes & Cafe Sdn. Bhd. is well known for its find quality

products such as cakes, fusion, food and distinctive service. Secret Recipe well-guarded

homemade recipes have become favourites for both old and young. Secret Recipe are serving

a wide selection of more than 40 types of gourmet quality cake and other bakes desserts.

Inside the part of starter, it contains those light foods such as salad, spring roll, pumpkin soup

and mushroom soup. In Asian classic, those food are in Asian style, such as tom yam noodle,

Japanese soba, curry mee, Thai fried rice and laksa. In chicken category, Secret Recipe

provides chicken steak burger, chicken chop and chicken parmigiana. In fish and lamb

category, the foods are in western style, such as fish and chips, fish fillet, baked fish, grilled,

dory fish, beef steak and lamb shank. In pasta category contains varies type of spaghetti while

in pies category contain puff and pie. Moreover, in kids club, those foods are special design

to attract kids. For example, kid’s burger, kids fish and chip and also kids spaghetti carbonara

and bolognese.

Other than starter food and main food, Secret Recipe also introduced drinks and cake.

In Secret Recipe, there are few types of cakes which customer like the most, such as

chocolate indulgence, tiramisu, New York cheese and red velvet. Besides, Secret Recipe
Cakes & Cafe Sdn Bhd also offer more than 40 types of different cheesecake, chocolate cake,

and brownies. Other than that, it also offers seasonal cakes using seasonal ingredient in

Malaysia such as Durian Cake, Durian Cheesecake and Hazel Cheesecake. Health cake was

introduced to the market as the market trend shift to healthier lifestyle. Sugar free and trans-

free cake such as Sugar Free Moist Chocolate Cake and Hi-fiber Cream Cheese was put on

shelf and gets good review from the customers.

As for the services aspect, the Secret Recipe was provided with the standards of

service that they need to deliver in correlation to standardize all these services provided by

the brand. It has help to reduce the cost in terms of training, developing own service

standards, minimize the chances of guest complaint, increase guest satisfaction and others.

Next, Secret Recipe Cakes & Cafe Sdn Bhd do have the service of baking cake in

shape of different character of Disney cartoon based on the preference of customer’s choice

of flavour. Customer can choose the cartoon character pose from our album and choose up to

three different flavours depending on how big the cake they want. This cake reservation must

be made 3 days in advance.

Management Team

For management team, Secret Recipe Cakes and Cafe Sdn Bhd divides their

employees by using work specialization. This can improve employees’ skill by repetition of

work every day. The employees are departmentalized by functions. The functions that

departmentalized are sales & marketing department, financial department, purchasing

department, admin & human resources department, information technology (IT) department,

training department, culinary department, service department.

Secret Recipe is practising narrow span of control. There are many levels in this

company. Employees only report to their respective superior. The level separated into
management level which included the company’s Chief Executive Officer, Chief Operation

Officer, Chief Financial Officer, Chief Marketing Officer, Chief Product Officer, Chief

Information Technology Officer, Chief Training Officer and many others. After the

management level will be the senior manager of each department, then the managers and the

assistant managers. After the managers is the supervisor, then the senior-executive, junior-

executive and the non-executive staff. The narrow span of control makes the staff clear of to

whom they should report to and is clear of their job description.

Secret Recipe is also a high formalization company. There are many rules and

procedure to be followed by the employees. Jobs within the organization are all standardized.

The top management will make the decisions, set the rules and procedure. This is because

they are a food services company. Should there are no standard rules and procedure that to be

followed, the quality of their products such as foods, cakes, drinks and their services in all the

outlets will not be standardized. However, the outlet’s managers do have their power to make

small decisions within the outlets so that the small problems are to be solved as soon as they

can.

To conclude, Secret Recipe is the leading restaurant and bakery cafe in Malaysia as

well as in ASEAN is still expanding its wings with growing demands and customer. Secret

Recipe serves fine quality and delicious homemade cake and pastries together with fusion

food of Asia’s dishes and beverages.

Secret Recipe is targeting for individuals, families and take out customers with higher

income by selling high quality, innovative products at a moderate price, designing tasteful,

convenient locations and providing high quality customer service. This is in line with Secret

Recipe’s principle which is to gin the best for all its valued customers.
2.0 MOTIVATIONS AND MENTALITIES

Secret Recipe Cakes & Cafe Sdn. Bhd. use a traditional motivation. This is because Secret

Recipe always try to enter a new market through franchising. This can be proven when the

first restaurant is opened at SS2 Petaling Jaya and then it has successfully expended and

establishes their business to overseas including Singapore, Indonesia, Thailand, China,

Brunei, Myanmar and Maldives. This is relating to their mission as they want globalizing

Secret Recipe into international market and becoming the best cake shop cum cafe in the

world.

Globalization of market has grown rapidly in these recent years. Therefore, Secret Recipe

Cafe has practiced the franchising and joint venture strategy as their main expansion

strategies. Secret Recipe do not wait for thing to happen, instead they seek out new market or

services and focus on developing new market and services. Secret Recipe cafe want to

redefine the lifestyle by setting the benchmark in specialty cake, fusion food and services. On

other hands, the Secret Recipe café also struggles to create and produce the high and standard

quality to increase the brand value as they want to be recognized as a leader in the industry.

In order to expand the business throughout the world, Secret Recipe has carefully chosen

the segment audience and provided what the customers expect. It is because, nowadays,

western culture and western foods have been adopted by the society regardless of adults or

young generation. Besides, Secret Recipe also targets middle and upper class which have

better financial background as primary customers since the price is slightly higher than those

normal food stalls. So that, it is easier for Secret Recipe to enter the market and attract the

customers.
 Secret Recipe is using multinational mentality because Secret Recipe have investment in

other countries, but do not have coordinated product offerings in each country. It is more

focused on adapting their products and service to each individual local market. it one of the

companies that operates in many countries at the same time.

Secret Recipe has committed to understand the preferred foods in specific cultures. It has

adapted the menu to include foods that are popular in specific countries. It also does product

tests and experimentation through the addition or removal of food items based on local trends

and popularity among consumers. Cultural awareness training programme for staff will also

provide expatriates with key insights and practical information about business and social

practices in the new country. This has allowed Secret Recipe to be successful in international

market growth.

3.0 STRATEGIC ADVANTAGES/DISTINCT COMPETENCIES AND

The approach that used by Secret Recipe is differentiation strategy. The objective of

this strategy is to provide a variety of products, services, or features to consumers that are not

yet offering or are unable to offer by competitors. This gives a direct advantage to the Secret

Recipe to provide a unique product or service that none of its competitors can offer.

The food and services that provided by Secret Recipe can describe by the word

“quality”. The company has its own production plant in Klang Valley that produce all the

products for their branches. Therefore, Secret Recipe produced unique and quality product

which is to provide a variety of products, services, or features to consumers that competitors

are not yet offering or are unable to offer. This gives a direct advantage to the company
which able to provide a unique product or service that none of its competitors can offer. The

taste and quality of food also are always the same as it’s applied for the standard quality

control. Secret Recipe will also provide training to the staff in order to make sure they can

deliver the standard services to the customers.

Next, Secret Recipe group chief executive officer Datuk Steven Sim has extended his

product range to cater to his more health-conscious customers who still want their cake.

Secret Recipe opened Beyond Veggie, a café with a healthy vegetarian concept where their

cakes are sugar free, eggless, free saturated fat, high in fibre and low in calories, which make

customers suitable for diabetics. The menu is vegetarian, and their main ingredients are

vegetables, mushrooms, brown rice, whole wheat noodles, bread and Tofu. All this is used to

make salads and other familiar dishes such as pizza, veggie rolls and sandwiches.

Moreover, Secret Recipe well-guarded homemade recipes have become favourites for

both old and young. They are serving a wide-ranging selection which are more than fourty

types of gourmet quality cake and other baked desserts. Other than that, they also offer food

such as local delicacies and fusion food. It includes Secret Recipe award winning Lamb-Stew

and other favourite’s dish of all time, Pasta, Kebab and Black Pepper Chicken.

Secret Recipe also uses a price lining strategy on certain categories of products. This

is to simplify the choices of the customers by introducing same pricing for foods of the same

type. Secret Recipe’s mark-up of 250% to arrive at menu price is at the industry average level

range. This is to cover up the overheads generated to operate the business. Retail prices will

be competitive at about $15 for the average meal which is about 30% above competitor’s

prices. The goal of this strategy is to be as reasonable as possible for the average household

income who demands a great dining experience, therefore the cap limit for which the average

target market would be willing to pay for a meal is slightly above the normal pricing.
 Lastly, having a large number of franchises will also consider as Secret Recipe’s

competitive strategy. In year 2000, the company started franchising and the opportunity is

only open for close friends and family in Malaysia only. The growth of the outlets was good,

and this has invigorated the founder to expand a wide market which is taking his brand

abroad.