SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN

FOUNDATION IN NATURAL BUILD ENVIRONMENT

PRESENTATION TITLE: BAK KUT TEH

GROUP MEMBERS:

Names Student ID Number

Welson Lum Wei Jiunn 0319514

Yong Sing Yew 0318766

Kong Zhen Chung 0319528

Chong Wai Loon 0319745

Principles of Economics ECN30205

LECTURER: Mr. Chang Jau Ho

SUBMISSION: 25th January 2015

2

TABLE OF CONTENTS

1. Key Summary

3

2. Description History of the Business

4-5

3. Brief Bio of the Business

6-9

4. Comparative Analysis of the Business

10-12

5. The Competitors

13

6. Obstacles Faced By New Businesses

14-15

7. The Nature of The Markets

16

8. Summary Table

17-18

9. Analysis

19

10. Recommendation

20

11. Appendix 1 (Pictures)

21-22

12. Appendix 2 (Interview Questions) 23-28

13. Appendix 3 (Comparative Analysis Summary Table)

29

14. References

30

3

The Key Summary

In this English research assignment, we compared 2 business of similar industry in Klang Valley.

In a group of 6 which are Ng Hong Bin, Chong Yu Xuan, Welson Lum Wei Jiunn, Yong Sing

Yew, Kong Zheng Chung and Chong Wai Loon,we decided to do a research on Bak Kut Teh,

which is one of the famous traditional Chinese food in Malaysia. We choose a home-based Bak

Kut Teh restaurant which is Ah Cham Bak Kut Teh in Klang, Selangor and a commercial Bak

Kut Teh restaurant which is Sun Fong Bak Kut Teh in Bukit Bintang, Kuala Lumpur. Both of

these restaurants have been operating for more than 10 years. After interviewing the 2 respective

restaurants, we concluded that Sun Fong Bak Kut Teh is more commercially successful than Ah

Cham Bak Kut Teh.

4

Description History of the Business

Ah Cham Bak Kut Teh

The first ‘Bak Kut Teh’ restaurant that we choose called Ah Cham Bak Kut Teh located

at Jalan Meru, Klang. This restaurant only has one generation and doesn’t have any branches yet.

The main product of this restaurant is Bak Kut Teh which serves with soup or sauce.

The business was founded by an old lady called Ah Cham, and her eldest son in 1995.

The reason of starting this business is because during the early years, Ah Cham and her family

were extremely poor. Ah Cham was very good in making Bak Kut Teh so she started the Bak

Kut Teh business to support her family.

For their recent development, Ah Cham’s business recently is not as good as past few

years as there are more competitors in Jalan Meru. In addition, she doesn’t have any future plan

for her business yet because she wants her children and grandchildren to find better occupations

and it’s not easy to find successor to continue this business.

5

Sun Fong Bak Kut Teh

The second “Bak Kut Teh” restaurant that we choose is called Sun Fong Bak Kut Teh located at

Jalan Medan Imbi, Kuala Lumpur. This restaurant was pass down from father to son for 2

generations and now have 4 branches which 2 are located in Malaysia and another 2 located in

Jakarta. The main product of Sun Fong Bak Kut Teh is Bak Kut Teh which is served with or

without soup. They also serve other dishes like fried noodle, fried rice, porridge and other

delicacies.

Sun Fong Bak Kut Teh established since 1971 by Mr Low Kok Cheng which is the current

owner’s father. The business starts from a small stall into a restaurant. It serves a variety of

Chinese cuisines with Bak Kut Teh. The main essence of Sun Fong Bak Kut Teh is derived from

its secret soup recipe. The reason of starting this business is because the founder wants more

peopletaste and experience the real traditional Bak Kut Teh, he is planning to expand his

business to other country like Macau, China and Australia.

In their recent development, the current owner wants to open one more franchise in Jakarta

possibly March this year if his business goes well. The current owner’s future plan is to expand

his business to countries like Macau, China or Hong Kong.

6

Brief Bio of the Business

Ah Cham Bak Kut Teh Sun Fong Bak Kut The

Location 2, Persiaran Pulau Pinang, Off

JalanMeru 41050 Klang,

Selangor Darul Ehsan

No.35.37.39.41.43, Jalan

Medan Imbi, 55100 Kuala

Lumpur

Number of branches and

employees

It doesn’t have current branches

and only has one employee

which serves as waiter.

It has 4 branches. There are 2

branches in Kuala Lumpur,

Malaysia and the other 2

branches in Jakarta, Indonesia.

Each of the branches has more

than 10 employees include the

chefs and waiters.

Main products or services sold The main product sold is “Bak

Kut Teh”. There are two

different types of style, which

is Bak Kut Teh serves with

soup or sauce. Ah Cham is the

founder and current owner of

her shop.

The main product sold is “Bak

Kut Teh” which serves with

different style which are soup

or sauce. It has already been

selling for two generation. It

has also other dishes which are

porridge, fried dishes, seafood

and others.

Who are the customers Customers who visit her

restaurant are mostly Chinese

Customers who visit his

restaurant are mostly local and

7

and India. Some of the

customers come from different

states in Malaysia such as

Johor, Melaka, Negeri

Sembilan and many more.

Besides, the customers of

different occupations such as

teachers, headmasters and

doctors also come to her

restaurant

tourists from Hong Kong,

Taiwan, Singapore. There are

also many celebrities from

Hong Kong and Taiwan came

here to taste Bak Kut Teh.

There are photos of them

stickled to the wall of the

restaurant.

Estimated current number of

customers

There will be more customers

from 8am until 12.30pm.

Estimated number of customers

is around 150 during weekdays.

Although her restaurant is quite

small and old, it is often

crowded because many

customers love to eat her

delicious Bak Kut Teh. There

would be more customers

during weekends.

There will be more customers

in the morning until afternoon.

During dinner time around

7pm, there will be more

customers. Estimated number

of customers is around 250

during weekday. For weekend,

there will be more customers.

The amount will be changed

due to certain circumstances,

for example: rainy day,

economic in bad shape and etc.

8

When were the businesses

started

It is first started during the

year, 1995. Ah Cham has been

in this business for 20 years in

Klang.

This business was founded

since 1971 which had already

been passed down by two

generation until now. It started

from a small stall to a bigger

restaurant and has a few

branches now.

Who are the founders The key founder of this shop is

an old lady called Ah Cham

and her eldest son.

The key founder of this

business was Low Kok Cheng

which is the father of the

current owner.

What was their motive(s) for

starting the business

In 1995, Ah Cham and her

family were extremely poor.

Since Ah Cham had the

techniques of making Bak Kut

Teh, her family supported her

to open this restaurant in order

to search for prosperity. This

business was successful and

helped them escape from

poverty.

The founder wanted to let more

people to taste the traditional

“Bak Kut Teh” even for

different countries such as

Indonesia, Macau and

Australia. Other than that, the

founder also wants to earn

money for better a life.

9

Their recent development According to Ah Cham, her

business recently is not as good

as past few years as there are

more competitors in Jalan

Meru. In addition, she doesn’t

have current branches and any

future plan for her business.

This is because she wants her

children and grandchildren to

find better occupations and

does not have a successor to

continue this business.

They decided to sell seafood

and also build a VIP room in

their restaurant because

sometimes some popular

celebrities eat there. Since they

already have two branches in

Jakarta, so if their business

getting better over there, they

will expand their business to

other countries which are

Macau or China. They also

decided to have one more

branch in Jakarta this year.

10

Comparative Analysis of the Business

Shops Ah Cham Bak Kut Teh Sun Fong Bak Kut Teh

Number of competitors Approximately 500-1000 of

Bak Kut Teh shops in Klang.

Jalan Imbi has only 3 Bak

Kut Teh shops.

Top competitors Restaurant Hon Ki Bak Kut

Teh

Restaurant Hon Ki sells Bak

Ku Teh and has good tasting

food, but it doesn’t provide

free additional soup.

Restaurant Ah Her Bak

Kut Teh

Restaurant Ah Her is fairly

new so it is clean and

hygienic, but it has less

choice of food. The owner of

the shop does not have

enough experience compare

to other Bak Kut Teh shops.

Restaurant Bak Kut Teh

Yu Yi

Restaurant Bak Kut Teh Yu

Yi is located not far from our

interviewee. The product they

sell is also Bak Kut Teh and

the price of their product is

between Rm11- 20 which is

cheaper and its operating

hours are 6am to 9pm.

Restaurant Ah Hee Bak

Kut Teh

Restaurant Ah Hee is also

located in Medan Imbi. Bak

Kut Teh is also their selling

11

products and their business

opening hours only Monday

to Friday from 5:00a.m to

2:00pm.

Business strategies employed The owner of Ah Cham Bak

Kut Teh opens her shop early

in the morning at 6:00 a.m. so

that the office workers can

have their breakfast there. Ah

Cham Bak Kut Teh has more

than 10 years of experience to

cook Bak Kut Teh so its

customers are used to eating

their foods. The good thing

about Ah Cham Bak Kut Teh

is the owner is generous as

she will provide free

additional soups to her

customers when needed. She

does not do any advertising to

promote her restaurant as her

customers help her to

promote it through social

Sun Fong Bak Kut Teh opens

at 5:00 a.m in the morning to

make sure people around

Jalan Imbi have something to

eat at that time. Sun Fong

Bak Kut Teh has become the

most popular Bak Kut Teh in

Jalan Imbi because it was

established since 1971. Sun

Fong Bak Kut Teh has 4

branches where 2 of them is

restaurants in Malaysia and

the other 2 restaurants is in

Jakarta, Indonesia. The

purpose of having branches at

different places is to raise the

reputation of Sun Fong Bak

Kut Teh. The owner also

advertises his Bak Kut Teh

12

media such as Facebook,

Twitter and Instagram.

through the Air Asia’s

magazine, Tiger Airlines and

Singapore Airlines.

13

The Competitors

Ah Cham Bak Kut Teh’s competitors

Hon Ki Bak Kut Teh Ah Her Bak Kut Teh

Sun Fong Bak Kut Teh’s competitors

Ah Hee Bak Kut Teh Yu Yi Bak Kut Teh

14

Obstacles Faced By New Businesses

Financing Problems

To start a business, a large sum of capital is needed. The capital includes rental, renovation and

money to buy furniture and appliances. According to the owner of Sun Fong, an estimated 200k

is needed. Even after the business started, money is also needed for maintenance and ingredient

supplies. Finance remains the biggest problem for people that want to start a new business.

Market Competitions

Klang is a place that is famous for its Bak Kut Teh, there are more than 500 shops selling the

same product. It would be very challenging to enter this market and compete will all the existing

shops which has been around for much longer time that possess more experience and their own

loyal customers.

Quality of the foods

The communication with the food suppliers must be good so that the pork suppliers will always

supply fresh ingredients. The quality of food products sell must always maintain their originality

as well as coming out with their own signature taste. The shop must maintain their quality to

attract and keep its customers. If the food of the restaurant does not have quality, it will slowly

lose all its customers and eventually go out of business.

15

Getting Customers

A new business often doesn’t have any customers at the start, the owner have to advertise his

business to let people know his restaurant. To attract customers, a lot of effort must be placed in

creativity to produce some special features which are different from others.

16

The Nature of the Markets

The nature market of Ah Cham Bak Kut Teh is that they have a perfect competition

which is due to the market represented by a fairly large number of market. This is because Klang

is a place that is famous with its Bak Kut Teh. Monopolistic Competitive have a relatively weak

barriers to entry means that the new firms can enter the market and exit the market easily.

Sun Fong Bak Kut Teh has a nature market which is Oligopoly. Oligopoly is a market

that dominated by only few sellers. There are only 3 shops of Bak Kut Teh located in Jalan Imbi

and Sun Fong Bak Kut Teh is one of them. The barriers to entry the market is very strong

because Sun Fong Bak Kut Teh has already settle down at Jalan Imbi since 20 years ago and

getting more famous day by day.

17

Summary Table

Name of business

Ah Cham Bak Kut Teh Sun Fong Bak Kut Teh

Similarities 1) Both of them sell the same product --Bak Kut Teh.

2) Both of the restaurants do not rise their price at will

because they have their own regular customers.

Differences Menu 1) The restaurant does not

provide a proper menu.

1) The restaurant provides a

nicely designed menu.

Advertising 2) The restaurant does not

advertise in any form.

2) The restaurant advertises

through social media,

internet and also in airplane

catalogue at certain months.

Current

Branches

3) The restaurant does not

have any separate branches.

3) The restaurant currently

has 4 branches, 2 in

Malaysia, 2 in Jakarta,

Indonesia.

Price 4) The product price of the

restaurant for a single person

is RM13.

4) The product price of the

restaurant for a single person

is RM15.

18

Future plan 5) The restaurant does not

have any future plans.

5) The restaurant is planning

to expand to Macau or

China if the business goes

well this year.

Shop

Characteristic

6) The restaurant seating is

located outdoor with a shade

build above it and it does not

have air conditioning.

6) The restaurant is

separated into 2 parts, air

conditioned indoor rooms

and outdoor.

19

Analysis

Based on our group analysis on the two Bak Kut Teh restaurants we interviewed, Sun Fong and

Ah Cham, we have concluded that Sun Fong Bak Kut Teh is more commercially successful then

Ah Cham Bak Kut Teh in Klang. The main reason is Sun Fong has a larger market because it

owns several branches whereas Ah Cham does not have any branches. Sun Fong has a strategic

location which is near to tourist hotspots like Pavillion and KLCC compared to Ah Cham which

is located in Klang, the place where Bak Kut Teh is very famous. Other than that, Sun Fong had

been in business since 1971 longer than Ah Cham which started in 1995.

20

Recommendation

Based on the analysis of the two restaurants we interviewed, both them still have a lot of

potential to improve. The first Bak Kut Teh restaurant that we interviewed which is Ah Cham

Bak Kut Teh has to improve the skills and strategies in managing the business so that they can

compete with other markets and won’t suffer from loss easily. Other than that, it also has to

provide a proper menu for the customers so they can clearly know what it serves. It should also

serves different types of foods like vegetables, fried dishes, seafood and etc so customers have

more choices to choose on when having their meal. In addition, it also need to renovate to

become more comfortable. For example, set up air-conditioning, change new tables and chairs,

and etc. Currently, Ah Cham has only one shop in Klang. To enable people from other places to

taste this delicious food, the owner has to expand to other states and countries. With new

branches at different places, the customers will eventually increase too, the profit and the

reputation will bloom as well. It may cost a lot to expand but it may show results and the owner

can make more money in the long run. Furthermore, the owner should also make some

advertisements to promote the restaurant so that more people know about it. The owner can

advertise her business through social media such as Facebook, newspaper, magazines, TV

channel and etc.

For Sun Fong Bak Kut Teh, it is a higher class restaurant compare to Ah Cham Bak Kut

Teh. To make it better, the owner of Sun Fong Bak Kut Teh can expand more branches to other

countries, especially western country so that western people can know more about Bak Kut Teh

and taste it in future.

21

Appendix 1 (Pictures)

Ah Cham Bak Kut Teh

The interior view of Ah Cham Bak

Kut Teh

A one person clay pot Bak Kut Teh

(Dry) at RM 14.00

A three person clay pot Bak Kut

Teh (Soup) at RM 39.00

Chinese Donuts (油条) at RM 1.00

Group photo after the interview

22

Sun Fong Bak Kut Teh

The interior view of Sun Fong Bak

Kut Teh

A two person clay pot Bak Kut

Teh (Soup) at RM 28.00

A two person claypot Bak Kut Teh

(Dry) at RM 30.00

The menu of Sun Fong Bak Kut

Teh

Group photo after interview

23

Appendix 2 (Interview Questions)

INTERVIEW Q&A OF AH CHAM BAK KUT TEH

Q: When was the business founded?

A: It is first started during the year, 1995. I’ve been in this business for 20 years in Klang.

Q: Who are the key founders?

A: The key founders of this shop are me and my eldest son.

Q: Who prompted the founders to start this business?

A: My family prompted me to start this business as we were extremely poor during the early

years and we wanted to earn money.

Q: What are your main products or services?

A: The main product sold is “Bak Kut Teh”. There are two different types of style, which are

Bak Kut Teh serves with soup and sauce.

Q: Who are your customers?

24

A: The customers are mostly Chinese and India. Some of them come from different states in

Malaysia such as Johor, Melaka, Negeri Sembilan and many more. Besides, they also come from

different occupations such as teachers, headmasters, doctors and many more.

Q: What is the business’ annual revenue figure?

A: The monthly and annually revenue of my restaurant are RM10, 000 and RM100, 000

respectively.

Q: How many branches and employees do you have?

A: Currently, I don’t have any branches and only have one employee who serves as waiter.

Q: Can you provide us a brief history of your business and its most recent developments?

A: It was first started during the year, 1995. During that year, my family and I were extremely

poor. Since I had the techniques of making Bak Kut Teh, my family supported me to open this

restaurant in order to search for prosperity. This business was successful and helped us escaped

from poverty. I’ve been in this business for 20 years in Klang. My business recently is not as

good as past few years as there are more competitors in Jalan Meru.

Q: Do you have many competitors? Who are they?

A: I have some competitors which are Hon Ki and Ah Her restaurants which are located a stones’

throw away from my restaurant.

Q: How much capital is required to start this business? Do you need any knowledge or skills to

run this business?

25

A: The capital is RM18, 000. To run a Bak Kut Teh restaurant, you need to know the techniques

of making Bak Kut Teh and use some ingredients which are wolfberries, dried dates, dried

chilies, dried squid and many more to make it scrumptious.

Q: What are the obstacles faced by your business?

A: There are some obstacles to run this business. For example, there are no customers sometime

and the leftovers cannot be reused. This really wastes our money as some of the ingredients like

pork is very expensive. Besides, during H1N1 pandemic, many customers don’t dare to eat pork

and this affects our business negatively.

Q: What strategies do you employ to promote your product?

A: I don’t have any strategies because most of my customers help me to promote my restaurant.

Some of them promote my restaurant through social media such as Facebook, Instagram and

Twitter.

Q: What is the future plan for your business?

A: I don’t have any future plan for her business. This is because I want my children and

grandchildren to find better occupations and it’s not easy to find successor to continue this

business.

26

INTERVIEW Q&A OF SUN FUNG BAK KUT TEH

Q: When was the business founded?

A: This business is start since from 1971.I’ve been in this business for 45 years in Kuala Lumpur.

Q: Who are the key founders?

A: This business is founded by my beloved father, Low Kok Cheng.

Q: What prompted the founders to start this business?

A: My family prompted me to start this business as we wanted to earn money for a better life.

Q: What are your main products or services?

A: We sell Bak Kut Teh which serves in different styles which are soup and sauce. Besides, we

also sell seafood, fried dishes and porridge.

Q: Who are your customers?

A: The customers that come to my restaurant is local people and tourist.

Q: What is the business’ annual revenue figure?

27

A: Sorry, I cannot answer this question, it is not available to let you all to know.

Q: How many branches do you have?

A: So far I have 4 branches include this restaurant. 2 branches at Malaysia and 2 branches is at

Jakarta, Indonesia.

Q: Can you provide us a brief history of your business and its most recent developments?

A: Sun Fong Bak Kut Teh established since 1971 by Mr Low Kok Cheng which is my father. At

first this business was starting from a small stall until a restaurant now. We serve a variety of

Chinese cuisines with their special “Bak Kut Teh”. The main essence of my restaurant is derived

from the secret soup recipe. The reason of starting this business is because my father wanted to

let more people taste the real traditional Bak Kut Teh even expand to other countries like Macau,

China, Australia and etc.

Q: Do you have many competitors? Who are they?

A: Yes, there are two Bak Kut Teh restaurants around my restaurant which is Yu Yi Bak Kut

Teh and Ah Hee Bak Kut Teh. But we have our own customers, because different people have

different taste. It depends on the taste of the customers.

Q: How much capital is required to start this business? Do you need any knowledge or skills to

run this business?

A: To start a business I think we need at least RM 200k to 300k to renovate the restaurant.

Q: Generally, do you feel it is easy or hard to enter this market? Why?

A: It’s hard when starting and I’m not sure that whether the business will be successfulas there

are too many restaurants in Kuala Lumpur. Besides, it also depends on the location.

28

Q: What strategies do you employ to promote your product?

A: We promote our restaurant on the Air Asia magazine at Malaysia and Indonesia. We also

promote on the Singapore airline magazine.

Q: What is the future plan for your business?

A: In the future I will open some branches at Jakarta, Indonesia again and maybe we will open

some branches at Macau or China. In the future we will build a VIP room for celebrities.

29

Appendix 3(Comparative Analysis Table)

Competitive Traits Business A

(Ah Cham’s Bak Kut Teh)

Business B

(Sun Fong’s Bak Kut Teh)

1.Number of competitors

Approximately 800 shops of Bak Kut Teh.

2 to 10 Bak Kut Teh shops

2.Barrier to entry Have a weak barrier to

entry.This is because Klang is a place that famous with Bak Kut Teh and the market have

unlimited number of Bak Kut Teh Shops

Have a strong barrier to entry.

This is because in Jalan Imbi there are only few close substitute products.

3.Differentiated or

standardized products

Sell standardized product

Sell differentiated products. For example, sea foods, fried

dishes, and porridges.

4.Pricing power

It has a weak pricing power. This is because most of the customers treat the Bak Kut

Teh in Klang is the same so they will only go to the shop

with the lowest price of Bak Kut Teh. Therefore they have a weak pricing power.

It has a strong pricing power. This is because in Jalan Imbi there are only 3 shops of Bak

Kut Teh. So the products sell in Sun Fong Bak Kut Teh’s

products have no close substitutes. Therefore they have a great pricing power.

5.Other characteristics Although Ah Cham Bak Kut

Teh do not have a great pricing power but they strive

to differentiate their products like they provide a good customer service so that the

customers will come back again and introduce the shop

to their friends.

It have a constant advertising which Sun Fong Bak Kut Teh

will advertise their products through Air Asia Airlines and Singapore Airlines.

6.Verdict Perfect Competition

Oligopoly

30

References

1) Bak Ku Teh. (n.d.). Retrieved from http://my.openrice.com/klangvalley/restaurant/sun-fong-

bak-kut-teh-bukit-bintang-kuala-lumpur/88278

2) A. Cham (personal communication, December 13, 2014)

3) D. Low (personal communication, December 5, 2014)

4) 新峰肉骨茶. (n.d.). Retrieved from

http://you.big5.ctrip.com/food/kualalumpur45/4927395.html

5) Sun Foong Bak Kut Teh at Imbi. (n.d.). Retrieved from http://kyspeaks.com/2010/10/27/sun-

foong-bak-kut-teh-at-imbi/

6) Copper, B., Floody, B., & McNeill,. G. (2000) Start And Run A Profitable Restaurant. Bellingham,

WA.

7) Wade, D. (2006) Successful Restaurant Management: From Vision To Execution. Clifton Park, NY.

8) John R. Walker, Donald E. Lundberg,. (2001) The restaurant: from concept to operation. NY

9) Michael Garvey, Heather Dismore, and Andrew G.Dismore,. (2001) Running a restaurant for

dummies. Hoboken, N.J.

10) Carol Godsmark. (2010) Start and run a restaurant. Oxford, UK.