What is Baba Kevin’s American Barbecue Co., Ltd.?
Baba Kevin’s American Barbecue Co., Ltd. is a food service company that provides full-service, on-site American BBQ catering, hot food delivery, and wholesale frozen foods. They specialize in the beloved culinary pastime of truly authentic American barbecue, and their mission is to introduce this nostalgic American culture to all of Taiwan. With just a few clicks on Kevin’s company website, nearly anyone in Taiwan can enjoy competition quality BBQ with America’s favorite party foods at their home or the office.
http://www.88k.com.tw/ (Chinese)
http://www.88k.com.tw/en/ (English)
If you could book over 100 catering events a year serving thousands of people, would you still want to open a restaurant? While hundreds of screaming fan say yes, it’s still a huge dilemma for Baba Kevin, Taipei’s own barbecue king.
On August 19, 2014, we interviewed Kevin, a Kansas City Barbecue Society certified barbecue judge and owner of Baba Kevin’s American Barbecue Co., Ltd. He turns hunks of beef brisket and pork shoulder into the most delectable slices of heaven, but he kept those recipes top secret during our chat. Kevin has chosen not to start a restaurant (yet) and focus his attention on catering events, hot food delivery, and frozen foods distribution. We took a short tour of his central kitchen where he houses his pride and joy—a US$12,000 custom-built smoker shipped directly from the U.S. We then sat down at a nearby Starbucks to chat about the evolution of his business, his frustrations with the Taiwan business environment, and some solutions to the myriad of problems he has faced along the way. Lucky for all of us, he’s kindly shared some practical advice for entrepreneurs and wantrepreneurs in the food industry.
To help understand Kevin’s experiences in Taiwan, we’ve asked him to first share a bit about his background and how his barbecue business came to be. In early 2001, Kevin visited Taiwan for the first time while attending a cultural exchange program. He later returned to study for a full semester in 2004 as a UC Berkeley student. After completing his undergraduate degree, he stayed in Taipei to pursue language studies at National Taiwan Normal University. During that year, he explored the city life of Taipei, enjoyed some country life in central Taiwan, and made friends throughout the island. He fell in love with the friendly people of Taiwan (especially the beautiful girls) and eventually met his wife.
Kevin married Yvonne while attending the National Taiwan University EMBA program. They held two weddings, one in Taiwan and the other in California. During their stay at his family home in San Francisco, he demonstrated his superb backyard BBQ skills on the pool-side patio, and that was when his wife tasted “the most delicious BBQ ribs” she had ever had. Surprised and impressed, she told Kevin that selling this kind of BBQ would make a great business in Taipei. However, at that time, Kevin was focused on his graduate studies and was set to accept a job offer in Taiwan.
As an undergraduate business minor and MBA graduate, Kevin undoubtedly had an interest in business. He had previously run several small businesses in the States, and he took an executive position at a technology company in Taipei before graduating from the NTU EMBA program. Unfortunately, this work experience was far different than he expected. The company culture and limited opportunities quickly disappointed, and he recalled feeling that “nobody was on the same page” and complained about “the Taiwan shotgun style of management” of attempting everything and anything in fashion. Kevin was responsible for international marketing efforts and had a large role in finding funding for the company. After attracting a number of potential investors with a contest-winning business plan, Kevin saw all of them walk out feeling confused and disappointed. “The company was just going in too many directions without a strong focus on their core competencies,” Kevin said shaking his head. What’s more is that given Kevin’s position, he was still asked to serve coffee and entertain guests. Toward the end of his employment contract, he was simply turned off by tradition Taiwan corporate culture and working for an older boss who failed to recognize his talents as a Chinese-speaking UC Berkeley alumnus with a MBA degree.
In 2009, Kevin finally took a stab at entrepreneurship in Taiwan and started his BBQ company. He said it’s a good idea to first spend a little time putting your idea to market to see if the business model works before you go through the trouble of actually registering a company. During the first six months, he sold frozen barbecued meats and side dishes and occasionally cooked to order for pickups. Then a phone call came that changed the direction of his business entirely. A customer asked Kevin if he could provide BBQ catering instead of frozen foods. This meant serving hot food on site without the large BBQ pit and all the professional equipment usually used by caterers. Kevin was a bit hesitant at first, but he took the challenge and pulled off a successful catering experience for his customer. In the months following that event, Kevin’s business turned from online food distributor to full-service BBQ catering business. For this he took lessons from his friend Joe, previously a sous chef at Google and currently a chef at Apple. Joe taught him many secrets of the catering business, but he learned more at every event. During the three years that followed, Kevin and his team catered more than 200 events, big and small, public and private. Kevin recalled Enspyre’s 10-year anniversary in 2012 where he catered for 150 Enspyre staff and guests at an ice skating rink in Ximen. He smiled at the memories and said Elias is a special client. Since then, Kevin has invested heavily in equipment and human resources, and today it’s paying off big.
When first starting the company, Kevin tried to be as authentic as possible, insisting on using U.S. meats and making his own BBQ sauce. For a long time, he fought local customs and tastes, insisting on traditional American BBQ flavor profiles and refusing to serve local Taiwanese dishes. Nevertheless, he was happy to receive feedback and was surprised that the customers wanted less meat and more side dishes. He also learned that Taiwanese people prefer chicken legs, whereas American customers like chicken breasts. He realized that no matter how much he loved his business, it’s was either “listen to your customers or fail.” Now he serves rice and is prepared to launch more vegetable dishes as long as the majority of his customers appreciate them. Since dish names such as mesquite-smoked beef brisket and hickory-smoked spare ribs are rather unfamiliar to Taiwanese people, Kevin spends the majority of the time educating his catering customers about how many people his BBQ meats can feed and how many ribs their guests will be served.
In response to the time consuming inquiries, Kevin revised his online menu to show item descriptions and more detailed information about where the meat comes from and how to determine portion sizes. After this year’s Moon Festival BBQ rush, Kevin plans to simplify the ordering process with set menus that feature meat and side dish options at prices ranging from NT$300 to NT$2400 per person.
Over the years, Kevin has relied on word-of-mouth as the main channel for promoting his business. The company website and online advertising tools also help him find customers, which vary from companies to individuals, from schools to churches, and from sports car societies to truck clubs. Customers call him for various occasions such as weddings, grand openings, birthdays, and year-end company parties. During the upcoming moon festival holiday, he’ll be traveling as far as Hsinchu and Yilan for BBQ celebrations. During our two-and-a-half hour interview, he received five phone calls from people inquiring about his available catering times and payment schedule. “The secret to working with potential customers,” Kevin revealed to us, “is not to assume they all have the same expectations. Always go the extra mile—do the things your competition is unwilling or unable to do—and meet even the most troublesome requests. Follow your SOPs and be professional. New costumers might keep the lights on, but repeat customers tell you that you’re doing things right.” But Kevin did caution new entrepreneurs that when it comes to money, “[do not] make exceptions for new customers—always take a deposit.” He also emphasized the importance of developing company accounting and reporting SOPs early on to ensure profitability and scalability.
Whether or not to start a brick-and-mortar restaurant has always been on Kevin’s mind. He’s content with how the business is operating at the moment with catering, hot delivery, and frozen foods. He hopes to one day have a larger central kitchen for food tasting and special events. Opening a restaurant would probably mean having to give up a large part of the catering business because he’d have to be present a restaurant all day. He’s would consider partnering with the right people, but he’s very cautious. All things considered, the restaurant probably won’t open anytime soon, but a private kitchen is in the works where people should be able to get a taste of Kevin’s amazing barbecue.
The first piece of advice from Kevin is “get the accounting straight”. If you are just starting a restaurant or catering business, Kevin encourages you to actively keep track of the food costs and create a spreadsheet to document your formula and break down the costs proportionally. With that number, add a percentage for loss and equipment use costs, then double that to take into account price fluctuations, substitutions, inaccurate measurements, theft, spoilage, spills, breaks, shipping, cleaning, and samples. This way you end up with more realistic costs than what you might have used to calculate a theoretical profit margin. Kevin notes, “Accurate cost accounting and conservative forecasting models are crucial if you want to stay in business.”
For business-starters, Kevin has another precious piece of advice. Every now and then he would receive a call from an association or festival organizer inviting him to rent a booth and sell barbecue at an event. Kevin said that nine times out of ten this is “a recipe for disaster.” Having worked many of these events thinking it would be good for marketing, Kevin said, “Food stands have hurt my business far more than help me get the word out.” Oftentimes, revenue doesn’t even come close to covering the costs, and running a food stand associates your brand with cheap night market food. Kevin said, “Taiwanese people won’t buy a NT$200 ‘lunch box’ even if it’s full of baby back ribs and beef brisket.” Foot traffic is another big issue. Organizers often overstate the number of visitors and attendees, showing pictures of similar events and telling success stories of previous vendors. “There are three major risks in undertaking such invitations,” he pointed out. “You have to cook an unknown quantity of food for an unknown number of people at and unknown time.” He understands that the idea of increasing exposure and promoting the restaurant name is alluring for start-ups, but you have to be smart about which events to attend. To do that, Kevin suggests due diligence—check out out the organizer’s website, view their social media profiles, and ask others about the organizer’s reputation to see if they even have the following that they claim. Do the same for the other vendors attending the event to size up the competition and calculate potential earnings. Also, make sure your products are suitable for the event. Kevin’s experience of selling NT$200 plates of BBQ at a student event where young kids prefer a NT$50 bowl of noodles was “an expensive lesson.” He urges new business owners to carefully evaluate risk and worst-case scenarios before agreeing to rent a food stand.
New entrepreneurs worry most about customers and profits, but Kevin proves there are many other things that can impact your business. Kevin’s hand-built brick barbecue pit produced a lot of smoke, and many neighbors complained. One day, a guy barged into his shop shouting and threatening to shut everything down. The man didn’t identify himself, but Kevin noticed the Department of Environmental Protection vehicle parked outside and dialed 1999. He managed to reach the agent’s superiors and explain the situation. Moments later, the agent’s phone rang while still at Kevin’s shop, and he left within seconds of the phone call without incident.
The Department of Environmental Protection didn’t issue Kevin a fine that day, but they gave him a list of restricted activities. Without helping Kevin find solutions to avoid breaking the law, they simply instructed him to build a chimney, install filters, and take a 3-day class at the department. During the training, he learned that his business fell under a Category 4 air pollution rating, the category that requires the highest level of filtering equipment. He spent nearly NT$150,000 on hardware and service fees, but that still didn’t make his shop completely smoke-free. There was a constant threat of getting fined if the neighbors reported smoke, so he couldn’t cook on the weekends or weekday evenings. With customer orders at hand, he had to plan his cooking schedule very carefully. On top of that, the filters had to be changed every two weeks. After a while, Kevin decided to relocate and import a custom-built stainless steel smoker from America.
Supplier relationship is another thing entrepreneurs should take care to manage. Years of experience in dealing with suppliers have made Kevin a seasoned expert. He advises restaurant and catering entrepreneurs to find and buy from multiple suppliers because at some point one will run out of stock, suffer quality issues, delay deliveries, discontinue an item, or arbitrarily raise prices. Having more than one supplier keeps them on their toes, and it also protects his business and his reputation from supplier related issues.
When Kevin first started his business in 2009, there weren’t any American BBQ restaurants, except T.G.I. Friday’s and Chili’s. According to him, the food they serve isn’t authentic BBQ at all. Competition was scarce, and Kevin’s nostalgic American BBQ cuisine and catering services really stood out—the experience was new and fun, plus the food was delicious. Today, Taipei has a few American BBQ places, yet Kevin pointed out that none of them use imported wood or make their own sauces like he does. Only a few restaurants actually smoke their meats, but the restaurants that do all use local wood. What’s worse is that they all use commercial sauces and not authentic, kitchen-fresh BBQ sauce. He speaks of his homemade BBQ sauce with great pride, quoting one customer saying, “I can drink your BBQ sauce right out of the bottle.” He is aware of the copycats out there but believes he still has an edge in the market. What he offers is still new, and because of this he has the opportunity to go to different cities in Taiwan to do business.
Kevin does most of his business online, but he’s has had tons of problems with accounting, invoices, receipts, payments and shipping systems. He has a strong IT and web development background and complains that all system vendors he’s found use “1990s Microsoft technology.” He can’t easily incorporate system data with Linux or Mac platform software and is forced to export data to an Excel spreadsheet to use on a windows system. For e-commerce, these Window-based systems have very poor integration options and no modern APIs. Kevin desperately feels that Taiwan needs to upgrade and elevate its e-commerce scene. He sees a great number of opportunities in the business software market, especially for SMEs. He’s hopeful about the new e-invoice initiative, but he urges the government to make it easier for SMEs to implement. For example, he suggests releasing a guide with comprehensive and easy-to-understand instructions on how to implement the new e-invoice platform, POS systems, and e-commerce software. Better yet, make the e-invoice system web accessible as an SaaS option. Kevin said the problem right now is that “no one knows where to go, and there is little help out there.” It’s hard to find actual problem-solving tools online because instructions for these new services are poorly documented.
The invoice/receipt system is a perfect example. The government keeps track of a company’s finances via government issued invoices that companies all have to use. To make sure customers demand a legal invoice, the government holds a lottery using receipt numbers every two months; however, receipts issued by businesses to other businesses are not qualified for the lottery. Due to this single issue, the government created two separate e-invoice systems, one for business-to-business transactions and the other for business-to-customer transactions. It gets very complicated when businesses like Kevin’s sell to both customers and businesses. Electronic invoices have just started to roll out, but he finds the current POA (Purchase Order Acknowledgement) application process “ridiculous.” Uncoordinated department contacts within the e-invoice regulating body make compliance with overly rigid rules and redundant security protocols a very challenging task. Of the few options currently available on the market, the least expensive costs NT$2,000-3,000 a month. For a business like Kevin’s that issues 20-30 receipts per month, simply printing a single receipt would cost upwards of NT$100. He finds this hardly worth the effort to go digital, so he pays his accountant to help with invoicing. To address current inefficiencies in the online business and e-commerce sectors, Kevin has committed resources and hired developers to make a web-based POS system. Angry at the existing companies with poor attitudes and lack of interest in improvement, Kevin might actually “disrupt the market” by releasing his project as a free and open-source deployment.
Receiving payments is another issue that concerns Kevin. He has accepted ATM transfer, credit cards, and recently added Bitcoin payment to his website. ATM transfers are very popular in Taiwan and fairly easy and simple; the only thing to complain about is that he has to check the numbers of his clients’ bank account, which can be rather time-consuming and bad for the eyes. Using virtual account numbers is an option, but again, Taiwan banks run on outdated Microsoft technology, so integration with his current system wouldn’t be worth the cost.
The mobile payments and credit card processing application process for his business was, again, “ridiculous.” Unhappy with the excessive steps and lengthy process, Kevin approached the NCCC (National Credit Card Center). He acquired a mobile credit card machine and paid NT$800 per month, plus credit card transaction fees. He ditched it after having only used it a handful of times that year, realizing that it was not worth the money, either. He did, however, find NCCC quite helpful. His advice to entrepreneurs is that NCCC is a resource you can use as long as you can prove that you’re a good company. You’ll need to show them quite a bit of documentation, including tax and capital statements and your company registration. An agent will also visit your business location, but the good people at NCCC are nice and willing to help.
As for the new addition, Bitcoin, only few customers have used this payment method, but it is an easy portal for English speakers. Though the Bitcoin processor does not yet have a Chinese interface, Kevin helped U.S. with translation and hopefully it will be published soon. The idea of Bitcoin is basically digital gold. Mainland China has outlawed the digital currency, but the Taiwan government remains open. In contrast to its lagging e-commerce technology, supporting policies are in place to make great things possible.
As for the shipping companies, Kevin’s advice is “push, push, push”. The shipping company he works with now (黑貓 T-Cat http://www.t-cat.com.tw) categorizes businesses into different levels according to the amount of orders they ship per month (http://www.t-cat.com.tw/contract/explain.aspx). Kevin’s business first belonged to the entry level “icat”, and though he persuaded them to upgrade the business to “ezcat” (for SMEs), the shipping arrangements and logistics were still inconvenient and slow. In the U.S., companies like UPS, Fedex, and DHL all have systems that easily integrate with e-commerce websites, so shipping labels can get printed easily with just an account, password, and a software module installed on the vendor’s website. In Taiwan, it’s not that easy.
For over a year, Kevin fought with the shipping company and just recently obtained the ultimate, but somewhat unfortunately named “scat” service level. This kind of access is reserved for businesses that receive thousands of orders a day, like PCHome or MOMO. With Scat, Kevin can directly upload his orders to the T-Cat system and have the labels printed out and processed quickly. He highly recommends this to any business that has more than 20 orders a day, although be forewarned you’ll need to argue over the 5,000 orders per month policy. Scat is relatively easy to install and configure on a Windows machine, and it saves a lot of time handwriting shipping labels. Though the negotiation process can be lengthy, it’s definitely worth it.
Despite Kevin’s feeling that Taiwan’s technology and regulations fall miserably short on accounting, payment, invoice, and shipping, and thus makes it difficult for entrepreneurs to run their businesses smoothly and efficiently, he did point out the merits of running a business in Taiwan. For starters, government programs are pretty accessible, and they do offer zero or low interest loans. He believes there are still plenty of opportunities. As long as the products are new and unique, catching a niche market and making a profit is quite feasible. He is confident in this regard and believes that there remains a great number of opportunities for entrepreneurs to seize in Taiwan. National benefits are good for employees and he likes how the retirement fund is built into the salary scheme, whereas in the U.S. the retirement scheme is complicated. Living in Taiwan also means he is entitled to the amazing health care and the satisfyingly low tax rate, which he cherishes.
Looking ahead into the future, Kevin puts his key focus on wholesale. He’s open to more cross-promotion opportunities with retail partners island wide. This business model of wholesale pre-cooked BBQ meats and homemade BBQ sauces seems the most scalable and tells me “anyone interested in wholesale can contact me.”
If you think Kevin’s frozen products are like the dry, bland supermarket variety, you couldn’t be more wrong. His heat-n-eat American BBQ meats and side dishes are flash frozen and vacuum sealed in eco-friendly, microwave-safe packaging to lock in moisture and freshness. Proud of this, Kevin is happy to work with restaurant and café owners who would like to sell his food. The benefits are plenty; retailers can offer customers inexpensive, fast, quality food without having to hire an expensive chef, purchase large smoking ovens, or install filters and chimneys to meet DEP kitchen regulations.
Who knows what the future holds for a man with proven abilities to create food that people crave? Maybe one day a Baba Kevin BBQ restaurant?