Financial Adviser: 5 Leadership Lessons Every Family-Owned Business Can Learn from Max's Group Chair Sharon Fuentebella
ILLUSTRATOR WARREN ESPEJO
In 1945, Ruby Trota opened her first restaurant café with her uncle, Maximo Gimenez in their home in Scout Tuason Street in Quezon City to cater primarily to American soldiers after the war.
Trota, who named the café Max’s Restaurant after her uncle, developed a special fried chicken recipe that became a hit among her loyal customers.
The success of Max's Restaurant, which became known as "The House That Fried Chicken Built,” resulted to the expansion of several outlets over the years.
The growth of Max's Group
The growth in Max’s Restaurant outlets, however, came from three families: the family of Ruby Trota, Maximo Gimenez, and another relative, Erlinda and Edgardo, who opened their own outlets independently.
In 1998, instead of going their own separate ways, the third-generation children of the three families agreed to work together by standardizing the restaurant operations and expand the business as a group.
Max’s Restaurant became stronger as a result and started diversifying into other brands. In 2006, the Max’s Group acquired the master franchise of American brand Krispy Kreme and later, Jamba Juice, which became dominant foreign brands in the market.
In 2014, the Max’s Group acquired the Pancake House Group for P4.3 billion, which consisted of several brands such as Dencio's, Teriyaki Boy, Sizzlin' Pepper Steak, Le Coeur De France, and Yellow Cab Pizza.
Today, the Max’s Group is the largest operator of full-service restaurant in the Philippines with over 600 locations controlling roughly about 30 percent share in the market.
How did the Max’s Group manage to grow from a traditional family business to be one of the largest food and beverage conglomerates in the country?
Here are the five growth lessons every family business can learn from Ruby Trota’s granddaughter and Max’s Group chairperson, Sharon Fuentebella:
1| Grow by keeping harmonious family relationships
Family harmony is an important foundation to a strong family business.
When family members share the same vision and values, they are more committed to help the business succeed. They make decisions faster and execute better.
Keeping a harmonious family relationship does not mean that there are no arguments. It simply means that family members have the ability to trust and support each other.
“All the families were always talking to each other,” says Fuentebella. “It is always a goal for us to be able to see where we can take the opportunity to grow the business. Collectively as a family, we help each other to come up with ways to address that opportunity.
“We find a way to work together as cousins. I guess that’s where we support each other in making business decisions like, for example, discussing about an upcoming TV commercial. The efforts are there from all the branches of the family to enable us to move in one direction.”
2| Grow by spending family time together
There is a saying that the family that does business together stays together. Coming together as a family outside the hectic work environment can be a good thing for developing healthy relationships.
“I think what was important aside from the business is we have activities on our own where we really spend time with each other,” Fuentebella says. “Whether we meet for birthdays or holidays or vacations, those activities really helped.
“Those moments are the intangibles that you don’t really get just by doing business per se. That’s important because it helped forge the relationship among us cousins.”
3| Grow by leveraging the brand heritage
Two years after Max’s Restaurant celebrated its 50th anniversary in 1995 with 38 branches, the third-generation cousins agreed that, for the family business to grow, they needed to expand by franchising the restaurant.
At the time, Bill Rodgers, the US-based grandson and only heir of Maximo Gimenez working for the family business, traveled to the Philippines to lead the efforts in coming up with a franchising system for Max’s Restaurant.
“Because we came from different groups, we had different menus for some items,” Fuentebella recalls. “We had to come up with one system for the franchisee where everything is standardized.
“We needed to come up with a model that we could replicate from and be able to take that model into different markets nationwide and internationally.”
Ten years after the franchising system was launched, Max’s Restaurant more than tripled its total number of branches to 124 in 2008. Today, Max’s Restaurants has a total of 222 outlets.
4| Grow by diversifying into other market segments
One way to sustain the family business over the long-term is to diversify into new products and services. Diversification helps in mitigating risks of slowdown in core business by providing new revenue streams from new businesses.
But investing into new ventures can be equally risky too due to the lack of competitive advantage. In order to lessen the risks, Max’s Group partnered with global franchises such as Krispy Kreme and Jamba Juice.
Max’s Group improved its chances of succeeding in the market by leveraging the expertise of another business.
“We were looking for opportunities to grow so we got the franchise from US companies like Krispy Kreme and Jamba that allowed us to further strengthen our market position,” Fuentebella says. “Getting the international franchises makes us unique because that make us not just a franchisor but a franchisee of global brands.”
Max’s Group to date has 93 outlets of Krispy Kreme and 14 outlets of Jamba Juice.
5| Grow by expanding into complementary businesses
When the Max’s Group acquired Pancake House Group in 2014, Pancake House had about 400 outlets at the time under 10 different brands such as Pancake House, Yellow Cab Pizza, Teriyaki Boy and others.
The acquisition enabled Max’s Group to expand its total outlets to over 500 and doubled its total revenues at that time to over P4 billion.
The merger also allowed Max’s Group to economies of scale that translated to lower supply costs and higher productivity.
“In our group we have the shared services group that help leverage the scale of our business, which handles accounting to supply chain for all different brands,” Fuentebella explains. “For example, in supply chain, when we buy chicken, we buy for all brands so we enjoy economies of scale.
“There are different challenges for different brands,” she adds. “What we were able to do is to find synergy and see where we would be able to get the best position of each brand. We now have different brands that appeal to different age groups, different consumer taste preferences and different generations and formats.”
Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice [email protected] or follow him on Twitter @henryong888