Chinese takeaway chain Hotcha looks set to shake up the British fast-food sector
Research released last year by MyVouchersCodes.co.uk revealed that we spend almost £30m on fast food and takeaways annually. But it’s not curry, pizza or even fish and chips that comes top of the pile as the nation’s favourite takeaway. Suffice to say, the British love affair with Chinese food doesn’t look like ending anytime soon.
Yet for every Domino’s or Harry Ramsden’s, you’d be hard-pushed to name a national brand that is synonymous with Chinese cuisine. While one could argue this is because we’re happy enough ordering from our local takeaway and waiting as long as it takes to tuck into our prawn toasts, there are sounder reasons for this gap in the market. These are explained by James Liang, co-founder and managing director of Hotcha, the Chinese takeaway chain that is hoping to shake up the sector.
“Chinese cuisine is such a complex operation and relies on years of experience of being a chef to be able to run a busy kitchen,” says Liang. “If you are trying to develop a brand, there is no way you can rely on that kind of operation. How are you going to find enough experienced chefs to run all of those kitchens for you?”
Liang established Hotcha in 2011 with his friend Andy Chan, who he’d met while studying at University College London (UCL). While Chan has since returned to Hong Kong, he still retains a position on Hotcha’s board.
The pair had previously run West Decor UK, an import business whose customers included House of Fraser, Argos, B&Q and Homebase. However, the flourishing Chinese economy meant they were unable to sustain that particular venture. “Towards the back end of 2009, the Chinese economy shot up quite quickly and labour costs went up three times in a year, so we as the middlemen got squeezed out of the market,” Liang explains. “That was when we decided that we wanted to develop our own retail brand.”
It wasn’t clear at that stage what sector they’d target but the business partners soon identified the perfect opportunity. “We had a lot of friends whose parents or grandparents owned Chinese restaurants or takeaways,” says Liang. “I got a lot of insight into the industry and one of the fascinating things we found was that, while the Chinese food market is twice the of the pizza market, there is no national brand. So we set up Hotcha at the back end of 2011 with the aim of developing it into a national brand.”
Despite toying with the idea of launching the business in London, the entrepreneurs found a more natural home a little further afield. “We thought about starting up in London but the startup costs were way too high,” explains Liang. “We looked at our target customers and realised they are quite well populated in the south west so we decided to launch in Bristol, which is the biggest city in that part of the country.”
Liang has his eyes set on turning Hotcha into the Domino’s of Chinese food. He believes the pizza chain is currently setting the standard for takeaway service; a standard he’d like to match or surpass. “Domino’s is delivering within 25 minutes and we have to make sure that we at least match that if we want to be able to compete on the service level.”
Undoubtedly, while people might have a certain affinity with their local takeaway, Liang is sure they would look elsewhere for the sake of shaving some precious minutes off their waiting time. “People are not going to come to you because you sell the cheapest egg fried rice or chicken chow mein; the only thing that matters in the takeaway industry is the speed of service,” he says. “If you can consistently deliver your order within half an hour every single time, customer loyalty is going to be a lot higher.”
But that’s not to say the food takes a backseat. Hotcha’s menu boasts all of the British classics with a few authentic dishes thrown in for good measure. “If you look at the other independent takeaways, their menus will stay the same for quite some time,” says Liang. “It’s hard for people to change their mindset but we have something new on the menu every quarter to at least entice them to try.”
All of Hotcha’s recipes are devised by its executive chefs in a central kitchen, with all ingredients prepared before they are delivered to the restaurants. Not only does this ensure a consistent level of food quality across the board, it also means Hotcha doesn’t have to worry about finding experienced chefs for each and every one of its sites. “Our main focus was on simplifying the operations so that anyone can learn it in six weeks,” explains Liang. “It will take us about four to five weeks to train anyone to a good level of skill.”
Liang is now looking to franchise Hotcha nationwide, something the company wasn’t quite ready for when the idea was first floated back in 2012. “I met Andrew Emmerson who was the business development director at Domino’s at the time,” says Liang. “He told me about the Domino’s model being purely a franchise but at the time I didn’t think we were at the right stage to franchise the business because we were still developing our systems and trying to get the in-store profitability high enough to make it a viable business for franchisees.”
Three years later, and with Emmerson on board as an advisor, Hotcha has already signed up its first franchisees, who will be opening their doors in the coming months. “So far we have signed up three franchisees, two of whom have signed up a ten-store development over a five-year period,” says Liang. “And two out of the three are currently Domino’s operators so they know the takeaway industry very well.”
However, experience isn’t everything for prospective Hotcha franchisees. As long as candidates have a working knowledge of the industry and a solid business acumen to boot, that’s all that matters to Liang. “Finding the right partners is more important than anything in franchising,” he says. “Obviously you can’t just ask them to have takeaway experience but at the very least we’re looking for someone who understands and knows how to develop a business. We can then work with them and make them understand what really drives this brand.”
Hotcha is hoping to expand from ten to 100 stores within the next five years, opening one corporate store per year in its West Country heartland in addition to between ten and 15 franchised stores on an annual basis. “Our model is set up on deliveries so we want to look mainly at populated towns that have a lot of addresses and a good percentage of high-propensity customers,” says Liang. “When I say high propensity, that means customers that are students or young professionals with families. Those are the customers that order from us most frequently so we will attack towns with those types of customers first.”
While Hotcha looks to have enough on its plate for the next few years, that hasn’t stopped Liang broadening his horizons. The UK may be the adopted home of Chinese food outside of China but Liang says there is also a lot of interest across Europe, Australia and America.
“Hotcha is not just a British brand. It can go international,” he concludes.