Business Model of Specialty Food Restaurants in Business Districts: A Case Study of Dongshanzhan Urn Chicken
Wei-Chun Nien1*
1 Feng Chia University, Taiwan
*Corresponding Author: ginoab1012@gmail.com Accepted: 15 February 2023 | Published: 1 March 2023
DOI:https://doi.org/10.55057/aje.2023.4.1.1
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Abstract: The development of business districts is a focus of governmental endeavors, and the outcomes of such development are a key benchmark that reflects the effectiveness of governmental policies and the prosperity of local economies. In addition, the successful management of business districts increases the number of international tourists that they attract. However, achieving quick success in business district management is often difficult.
Governmental policies can only support the rapid and sustainable development of business districts, and the management of such districts is still dependent largely on collaborations among private stakeholders. These stakeholders shall attempt to identify the unique characteristics of their districts and sustain their development flexibly while improving their reputation. In this manner, the visibility of the districts can be enhanced. Studies have mostly focused on governmental policies and neglected the fact that the development of a business district is mainly dependent on the businesses therein instead of governmental policies. To address this research gap, this study examined the business model of a specialty food restaurant in Dakeng Shopping District, which is located in Beitun District, Taichung. A case study design was adopted to conduct an in-depth examination of the restaurant and clarify the process by which it has solved relevant problems and identified new opportunities for further development since it was founded.
Keywords: Restaurants, Chicken, Business model
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1. Introduction
The concept of the local business district arose in the late 1970s following the emergence of the globalization trend, which has increased the competitiveness of various industries by introducing international competition and, consequently, led to the failures of numerous economic, industrial, and regional development polices. In the 1980s, the one-village-one- product movement began in Japan. It deviated from the traditional practice of implementing consistent nationwide economic policies, thereby facilitating successful local development.
Local economic development emphasizes the unique characteristics of local regions and improves the economy, quality of life, and employment opportunities of such regions through collaborations between the public and private sectors. A common development strategy is to have the restaurant industry lead the development of other relevant industries, including the transportation and tourism industries. This strategy ensures the diversity of the industries participating in local economic development and promotes tourism development that emphasizes local characteristics, thereby showcasing the heterogeneity of a local area to
potential consumers. Accordingly, the restaurant industry plays a key role in local economic development.
The emergence of the global economy and prevalence of relevant technologies have changed the socioeconomical patterns of various countries. With the support of government policies, leisure activities become more accessible to the public, and people are increasingly spending more time on such activities. Improvements in economic conditions and policy standards have led to people having more time to spend on recreational and entertainment activities. Most studies on leisure activities have focused on local economic development or tourism. Research on local economic development covers diverse topics, including economic theories, industrial activities, strategies, participant interactions, and globalization effects (Blakely, 1994;
Eisenschitz, 1993; Haughton, 1999). However, few Taiwan-based studies have focused on local economic development or adopted a business operator’s perspective. The present author has participated in various startup and investment activities and managed several types of food service stores, including boba tea shops and pubs. Moreover, the author has worked in the food service industry for numerous years and has thus accumulated a substantial amount of relevant experience and knowledge regarding restaurant management. Therefore, this case study explored the business model of a specialty food restaurant that was founded by the author in a business district, and it addressed the research gaps left by local studies.
2. Business Districts
From 1995 to 2015, Taiwan’s Department of Commerce progressively implemented a series of projects that focused on the development of business districts. These projects were the Business District Image Shaping Project (1995–2015), Business District Reconstruction Project (1999–2003), Attractive Business District Medium-Term Project (2004–2007), Brand District Project (2008–2011), and Four-Year Business District Competitiveness Project (2012–
2015). This trend indicates that when the central government of Taiwan implements a development policy for business districts, it usually proposes an overall policy guideline that is subsequently implemented by local governments per regional characteristics and the themes of individual districts.
Various studies on business districts have been conducted. Bolen (1988) defined a business district as a geographical region with potential consumers from whom a single or multiple stores can generate profits by selling products or services. Bennet (1993) identified business districts as a geographical region where products can be sold or transported after accounting for relevant costs and sales volume.
According to the Ministry of Economic Affairs (2000), a business district comprises multiple stores that operate within a specific region and form a business cluster. The main constituents of a business district include its land, main shopping streets, and other resources. The present case study focused on a restaurant located in Dakeng Shopping District, which is designed by the Economic Development Bureau of the Taichung City Government. The district neighbors the Dakeng Scenic Area, which has 12 hiking trails of varying difficulty that total 16 km in length. The hiking trails are located at an altitude of 112–859 m and are suitable for visitors with varying levels of hiking experience. The nearby regions also feature hot springs that were formed during the 1999 Jiji Earthquake and more than 30 types of deciduous trees, which collectively form beautiful sceneries during seasonal transitions. Accordingly, Dakeng Shopping District is regarded as the business district with the most abundant natural sights in
Taiwan. Its main shopping street is located on Dongshan Road Section 1 in Beitun District, Taichung.
Dakeng Shopping District organizes various events annually to promote its products and builds its reputation by integrating several of its advantages. For example, at the Dakeng Carnival, several individual stores prepare their signature dishes to create set menus that include main dishes and desserts. These menus enable consumers to taste various signature dishes at the business district. At the Dakeng Food Voucher event, which is organized jointly by Dakeng Shopping District and the Taichung City Government, visitors can purchase food vouchers that cost NT$3600 each. The vouchers can then be exchanged for NT$6000 worth of food. This event has received highly positive responses from consumers each year, and the vouchers are always sold out quickly.
3. Methods
Generally, research methods are divided into qualitative and quantitative methods. Qualitative methods usually do not involve the application of clearly defined constructs but focus instead on in-depth explorations of research topics. Therefore, qualitative research yields more profound results relative to quantitative research. By contrast, quantitative research focuses on objective perspectives to clarify specific phenomena of interest and aims to identify consistent and generalizable principles. Consequently, quantitative studies often adopt a single perspective to explain multiple phenomena or observations.
Before the case study design of the present study is introduced, this section discusses the debate between Eisenhardt (1989), who proposed a qualitative research design based on positivism and the multiple case research method, and Dyer and Wikins (1991), who emphasized hermeneutics methods. For theory construction, Eisenhardt (1989) advocated the inclusion of multiple cases in a single study. This method facilitates a summarization of the similarities and differences among multiple cases, which is then used to draw relevant theories. However, Dyer and Wikins (1991) raised two concerns regarding the method proposed by Eisenhardt (1989).
First, including numerous cases in a single study is not always necessary because an investigation of multiple cases collectively usually yields results with shallow insights. Second, a simultaneous analysis of multiple cases to identify their differences is often unnecessary;
instead, researchers should focus on writing better stories about these cases to produce meaningful research content.
In recent years, scholars in Taiwan are increasingly conducting hermeneutics research that focuses on examining a single case subject or composing detailed stories about a subject. The case study is a primary qualitative research method that aims to present profound content that is comprehensible to readers. To clarify the societal role and position of a case subject, researchers must create content that straightforward for readers to understand, and the case study is a useful method for achieving this goal. Accordingly, the present study also focused on the in-depth research of a single case subject.
This study mainly explored the development and business strategies of specialty food restaurants in local business districts. A bottom-up approach was adopted to examine Dongshanzhan Urn Chicken (a restaurant located in Dakeng Shopping District) and its challenges and opportunities. The experience of the present author in the food service industry was applied to analyze the general business model of specialty food restaurants.
4. Case Restaurant
4.1. Business Management Process
An awareness of the changes in one’s surrounding environment is a necessary skill that entrepreneurs and pioneers in emergent fields must master. In 1998, the present author observed the progressive changes in Taiwan’s restaurant industry, particularly the increasing interest in consuming roasted chicken among consumers. Although the competition among roasted chicken restaurants was considerable, most of them were serving products that were dry and had a bland favor. Detecting a business opportunity, the author decided to develop a competitive roasted chicken product with long-term development potential. After identifying roasted chicken as an investable market, the author pooled all available resources to develop roasted chicken products with unique characteristics and flavors.
On August 8, 1999, the first Dongshanzhan Urn Chicken restaurant was opened. However, similar to various other successful businesses, the restaurant had to overcome various challenges to demonstrate the uniqueness of its products. One and a half months after the opening of the restaurant, Taiwan was hit by the largest earthquake ever recorded in the country, that is, the 1999 Jiji Earthquake. The earthquake was regarded as the most severe natural disaster to have occurred in Taiwan, and it substantially affected Taiwan’s economy.
Because of this event, the restaurant’s profits and customer numbers decreased considerably.
The disaster led to the closedown of numerous restaurants in the restaurant industry. However, the author persisted, rationally evaluated the overall situation, and concluded that the tourism industry in Dakeng is still in an early development stage and has yet to reach saturation. Dakeng has excellent air quality, and it is located in a suburb of Taichung that has various hiking trails, which are suitable for day trips by residents living in the urban areas of Taichung. Therefore, the author continued to develop new products and expand the menu of the restaurant.
Although the restaurant was severely affected by the changes in the overall economy, the author remained confident about his products. During the period when the restaurant had fewer customers, the author insisted on selling freshly prepared food. Furthermore, unsold roasted chickens were donated at the end of each day to nearby disadvantaged groups and on-duty policemen and firefighters. This policy ensured that leftover food was not wasted in a poor economic climate while also serving to promote the restaurant. Accordingly, potential customers began to learn about the restaurant, and the generated profits allowed for all roasted chickens to be freshly prepared daily. Eventually, the restaurant gained an excellent reputation in the local area because of its excellent product quality and contributions to the community, and more customers from other regions began to visit the restaurant because of the positive word-of-mouth.
The recovery and reconstruction efforts following the earthquake gradually improved the economy of Taiwan, and the restaurant began to grow stably, becoming the most profitable and representative restaurant in the business district. With the restaurant building its reputation and attracting an increasing number of loyal customers, it gradually became a must-visit attraction for numerous tourists and hikers in Dakeng. However, the expansion of restaurant operations also led to several problems, including the annually increasing rent, inadequate local infrastructure, and lack of restaurant space. Consequently, the author planned to purchase a plot of land and construct his own building for the restaurant. After conducting environmental surveys and analyses, the author purchased a plot that is approximately 1000 m away from the original site of the restaurant. The construction of the new restaurant building began in June 2017 and was completed in late August 2019.
After the restaurant’s dining environment was improved and its food quality was stabilized, it was listed in the 2020 First Taichung Michelin Guide and became the first urn chicken restaurant to be listed in the Michelin Guide. This milestone elevated the status of Taiwanese cuisine and promoted the unique urn chicken preparation technique to the global community.
After earning the recognition of Michelin, the author continued to uphold his principle of preparing high-quality food. In addition to improving the restaurant’s food quality and kitchen cleanliness evaluation standards, the author continually developed new dishes and upgraded the restaurant environment. Accordingly, the business model and vision of the author resulted in the restaurant being consecutively listed in the 2021 and 2022 Taichung Michelin Guides, distinguishing the restaurant from other competitors that sell similar products.
4.2. Space and Hardware
Specialty restaurants that sell roasted chicken as their main product are mostly tourism restaurants located in suburban areas. Because tourists are less likely to visit such areas during the weekdays, the revenues of such restaurants are considerably affected by the number of tourists and hikers that visit the region. The decor of these restaurants mostly feature nature- related themes that correspond to the surrounding suburb or mountainous sceneries. However, this type of decor does not fulfill the needs of customers with respect to diverse sensory experiences.
Studies have indicated that colors are an essential visual element that determines the ambience of a physical environmental and a crucial variable that attracts consumer attention and stimulates the emotions of consumers (Eiseman, 1998). Customer satisfaction and loyalty are largely influenced by the physical environment of a restaurant, which should exhibit elements such as innovative interior decorations, appropriate background music, relaxing ambient lights, unique color combinations, an enjoyable ambient scent, a spacious floor, an appropriate table setting, and professional service standards (Kim & Moon, 2009; Sulek & Hensley, 2004;
Turley & Milliman, 2000). The present author posited that restaurant decorations with natural themes are usually excessively simple and old fashioned and that such themes correspond to the stereotypical image of urn chicken restaurants. Consequently, these decorations do not contribute to the establishment of a high-quality dining environment for customers; this is because high-quality food should be appreciated in a suitable environment. Therefore, when the author began the construction of his own restaurant building in June 2017, he adopted an innovative strategy and deviated from the conventional natural decoration themes applied by urn chicken restaurants. Specifically, the dining environment of the newly constructed restaurant was enhanced by installing high ceilings; increasing the space between tables; using elegantly designed, brightly colored furniture; building a meticulously designed interior garden; constructing counters and kitchen islands with a contemporary design; and putting up unique decorations on each floor per the designated purpose of the floor. Through this strategy, Dongshanzhan Urn Chicken became the first roasted chicken restaurant in Taiwan’s restaurant industry to have a unique and striking decor. Consequently, the number of customers served by the restaurant fluctuated less over the week.
4.3. Circulation Flow Configuration
Because of its increasing reputation and customer numbers, the restaurant also required more space to sustain its operations. To ensure that all customers experience the same level of service and food quality, the configuration of a restaurant’s circulation flow is crucial. The present author identified two major aspects of efficient circulation flow.
The first aspect is service efficiency. For front-of-house operations, service efficiency encompasses the efficiency with which waiters add the names of customers to the waitlist, guide customers to their seats, deliver tableware to customers, take the orders of customers, deliver food to each table, provide tableside services, and clean tables. For back-of-house operations, service efficiency refers to the efficiency of kitchen staff in preparing ingredients, cooking food, and delivering meals to waiters.
The second aspect pertains to customer efficiency, which denotes the efficiency with which customers locate parking lots, enter a restaurant, join the waitlist, move to their seats, order food, dine, and leave the restaurant.
Low service efficiency tends to increase human resource costs and prevent restaurant staff from contributing to the best of their ability. The labor shortage problem in Taiwan also hinders the ability of companies to recruit sufficient employees, which in turn increases the workload of existing employees. In addition, low service efficiency limits the ability of employees to undertake multiple tasks, leading to a high employee turnover rate and, consequently, a negative cycle in which service efficiency continues to decrease. Low customer efficiency reduces the table turnover rate and management efficiency of a restaurant. It also considerably influences customers’ impressions of various aspects of a restaurant (e.g., access to parking lots, restrooms, and restaurant entrances; speed of food delivery; and seating comfort). These factors determine the operating performance of a restaurant.
Accordingly, the present author carefully planned the circulation flow of his restaurant by conducting multiple trial runs on the basis of his working experience in the food service industry, thereby attaining a balance between operating efficiency and performance. This strategy enabled Dongshanzhan Urn Chicken to attain breakthroughs in its business performance.
For the configuration of the restaurant’s circulation flow, the urns used for roasting chicken are placed at the restaurant’s front entrance to emphasize its signature cooking technique. The countertop used by staff to cut up roasted chickens is located next to the counter at the entrance.
This enables visitors to view the process for preparing roasted chicken and confirm that all the chickens served at the restaurant are freshly prepared.
The restaurant also has its own parking lot, which customers can use free of charge. This enables customers to enter the restaurant directly after leaving their vehicles. In consideration of situations in which the parking lot is full and customers are required to park their vehicles at other locations, the restaurant features a front entrance and a back entrance for customers arriving from different directions.
The dining area is spacious and brightly lit. The overall configuration of the restaurant allows customers to locate their seats easily and summon a waiter when necessary. Tables are spaced sufficiently far apart to ensure the privacy of customers and prevent conversations at other tables from affecting their dining experiences. Within the spacious dining area, all dishes can to be delivered through carts, enabling waiters to serve multiple orders quickly and reducing the wait time of customers.
The kitchen is located at the back of the restaurant. To improve meal preparation efficiency, a dumbwaiter system that links all floors is installed. After a group of customers are seated at a table, a waiter delivers tableware to the table, introduces the menu to the customers, and takes their orders. The circulation flow is configured to ensure that customers need not go to a counter
to order food. Instead of providing a one-stop service at its counter, the restaurant deploys multiple waiters to take orders and manage checkout. This system enables the restaurant to serve multiple customers simultaneously. Furthermore, customer orders are divided into those involving the roasted chicken team and those involving the kitchen team, and food preparation tasks are further divided among team members to ensure an efficient cooking process and reduce customer wait time. Therefore, this system also increases the restaurant’s table turnover rate.
4.4. Specialty Roasted Chicken
At first, the restaurant did not use urns to roast chicken; instead, traditional cone-shaped iron containers were used. In Taiwanese Hokkien, container-roasted chicken is called tangahgue, which means chicken roasted in an iron container. Such containers must be sufficiently thick and dense to ensure that the fragrance and moisture of the chicken being roasted are not lost during the roasting process. Accordingly, the resulting roasted chicken has a crispy exterior and juicy meat. Another traditional cooking technique that was popular in Taiwan is preparation of chicken using an earth oven. Specifically, a chicken is fully wrapped in aluminum foil before it is heated in an earth oven. Although the resulting meat has a pleasant and sweet taste, this technique causes an excessive amount of moisture to be retained in a chicken. Consequently, the resulting chicken skin has an overly soft texture, which conflicts with the preference of Taiwanese people for a crispy exterior. Therefore, the present author attempted to combine iron container–based and earth oven–based chicken roasting techniques to retain the advantages and eliminate the disadvantages of both techniques, resulting in the creation of urn roasted chicken.
The developed urn-based preparation technique takes advantage of the thermal resistance and insulation of ceramic urns and the high thermal conductivity of iron stoves to quickly heat chicken, thereby producing chicken with crispy skin and juicy meat while retaining an adequate amount of moisture. The roasted chicken prepared using this technique exhibits a sweet, nongreasy flavor. Another essential factor that affects the quality of roasted chicken is the chicken breed that is used. Dongshanzhan Urn Chicken purchases chicks from the native black feather breed, which is an expensive breed. The chicks must attain a specific weight and be raised in a fruit garden to provide them with sufficient space for movement. These chicks feed on wild vegetation and insects in a garden while receiving feed as a dietary supplement. The health and growth of the chicks are closely monitored to ensure that their meat has a firm yet supple texture. Each chick is raised for at least 120 days and reaches an approximate weight of 3 catties before harvest.
4.5. Staff Turnover
Parasurama et al. (1985) asserted that service quality is the outcome of the interactions and collaboration between customers and waiters during service delivery. This quality can be determined by the difference between the expectations of customers and waiters. Service quality assessment should focus not only on the outcome but also the process of service delivery. Service quality is rated on the basis of perceptions, and it is more difficult to assess than the quality of physical products. Professional waiters with sufficient experience and knowledge are crucial to the service delivery, operations, and brand image of a restaurant. A high waiter turnover rate tends to reduce customer expectations regarding service quality, and the resignation of experienced kitchen staff affects the flavor and quality of dishes as well as the retention of existing customers.
More than half of the current full-time staff of Dongshanzhan Urn Chicken joined the restaurant shortly after its founding. Therefore, the employee turnover rate of the restaurant is low compared with those of other businesses in the restaurant industry. In addition to providing a favorable workplace environment and employee benefits, the present author implemented several measures that are continually being refined.
First, the restaurant allows its staff to freely express their opinions. During management meetings, the experiences and views of first-line waiters are considered, and the author ensures that all staff understand the operation guidelines and corporate culture of the restaurant. This measure in turn improves the overall cohesion of the staff and encourages them to be meticulous at work.
Second, the restaurant provides attractive employee benefits. Bonuses are awarded to the staff during the Lunar New Year, Dragon Boat Festival, Mid-Autumn Festival, and various other celebratory events, including Father’s Day and Mother’s Day. Because these benefits exceed the staff’s expectation, they improve the staff’s level of identity with the restaurant, enhance the staff’s overall cohesion, and increase employee retention.
Third, the amount of employee bonus awarded is increased to encourage the staff to perceive their work as an integral part of their lives. The growth of the restaurant is directly reflected in the salaries of the staff; thus, they understand that their work entails more than the completion of tasks in exchange for monetary compensation. By improving their service attitude and performance, the staff can contribute to the development of the restaurant while also improving their own quality of life. This process creates a positive cycle that encourages the staff to work diligently.
Finally, allowances are provided regularly for the staff to travel together domestically and abroad. This measure enables the staff to expand their horizons by experiencing diverse customs and dining cultures worldwide. Such traveling experiences also enhance the social connections and teamwork of the staff.
5. Conclusion
The present author has managed Dongshanzhan Urn Chicken for more than 20 years and has overcome various difficulties from maintaining product quality to ensuring a sufficient stock of products, preparing delicious roasted chicken in large quantities, and developing ovens that enable the simultaneous preparation of multiple chickens without comprising heating and product quality. The author’s experience of working in the food service industry and his profound understanding of food services enabled him to adopt the appropriate crisis management strategies, allowing the restaurant to experience further growth after reaching the maturity stage of its business development. Being listed in the Michelin Guide for 3 consecutive years was a milestone for the development of the restaurant.
The restaurant is undergoing continual improvements to meet the everchanging needs of its customers. The present author continues to develop new menus to provide menu variety while maintaining the quality of its specialty products. To meet the needs of customers with respect to regular dining, business dining, and banquets, the restaurant staff continue to improve their professionalism. Moreover, the restaurant implements an employee welfare system that is superior to those of its competitors to retain its top performers. The author adopts an altruistic attitude toward the treatment of his employees, believing that this promotes a mutually
beneficial relationship between the restaurant and its staff. Consequently, the restaurant has maintained a low employee turnover rate. Nevertheless, continual improvements and development are required to respond to competitors and the everchanging environment of the restaurant industry, thereby ensuring the survival of the restaurant in the industry.
Against the backdrop of the COVID-19 pandemic, consumers are increasingly emphasizing the adequacy of ingredient preparation processes and the safety of dining environments.
Dongshanzhan Urn Chicken continues to uphold its principle preparing delicious food made from natural ingredients, and it strives to ensure the excellent quality of its products.
Accordingly, the restaurant does not plan to open additional restaurants or to establish a franchise system. By focusing on the management of a single restaurant, the present author has maintained the restaurant’s quality and developed it into a unique landmark of the business district.
Future marketing studies on the restaurant industry can explore emergent marketing methods such as online marketing, which may become the dominant marketing strategy for attracting new customers. The restaurant examined in the present study is a unique case in the restaurant industry. Through an in-depth yet comprehensible study of the business model applied to his restaurant, the author aims to address current research gaps with respect to marketing in the restaurant industry.
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