I don’t apologize for being a fan of Honeymoon Dessert. In fact I am more of an addict! This dessert Company began selling its delicious South China sweets in Hong Kong in 1995 and 13 years later has over 20 sores in the territory but more importantly 44 stores overseas of which 40 are in Mainland China. Many years ago I asked some friends in Hong Kong and China about the international development potential for this concept and was treated to a long lecture about all the regional cuisine differences in China and why Honeymoon Dessert could not develop a national footprint on the Mainland. First, they were selling desserts which is not exactly a big part of Chinese cuisine. Most people prefer fruit after a meal and dessert is really treated as an after-thought. Second, they were selling South China style desserts which were alien to people living in other parts of China. Third, selling desserts and drinks by themselves is not an easy business considering the limited hours when most people are comfortable eating this type of food. In the language of the restaurant industry, were there enough “day parts” to sustain the business? And yet by the end of 2008, the Company had stores in Shanghai, Hunan and Jiangsu Provinces in addition to Guangdong.

I was surprised to discover that Hong Kong people use Honeymoon Dessert for three day parts. Some actually eat the sweets for lunch, some as an “Afternoon Tea” set and some as late night snacks. In

China, I can see that this concept is used a little like Starbucks as a place to hang out but with food and drink items more suited to the Chinese palate. The stores I have visited on the Mainland are always busy in the afternoon and evenings.

It is also interesting to study the different business model between Hong Kong and China that the Company employs. In Hong Kong, there is a mixture of Company Owned and Franchise Food Court and stand alone locations but nothing elegant about them. In China the stores are all franchised to large Groups, somewhat classy and very inviting with 100% table service. Nice red cushion seats give the store an upscale feeling even though plastic replicas of the food are displayed outside each shop. Interesting that if the Chinese customer needs plastic food and pictures to understand Chinese desserts, you can imagine what is necessary to explain Western cuisine! Also, since most of the food is prepared ahead of time in a Central Kitchen, it is fairly easy to employ a franchise model whereby if the franchisee does not pay the royalty then they don’t get the raw material to operate the store.

Why is Honeymoon Dessert doing so well in China while the leading Hong Kong bakery chain, Maxim’s, appears to be struggling? First, the Maxim’s stores in China pretty much look the same as the ones in Hong Kong – clean but very middle class – and they are basically take-away outlets. Why would a Chinese customer pay 4-6 RMB for a sweet bun there when he can pay 2 RMB at a local shop nearby? Honeymoon Dessert is expensive for the Chinese, over 20 RMB per person minimum, but the atmosphere is elegant and the charge also includes the 1-2 hour seat rental like in Starbucks.

Can Honeymoon Dessert become as big in China as MIster Donut in Japan with 1000 stores? It is difficult to say but I would bet my money on this concept over the American donut retailers any day!

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