When a young Dane named John Christensen had trouble finding a good sandwich in Shanghai in 1999, he decided to open a café. He named it Wagas – simply because he liked the sound of it.

 

A chance meeting a couple of years later with Jackie Yun, an Australian who had arrived in China in the late ‘90s to study the language after managing a café in Sydney, was the start of a business partnership which has continued to blossom more than a decade on.

 

 

Jackie, who began her career with Wagas as the shop manager at the first Wagas in Shanghai’s Citic Square, quickly joined John as his business partner. The company has expanded rapidly –

from humble beginnings with just one café in 2001, Wagas will open its 28th store at a yet-to-be-announced location by year’s end, bringing to 50, the total number of ventures in the Wagas stable.

 

*Pictured right: Jackie Yun, General Manager of Shanghai Wagas receiving the Business Entrepreneurial Award at the 2010 Australia China Business Awards.

Business strategy

 

“John started Wagas because he himself couldn’t find a good sandwich in Shanghai,” says Jackie of Wagas’ humble beginnings.

 

It is an ethos that forms the basis of all new Wagas projects. Baker and Spice bakery, which first opened on Anfu Lu in January 2010, was opened because “we wanted good bread.” A further two were opened that same year, with another two Baker and Spice planned for 2012. Wagas now also roast their own coffee and have just ventured into wine imports selling directly to the public through the Baker and Spice ventures.

 

It may have started as a venture to cater for foreigners’ desires for a proper sandwich, but Wagas clientele today is 50 percent Chinese and 50 percent foreign.

 

“At the start, Chinese people would pay good money for a sandwich, then pick out the meat and leave the rest,” says Jackie of the changing tastes of the Chinese middle-class.

 

“We realized there was a market for sandwiches in the Chinese market too because they were curious, and we wanted to capitalize on that.”

 

Tapping into the Chinese market began by introducing sandwiches with slightly sweetened bread to appeal to the Chinese palate, and over time with the Baker and Spice venture, the bread has become unsweetened and very western.

 

“With Baker and Spice, we adjusted our recipes very gradually,” says Jackie.

 

“You can’t force what you think is delicious.”

 

Other concepts to appeal to the Chinese market include a half salad-half sandwich lunch special tapping into the Asian tradition of sharing plates and the set menu.

 

 

Jackie and John remain the sole investors of the Wagas restaurants. There are no outside investors, although some of the other ventures including Mr Willis, headed up by Craig Willis – once the former Executive Chef at Wagas and a long-time friend of Jackie’s from Sydney, include shared partnerships.

 

There is an emphasis on doing as much as possible without outside help. And there is no marketing or advertising department.

 

“We are very cost effective – we are in a very fortunate position where we do everything ourselves and John and I make all the decisions,” says Jackie.

 

The two have a unique business strategy that has passed the test of time – John the ideas and logistics man and Jackie the on the ground manager.

 

“John is like a kid in a candy store – always has ideas.”

 

Despite interest from Dubai, the UK, the US and from within China to franchise the Wagas concept, this is not on the cards.

 

Keys to success:

 

“Location has been very important to us,” says Jackie.

“In Shanghai, location has been very much the key.”

 

But along with selecting the right venues for Wagas stores, the team has remained cautious about who they partner with especially landlords and have had the benefit of retaining key staff in the company.

 

“These people help retain the Wagas culture, and with our rapid expansion, this has created opportunities for staff to move up quickly into management roles – a great motivator for staff,” says Jackie.

But while she encourages Wagas staff to think about new opportunities, staff who leave Wagas for greener pastures face a strict no returns policy if things with new employers don’t work out.

 

She also has a complacent view on potential copycats – a recurring problem for any successful venture in China.

 

“We don’t care – we just focus on us. I am more concerned at looking at us, and what we are doing than focusing on what other people are doing,” says Jackie.

 

Consistency, she says, has also played an important role.

“We learnt early on not to try and capture every part of the market but to remain true to what we do.“

 

“Our menu is quite simple – salads, sandwiches, pastas and we have now introduced rice.”

 

“If we tried to do too much, actually people wouldn’t understand what you do – and so the advantage of having Bistrow and  Mr Willis is that through them we do those other things we love to cook and eat.”

 

Always seeking improvement

 

“Overall we’ve done quite well. John and I each take it very personally when there is a fuss – from a hair in the pasta to a walnut shell in the bread etc. We take these things very seriously,” says Jackie.

 

Doing business in China

 

Jackie says the business environment in China today is very transparent.

 

“Overall, the economy has developed so quickly and the standard in Shanghai has improved and now the landlords actually come to us,” says Jackie.

 

With 24 Wagas stores under their belt, opening new stores has become easier with experience too.

 

“There are obvious advantages in already having opened so many before – and for the last four years, landlords have approached us,” says Jackie.

 

“Everything becomes easier: Lease agreements, construction, navigating local charges and taxes and municipal rates.”

 

Challenges

 

Jackie says a big challenge is keeping up.

 

“Even though we handle the expansion ok, every time we open a new store we have to replace people – which is good – as it means the next generation get a chance to be managers which is very motivating, but also means training up more people.”

 

Costs in Shanghai have increased significantly also with food and labour and rent all going up. “There’s nothing you can do about that but it does create new challenges.”

 

Other ventures

 

 

Baker and Spice came about at the last minute says Jackie. “We just wanted to bake our own bread.”

 

Space had become available on Shanghai’s quaint Anfu Lu in the French Concession and the bakery was born. It was then, that the Wagas team realized they could turn it into a concept.

 

Mr Willis and upmarket pizzeria La Strada, Mi Thai, Sushi Raku, Bistrow and Amokka and Circa cafes are all part of the Wagas family.

 

With 15 staff already hired in Beijing, Wagas expects to open its first store in the capital in mid-May in Sanlitun Village.

 

“Our goal is to do Beijing, and do it well,” says Jackie.

 

“For us, Wagas is still a baby – there’s a lot for us to do.” ■

 

 

Jackie’s advice to other Australians looking at doing business in China

 

• Don’t assume that what you can do overseas will work as well in China
• Work locally for a while and understand the culture rather than complain and battle it out
• Have a sense of humour
• Business is business – you win some, you lose some – it’s how you handle the loss that counts