CHASWOOD: Restaurant chain with ambitious target of 100 outlets by 2015

Andrew Reddy, 54, MD of Chaswood Resources, at T.G.I.Friday's outlet in 112 Katong. Chaswood has a market cap of about S$80 million and ambitiously targets to open 12-14 restaurants a year over the next 4 years in the region.
Photo by Leong Chan Teik

ANDREW REDDY had just checked out some malls in Singapore for his upcoming restaurants when he met me for coffee in the new shopping mall of 112 Katong  -- and this was after opening five restaurants in three days in Malaysia recently.

He is clearly a man in a hurry.

"Year to date, we have opened 8 and are on target for 14 this year," he lets on over coffee at T.G.I. Friday's.

His group, Chaswood Resources, operates 48 restaurants, including the T.G.I. Friday's at 112 Katong, and is moving determinedly towards its target of 100 restaurants by 2015.

T.G.I. Friday's is an American franchise that is recognisable to Singaporeans -- but it's just one of many brand names in the stable of Chaswood Resources of which Mr Reddy is the MD.

Chaswood Resources, which also operates WATAMI Japanese Casual Restaurants and recently clinched the Bulgogi Brothers Korean BBQ Restaurants franchise, is a newly-listed company on the Singapore Exchange, having achieved its listing status quietly in March by the backdoor or, in market parlance, a reverse takeover.

Mr Reddy and his two partners had done much work on a listing of their business on the Malaysia bourse when they heard knocks on their door from alternative asset manager Asiasons, which is listed on the Singapore Exchange.

Asiasons wanted to buy in, and leverage its regional network of contacts to help Chaswood achieve its vision of becoming 'the No.1 casual dining, multi-concept player in the region."

"I knew I had limitations going it on my own. I would be making a lot of cold calls, and having to start relations working. If I want Chaswood to grow big, I cannot think small. Asiasons already has a regional footprint, and can open doors for me. We have gelled pretty well."

A meal at T.G.I.Friday's. There is one T.G.I.Friday's restaurant in Singapore and 16 in Malaysia, including KL and Penang. Photo: Company

Windfall, and new wave of passion

Mr Reddy and partners sold 75% of their total holding to Asiasons for RM37.5 million. Asiasons now holds 62.4% interest and Mr Reddy 22.3%.

Mr Reddy himself collected about RM17 million, with a chunk of the windfall sitting in the bank still.

"I have invested some of it as part of risk management for my family. But no, I have not bought a sports car -- even though I get asked everytime : 'Where is your Porsche?' "

"Of course, I do feel the joy and excitement that the work has paid off. And there is a greater sense of security."

Mr Reddy had turned enterpreneur in 2002 when he and two partners bought over the T.G.I. Friday's franchise in Malaysia from their employer, a conglomerate with diverse businesses.

"All three of us re-financed our homes. We worked hard, we ploughed the profits back into the business and took salaries and didn't pay ourselves dividends. First year, we were cashflow break even and after that we became profitable all the way."

Chaswood has 5 Malones restaurants in KL.
Photo: Company

As they opened their first restaurant in 2003, they had the support of CIMB venture capitalists.

Since 2003, Chaswood Resources' revenue has shot up from RM16 million to RM112 million in 2010. Net profit was RM8 million in 2010.

The biggest spurt of growth began with the global financial crisis sparked by the fall of Lehman Brothers in 2008 when Chaswood had 21 restaurants.

"Landlords had space no one wanted. We had enough cash -- we locked in good rental rates for 3 years in malls at the construction stage."

Mr Reddy added: "We were doing well and our confidence level was growing. The banks were confident about us too. As a matter of fact, there are not many restaurant groups in Malaysia that have the support of banks."

Why target 100 restaurants by 2015? "If you don't have a high target, then there's nothing. Everybody in your team is doing day to day work. We need to show them what tomorrow is, what's in it for them. If I don't have a growth plan, I will lose talent."

(I put aside any thought of delving into whether this was overly aggressive expansion and its implications on cashflow, gearing, dividend payout, profitability etc. The financial results will come out regularly and investors can decide for themselves.)

Mr Reddy's personal growth story has proven to be extraordinary too, starting from when he worked as a hotel bell boy for a couple of months while waiting for his examination results (the equivalent of O levels).

From then on, he would build a career in the hospitality industry, rising to various managerial posts. "From young, I have always thought -- what's next? what's next?"

Hard-working, he has not developed much interest outside of work -- he doesn't golf, for instance. He and his home-maker wife, Trixie, have raised four children aged between 33 and 16 -- Petrina, Nicol, Andrea and Beth. Two of them now work in Chaswood. Mr Reddy and his wife have five grandchildren.

If Mr Reddy has one big pleasure outside of work, it is listening to music of many genres, ranging from jazz to heavy metal. His favourites are songs from the era of Frank Sinatra, Sammy Davis Jr and Dean Martin.

While one of his partners has retired, and another -- Joannis Martin Beins -- stayed on as COO, Mr Reddy is still charging ahead with a dream.

"I feel a second wave of energy and passion. It's difficult for people to understand -- they wonder why I have not slowed down and taken a back seat in the business. In fact, I am working twice as hard as before and enjoying it," he says.

Soon it's 5 pm, and our interview tapers off -- and then he is off to meet a business contact.