Doing Business : Exotic Dining in Bangkok Means the Pizza Hut? : The experts told William Heinecke he couldn’t sell pizza in Thailand. But with 4 million customers last year he has had the last laugh.
When William E. Heinecke decided in the early 1970s to try to sell pizza in Thailand, everybody said he was crazy.
After all, Western fast food such as Kentucky Fried Chicken had been tried in Thailand and had already proved a flop in the 1960s. Even worse, most Asians simply had not adapted to eating dairy products, so that cheese, the key ingredient in gooey American pizza, made them physically ill.
But Heinecke, an American who grew up in Thailand as the son of a correspondent for the Voice of America, was convinced that the booming economic times in the country would produce a burgeoning middle class, translating into a generation of young, increasingly Westernized consumers acclimatized to milk from infancy. His hunch proved right.
Now Pizza Hut, with 11 outlets and four more under construction, is the largest restaurant chain in Thailand, with 4 million customers a year. He’s also opened a string of Swensen’s Ice Cream Parlors and plans both Thailand’s first cheese factory and a chain of Sizzler Steak Houses.
Next month he goes international when he brings Pizza Hut to Beijing.
But fast food now forms just a portion of 41-year-old Heinecke’s growing business empire. As chairman of publicly-held Minor Corp., which had reported revenues of $5.5 million last year, his empire also includes a chain of hotels, a catering business, consumer products franchises, and about 2,000 employees. He has become an unusual example of an American businessman who is succeeding against stiff local competition in a domestic Asian market.
“As an American, I can look at this society as an outsider and perhaps see opportunities where others don’t,” Heinecke said in an interview in the offices of Minor Corp., of which he is chairman. “So much of what is done in Thailand is done following someone else’s success and people jump on it. What people don’t do as much of is looking forward. The only way you’re going to be able to carve a niche in Thailand is to be looking forward. Timing becomes critical.”
People scoffed, for example, when Heinecke decided to open a chain of Benetton shops because cheap rip-off copies of the Italian-designed clothes are available on practically every street corner in Bangkok.
“We just assumed that some people would be willing to pay for the real thing,” Heinecke said, “and we were right.”
As he admits, Pizza Hut was not a runaway success when he opened the first outlet in the southern resort of Pattaya nearly 20 years ago. In fact, a resort was chosen because he felt to be on the safe side there should be some foreigners around to buy pizzas in case the Thais really hated it.
“We couldn’t do any market research because nobody knew what a pizza was,” he recalled.
Heinecke and his Thai associates also rejected advice that they try to make the pizzas and ice cream more attractive by changing the American formula to conform more to Thai tastes for spicy food and pungent fruits.
“We believe that you don’t adapt the product to Thai tastes, but wait until Thai tastes adapt to international tastes,” he said. “People are going in to eat an American pizza--not a Thai pizza. They don’t want the Swensen’s to look like Thailand, but just like it would in San Francisco. They want to feel they’re part of the new generation.”
The Pizza Hut took five years to turn a profit, but now is soldily established, along with a proliferation of competing fast food stores such as Kentucky Fried Chicken and McDonald’s.
“As you see disposable income coming to Thailand, you’re going to see how similar, not how dissimilar, Thais are to every nationality in Asia and even Americans,” he said. “They’re all wearing a pair of Levis, using international cosmetics and not really different in their habits than Taiwanese or Japanese. It just takes a little longer because of the (relatively low) disposable income question.”
Such rules are not 100% foolproof, though. Heinecke noted ruefully that his attempt to turn Malaysia into a nation of doughnut eaters failed miserably a few years ago. And while he feels his timing is good in China, he is painfully aware that business in Beijing has fallen off sharply since the Tien An Men Square massacre last year.
Heinecke said that while he will probably always be regarded as an outsider in Asia, he feels more comfortable doing business in Thailand than in other countries, including the United States, simply because he is more familiar with the market.
Married with two sons, one now attending college in the United States, Heinecke said he is fluent enough in the difficult Thai language “to get by.”
“We have red tape,” he said of doing business here, “but the U.S. has a lot of red tape, too. Maybe even more.”
Having successfully anticipated the changing tastes of Thais, Heinecke is now trying to attune the hotel side of his business interests to the changing tastes of the international traveler. He’s betting that the tourists who are flocking to Thailand will prefer to stay in hotels that feature a bit of Thai culture--low-rise buildings with characteristic sloping roofs rather than the high-rise concrete boxes now springing up around the country.
“We plan these to be culturally interesting resorts,” he said. “When you come to Thailand, you want to feel you are in Thailand. You don’t want a hotel that could have been in Monaco, Hawaii or Japan. That seems to be forgotten by so many other developers. . . . “
