99 and Counting

SPECIAL TO THE TIMES

Tawa Supermarkets, whose flagship 99 Ranch Markets is a favorite of Asian consumers throughout Southern California, got its start because a Taiwanese immigrant named Roger Chen missed the flavors of home.

Chen, who moved to Orange County with his family in 1983, found himself driving to Chinatown each weekend to buy Tong I cookies, his favorite brand of soy sauce and the green vegetable tong ho (a must for Chinese hot pot).

On those long drives from Fountain Valley, Chen got an idea: Why not build a supermarket that caters to the specific desires of Asian consumers as well as provides the toothpaste, onions and other staples that everybody buys anyway.

As tens of thousands of Asian immigrants poured into Southern California in the 1980s, Chen's idea hit big. Today, there are 16 of the 99 Price and 99 Ranch supermarkets in the United States and Canada that ring up $150 million in annual sales, and 99 Ranch has become the biggest player in California's growing Asian supermarket industry. Most of the Tawa supermarkets are in Southern California.

The company has more than 1,200 employees, averages 10% to 15% growth each year and has expanded into licensing the 99 Ranch name.

"We were trying to upgrade and improve the image of Chinese grocery stores by using Western skills to sell Asian products," recalls Chen, 45, the chairman and chief executive of privately held Tawa, which is based in Buena Park. The company also builds its own retail centers with other partners.

One of the best-known of these shopping centers is San Gabriel Shopping Plaza on Valley Boulevard in San Gabriel, which Chen developed as a joint venture with four partners.

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Designed in an attractive, earth-tone, faux-Spanish-mission architecture style, the 250,000-square-foot, two-story shopping center is anchored by a gleaming 99 Ranch Market, where patrons can buy everything from fresh whole lobsters to $400 bottles of aged French cognac.

The plaza also features a department store, jewelry stores, insurance offices, clothing boutiques, bakeries, hair salons and scads of Chinese restaurants for every palate, from Hunan to Peking, including one that dishes up exclusively Islamic Chinese cuisine.

Some businesses even follow the 99 Ranch Market to new locations to piggyback on its vast clientele. One businessman who has followed some 99 Ranch Markets is Victor Kuo, who owns a chain of cosmetics stores called Vitativ, which stocks such products as Clinique, Christian Dior and Shiseido but caters almost exclusively to Asian customers who prefer not to shop at mainstream department stores because of language barriers.

"99 Ranch is very upscale. They have a niche market for Asian customers and more drawing power than other shopping centers," says Kuo, who has placed six of his 10 Vitativ boutiques in 99 Ranch shopping centers. "The rent is a bit more expensive there, but it's worth it. Our business has grown since moving into their centers."

Mainstream chains have responded to the new Asian supermarkets by stocking their own shelves with products such as daikon radish, ground pork and fish sauces to lure Asian customers, says Edie Clark, a spokeswoman for the Food Marketing Institute, a trade association for the supermarket industry based in Washington, D.C.

Mainstream supermarkets are also adding prepared Asian foods for takeout, she says. Overall, sales of Asian food products grew 17% nationally in 1996 to more than $68 million.

But Chen also faces competition from ethnic supermarket chains such as Yaohan, which caters to Japanese Americans, and Hong Kong Markets, whose three outlets offer slightly lower prices and attract Cantonese-speaking Chinese from Hong Kong.

By contrast, 99 Ranch Markets has a loyal Mandarin following from Taiwan. It also has a reputation for slightly higher prices, and some customers say the produce is fresher.

"My wife shops at both 99 Ranch and Hong Kong. From week to week they all have specials, but overall Hong Kong is a little lower," says Christopher Leu, president and chief executive of United Pacific Bank in Los Angeles, whose clients include 99 Ranch and several other Asian supermarket chains.

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However, "when you go into a 99 Ranch Market, you feel there's more turnover, so people think the food is fresher."

Leu says that Yaohan, based in Japan, is the largest such chain in the United States but that Tawa is the largest in California.

"The market has been pretty much cornered by Roger's group; he was the first to get the Asian supermarkets independently organized and run more professionally, like Vons," Leu says.

One recent day, customers browsing through the aisles explained why they'll pay more for food at 99 Ranch.

"Why do I shop here? Because the fish is still wiggling," says Ontario resident Calvin Tong, 36, a bus driver originally from Hong Kong, pointing to the packs of fresh fish piled in his cart.

Nantawan Chee, 22, a Thai who studies marketing at Azusa Pacific University, agrees.

"It's clean, it's close to my work, and there is a lot of choice," says the Baldwin Park resident.

Jonathan Ziegler, a supermarket analyst with Salomon Bros. in San Francisco, calls 99 Ranch "a very clever concept."

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In the ethnic-food market, "there's room for a sophisticated operation," Ziegler says. Chen "is trying to create a one-stop shopping, attractive environment for the customer."

Chen is always looking for ways to continue to upgrade his business. One recent day, he sat in the conference room of his Buena Park corporate headquarters and discussed his company.

In the center of the conference table sat a floral centerpiece for Chinese New Year brimming with silk flowers and dollar bills folded into the shape of butterflies--for good luck. A Chinese scroll hung from the wall, admonishing that "Honesty is the most important virtue."

Chen explained that he first started coming to Southern California in the late 1970s to import U.S. cars for the Taiwanese market and found it a good environment with excellent schools to raise his children, now 22, 19 and 17.

He moved his family over in 1983, lived in Fountain Valley for a while and then eventually settled in Anaheim Hills. Chen tried exporting cars and computers to Taiwan but grew frustrated by the heavy competition. He didn't speak English well and couldn't get a job here, despite having graduated from the elite Taiwan University.

Then came the idea for a supermarket. Unable to obtain a bank loan--Chen didn't even have a credit card back then--he and a partner ransacked their savings and investments to come up with nearly $1 million.

"The banks wanted to see business experience, to prove that we could run a supermarket, which I didn't have," Chen explains.

With that nest egg, they opened the 16,000-square-foot Man Wah Supermarket in Westminster in 1984, displaying thousands of traditional Asian food products in a Western supermarket style that featured gleaming aisles, neon signs, appealingly packaged foods, electronic inventory control and efficient service.

A second Westminster supermarket, 99 Price Market, followed a year later and launched the brand name that Chen would use for all his future stores, since 99 is considered a lucky number among Taiwanese.

But they learned as they went. The partners imported about 40% of the food and lined up local suppliers for the balance. They schooled themselves on Food and Drug Administration regulations and on local health ordinances.

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In the beginning, for instance, Chen didn't realize that meat, fish and eggs had to be refrigerated, not just stacked on ice as they are back home. "At that time, I was still Asian-minded. But [government agencies] knew we were new. They gave us a chance because they realized we didn't know."

Chen's wife worked as cashier, accountant and administrator to help out. The store flourished. Five months into the venture, Chen bought out his partner's share in the supermarket.

By the time he asked Union Bank for a loan to open a second store in 1986, Chen could hand over business receipts proving his success. The bank anted up.

That loan helped fund the 99 Price Market in a Westminster shopping center that Chen developed in partnership with Frank Jao, a legendary immigrant who built most of Little Saigon.

Jao recalls meeting Chen in the late 1970s.

"He came to Bolsa Avenue [the main thoroughfare of Little Saigon], looked around, found my company and approached me to talk about real estate investments, the economy and the growth of the Asian immigrant population," Jao says. "We seemed to have the right chemistry.

"I was impressed with his intelligence and his analytical mind when we discussed returns on investment. He had all the numbers laid out very fast, faster than I could put them on paper."

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At that time, Chen knew little about real estate, but in partnership with Jao--already a successful developer--he converted an industrial park of 100,000 square feet into a profitable retail center anchored by his supermarket.

Jao and Chen, who remain good friends, went on to build half a dozen more centers, including the two-story, enclosed Asian Garden Mall, the beating retail heart of Orange County's Vietnamese community.

The 99 Ranch Markets grew apace as increasing numbers of Chinese immigrated here. The chain quickly opened stores in Rowland Heights, Montebello and Anaheim.

Tawa also began manufacturing and stocking 300 food products under its own brand names in the 99 Ranch Markets. The products included cooking oil, chicken broth, noodles, fruits and vegetables.

Today, Chen is exporting the 99 Ranch Market concept outside Southern California because he says the market here is saturated, tastes are changing and there are many competitors. His development division, founded in 1992, is helping to build supermarket plazas from Atlanta to Toronto, Las Vegas to San Jose--almost anywhere with an Asian population to sustain a store. Atlanta, for instance, has nearly 100,000 residents of Asian descent, Chen says.

The arrangements call for Tawa to license its logo and merchandising plan to local business partners. The supermarkets bear the 99 Ranch name, which is now known for quality throughout the Asian community.

But Chen isn't ready to franchise his 99 Ranch Markets across the nation and worries about overextending his company.

"Our strategy is to really study," he explains, "not to jump in."

He turned down an offer to open a store in New Jersey, for instance.

"That's too far for now," he says.

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But Tawa is poised to expand into Asia, where changing tastes have created a new opportunity for high-tech, Western-style supermarkets that can deliver American as well as Asian products--a delicious irony since the idea for the chain arose when Chen couldn't find Asian foods in his adopted country.

Chen says the overseas projects will be planned as joint ventures with local business groups eager to use his mix of Western technology, marketing and inventory controls to track consumer tastes and spending habits. Chen also plans to supply a large selection of American canned and packaged foods, for which there is a growing appetite abroad.

Already, he's been approached by a group in Indonesia. And he envisions 99 Ranch registers ringing up sales in Hong Kong and Taipei.

"More than half the people in Asia still shop in traditional stores, not supermarkets, but it's changing day by day as the younger generation is converted," Chen says.

"I think we still have some room to expand."

Freelance writer Marie-Claude Lortie contributed to this report.

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