More than just selling xiao long bao

Service is everything at Taiwan’s Din Tai Fung restaurant group. For instance, employees at its branch in Xinyi, Taiwan, spent over an hour to help a customer from France recover his lost mobile phone from a taxi.

The service spirit CEO Warren Yang wants every Din Tai Fung employee to have is to “treat every customer as you would treat your family member, and genuinely show them your care and concern”, according to Associate Professor Brian Hwarng, Department of Decision Sciences.

From September 2013 to March this year, Prof Hwarng had full access to the group’s restaurants in Taiwan for a case study, which he co-authored with Dr Xuchuan Yuan of Harbin Institute of Technology, his former PhD student at NUS Business School.

Brian’s case study clinched the Best Teaching Case Studies Award at the 2015 Decision Sciences Institute Annual Meeting in Seattle, US on 23 November this year.

Prof Hwarng receiving the Best Teaching Cases Studies Award from Natasa Christodoulidou, Co-Program Chair of Decision Sciences Institute Annual Meeting

Prof Hwarng receiving the Best Teaching Cases Studies Award from Natasa Christodoulidou, Co-Program Chair of Decision Sciences Institute Annual Meeting

So what made the case study an award-winning piece? According to Prof Hwarng it offers insights into a unique management style from a global restaurant brand from Taiwan. “It is quite rare to see case studies on such organisations based out of Asia.”

Din Tai Fung has a strict principle where the quality of ingredients is given priority over price. The management examines the certifications of the suppliers and conduct internal audits on them.

As a result of Din Tai Fung’s stringent requirements, suppliers know that their reputations will be enhanced when they work with the group, said Prof Hwarng.

The case study also revealed how much Yang value his people. For instance, the group spends more than 50 percent of its revenue on its people on training, benefits and salary.

Prof Hwarng said this is not common because companies usually measure how much they spend on staff based on their profits rather than revenue for expenditure. And even for businesses that do spend based on revenue, the industry norm is only about 30 percent or less, said Prof Hwarng.

The case study marks the first time that the Din Tai Fung organisation has opened its doors to a university for such an in-depth research, according to Prof Hwarng.

Prof Hwarng and Dr Yuan (right) with Din Tai Fung CEO Warren Yang

Prof Hwarng and Dr Yuan (right) with Din Tai Fung CEO Warren Yang

Despite its fame, Yang is very conscious of putting Din Tai Fung in the limelight. The organisation does not advertise in Taiwan, nor does it participate in discounts or promotional activities, Prof Hwarng added.

The well-publicised visit of Hollywood star Tom Cruise to a Taiwan branch was actually a rare event. It was an occasion requested and organised by the actor’s management.

Prof. Hwarng’s break actually came from one of his students, an alumnus of the Asia Pacific Executive MBA (APEX-C), who is a business acquaintance of CEO Yang.

The professor’s main challenge in developing the case study was to strike a balance between writing down the facts and respecting the sensitivity of the company’s confidential information.

He had to frequently communicate with the Din Tai Fung management team and assure them the data were vital to making the case study a valid one.

The case study is now taught to students in the Managing Operations module for the MBA programme, as well as the System Operations and Supply Chain Management module in the APEX-C course.

The Din Tai Fung case study is Prof Hwarng’s third as he seeks to create compelling case studies based on Asian organisations. A fourth is already in the pipeline — a study on the government agency in charge of Jiuzhaigou, a nature reserve and national park located in the north of Sichuan province in China.

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