How Cinnabon’s Hong Kong opening shows a shift in local F&B

A staple of airports stateside, a major plot point in Better Call Saul, and the only brand that comes instantly to mind when one thinks of cinnamon rolls. Cinnabon is a brand that surely should have tried to make its mark in Hong Kong at some point. Yet, it is only now the brand is finally launching in the territory. Rick Boost asks what makes now the right time for the brand to finally make its debut.

The why

Few would rate the spring of 2020 as the optimal time to be launching a new F&B brand in Hong Kong. For several months, intense civil unrest has hit visitor rates and revenues of eateries across the city hard.

And if that wasn’t enough of a challenge, the sudden appearance and spread of the Wuhan coronavirus from the Chinese Mainland has cast a pall of fear over consumers and left many popular entertainment areas devoid of activity.

But when Marketing describes the city’s current troubles as an obstacle, Reach Out Philosophy’s director Steven Yang looks on the bright side, saying: “It’s also the best time to negotiate rent; Hong Kong is always about rent, rent, rent, along with location, location, location. But I think over the last six months I’ve seen far friendlier landlords!” Indeed, while anyone in the F&B industry couldn’t be blamed for fearing these dark clouds overhead, Yang is only seeing cinnamon silver linings. He founded his holding company with a single goal, and nary a doubt in mind, to bring US baked goods chain Cinnabon to Hong Kong.

Founded in Seattle in 1985, Cinnabon (which is best known for serving its signature cinnamon rolls) has expanded over three decades to 1,200  locations in more than  50 countries.

But while immensely popular branches already dot APAC in countries such as Japan, Korea, and most recently Australia, no attempt had been made on anywhere in Greater China.

It was a single meal that left Yang baffled by the lack of a Cinnabon presence in his hometown. Two and a  half years ago when on a foreign business trip, he had bought a Cinnabon roll at a mall to stave off his hunger from endless meetings. But rather than being a forgettable belly filler, at close to midnight that night he was still lying in his hotel room racking his brain about why the lingering taste was so familiar.

On returning to Hong Kong, he discussed it with his friend – and now fellow Reach Out Philosophy director, Alle Siu – who recalled how much she loved eating Cinnabon during her time studying at university in Boston.

Yang recalls: “I asked, why is this not in Hong Kong? Because something that’s good, something that’s unique,  something that’s an authentic American dessert bakery ….  how come that’s not in Hong Kong? What’s the problem?”

So, with Siu as his partner, Yang dived into extensive research on the brand before eventually reaching out to Cinnabon’s owners, Focus Brands. But despite their evident passion, the pair’s lack of experience in an F&B background made for a shaky first impression.

Siu had primarily worked in trading and manufacturing, while Yang’s jobs had also been in manufacturing, as well as HR. Focus Brands had coincidentally begun looking at taking the Cinnabon brand to Hong Kong but was nervous about Siu and Yang’s capability.

It took some convincing, as Yang describes: “A bit of passion and seriousness and steadfastness.”

When an international rep visited Hong Kong, he was allotted just 45 minutes to speak with him. But over three hours later, the meeting was still going and by hour four he knew he’d get the green light.

“I gave him my analysis and research on Hong Kong: what’s the market and what the penetration should be. What was similar and didn’t work and what worked really well.”

And there was certainly a lot to say on that front.

The who

For quite some time, western fast-food outlets –  apart from the well-established titans that are KFC and McDonald’s – haven’t found it particularly easy to secure a foothold in Hong Kong. Notably, in 2008, doughnut chain Krispy Kreme, a worldwide favourite for consumers, was forced to close all seven of its local branches within two years of launching.

Yang comments that the city’s food scene is mainly owned by a few key players saying: “For individual players, it could be quite challenging because Hong Kong is quite expensive and it’s quite tough. You need to think about what is really right to make it work. Unless you have loads of money to burn from a corporate perspective, it could be quite difficult to last.”

Furthermore, despite the city’s glowing reputation for international dining, other less developed Asian markets have actually shown much faster growth in the range of international affordable eateries.

But something has shifted, as in recent years the city has seen younger trendy fast- food brands such as Five Guys and Shake Shack test the local waters again.

“This is exactly why I thought it would work in Hong Kong for Cinnabon because people have been getting bored,” he comments.

“People travel quite frequently these days. When people go to the US, Singapore, or Vietnam, they see something different they want to try. If you look at consumer research they will say that world consumers want something different.”

One of the methods Yang hopes will get Hong Kong customers hooked on this unknown entity isn’t just the cinnamon, it’s the java. From his research, he found that unlike its US branches, Cinnabon outlets in Korea and Japan had solidified their reputations through quality coffee. Likewise, Cinnabon in Hong Kong will similarly be serving a unique Japanese roasters coffee blend.

What’s more, he believes Hong Kong consumers are ready to accept the badge of quality despite it not being from a traditional coffee shop.

“The coffee culture in Hong Kong is growing, it’s changing, and it’s evolving. In the old days in Hong Kong it used to be the cha chaan teng milk coffee. Now expectations are higher and people are looking for better coffee. Nobody thought that McCafé coffee would do well, but it’s not bad!”

^{The team bringing Cinnabon to HK: (Left to right) Chance Communications chief consultant Jeff Chan and Reach Out Philosophy Limited directors Alle Siu, and Steven Yang.}

He suspects the city’s rapid growth of its coffee culture as having sprouted out of the previous duopoly of Starbucks and Pacific Coffee; close to the only game in town for a decade.

Yang posits: “Over the last five years there have been so many individual coffee shops popping up, neighbourhood shops. I did my rough figures, that there would be about two or three hundred of these small shops, so where are these people from? These people must have worked in Starbucks or Pacific Coffee before!”

The where

Yang wants to make Cinnabon a household name in a city where the majority of people have likely never heard of it, never mind tasted it. But he believes in the power of the brand.

“If you look at Cinnabon in the US, there’s only been imitation, not replication. So they’re still the hero product, unique and on their own. When you talk about cinnamon rolls, Cinnabon is the king. That is really the marketing effect I want to hit in Hong Kong.”

But surprisingly, rather than set up shop in an eye-catching island-side location such as Shake Shack’s IFC balcony perch, or Five Guys’ premium Wan Chai spot, Hong Kong’s first Cinnabon is situated in the humble setting of the Olympian City mall in West Kowloon.

And though the more forgiving level of rent was definitely a factor in choosing the place as the testing grounds for this international brand, Yang says it was by design.

That not only was this neighbourhood safely far enough from the regular clashes between protesters and police in districts such as Central and Tsim Sha Tsui, the site also presented a perfect cocktail of customers.

“If you look at Olympian it’s actually a good community,” Yang says.

“It’s high-end middle class, right next to the ICC. A lot of people who work in the ICC would be living around that location. So that Western culture perspective is not missing. People coming from an international background are not missing. People who can spend a decent price are not missing. And we’re surrounded by six international kindergartens. Families.”

Yang also believes there are several sites on both sides of the harbour that also maintain pools of educated professionals similar to Olympian City. Groupings of affluent people who likely took higher education in North America, or are well-travelled enough to have previously tried the product.

He says that a matter of days ago when visiting the Olympian site, a passerby stopped outside and noticeably sniffed the air. Asked if he knew the brand, the man answered he had studied in Canada and the smell reminded him of that faraway home.

Yang thinks that kind of memory-triggering “aroma marketing” is going to be key. “You can’t avoid it if you smell it. It will hook you back, whether it’s today or tomorrow, you’ll come in and buy another one. I think that’s quite unique.”

The how

Scents and nostalgia aren’t enough to build a customer base on however, which is why another field of interest to Yang and Siu is localisation. Cinnabons across Asia have already played with regional limited time offers, such as Filipino branches using mangoes as a pastry ingredient or Japan’s chains experimenting with Sakura.

And fortunately, because Focus Brands shares all this R&D information, there’s a mountain of findings available for Yang to leverage on right out of the gate.

One example will be to focus on smaller sizes for sharing. While in the US it is common for diners to eat an entire classic Cinnabon roll solo, Asian customers often share the large pastry.

Likewise, to suit local palates and health concerns, Cinnabon Hong Kong is adjusting the amount of sweetness in its recipe, reducing it by about 30%. There’s even considerations of introducing Hong Kong flavours such as egg tart or milk tea once the business hits pace. But the real trend Yang is keen to see pay off in the long term is Asian Millennials embracing snacking as part of their lifestyle.

“Young people are much more happy just to munch and chew and snack, and substitute that for a full meal, because they don’t have time for that.”

When asked if he’s worried about wellness beliefs turning people away from more decadent treats, he considers thoughtfully before answering: “The concern is there, but we still have seven million people in Hong Kong, snacking won’t go away.”

It’s honestly refreshing to meet someone who is as unambiguously in love with a brand as much as Yang. Someone, who after a single pastry decided to change his entire career path, fight for a brand, and get it launched, even as Hong Kong faces some of its most troubling times. And that spirit couldn’t be clearer when giving his final thoughts on what separates Cinnabon from other food chains.

“The message is about sharing, it’s about love and wellbeing, it’s about gifting. A lot of people look at us and go ‘wow, you guys have got brand colours like a tiffany’. It’s sunshine and lollipops. If you have a Cinnabon, you know it’s gonna bring you happiness. And I think that’s something critical for Hong Kong at the moment, that we should be happy.”

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