In a one-on-one exclusive interview with Manila Bulletin, Bounty Agro Ventures, Inc. (BAVI) President and General Manager Ronald Mascariñas shared his non-traditional leadership that steer BAVI to success. He highlighted how speed and quality of execution, as well as employees’ freedom to exercise good judgment contributed to the success of BAVI, which is now one of the largest and fastest growing food retail companies in the country.
Read the full article below by Manila Bulletin’s Bernie Cahiles-Magkilat.
Speed and quality of execution
‘I don’t believe in strategic planning, but my assumption is that our competitors have better plans than us. To counter that is through speed and quality of execution.’
By Bernie Cahiles-Magkilat
There is no doubt, Bounty Agro Ventures, Inc. (BAVI) holds the country’s chicken rotisserie business by its purse. It has done so with its no nonsense aggressive and rapid market expansion strategy that defies the normal grind of the industry.
This can only be done with the non-traditional leadership of Ronald Daniel Ricaforte Mascariñas, who shunned the usual feasibility study and clear-cut rules employed by even the largest of organizations before any project is implemented.
Instead, this agriculture graduate from UP Los Baños, Laguna seizes opportunities as they come with speed and quality of execution without fear of mistakes or failures.
BAVI is the country’s second largest poultry integrator company and a member of the Bounty Fresh Group of Companies. Together with sister company Bounty Fresh Food, Inc., the company carried the Bounty Fresh brand to the entire archipelago.
Owned by the Chen family, BAVI was incorporated in 1997 with initial operations in Cebu and Davao. In 2002, the company launched into full operation as poultry integrator in the country.
Led by the shrewd business leader Mascariñas, also a product of the Asian Institute of Management, BAVI now has a nationwide business network with branches in key cities and distributorships across the country, creating a highly efficient supply chain in poultry integration.
In 2008, BAVI launched its oven-roasted chicken business under the Chooks-to-Go trade name, completing the integration cycle of poultry operations, from the farm to the dinner table. This was shortly followed by other retail brands, Uling Roasters and Reyal.
The company’s processing plants have been conferred by the National Meat Inspection Service (NMIS) as the best and cleanest processing plants in the country with consistent Triple A ratings. This has earned them numerous prestigious national awards in the poultry and livestock industry for the past several years, from Product Quality Excellence all the way to Consumer Services here and abroad.
“Business has really been good,” says Mascariñas.
The company expects P14.4 billion in gross sales this year from last year’s P11.1 billion. Its retail business is driving profit. It will account for 70 percent of the company’s business this year, a vast improvement from only 55 percent last year.
“That is the most profitable part and most stable because commodity is demand and supply game,” he says. Unlike other enterprises, which are 100 percent dependent on the commodity or the supply of chicken, BAVI has a very strong dominant market position in the chicken rotisserie chicken chain business.
Consider these figures: Andoks, considered as among the pioneers in the popular “litson manok” business in the country has 400 stores. Sr. Pedro, which originates from Cagayan de Oro, has close to 300 while Baliwag has 150. If you combined the three, they cannot even come close to just Chooks-To-Go’s existing 1,300 outlets.
Its second brand, Uling Roasters, launched only in 2013, has more outlets than competition. Its third brand Reyal has close to 200 stores, but will end with 350 stores this year, cementing its presence as the largest chain in its category. Reyal is charcoal roasting and comes with sauce unlike the oven roasted Chooks.
“That is our strength, we always have something on the table. It is so easy for us because we have farms, processing plants all over the country,” he added.
Aside from its own requirement, the group supplies Bounty Fresh chicken to supermarkets. It is the exclusive supplier of S&R.
Together with its sister company Bounty Fresh Foods, Inc., they produce 200 million heads of chicken a year.
Mascariñas said the organization was originally built for 250 people, but the retail business is labor intensive that they now have over 1,000 direct workers. The company is hiring 300 more.
BAVI’s expansion is in tandem with the growing consumption-driven domestic economy.
The country’s economic growth may not be palpable to many yet, but Mascariñas noted that Filipinos have somehow been able to afford some things which used to be luxury items.
“Even the minimum wage earner can now afford to have a motorcycle,” says Mascariñas, who used to be the youngest senior vice president at Purefoods Corp.
“These are the pent-up aspirations, you will be surprised because whatever the market offers from motor vehicles to electronic gadgets, consumers are ready to grab. That is the kind of human behavior that is beginning to manifest nowadays as the economy grows,” he adds.
Other than the material things, Filipinos are now spending more for food. In terms of protein where chicken is the one of the best sources, Mascariñas said there is still huge room for improved chicken consumption.
Protein consumption in the country is only 8 kilos per person per year as against Malaysia’s 32 kilos.
To secure its market, Mascariñas said the strategy is the store location. In fact, the company has been using software that tracks its store location nationwide. It can also track which store is performing or not.
Competing for good location is tough. But BAVI’s deep pocketed resources give them the advantage. The company is also into an acquisition mode of other existing “litson manok” sites. It has already acquired a small rotisserie chain in Pasay with 5 outlets. BAVI has also acquired restaurant chain “Adobo Connection,”
Litson manok is so popular in this country that there are a total of 2,200 brands nationwide but mostly they are limited to mom and pop operation. Despite being small, Mascariñas considers each of these brands competitor.
From its existing stores, BAVI is targeting 800 new stores this year for its existing three major brands for an estimated capital expenditure of P450 million. Of this amount, P320 million would be used for store expansion.
Stores in Metro Manila might even be doubled this year from the current 200. This means most of its stores are in the provinces. He said they will continue to build in difficult areas like Tawi-Tawi.
“The more difficult a location, the higher the profit,” he adds.
Chooks has already forayed overseas with two stores in Malaysia. It is going to Indonesia soon. With proper halal certification, it can reach more countries with dominant Muslim population.
BAVI owns all of its stores. Mascariñas does not believe in franchising as a way for the company to expand its business as quickly as possible.
“We are growing against the grain of the industry,” says Mascariñas noting that going into franchising could only mean competing its own brand and competing for location that could only stunt growth.
Aside from its fully-integrated operation, Mascariñas said, its business model is very viable. Each store will only require total investment of P400,000, including equipment, rental, among others.
Mascariñas, an entrepreneur who does not stop at anything to spread his reach, is now experimenting of opening a 24-hour service. Chooks closes at 9 p.m.
“We don’t have expertise in this kind of business, but we are experimenting with little success on our six stores because we want to learn,” he adds.
Last March, it launched a new brand “SNOK,” short for “snack na manok.” By June, Mascariñas said there will be a total of 20 SNOKs even as they prepare for a nationwide expansion to reach its goal of 300 outlets by end this year. The commitment actually is 500 stores. Investment for SNOK is very manageable at P80,000 to P50,000 per store only.
SNOK is the group’s snack line offered via kiosks in malls and canteens and in other Chooks stores. For a price of P39, you can buy from SNOK. The snacks include chicken fingers and French fries or cheese sticks. It comes complete with a drink.
“This is good during special events because kids will love it,” he adds.
Another innovation is the company’s foray into the pork line. According to Mascariñas, they will roll out at the latest in July this year its “crispy ulo,” a variation of the popular local delicacy “crispy pata.” The company is just finalizing its registration and is fine tuning the menu. It is tentatively called “Kamukha Mo” with a tagline “Mukhang Masarap.”
The group has a piggery business also but it basically imports pork. Surprisingly, its cheapest source of pork is France.
It has already introduced at Reyal its pork barbecue and is already experimenting at offering pork products at Chooks outlet. Reyal, which caters to the masses, offers a lot cheaper products than Chooks.
“Reyal is our cheapest, but actually it is out most expensive because of the high cost of charcoal,” says Mascariñas. Charcoal supply is becoming scarce because of environment concerns.
Charcoal cost is P12 per chicken, more expensive than the P3 per chicken cost using electricity. To address this cost, Mascariñas said its product development team is looking at shifting into the use of “pugon” type of roasting. This system can reduce cost by 50 percent.
The only cost component that has remained problematic is the sauce, which is based on honey, chili oil and garlic. The cost of honey alone is P2,100 per kilo. They are sourcing honey from the honey farm of a sister firm in Bukidnon.
All these endeavors can only be implemented by someone with a mindset like Mascariñas.
This native from Butuan is not your ordinary kind of boss. He executes business plans as quickly as possible without the benefit of a feasibility study, which he considers time consuming and useless.
Lots of companies are still undertaking the traditional way of doing business where they launch a research and studies before a project can be implemented. But Mascariñas said doing this only caused delays resulting in lost opportunities.
“If you are stuck in that kind of model, you will lose the opportunity before you are done with your study,” he points out.
At BAVI, once an idea is approved, a project can start the following day and opening is 30 days after.
“If you don’t deliver, you can hear from me but if you take the initiative and you commit a mistake, you cannot make me angry,” he adds.
“I don’t believe in strategic planning but my assumption is that our competitors have better plans than us. To counter that is through speed and quality,” he adds.
“Even with no will feasibility studies, as long as we have viable assumptions we execute a project instead of going through the useless exercise of conducting feasibility studies,” he adds.
The idea is grab the opportunity and implement the project immediately. Along the way, they adjust and correct the system. Overtime, they were able to reduce cost substantially.
“We don’t look at the cost,” he adds. Once an opportunity has been spotted, he will give the go signal to execute even without clear rules to his people.
“You may not be that good, but as long as you are trustworthy,” he says.
Mascariñas allows his people to exercise good judgment. If a mistake is committed, he would not resort to scolding people, but lets them correct the mistake making its operation more efficient in the end. This freedom has encouraged his people to be more innovative and cost efficient because they are not afraid to commit mistakes.
BAVI has also been very generous to his employees. “Sometimes, our rewards can account for 30 to 40 percent of an employee’s compensation,” says Mascariñas.
In northern Luzon, an employee’s monthly incentive can be equivalent to his month’s salary. They also pooled their incentives and are divided for the different support groups, but the sales people get more because they are the ones that drive growth.
BAVI is also structured in such a way that all its divisions from accounting, finance, marketing, HR, are called support groups to the business center, which is the one driving the incentives. So, the employees understand that the sales people get more incentives.
“We have to find out how to make life easy for them (sales people) so all of us including the board and me are support centers to the business center,” he adds.
That is why, those from the business center are accorded only the best treatment. They are pampered. When a member of the business center from the province comes to Manila, they must be fetched from the airport.
“Drop everything, give them the due importance,” has been Mascariñas order. During the Gilas last game, all the business center from the provinces were brought to Manila because they wanted to watch the game.
But while they play, they also work hard.
“We are very demanding and strict from executive down to the lowest level,” says Macarinas, who does not tolerate late submission of report unless the employee was granted prior permission. Tardiness gets disciplinary action.
“If it’s a commitment then you must deliver, but I am always lenient to those who would ask for prior approval that his report may be late, but not after the fact because you can always invent reasons,” adds the former full scholar of the Philippine Coconut Federation.
But Mascariñas is also quick to make his people happy. Employees are encouraged to have team-building events at company’s expense because these foster teamwork. Mascariñas is also preparing its people become the best in its field. In fact, he got an award for having the most number of employees enrolled at Toastmaster’s.
Even if BAVI is already the dominant player in the market, Mascariñas does not like the way government is treating the small local players in any industry for that matter.
In Malaysia, he noted, big retailers are not allowed to establish branches in the provinces because they will just gobble up the small ones. “If you are a big one, you have to go Kuala Lumpur,” he says.
A big player like them can easily kill a competitor in the provinces. In the case of Chooks to Go, they will just hold a promo and that will banish its competitors.
“I hope there is limitation because the corporate world is really greedy and only the government can prevent that. That is why only the big companies owned by certain families are the ones who get richer and richer,” he adds.
But what if this situation applies to BAVI Mascariñas said, “We will understand. Government must be there to protect the small players. In Malaysia, you cannot bring prices down, if you do that there is a long process, but here bureaucrats do not look at the small ones,” adds Mascariñas, an outstanding alumnus awardee for entrepreneurship of his alma mater, UP Los Banos.
“It is really greediness, self-interest at the expense of the public, government should be there to protect the small players,” he reiterates.
This is one reason he shunned joining domestic industries lobby against importation because importation is good for the public.
In the first place, he said, the Philippines cannot be competitive in poultry and rice. Industries are not well informed and even if they are, they do not listen and do not shape up.
Mascariñas even admitted that BAVI is not competitive in its poultry operation. Time will come when they will be importing its own chicken. They may produce only for a niche market and needs.
“But we are the only one that is very well positioned, we can walk away from integration anytime. We have seen the writing on the wall,” says Mascariñas.
If chicken importation is liberalized, he predicts the landed cost of chicken would be only P30 per kilo and retail prices at P60, which is good for the consumers.
Its participation in basketball is not just all for brand awareness, but it is an advocacy to restore the true spirit of sportsmanship. Superstars are idolized by the kids, but unfortunately they also show very bad behavior all the time.
“These superstars show their bad behavior because athletes are trained to win at all cost. But this is not business, we call this sport. Referees do have bad calls from time to time, if there is a mistake just go ahead. Instead, they show the opposite of good behavior and you see this all the time,” says Mascariñas.
He would like to see an impact of the Chooks’ advocacy one day.
“For instance, if we play in the Olympics and there is a very little chance of winning there. But what if the referee made a bad call and says the ball goes to the Philippines, but our players say no it is the other side. That is our shining moment, when that time comes then we are winning,” he adds.
The goal is to reinforce good values among the youth. Through this most-watched sport, Mascariñas believes they can influence the behavior of the young Filipinos.
Through the good behavior of its players, children will learn true sportsmanship.
“So if there is a call for a foul, acknowledge, smile, do not smirk,” adds Mascariñas, whose main CSR program now is geared towards helping the indigenous peoples, whom he think as the most marginalized sector in the country.
This is what he has been trying to teach his players. All he could ask of his team is that he be given an incentive: By showing their true spirit of sportsmanship.
Mascariñas is responsible for steering BAVI from a virtual unknown in the poultry industry to being one of the largest poultry integrators in the country and the country’s number one chicken rotisserie store chain.
In an industry where they operate, nobody has ever grow a retail business in this kind of magnitude. BAVI has trailblazed in this industry.
“We don’t make big decisions, but success is really based on small decisions that we address everyday,” says Mascariñas.