Cover Story: Fast + Furious

This article first appeared in Options, The Edge Malaysia Weekly, on July 10, 2017 - July 16, 2017.

Pereyra and his team giving the children of Kampung Kambug a KFC treat during the Add Hope Distribution Programme at SK Kambug in Sarawak

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QSR Brands CEO Merrill Pereyra talks to Tan Siok Hoon about his career in the quick service restaurant industry — a trajectory shaped by opportunity, perseverance and continuous learning. 

 

Half a year into his current position as CEO of QSR Brands (M) Holdings Sdn Bhd — the largest quick service restaurant operator in Malaysia and a leading franchisee in Southeast Asia — Merrill Pereyra is a picture of relaxed authority in his spacious, light-filled office located in a new corporate tower in Petaling Jaya. His role encompasses overseeing and steering the company as the franchisee of over 750 KFC restaurants in Malaysia, Singapore, Brunei and Cambodia, as well as the operator of Pizza Hut with more than 390 restaurants and delivery concepts in Malaysia and 82 in Singapore. He joined the company as chief operating officer in the middle of last year.

NEW LAND, NEW OPPORTUNITIES

Indian-born Pereyra’s three-decade career in the fast-food business (as it is usually referred to) has taken him halfway round the globe — from Australia to the Middle East, the South Pacific and Asia — and he is a living example of the adage “when one door closes, another door opens”. Hit by a setback in 1987 when he first arrived in Melbourne as an immigrant from Mumbai, Pereyra was undeterred and took things in his stride as he quickly went about activating his Plan B.

“In those days when I got to Australia, even though I was qualified to join the hotel industry as a manager (he held a diploma in hospitality dealing with food handling and technology), I was told I needed to have Australian experience to be a trainee manager,” Pereyra recounts.

“So I said, ‘I won’t join as a management trainee but at the bottom like a concierge or a cook’, to which they said I was overqualified. I didn’t have the experience to go into the middle and was overqualified to start at the bottom.

“The only people who were hiring in those days were fast-food companies. I thought I would apply to McDonald’s for the position of a manager so I could start working, thinking that in a few years’ time, I would leave and get a ‘real’ job.”

The position that Pereyra thought would only be transitional eventually panned out into a 23-year journey. “I started out as a trainee manager at the Bourke Street West store and worked my way up to all levels — restaurant manager, area manager — before I was assigned to open McDonald’s restaurants all over Australia.”

Although he was already on the fast track of his career, he aspired to take on bigger challenges, which led him to ask the Human Resources Department “to do something bigger”.

Request granted, he was sent to the Middle East to set up McDonald’s in Saudi Arabia. A year later, he was relocated back to Australia and put in charge of opening McDonald’s restaurants in the Pacific Islands — Fiji, Samoa, Tahiti and American Samoa — before being made its regional head for Asia, looking after the company’s businesses in five countries — Hong Kong, Macau, Thailand, Indonesia and the Philippines. After an extensive career at McDonald’s, culminating in a long list of achievements on top of being presented in 2001 with the prestigious President’s Award — accorded annually to the most outstanding corporate employee in the country — this chapter of his career came to a close in 2010.

TIME-OUT SEASON

“After 23 years with McDonald’s, I took a year off in 2010 to study in the US. I did my Advanced Management programme at Wharton Business School in Pennsylvania,” says Pereyra.

“At the same time, I wrote a book, Expand Your Brand: How to Supersize Any Brand Anywhere in the World. I wrote about some of the things I had done — expanding McDonald’s all over the world. It took me a year to complete it.”

The process of writing his one and only book resembled a rite of passage for Pereyra. “I had just finished at McDonald’s and I wasn’t sure what I was going to do. After finishing a long career, you have to take some time off to work on your next move. So I was just writing down what I had done. I never thought it would become a book.”

As opportunities have a way of weaving themselves into Pereyra’s life, a casual coffee meet-up with a female friend led to her asking for a peek at what he had penned. “A month later, my friend convinced me to publish a book. I wanted to keep it simple, something you can read in about three hours, with big fonts and space to take notes after every chapter — a light and easy read,” Pereyra says of his oeuvre.

I ask if it is a practical type of book, and he wittily replies, “Yeah. It has to be practical because for 23 years, I reported to a clown — Ronald McDonald. You have to keep it that way.”

In many ways, this reveals not only Pereyra’s instinctive and pragmatic way of relating to situations but also his natural and light-hearted manner that puts people around him at ease, a very likeable quality.

BACK TO BUSINESS LIFE

Thereafter, Pereyra took up the position of CEO at MAP Indonesia, responsible for the market operations and business development of Domino’s Indonesia. “I had worked in 14 countries with McDonald’s and then Domino’s before I was approached by QSR Brands to head its KFC and Pizza Hut operations. Within 30 years, I have covered the top four quick service restaurants,” says Pereyra.

He is enthusiastic about his new base in Malaysia and the two brands he now leads. Being Malaysia’s first and only fully integrated food operator guaranteeing full halal compliance, KFC was named Franchisee of the Year (the top award given by franchisor Yum! Brands globally) last year, besides winning awards for best in marketing, store development and restaurant operations.

“Malaysia is my home now. It is exciting as we’re taking the company to a different level, as you can see with everything we have been doing with KFC, a strong brand that has been here for 40 years and nearly 2.5 times bigger than the nearest competition. We have been able to take an American brand and make it local by catering for the tastes of Malaysians. The people in Malaysia love chicken, and looking at the numbers on chicken consumption here, the chicken business is going to keep on growing. We are determined to keep going. On average, we have been opening around 25 new stores every year. By next year, we’ll have 700 stores,” says Pereyra.

Pizza Hut, meanwhile, is celebrating its 35th anniversary in Malaysia this year.

“At present, Pizza Hut has close to 400 stores or restaurants. It has had some challenging times over the past four to five years due to intense competition. But in the last six months, we have been able to bring the customers back, and we’re very happy with that. When you look at it, we have got two brands that have been here a long time and are here to stay,” Pereyra sums up the two franchise brands’ positive performance and optimistic outlook in the local market.

He counts his blessings in having not only a very supportive board but also teams that support him at KFC and Pizza Hut. The former is stewarded by an experienced team while the latter is now managed by a whole new team. “We’re already thinking ahead ... locked in and drafted our plans for next year. On my appointment as CEO, my 100-day plan was to understand the business, people and culture in the first 30 days, even though I have worked in Asia for a long time. After that and up to the 90th day, I worked on plans to turn around the brand that was not working and sustain the growth of the brand that was working. The final stage was presenting my plans to the teams and key stakeholders like the board and franchisor. Now that everything is locked in, you run with your targets and start testing them all,” he says.

ART OF INNOVATION

Pereyra’s confidence in the future of quick service and fast casual dining restaurants is founded on solid facts and principles. Firstly, QSR Brands has been catering for the low-to-middle-income segment with its quick service restaurants. He highlights the correlation between business survival and players who continuously innovate to serve customers better, taking into account how the digital sphere is changing the way people order food and dine. Even with the growing popularity of organic and health foods, he feels the reality remains that they are relatively expensive and only a small percentage of the population can afford them.

Secondly, adapting to what locals want has been the key to QSR Brands’ success (in the case of KFC and Pizza Hut, for the last 40 and 35 years respectively in Malaysia). Pereyra says everything they do at KFC and Pizza Hut is consumer-tested before being rolled out.

One thing Pereyra never does is rest on his laurels. He sees leading a flourishing business and working to turn a sluggish one around as equally challenging. “Pizza Hut is a brand I have to turn around while KFC is the No 1 brand running at 100 miles per hour that I have to keep it running as fast or even faster. The challenge my leaders and I face is, we have to get our people to keep thinking about growth, although we are the No 1 brand. People with a fixed mindset will say we can’t grow, we have enough stores, we can’t do this or we’ve already done that. One big thing, besides recognising the team for a job they have done, is to get them going with a growth mindset.

“There’s no easy way, and I’ve always talked about keeping the innovation going. And where is your next blue ocean? Where is it going to come from? You have to always stay a couple of steps ahead,” he asserts, citing the example of how BlackBerry became obsolete with the advent of the iPhone, a lesson to be learnt in never to be complacent and to underestimate one’s competitors.

“We’re looking at many different things as a company, such as where and how to take the business to the next level. As the CEO, I have a responsibility to the board. How can we grow the business to a very profitable level, keep opening stores and get better? How can we grow our people and make sure we have good leaders coming into the business? We open 25 to 30 new KFC restaurants every year. Last year, we opened more than 100 KFC stores and renovated 50 Pizza Hut stores, so it was a lot of investment. We felt we needed to do that to stay in touch with our customers and continue innovating and giving them a better experience.”

POSITIVE MIND AND SPIRIT

Like many corporations around the world, QSR Brands is fully aware of its social responsibility and is constantly working to give back to society. “We have our charities. We work with other organisations to enrich the lives of the underprivileged. Two weeks ago, I was in a remote town in Sarawak. We brought groceries — food, rice and everything else — and gave them out at about 60 villages. The villagers had heard of KFC but never tasted it, so we brought them 200 boxes of fried chicken. It was a good event,” says Pereyra, who exudes positivity throughout the interview.

“The good thing about all this is, it is something I love doing and it has always been challenging. You’re always challenging yourself to take the business to the next level — this has kept me going for so long and I still enjoy it.”

Inevitably, issues relating to the negative perception of fast food pop up from time to time, and Pereyra does not shrink from tackling them. “Fast food is changing and you no longer refer to it as junk food because if you look at our fried chicken, it is of the best quality. We know everything about the chicken because we are involved from farm to fork. And if you look at pizzas, ours are made from fresh dough with world-class ingredients.

“When you arrive in a new country without knowing much about its menus and food pricing, your safest bet would be to get something you know. If you look at my five-day diet, I have at least two days of chicken and one day of pizza. But then, I work out in the gym five days a week, so it’s all about striking a balance. You know, you can go to a place and get a stir-fried [meal] and have the same [amount of] fat as two pieces of fried chicken. For me, everything’s about [maintaining a] balance and understanding your food.”

Pereyra also points out that quick service restaurants are evolving and that they have nicer and slightly more upmarket décor compared with 30 years ago. “It gives customers the option of dining in a nice environment and not spending too much. I think the brands that will survive going forward are those that are constantly looking forward to the next evolution.”

THE SECRET OF SUCCESS

With his past business experience and academic stints — he attended executive leadership programmes and courses at prestigious institutions like INSEAD China, Thunderbird School of Global Management at Arizona State University, and Wharton and Harvard business schools — it is interesting to see what Pereyra will bring to the table at QSR Brands.

Most recently, he completed the strategic programme on building and sustaining competitive advantage at Harvard.

His book makes essential reading for not only entrepreneurs interested in starting a franchise business but also those seeking to expand an existing one.

A mix of methodology and practical wisdom encapsulated in 23 succinct principles culled from Pereyra’s years of learning from life, work and business, the book’s contents reflect his straightforward brand of business management that has proved effective time and again over the years in different cultural contexts. Most importantly, he says, it is not just about replicating the franchise model but making the one store or model work first before trying to expand it into a chain of 100 stores.

A business gem for Pereyra and which he considers his biggest success is people. “How do you treat people? How do you motivate people? How do you get people to stay with you for a long time? Different people are motivated by different things. Some are motivated by money, some by titles, some by their career path, so as a leader, you have to figure out the right one for each employee,” he says.

“I don’t micromanage my team. I appoint people I know who can manage the team with little support. My goal is always to hire people who are smarter than me. That way, it makes my job easier. I try to get experts for all my companies. Of course, we still set targets, go out there and try our best to achieve them.”

Pereyra describes himself as “a very easy leader but at the same time, aggressive with targets”. As much as he always tries to shorten the timelines of what he is trying to achieve, Pereyra is happy to fail and fail fast, and to learn from the shortcomings and move forward. “If we do things quickly and it works, then we have that advantage to go into the market quicker,” Pereyra says.

For someone who has climbed the career ladder to the top, Pereyra attributes the “sort of success” he has today (being reluctant to consider himself successful as yet) to always saying yes to everything. “People have asked, ‘Can you do this job?’ I said yes. ‘Do you want to go to Perth and open stores?’ I said yes. ‘You want to go to the Middle East and open stores?’ Yes, of course. It has never been ‘I have to think about it’, ‘maybe it’s too challenging’ or ‘I’ll have to see what your offer is’. For me, it’s a job and you have to do it. That’s what I have done. So I think that has given me an advantage,” he says.

Pereyra also feels that his humble beginnings  in a lower middle-class family are a driving force. He lost his father when he was just a year old and, together with his three elder sisters, was brought up by his mother. “You always want to strive to improve. You don’t want to end up where you started. You always want to succeed ... I’ve always been driven to push boundaries.”

Pereyra has prioritised education since young. Even while doing well in his career, he would usually go back to his studies every two or three years. “For me, learning is always important, and I think it’s what drives me. While I am gaining all this experience, I’m always keen to learn the new ways of the world and what else I can do. Because one needs to change constantly and innovate, I’m always looking to see where’s the next new ocean for the brands I manage. You have to keep pushing yourself to think ahead of the curve while your business is going that way. You don’t want to wait until your curve goes downwards to ask what to do. It will be too late,” Pereyra concludes.

Judging from his past record, it looks almost certain that his business strategy is right on track.