Book Review: You just can’t - Din Tai Fung

The book mostly consists of details of Din Tai Fung by a reporter without a systematic breakdown, however it provides a glimpse on how it operates and what is its “meme” / “brand image”. The book also interviewed Din Tai Fung’s star staffs’ for their perspective, and then comments from other entrepreneurs in the food industry.

The following are my notes that can be potentially generalized to other industries:

• Standardization of operating procedure: taking to an almost extreme level for the consistency of the cuisine delivered everywhere. Their dedication on this prompts them to purchase much more expensive machinery and being very controlling on the ingredients.
• Daily Meetings between the managers: A good reflection tool for the company. The managers have to summarize worklogs of their staffs and clients’ review and bring these into the daily meetings to see how to resolve things.
• Higher salary to attract talents: Their personnel cost is around 48% of the revenue according to the book. As a separate datapoint from the book, the normal personnel cost for the restaurant industry in Taiwan is 20% (rent 10%, personnel 20%, ingredient cost 30%). Din Tai Fung’s gross margin is around 10%. Another related data from the book, Starbucks’ gross margin is around 7% so gross margin around 10% is good. My read on this “higher” salary allows the brand to implement additional rules onto its staffs and create a system with higher complexity.
• Incentive aware but NOT incentive centered: Din Tai Fung does not allow store manager to have revenue share about their own store - instead they get a fixed salary. This is because if the incentive structure is set up that way, then the store manager will try to cut costs and maximize client numbers to maximize profit, which likely will sacrifice customer experience.
• Focus on customer experience: All the SOPs, topics in meetings, and the rigorous trainings are focused on improving customer experience. The book describes about how the owner does not like it when Din Tai Fung gets media coverage because it attracts more people, burns out the servers, and tend to deliver suboptimal customer experience. They also changed who are typically in charge in the restaurant — in typical restaurants, chefs or in general back of house people have greater power, but in Din Tai Fung, store managers come from the background of Front of house as they will have better insights on customer experience. To generalize, they have identified one aspect in their industry and centered all the decision making there (including hierarchy, procedure, materials, funds allocation, etc). Customer experience may or may not be the key aspect of any industry, but identifying one and center everything around that might be something worth trying out.
• Human-centered management: their management style is being described as caring and with perks that stand-out among others. These perks are not necessarily costly, for example, taking the interns to museum in Taipei, however it makes staff members believe that they are being taken good care of by the management. The work log also served some purpose here, a staff wrote she was under tremendous pressure and then the next day she got a call from the CEO. This means that the work log was being reviewed by the store manager, the store manager brought it up in the daily meeting, and the CEO phoned her directly. If the company is not clear on being caring towards the staff as a culture, then the store manager could prioritize other issues and I can see this issue being missed. At the same time, this may be survival bias.

Can this operate on highly intelligent people? At first I thought maybe not, but on second thought, TSMC is a very rigid workplace with tons of rules operating on smart people. With higher salary, it provides a cushion for you to implement rigid system and create a machinery.

The book also describes the owner as someone who is very strict but also very warm at the same time. It is being indicated that he seems to be the soul of the current operation as he is extremely down to earth and still executes and goes to the place every day. This is certainly the strength of this company at the moment, but it can be a potential threat when it passes down. How does the machinery work if the company is being passed to another person.