1.

0 Background of the company

Secret Recipe Cakes and Cafe Sdn Bhd founded in 1997 by Tan Sri Dato’ Steven Sim,
who is currently Chief Executive Officer of the company. He began his business with
his nephews who were bakers at the time. Instead of building a cafe, Steven Sim
wanted to build a brand that is able to expand his business globally. And now Secret
Recipe is well known in food and beverage industry.

In the begining, Secret Recipe kick started their brand outlet in SS2, Petaling Jaya.
Today, Secret Recipe has expanded its operations of more than 50 outlets to several
countries, which were Singapore, Indonesia, Thailand, China, Brunei, Maldives,
Bangladesh, and so forth. Meanwhile in it’s origin country, it has more than 200
outlets are operating in every corner of Malaysia. Steven Sim has his lifestyle cafe
concept in establishing the Secret Recipe by giving comfortable environment to the
consumers. Secret Recipe was started as small family business with capital worth RM
150,000.

More than 20 years ago, from 10 types of cake and five dishes listed in Secret
Recipe’s menu, until today it has introduced 40 types of cake and not less than 30
combination of international and local dishes. Besides, Secret Recipe also enlarged
their market range for vegetarian and health enthusiasts by opening cafe that named
Beyond Veggie. Steven Sim has confident on implementing product differentiation
strategy on his Secret Recipe, because of it’s product and cafe uniqueness. By
attaining Halal certification on it’s products, it allowed Secret Recipe to expand their
market to muslim consumers.

Along the way of Secret Recipe’s growth, it has won not less than 50 awards since
2012, and has been awarded by Malaysia book of Records as ‘The Largest Cafe
Chain’. At the same time, it’s product also received numerous awards locally and
internationally, for instance, ‘Best Cheesecake Award’, ‘Most Original Chocolate
Award’, ‘Best Lamb Stew Award’, ‘Best Brand Food & Beverage Cafe- The Brand
Laureate Asia Pacific’ and so forth. These have brought worldwide recognition to
Secret Recipe’s authentic food recipes and cakes’ quality and it’s cafe environment.

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Mission Statement
‘’At Secret Recipe, we continuously strive to surpass our own commitments, and to be recognized as
a leader in our industry. The philosophy of practicing quality and high standards is the utmost
important brand value at Secret Recipe. Our principle remains the same in giving the best satisfaction
to our valued customers.’’ (Divira, 2008)

Vision
‘‘The Secret Recipe Cafe strives to success to increase the brand awareness and good
brand impression. The cafe strives to control and self regulate on the food and service
quality.’’ (otherspapers.com, 2012)

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2.0 Main Product and Competitor
2.1 Main Product
2.1.1 Cakes
Secret Recipe’s main product is cake, as Steven Sim started business with his
nephews who are all bakers and starting with 10 different cakes all designed by own.
With it’s uniqueness on cake that designed by themselves, their cakes became first
choice for Malaysia consumers to celebrate birthdays with Secret Recipe’s cake.
Today, in Secret Recipe’s menu, it has categorized their cake into 6 categories with 45
different types of cake.

Table 1 : Menu of Secret Recipe’s cake

Cream Cakes -Signature Tiramisu
-Moist Choclate Cake
-Chocolate Fudge
-Chocolate Chip Walnut
-Chocolate Banana
-White Chocolate Macadamia
-Chocolate Indulgence
-Choc Mud Cake
-Toffee Banana
Cheese Cakes -Wild Blurberry Cheese
-Cappuccino Cheese
-Hi-Fibre Cream Cheese
- Yogurt Cheese
-Rapsberry Cheese
-Oreo Cheese
-New York Cheese
-Chocolate Cheese
-Marble Cheese
-Creme Brulee Cheese
-Cheeze Chocolate
-Choc Cheese Berries
-Butterfly Pea Lemon Cheese
Brownies -Brownies Walnut

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 -Carrot Slice
-American Brownies
Premium Cakes -Black Forest
-Durian Fromage
-The Red Velvet
-Fruitilicious
-Absolute Chocolate
-Chocolate Brulee
-Chocolate Odyssey
-Salted Caramel Macadamia
-Hokkaido Triple Cheese
-Chocolate Strawberry
-Absolute Durian
Square Cakes -Chocolate Au LAit
-Red Velvet Supreme
-Classic Tiramisu
-Boston Chocolate
-White Chocolate Gateau
Shinjuku Bake -Shinjuku Maple Bake
-Shinjuku Nutella Bake
-Shinjuku Caramel Bake
-Shinjuku Chocolate Bake
(Sources: Secret Recipe’s menu)

2.1.2 Other Courses/ Dishes

Secret Recipe also developed many localized dishes to fit the preferences of
Malaysians. Besides, it also provided international dishes such as the dishes in
Western category. Kid’s club is developed to get attraction from child.

Table 2. Other Secret Recipe’s main courses

1.) Starter -Seafood Spring Roll -Pumpkin Soup
-Deep Fried Wonton - Mushroom Soup
-Chicken Metaball -Caesar’s Salad
-Crispy Chicken Fingers -Chicken Satay
-Garlic Herb Roll

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2.)Asian -Nasi Ayam Rangup
Classic -Vietnamnese Beef Noodle
-Noodle in Tom Yum Kung
-Thai Style Fried Rice
-Special Beef Noodle
-Singapore Laksa
-Secret Recipe Fried Rice
-Tom Yum Soup Noodle
-Penang Assam Laksa
-Curry Seafood Laksa
-Curry Mee
-Ipoh Hor Fun
-Special Seafood Mee

3.) Western -Stewed Aussie Beef Steak -Aglio Olio

-Thai Seafood Spaghetti -Irish Lamb Shank
-Pan Grilled Dory -Prawn Macroni
-Spaghetti Meatball -Fish And Chips
-Norwegian Salmon Steak -Lasagne
-Spaghetti Bolognese -Caribbean Style Fish Fillet
-Mozarella Baked Fish -Country Fried Chicken
-Chicken Parmigiana -Grilled Black Pepper/
-Chicken Cordon Bleu Mushroom Chicken
-Spicy Seafood Medley -Golden Crispy Chicken
-Seafood Marinara
-Arrabiata Spaghetti
4.)Kid’s Club -Kid’s Mac and Cheese
-Kid’s Chicken Burger
-Kid’s Cheesy Fish and Chips

2.2 Competition Analysis from Identifying the Competitors

Secret Recipe introduce themselves as a place where provided a comfortable

environment for family, friends’ to gather around. It promoted their dessert such as
cakes, brownies and so forth as their main product. In Malaysia, there are majority
number of citizens prefer dine outside, due to lack of time. Malaysians gradually
deemed their time is more precious than just saving money by cooking themselves.
Thus, there are numerous cafe and dining restaurant emerged rapidly and compete
intensely.

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By following that, the demand of family households toward eateries, quality foods
and dining environments increased subsequently. Therefore, there are several potential
competitors that might steal enormous market shares of Secret Recipe.

2.2.1 STARBUCKS (Cakes and Coffee)

Starbucks Malaysia commenced their first operation in Kuala Lumpur on 17

December 1998. Behind it’s operation, Berjaya Starbuck Coffee Company Sdn Bhd
take role as licensee. The price range of it’s various types of coffee and cake are
slightly higher than Secret Recipe’s. (Starbucks official website, 2019 ) Therefore,
both of them using differentiation strategy, but Starbucks has higher end position on
it’s products. The commonality between Starbucks and Secret Recipe is both of them
provided unique concept in cakes, menu and even in their cafe environment.
Starbucks can be major competitor for Secret Recipes, as it has larger market shares
and famous brand name. By comparing environment, Starbucks has better advantages
as there are no dishes other than coffee and desserts provided, thus their environments
are not affected by oily air. They are also have better advantages on their coffees as
their brand name is huge enough to gain enormous market shares. Despite that, Secret
Recipe still holding advantages on some points, for instance, Secret Recipe selling
whole cake and has own delivery system.

2.2.2 BIG APPLE (Coffee and dessert)

Big Apple Donuts & Coffee brand started their operation 2007 in Malaysia, but it has
already bought over by Duskin Co. Ltd. Big Apple is using cost leadership strategy in
this industry, thus their price is much lower compared to coffee and desserts of Secret
Recipe. Big Apple is not a big competitor for Secret Recipe as it does not hold much
market shares compare to Secret Recipe.

2.2.3 Mc Donald’s (Mc Cafe)

Mc Cafe was a new subsidiary introduced by Mc Donald in June 2012 which opened
in Kota Damansara as their firs outlet. Mc Cafe has better advantages in their pricing
as they are using cost leadership strategy. Besides, Mc Donald also well known by the

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public, and their outlets are much easier to find nowadays. (McDonald’s official
website, 2019)

3.0 Porter’s Five Forces of Competitive Model

Porter’s Five Forces Model developed by Michale E. Porter, it plays an important role
in scanning the external environment, such as the weaknesses and strengths that hold
by an industry. (Investopedia.com, 2019)

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3.1.1 Rivalry among the existing competitors
Secret Recipe has tough competition in it’s industry, where there are major
competitors, such as Mc Donald and Starbucks, and some minor competitor which are
local mom-and-pop cafe and cake shop competing in the field. The number of firms in
this industry is deemed high in Malaysia, as the cafe’s trend is getting higher. The
aggressiveness of firms is high also as most of them are striving to obtain larger
market shares, and many efforts have been spent to market their own products. The
switching cost is low for this industry, as the consumers will not face much loses if
they change their preferences to another restaurant or cafe, despite there are slightly
differences between the prices set by market participants.

This industry can be divided to two sector, where are production base segment and
retail-based segments. Secret Recipe need to compete in two of these sectors, as it
involved in to of these sectors. In coffee and cakes industry, the participants are not
competing in price of products, they compete in the values that added in to their
products, and customer services.

3.1.2 The threat of new entrance

The competition of market will getting more intense if there are new entry of new
company in this industry. Factor like low switching cost might increase the threat of
new entrance as there are number of the consumers are price oriented rather than
looking to the quality. The variable of capital cost is high as some small business
required lower capital cost to take minor market shares instead of creating major
corporations. Despite that, by investing in baking machine and coffee machine,
required huge costs to invest, thus it has moderate force on threat of new entrance.
Then, by developing the brand name that huge enough to compete with big company
like Mc Donald’s, Starbucks required high cost capital and time. Thus it has weaken
the force of new entrance.

3.1.3 Bargaining Power of the suppliers

Secret Recipe’s suppliers have weak bargaining power to secret recipe, because it has
large number of suppliers thus it weaken the bargaining power of suppliers, this is

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because ingredients like flour, baking powder are too common to see in market, thus
they have too many alternatives and gave Secret Recipe high overall supply.

3.1.4 Bargaining Power of the Consumers

Since the switching costs is low, consumers have greater bargaining strength. Besides,
there are large number of providers in this field including minor participants such as
mom and pop local shop and cafe, thus the consumers can easily switch their
preferences according to their convenient. High Bargaining power of consumers can
also caused by high availability of substitutes.

3.1.5 Threat of Substitutes products and services

The threat of substitutes of product and services is high as there are high substitute
availability , and low switching cost. Despite that, due to the uniqueness of the taste of
cakes produced by Secret Recipe, the threat of substitutes has been slightly reduced
by this factor.

4.0 SWOT Analysis

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Many companies nowadays analyze their internal and external competitive position
by using SWOT analysis before setting strategic plan. It included Strength,
Weaknesses, opportunities and threats. (Investopedia.com, 2019)

4.1 Strength
4.1.1 Hygiene and Halal Certification
In a majority muslim countries such as Malaysia, obtaining a halal certification is a
ticket to enter large muslim market. In Malaysia, there are around 61% population are
Muslim, thus, by getting halal certification on products, the company is able to obtain
larger market share. Secret Recipe’s products are recognized Halal by JAKIM.
Besides, Secret Recipe also always ensure their cleanliness in their outlets as they
wanted their interior design to meet the satisfaction among customers by promoting
their concept of lifestyle cafe. Therefore we can find every outlets of Secret Recipe
maintained an excellent level of hygiene.

4.1.2 Strong Brand Image

Secret Recipe has been most of the households’ choice for buying their cakes for
birthday celebration, and deemed their cakes give luxury perception. This is because
of Secret Recipe’s differentiation strategy successful built their brand image in
consumers’ mind. Besides, Secret Recipe has it’s uniqueness in their cakes and it can
only be found in Secret Recipe’s outlets, and difficult to imitate their cakes’ taste and
designs. Steven Sim also has a concept in his mind, where he wanted to develop more
special features to make their brand and products exclusive and unique.(The Star,
2009)

4.1.3 Returned Customer

Secret Recipe applied the method of membership reward to ensure their customers
will return to them to make next purchase. This strategy let the customers know
themselves were appreciated by Secret Recipe. Not only that , through this strategy,
Secret Recipe customers will introduce Secret Recipe to their friends and it formed
word of mouth to get Secret Recipe famous. They also prepared feedback form for the
customers to further improve their services.

4.1.4 Marketing

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In every special festival all day, Secret Recipe will not let go the opportunity of
making advertising and promotion. For instance, during Mother day, Valentine Day,
Thanksgiving day and so forth, Secret Recipe will give promotion to the consumers.

4.2 Weaknesses
4.2.1 Price
As Secret Recipes main targeted audiences are middle -upper income class, thus they
have set their price higher compared to normal foods. And it have became a weakness
for Secret Recipe as they might make lower income class of audiences feel
themselves have been discriminated. They might also face difficulties if Malaysians’
purchasing power have been reduced, as they need to maintain their price to maintain
the cost of quality control, materials, and to maintain their brand image.

4.2.2 Staff Quality

As mentioned, Secret Recipe targeted on middle-upper income class of consumers,
thus they required staffs who are able to speak fluently English. By hiring the group
of staffs that able to speak English fluently, it required Secret Recipe to pay higher
salary to them. Not only that, Secret Recipe also aimed to provide better quality
services to their consumers in order to meet their satisfaction, thus a costly staff
training is required to improve their staffs’ quality, and high employee turnover rate
might cost them even more.

4.3 Opportunity
4.3.1 Expansion in Developing Market
There are many ways to increase a company’s revenues, expanding business is one of
the effective way. As Secret Recipe have their uniqueness in products and they are
well experienced in localizing their products to suit the tastes of a region or countries.
For instance the menu they have introduced are mostly following the local taste of
Malaysia, such as Nasi Lemak and Tom Yum. Thus, by bringing their uniqueness into
worldwide, they can localize some of their menu to suit certain countries’ local taste.
As we can see in McCafe nowadays, they are selling Secret Recipe’s cakes as a
collaboration. This fact shows an opportunity for Secret Recipe to distribute their
cakes to cafe that do not provide cakes.
4.3.2 Special Festival

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During special festival, such as Mothers’ day, Parents’ day, birthday celebrations and
so forth, Secret Recipe hold a strong opportunity in boosting their sales on cakes. The
uniqueness of it’s cakes represent luxury in consumers’ mind, thus, it is always a great
choice for consumers to choose it’s cakes. Therefore, during special festival, Secret
Recipe can market their products more aggressively.

4.4 Threats
4.4.1 Competition between low-cost cakes and coffee sellers
There are many competitors entered into bakery and cafe industry. Although the
competition deemed minor to Secret Recipe, but when it comes with numerous minor
competitors, it could be threat for any single Secret Recipe’s outlets. Competitors may
compete with lower price strategy and sometime it locate their shop nearer to housing
area to bring convenience to consumers.

4.4.2 Food Waste

Secret Recipe produce their cakes on a daily basis, and they insist not to sell an
overnight cakes to maintain their quality image. Whenever there are lower demand,
Secret Recipe is forced to manage their food waste. If the wastage is not managed
properly, there might have negative image to the public and create losses to them.

5.0 Porter’s Generic Strategy

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5.1 Cost Leadership
Cost leadership is a strategy where the company used it to attract consumers with as
lower as possible price by cutting down their production cost, in order to compete
with competitors. (Pearce and Robinson, 2016). Porter (1980) pointed that cost
leadership require companies to ensure they can monitor their cost closely to prevent
over expenses in marketing or innovation processes. The firm which pursue such
strategy is usually giving more focus on competitors compared to customer.
(Frambach, et. al, 2003)

5.1.2 Differentiation
Differentiation is formed whenever a company using unique features of products to
obtain customers’ loyalty and attraction with a premium price. (Thompson and
Martin, 2005) A firm still can get perform better sales even setting higher price on
their products. This can be proved by a cases studied in Kajiado, which it improved a
firm’s performance (Muraya, 2016)

5.1.3 Focused Cost Leadership

Focused cost leadership is a form of cost leadership that compete in narrow market.
It’s market is based on demographics, for instance, targeting student market by
offering cheaper price on notebook.

5.1.4 Focused Differentiation

This strategy is form of Differentiation that target narrow market, it is also
demographic based strategy. For instance, in car industry, Mercedes-Benz provided a
advanced technology, styling car targeting higher income group of consumers.

5.1.5 Secret Recipe’s Differentiation Strategy

Secret Recipe is using differentiation strategy as it has a distinctive and unique
environment and foods with higher quality service and products. Steven Sim always
wanted his business to be special, thus, alot of efforts on innovation have been made
by him. The reason why Secret Recipe is not Focused Differentiation is it has various
types of food available, but not only cake. They have to ensure their price do not fall
into lower level to maintain their brand image.
6.0 Recommendations

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6.1 Collaborations as a distributor
Secret Recipe is able to boost their sales by distributing their cakes to other cafe. For
instance, Secret Recipe has collaborate with Mc Cafe by distributing their cakes to
them. Besides, since there are some cafe do not provide cakes in their menu, they can
distribute their cakes to cafe.

6.2 Seasonal Design

Secret Recipe’s cakes menu are too rigid for consumers to choose, although there are
variety of choices. In order to gain more favorable impression from consumers they
can customized limited edition cakes during special festival.

6.3 Delivery Service

Secret Recipe can decide to be one of the partner for GrabFood, or Foodpanda. This is
because, owning own delivery system is much costly than collaborate with food
delivery company outside. They can integrate their menu for every outlets before
collaborate.

6.4 Target health-conscious consumers with Cakes

Although Secret Recipe’s cakes are well known and taste unique, but they have
ignored some minority consumers that are having diabetes or obesity. Thus by
designing an organic and healthy cakes might help them to boost sales and receive
better reputations from public.

6.5 Corporate Social Responsibility

By committing such activities, the company is able to receive positive perceptions and
comments by the public, hence the brand image is being strengthened. (Lewis, 2003)

7.0 References

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 Chappelow, J. (2019, October 18). Porter's 5 Forces Definition. Retrieved November
10, 2019, from https://www.investopedia.com/terms/p/porter.asp.

Datuk Steven Sim – Secret Recipe. (n.d.). Retrieved November 10, 2019, from
https://www.family.my/datuk-steven-sim-secret-recipe.htm.

Foo, K. (1969, December 31). Secret Recipe for success. Retrieved November 10,
2019,fromhttps://www.thestar.com.my/news/community/2012/10/29/secret-
recipe-for-success.

Grant, M. (2019, October 9). How SWOT (Strength, Weakness, Opportunity, and
Threat) Analysis Works. Retrieved November 10, 2019, from
https://www.investopedia.com/terms/s/swot.asp.

Lewis S. 2003. Reputation and corporate responsibility. Journal of Communication

Management 7(4): 356–394

Lynch, R. (2003). Corporate Strategy. (3 rded.), Harlow, England: Prentice Hall

Financial Times

Muraya, D. M. (2016). Competitive strategies adopted to enhance performance by the

county government of Kajiado, Kenya. Un published MBA project School of
Business, University of Nairobi.

Ng, T. (n.d.). Secret Recipe. Retrieved November 10, 2019, from

http://www.divira.com/clients/secretrecipe/about.html.

Our Story. (n.d.). Retrieved November 10, 2019, from

https://www.secretrecipe.com.my/our-story/.

Pearce J. & Robinson R. (2016) Strategic Management; Formulation Implementation

and Control: Mc-Graw Hill Irwin U.S.A

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Porter, M. (1980). Competitive Strategy: Techniques for analysing industry and
competitors. New York: The Free Press

Starbucks Malaysia. (n.d.). Retrieved November 10, 2019, from

http://www.starbucks.com.my/about-us/starbucks-malaysia.

Thompson & Martin, (2005)Crafting and Executing Strategy 14th Ed New Delhi, Tata
McGraw-Hill

yap, C. (2019, September 6). Getting the Secret Recipe right. Retrieved November 10,
2019,fromhttps://www.thestar.com.my/business/business-
news/2019/09/06/getting-the-secret-recipe-right#r4MQfR4H9Xu9VZYj.99.

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