The Secret Ingredient

By Retchell Rubin L. Morales, Arthur Ryan C. Morales

Case Synopsis
Running a restaurant looks deceptively simple. However, those who
have ventured into this type of business know that making everything
work takes a lot of effort. Successful restaurants are like ducks gliding
on a pond. Things look serene on the surface. However, it took a lot of
energy and commitment to stay afloat. Over the last ten years, Ryan Cruz
and his partners and employees have built an organization recognized
as the “Ramen Champions” by their devoted customers. While the
company’s trajectory looks smooth from the beginning, the guys running
the company had to go through an arduous and, at times, challenging
journey. Over time, Mr. Cruz and company were able to put in place a
working environment that is demanding but non-toxic. As the company
grows, maintaining the corporate culture is becoming more and more
difficult.
Mr. Cruz finds it hard to find the time to strengthen the organization’s
culture while growing the business. On top of his responsibilities for the
company, he has several ventures that demand his time and attention.
Also, Mr. Cruz makes sure to set aside time for his family, personal
development, and other social commitments. Nippon Hasha’s expansion
is demanding more time, thus disrupting the balance that he has carefully
cultivated.

Keywords: corporate culture, internal alignment, people first, expansion

Case Learning Objectives

This case can be used by business and entrepreneurship students in an
undergraduate or graduate-level class on strategic human resource management.

The case aims to help students understand the importance of developing alignment
between human resource management and corporate culture. It will also help the
value of creating a healthy corporate culture, the difficulty in maintaining it, and the
challenges of growing the culture during a firm’s expansion.

Specific Objectives:
1. To illustrate that similar businesses in the same industry may develop
varying organizational practices emanating from the type of leaders, their
philosophies, and values.
2. To understand how management approaches influence the organizational
culture.
3. To explore and establish practices designed by human resource
management that will contribute to improving organizational culture by
examining and utilizing corporate culture models.

The Case
“Irasshaimase!” On a typical day, you will see a long queue where well-heeled
customers patiently wait in line or are waiting to be served at Ramen Yushoken and
Mendoko Ramenba, two of the most popular Japanese restaurants in the metro and
the talk of the town. But what happens behind the scenes of the renowned ramen
restaurant chain?

THE FOOD SERVICE INDUSTRY

The Food Service Industry comprises independent or chained businesses
and restaurants that create and sell meals prepared outside the home (Mordor
Intelligence, 2022). According to Naush (2016), this industry has four main types of
food systems:

• Conventional or traditional, where food is prepared and served in the same

area;
• Commissary or centralized involves food preparation in a particular area with
ingredients for final preparation while providing service in another location;
• Ready-prepared allows the food to be prepared in advance and is often
frozen and kept or prepared until needed; and
• Assembly service is where a company purchases food from the
manufacturer, and the final processing, such as seasoning, is done in the
place of actual service.

Filipinos often consider dining in restaurants as a time for family bonding or

celebration (Statista, 2022b). Also, our enjoyment of dining out complements our
busy lifestyle by allowing us to try out new food and explore different cuisines from
different restaurants (Mordor Intelligence, 2022). However, the COVID-19 pandemic
took its toll on the industry. This challenged restaurants to innovate and adapt. As
a result, most of these companies resorted to online delivery systems (Mordor
Intelligence, 2022). Moreover, during the pandemic, the annual revenue generated
in the food service sector in the Philippines decreased from 15.19 in 2019 to 8.55
in 2020 and 7.4 billion US dollars in 2021 (Statista, 2022a). Nevertheless, analysts
expect the industry to perform better despite the pandemic and experience a CAGR
GENERAL MANAGEMENT
DOING SUSTAINABLE BUSINESS | AIM-DLSU CASE FOLIO 2024
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• Assembly service is where a company purchases food from the
manufacturer, and the final processing, such as seasoning, is done in the
place of actual service.
Filipinos often consider dining in restaurants as a time for family bonding or
celebration (Statista, 2022b). Also, our enjoyment of dining out complements our
busy lifestyle by allowing us to try out new food and explore different cuisines from
different restaurants (Mordor Intelligence, 2022). However, the COVID-19 pandemic
took its toll on the industry. This challenged restaurants to innovate and adapt. As
a result, most of these companies resorted to online delivery systems (Mordor
Intelligence, 2022). Moreover, during the pandemic, the annual revenue generated
in the food service sector in the Philippines decreased from 15.19 in 2019 to 8.55
in 2020 and 7.4 billion US dollars in 2021 (Statista, 2022a). Nevertheless, analysts
expect the industry to perform better despite the pandemic and experience a CAGR
of 4.67% from 2021 to 2026 (Mordor Intelligence, 2022).

Ryan Cruz, a restaurateur in his mid-40s, is the CEO of Nippon Hasha Inc. Nippon
Hasha means “Japanese Champion.” As an entrepreneur, he has started several
businesses over his career with varying levels of success. But, according to him, it
is rare to have an opportunity to create, establish, and grow a business concept with a
loyal following, a strong brand, and a chance to work with like-minded people. Nippon
Hasha is one such business. For him, it is like capturing lightning in a bottle.

Mr. Cruz, his partners, and their employees are responsible for the popular Ramen
Yushoken and Mendoko Ramenba, known for their sumptuous and savory ramen
(see Figure 1). The company’s name comes from the Japanese ramen champion
chefs they work with to deliver the Philippines’ best authentic Japanese dining
experience. The Yushoken brand name is a direct Japanese translation from “House
of Ramen Champions.” The company was founded in 2011 and takes pride in its
mission of “bringing the best of what Japan offers while providing the best customer
and employee experience.” Their vision is “to be the most desirable place to work in.”
At the same time, their core values stress being empathetic, engaging, evolving, and
enthusiastic.

A “PEOPLE FIRST” CULTURE

Mr. Cruz had a vision for how the company should run and proactively developed a
culture for his people. Over the years, he and his managers have nurtured a culture
that allowed them to succeed in their space. They have effectively studied and
employed best practices to create an organizational culture that has proven fruitful.
Their low absenteeism and attrition rates are a testament to their success. The
common reason why people leave the company is to explore opportunities abroad.
Most of the managers he initially hired are still with the company.
In every employee orientation, Mr. Cruz spends a significant amount of time making
his people understand his whys embodied in three concentric circles, as shown in
Figure 2. He believes that doing so will help communicate their culture and how the
|new hires will contribute to maintaining and building on the culture. The smallest
circle is held firmly by his desire to take care of his family. The middle ring represents
his purpose of being a restaurant owner, the first-generation entrepreneur in their
family. This purpose is built upon his desire to develop a culture of excellence by
focusing on what he can do to allow the people working in the organization to thrive.
He believes that to succeed, you must take care of your people, and they, in turn, will
take care of the customers. As a restaurant owner, Mr. Cruz aspires to improve the
lives of everyone in the Food Service Industry by using their brands as a blueprint
for success. And his biggest why is to create quality jobs for people. He envisions
building and growing an organization that provides jobs and creates an environment
where people can grow in, be proud of, and love.

It is worth noting that the company does several activities to cultivate an encouraging
and engaging organizational culture. For example, as much as they invest in annual
team-building events such as going out-of-town for recreational activities that
Mr. Cruz calls “rah-rah-rah affairs” that foster camaraderie, they also prioritize
practices for building, developing, and maintaining long-term relationships with their
employees. Moreover, they acknowledge the value and impact of practicing
small but consistent actions such as greeting people, looking them in the eye, asking
them how they are, and recognizing, appreciating, and rewarding them with words
of acknowledgment. For Mr. Cruz and the company, these seemingly trivial gestures
make the actual difference in building a long-lasting corporate culture and creating an
environment of inclusion.

In addition, they leverage interactions between management and staff to establish

more profound and meaningful relationships. For example, Mr. Cruz allots two hours
of his time every week for his “Coffee with CEO” program; this initiative allows the
people in the organization to have a one-on-one conversation with him to talk and
learn from each other. There are also monthly birthday celebrations for the employees
where the managers and Mr. Cruz himself serve the staff in a buffet line. According to
Mr. Cruz, these seemingly small gestures resonate and are greatly appreciated by the
staff.

Nippon Hasha Inc. gives 100% of the service charge and equally divides them among
all employees compared to other similar businesses. The company also utilizes a
system where employees can keep track of their performance through metrics to
gauge their proficiency with their tasks. This approach allows the employees to see
if they become faster at a particular job while adhering to the expected standards.
Finally, the company encourages growth through what they refer to as an open road
map program where members of the organization can be promoted to any position
provided they demonstrate the ability to perform the task, exemplify character that
is consistent with the values of the company, and can listen and empathize with
co-employees. Even Mr. Cruz emphasizes that employees can replace him if they
are deserving and can do a better job than him.

That said, Mr. Cruz and his partners see an opportunity for growth. They plan to open
twice as many restaurants in the next two years. The expansion is an exciting time for
the company. However, it also presents new sets of challenges. One such problem
is maintaining the organizational culture they have worked hard to build for the past
decade. Expansion means new people to vet and train. He is acutely aware that the
wrong people can poison the proverbial well.
On top of this, Mr. Cruz has a lot of other commitments that require his attention. He
owns and is a part-owner of several other businesses in the food and automotive
industries. He also provides consulting services, does speaking engagements, and
serves as a mentor for entrepreneurs in the food industry. Additionally, Mr. Cruz is part
of the Entrepreneurs’ Organization, serving as a Board Member and representative
for the F&B industry in the Asia Pacific Region.

Expansion and ensuring the company culture continuity will require more of his
already limited time. For context, Figure 3 shows how he divides his time between
his responsibilities.

MAINTAINING, EVOLVING, AND ADAPTING THE CULTURE

Scaling up operations is not easy. There are countless examples of companies that
tried to grow but failed. A common theme is the lack of consistent service between
the different branches of a restaurant chain.

Mr. Cruz and his people invest a lot of time and effort in cultivating the company’s
culture. While profit is important for him, he believes that putting people first: both
the customers and employees has contributed to their success. For him, how he
takes care of his employees is directly related to the quality of customer service the
company can provide. Profit is the reward, not the objective.
Mr. Cruz also knows that there are certain things that he has done and is doing
to nurture the organization’s culture that are not scalable. While he believes that
“the bigger your organization gets, the more you have to recognize the power of moments,”
it becomes more challenging to do these actions consistently as the
company grows. Unlike physical resources such as facilities and equipment, you can
simply purchase these assets to scale up your operations, but you cannot duplicate
people. Maintaining the culture is a delicate balance between recruitment, training,
and retention, while creating an environment where employees can thrive. The
challenge now is how Nippon Hasha Inc. will maintain, evolve, and adapt the culture
during the company’s exciting expansion phase.

Guide Questions
1. What practices help shape the employee-centric culture of Nippon Hasha
Inc.?
2. What are some of the specific organizational cultural challenges they need to
be aware of? How will they be more aware of these difficulties?
3. What corporate culture model do you think will be helpful in the company’s
expansion? Discuss the components of the chosen model and why it will be
beneficial.
4. If you were Mr. Cruz, what activities, practices, and policies would you
implement to help maintain the company’s corporate culture as it grows?

Acknowledgment
Mr. Ryan Cruz, CEO of Nippon Hasha Inc. for his time, openness, and valuable input
and experiences that made this teaching case possible.

Asian Institute of Management and De La Salle University (AIM-DLSU) for conducting

the two-day workshop in preparation for the teaching case writing.

Reference(s)
Cruz, R. K. (2022, April 23). An interview on Nippon Hasha, Inc [Zoom Video
Conferencing]. Interview by R. L. Morales & R. C. Morales.
Mordor Intelligence. (2022). Philippines foodservice market - growth, trends,
Covid-19 impact, and forecasts (2022 - 2027). Mordor Intelligence. https://www.
mordorintelligence.com/industry-reports/philippines-foodservice-market
Naush, J. (2016, January 31). Types and category of food systems [PowerPoint].
Slideshare. https://www.slideshare.net/jaznaush/types-and-categories-of-
food-service-system
Nippon Hasha. (2021). Our story. https://www.nipponhasha.com/our-story/
Statista Research Department. (2022a, February 3). Food service sector revenue
Philippines 2015-2021. Statista. https://www.statista.com/statistics/1273942/
philippines-food-service-sector-revenue/#:~:text=The%20food%20service
%20sector%20in,billion%20
Statista Research Department. (2022b, April 22). Food service industry in the
Philippines - statistics and facts. Statista. https://www.statista.com/topics/8982/
food-service-industry-in-the-philippines/#dossierKeyfigures