Paris Baguette from Korea

Abstract

Paris Baguette, the largest bakery-cafe chain in Korea, harbors global aspirations "to become to bread what McDonald's is to hamburgers." Paris Baguette is owned and operated by SPC Group whose founder and chairman, Hur Young-in, believes that Paris Baguette needs to succeed in France to grow globally. Newly promoted marketing executive Park Ki-Nam is determined to accelerate Paris Baguette's expansion in France where the company has so far opened only two bakeries. To develop a marketing strategy for the brand's success in France, Ki-Nam arrives in Paris for a week of "baguette immersion," where he fully realizes the challenges of marketing Korea-based Paris Baguette outlets, and not only in the birthplace of the baguette.

Joie de Vivre, or the Last Supper

It was his last evening in Paris before his flight back to Seoul, and Park Ki-Nami was having a late dinner in the country whose cuisine was added to UNESCO's "Intangible Cultural Heritage of Humanity" list in 2010. In front of him sat a miniature paper cup with two shots of espresso and the last baguette to be had in Paris before his departure. Its crust, lightly dusted with flour, was casually sticking out from a brown bag stamped with the name of a popular local chain that was still busy with customers just before closing for the day. After a week of long walks around the French capital, Ki-Nam's back begged for a comfortable chair, but the only two tables close to the bakery's glass case were designed for standing. To be seated, he would have to move past the trays with pastries and loaves of bread and away from the woven baskets full of baguettes, a view which he wasn't willing to trade. "Joie de vivre, or so much for the beauty of living," he thought ironically, looking at his unassuming "farewell".

A newly appointed executive, Park Ki-Nami was on a business mission to help him develop a marketing strategy for his brand'sParis Baguettesuccess in France. Based in Korea, according to a company spokesman, Paris Baguette had been "working toward the ultimate goal of becoming a kingpin in the bakery business in Paris, believed to be the birthplace of bread" since 2012.

Owned and operated by the Korean SPC Group, Paris Baguette was born in Seoul in 1988. Since then it has become the largest bakery-cafe chain in Korea and has lately accelerated its global expansion, having already introduced the brand in China, the United States, Singapore, Vietnam, and France. It now has 400 bakeries outside Korea and over 3,300at home. Ki-Nam joined the company in 2004, right when Paris Baguette started its international expansion with the first bakery in Shanghai. A new graduate from Yonsei University, he was proud to have landed a marketing job with a reputable chaebol (family-owned) company with roots going back to the 1940s. Assigned to the team developing Paris Baguette's entry into the United States, Ki-Nam and his colleagues opened the first store in Los Angeles in 2005 and reported 78 bakeries in the United States by early 2019. It was this success that had earned Ki-Nam a recent promotion to head the division in charge of the brand's operations in France.

France was particularly important to Paris Baguette's founder and SPC Group chairman, Hur Young-in, who considered the country to be the "spiritual home" of all his bakery products. Although the founder believed that to grow globally, Paris Baguette needed to succeed in France, it was a long time before the first outlet welcomed customers in his dream country. Twenty-six years after the birth of Paris Baguette in Korea, the brand arrived in France in 2014 and opened its doors in the Chatelet district of Paris, not far from the Louvre and Notre Dame cathedral. A year later, the bakery was joined by a second outlet, which also boasted a prominent location, near the Opera subway station. Work was currently under way on the third Paris Baguette in Franceto be open on the rocky island of Mont Saint-Michel that is included in the list of UNESCO World Heritage sites. In addition, the company was ready to break ground on a bread factory in Normandy. When completed, the factory would supply frozen dough to the current and prospective European, U.S., Middle Eastern, and African markets.

That was the portfolio handed to Park Ki-Nam along with the new title of chief marketing officer. His task was now to "infiltrate" the birthplace of the baguette with his company's Paris Baguette outlets. Determined to craft a successful marketing strategy, the new executive excitedly left for Paris to immerse himself in the French baguette business. His report was now due in two days, and he was already scheduled to meet the chairman, Hur Young-in, upon his return in Seoul.

The Bread King: From Humble Beginnings to Global Aspirations

Hur Young-in, the chairman of the SPC Group, was a legend. Although he was in his early 70s, he was as ambitious as ever. Widely recognized in Korea as the "undisputed bread king" who developed "a love affair with bread" and made his company "the undisputed leader in the nation's bakery industry", Hur Young-in owed his interest in the bakery business to his father, Hur Chang-sung, who set up his first bakery, Sangmidang, in 1945 in Hwanghae Province (now in the territory of North Korea) and a second one later in Seoul. By the 1960s, the bakeries had become the Samlip General Food company which earned its success by specializing in cream-filled pastry.

To join the family business, the junior Hur, who was born a second son to his entrepreneurial father, first went to the United States, where he spent over a year learning breadmaking skills at the American Institute of Baking in Kansas. Returning home in 1983, Hur Young-in took charge of Samlip's high-end bakery line Shany. When he noticed the waning popularity of mass-produced cream-filled buns, he came up with the idea of a novel cafe-bakery and in 1986 launched Paris Croissant, which became the first chain in Korea to offer European-style breads. The idea seemed promising, and aiming to offer affordable prices for the European-inspired pastry, in 1988 Hur Young-in successfully started the Paris Baguette franchise by offering "a local twist on French bread, eschewing soft, salty grains in favor of sweet, gooey confections."

In 2004 SPC Group was established. The group not only operates its own brands Samlip, Shany, Paris Baguette, Paris Croissant, Maison de PB, and Coffee@Work, but it has also brought to Korea Dunkin Donuts, Baskin-Robbins, and Shake Shack Burger from the United States. In 2019, business and financial news magazine Forbes named Hur Young-in as one of the world's billionaires with an estimated net worth of USD 1.1 billion.

Recognized in the nation for introducing bread to rice-eating Koreans, Hur Young-in developed bold global aspirations and, in particular, ambitious plans for Paris Baguette. This brand took only 10 years to become the number one bakery-caf franchise in Korea by 1998, and Hur Young-in began eyeing international locations. The first expansion steps were successfully taken in 2004 in China and in 2005 in the United States, and by 2012, the SPC Group publicly announced its plans to increase the number of Paris Baguette outlets to 3,000 in 60 countries by 2020.

These global ambitions grew even further after the chain opened its first outlet in Paris in 2014 and stated its intention "to become to bread what McDonald's is to hamburgers." The aspirations were revised in 2016, when the Paris Baguette spokesman was quoted in Korea JoongAng Daily sharing the plans "to advance into a total of 20 countries by 2030 and operate more than 2,000 branches in China and the United States alone." In reality, in 2019 there were 301 Paris Baguette bakeries in China, 78 in the United States, 15 in Vietnam, 12 in Singapore, and two in France. Along the way, the French government made Hur Young-in an officer in the National Order of Merit and a knight in the Order of Agricultural Merit for his contributions to French cuisine.

The "Real" Baguette?

Never in his 40 years had Ki-Nam eaten so much bread in just a week, checking one bakery after another off his list. How many days would one need to sample the over 1,200 bakeries believed to be serving baguettes in Paris? Ki-Nam was definitely overloaded on carbs by now. Such were the perils of his job, he sighed to himself, nevertheless acknowledging no regrets. He loved his job, and he found great pleasure in food.

Ki-Nam reached out for his "dinner." No, he would not just bite into this baguette; first, he would tear a small piece apart and only then put it into his mouth. The French, Ki-Nam had learned, are very particular about eating their baguettes, and being in Paris, he wanted to do it right. Slowly, he took a first bite and let the crackling crust release a doughy flavor. On the table, his torn baguette had now revealed not only its amber-colored crust, but also its off-white interior that looked springy and moist. The baguette was between 55 and 70 cm long, 5-6 cm wide, 3-4 cm high, and weighed between 250 and 300 g. Ki-Nam knew these numbers by heart because this is how the traditional baguette (a baguette de tradition) is regulated in France by a 1993 government "bread decree." The decree established three conditions for a traditional baguette: it must be free of additives, naturally fermented, and never frozen. Only four ingredientswater, yeast, flour, and saltcan be used, and baguettes need to be made on site from fresh dough if the bakery wanted to be called a boulangerie. Today, these "traditional baguettes" make up about half of the baguettes sold in large French cities. To become a boulangre, one needs to train for two years, though some French bakers claim that it takes at least 10 years to master the baguette-making craft.

Ever since Ki-Nam started working for Paris Baguette he had been curious about the origin of the baguette, but his search did not result in a definitive answer. He learned that baguette literally means "stick" or "wand" and it is the most famous loaf in the bread-eating culture of France that goes back to the 1700s when bread provided almost all the daily calories. In one version of the bread's origin, it was Napoleon who invented the elongated shape to fit into a back pocket in his troops' uniform; in another version, the shape of the thin stick was a solution to bloody fights that broke out during the digging of the Paris metro between construction workers who always had their knives handy to slice lunch loaves. Whatever the truth is, baguette seemed to connect with the history of a nation that also knew the "Flour War," prompted by a bread shortage in 1775, and even had a religious patron for bakers, named Saint Honore. In 1920, the baguette was "officially christened" in Paris, and up until the 1990s, bread was a protected staple food in France with prices controlled by the government.

Ki-Nam leisurely tore another piece of baguette. He was a little disappointed that he hadn't managed to time his business trip with either a national bread festival or one of the many breadmaking contests in Paris. Next time he should definitely come for the Coupe du Monde de la Boulangerie, which is like the World Cup of baking and is held in Paris every four years. The last prize in 2016, by the way, went to the team from Korea. The annual Meilleure Baguette competition held each April had been running for 25 years. This is where the baguettes are judged using five criteria: appearance, baking, texture, smell, and taste. The winning chef receives a EUR 4,000 prize and the honor of supplying baguettes to the lyse Palace for a year; 10 finalists are permitted to emboss a gold laurel on their shop window, emblazoned with the year of the award and their ranking.

Taking his second bite, Ki-Nam glanced at his meal wondering how his last real Paris baguette would score according to these criteria. This thought instantly made him feel uneasy. Why "real?" Was it any different from the baguettes that his Korean company was offering in its two Paris Baguette outlets in the nearby arrondissements and back at home?

The Blank Pages

When Ki-Nam arrived in Paris the week before, he started his "baguette immersion" by visiting his company's first Paris outlet, located in a central arrondissement near the Seine. He already knew that Paris Baguette occupied three floors of a nine-story building; the stoves ran in the basement, the sales space occupied the ground floor, and the second floor housed the bakers. Outside, there were chocolate-brown awnings, dark wicker chairs, and small round tables. The window displays were decorated with dry sheaves of wheat, woven baskets, wooden kitchen utensils, dessert containers with glass dome-shaped lids, bright silk flowers, and colored eggs scattered on what appeared to be green imitation grass. A big pink heart drawn on one window enveloped the words "Bonne Fete" with "artisan ptissier" in a smaller font above and "boulangerie" in a larger font. The brand's logo, Ki-Nam noticed, looked slightly different; while "Paris Baguette" and "boulangerie" framed the outer side of the circle, the usual image of the Eiffel Tower was absent, leaving a lonely "PB" inside the round logo. The logo itself appeared small and even hard to notice compared with the large and bold "boulangerie" signs on the corner facades of the building.

Figure 1. Paris Baguette Storefront in Hongcheon, South Korea

Source: Chloe Kwangmo, Wikimedia Commons.https://commons.wikimedia.org/wiki/File:_IMG_3818.jpg

Figure 2. Paris Baguette Storefront in Paris, France

Source: screenshot of Google Maps.https://goo.gl/maps/c83WSkuaGXVKz2SQ8

Inside, there were at least seven choices of baguette, eight of round and brick-shape loaves of bread, and lots of trays that offered "oranais," "petit pain au fromage," "ficelle olives ou chorizo ou lardons," "baton aux fruits," "mini viennoiserie," "brioche," and "chausson aux pommes." On display, among sandwiches, there were also "hot dog," "pizza mozzarella," and "tarte fine aux lgumes." The separate refrigerated section invited customers, in English, to "Grab and Go" and "Help Yourself," and the menu on the wall had English translations. Behind the counter, a young man with short dark hair was dressed in a white shirt. Back home in Korea, and in the United States, Ki-Nam noted, the staff wore stripy Breton T-shirts and berets.

Ki-Nam was aware that all staff were hired in France, that the chefs were local, and that the ingredients and bakery methods in use were traditionally French. It couldn't be otherwise because Paris Baguette had joined the local trade group Chambre Professionnelle des Artisans Boulangers-Patissiers, which requires all of its members to adhere to traditional baking standards. He also knew all the logistics that preceded the opening of the first outlet in Paris in 2014: it took six years to find a suitable location and meet all the regulatory city requirements, and then two more years to obtain approvals from local residents for everything, including the colors of the signboards. Ki-Nam expected to tackle similar logistical issues with the franchise's further expansion in France. However, this week in Paris had taken his thoughts in an unexpected direction.

Looking at the shrinking row of bread sticks behind the bakery counter (the bakery was closing in 10 minutes), Ki-Nam suddenly felt the "weight" of his company's brand name. There was so much French culture and French heritage in the words "Paris Baguette" that it made him feel confused. Here he was, in a city that was a number one destination on the wish list of millions of travelers who lived with and worked for the dream of seeing the "City of Love" and "City of Lights." In 2018 alone, 30 million foreign visitors travelled to Paris, more than to any other city in the world, making France once again the most visited country on earth. Wasn't Paris a brand in itself? Was the baguette as well?

According to the latest statistics, the French eat between 8 and 10 billion baguettes a year, and there is roughly one boulangerie for every 2,000 residents in the country. Thirty-three thousand independent bakeries in France employ 180,000 people, and baguettes make up 80% of all bread sold. Even toasters come with a metal baguette extension in France. In addition, the country has a scientific "Bread Observatory"the Observatoire du Pain. No wonder, then, that the French have been lobbying for the traditional baguette to be officially recognized by UNESCO as part of its cultural heritage.

Ki-Nam was aware how threatened the French boulangers felt in 2011 when an entrepreneur in Paris introduced the baguette vending machine, filling it with semi-cooked sticks that would be fully baked when ordered; how they scorn the ordinary, mass-produced baguettes sold in supermarkets that do not meet the industry standards for the traditional baguette. Do these artisanal bakers know that Paris Baguette outlets outside Paris call themselves "a traditional French bakery" and that much of the dough and bread for Paris Baguette bakeries is made in South Korea, is frozen, and then dispatched around the globe? Do they care that outside France the Korean company's logo features the Eiffel Tower and its employees wear Breton stripes and berets, as if to strengthen "Frenchness?"

Difficult questions seemed to attack Ki-Nam. Do the French boulangers seek protection from his baguettes as well? Are these baguettes "not French enough?" Is there room in a nation eating 10 billion baguettes a year for Paris Baguettes from Korea? Can Paris Baguette serve as the face of French-style baking around the world? And does Ki-Nam's Korean company add to the global fame of the French baguette or detract from the nation's sacred heritage?

Feeling dizzy and ready for a final stroll around the birthplace of what now seemed to be more than just a baguette, Ki-Nam collected the bag with his unfinished "dinner" and slowly took off in the direction of the hotel. A sleepless night was waiting for him for sure; there could not be blank pages in his report to the chairman, Hur Young-in, by morning.

Notes

In Korea, people use their surnames first, followed by their individual names. While Park Ki-Nam is an imaginary persona, the case has been written based on publicly available data and sources of information. The case was developed strictly with learning objectives in mind, to provide thoughtful material for class discussions, and not to encourage or discourage actual companies' strategies.

This case is adapted from Kniazeva, M., (2020). Paris baguette from Korea.InSAGE Business Cases. SAGE Publications, Ltd.,https://www.doi.org/10.4135/9781529725810

Copyright: Maria Kniazeva 2020

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Questions:

1.Perform a SWOT analysis for Paris Baguette in France and suggest actionable recommendations. (20 marks)

2.What do you think is the current target market for the two Paris Baguette bakeries in Paris? (10 marks)

3.Are there any other potential segments of the population that Paris Baguette could target in France and in Paris in particular? What are they and why might they be interested in Paris Baguette bakeries? (15 marks)

4.How does Paris Baguette position its brand (a) in Paris and (b) outside of Paris? Do you see any differences in positioning? (10 marks)

5.Assume that you are Park Ki-Nam. Explain in two to three sentences what you will communicate in the report to the chairman, Hur Young-in.(10 marks)

6.You've learned from this case that the French seek World Heritage status for the traditional baguette. What marketing rewards/benefits come up with this recognition? Conduct online research to support your answer. (15 marks)

7.Paris Baguette hasn't stopped its global expansion plan and the next market it sets sight on is your home city or neighborhood. Being an innovative brand, it also attempts to add some local flavour to the menu.If you are in charge, what would you like to add? It could be food or drink.

Mention the location of your home city, then briefly explain your plan about the item to be added to the existing Paris Baguette western menu as shown onhttps://order.parisbaguette.com/menu/pbca001, its price relative to the locally available alternatives, and how you are going to promote it.Conduct online research to support your answer.(20 marks)