Sunny Hills, a pineapple cake brand in Taiwan, opened an outlet in Shanghai on Thursday as part of a pioneering effort to expand the chain into the mainland.
The Taiwan-funded 330 square meter shop, the first in the mainland, is situated in the city's Bund.
"We choose the Bund as a location for the outlet because its atmosphere suits our product," said Andre Hsieh, designer of the brand.
Sunny Hills practices a new business model. Rather than the traditional practice of placing articles on shelves for customers to choose from, no cakes are visible. Customers are served with a cup of tea on entering.
"The business is conducted by talking to customers," said Michael Sheu, one of the brand founders.
"The mainland is a huge market for pineapple cakes and it's worth us investing. We chose Shanghai first because it has so many office ladies to eat our products," said Sheu.
Sheu shifted his business from semiconductors to pineapple cakes in 2008 to realize his childhood dream of making food.
He invested about 60 million yuan ($10 million) in Sunny Hills, running two shops in Taiwan, one in Singapore and now one in Shanghai. An outlet in Japan is expected to open in Tokyo next January.
"We take a step-by-step business strategy and will not take a risk over product quality for the sake of blind expansion," he said.
"When we get a firm foothold in the Shanghai market, which will take at least two years, we will consider extending our business into cities including Beijing and Guangzhou," Sheu said.
In order to compete with its competitors in Taiwan, which features about 20,000 outlets, Sunny Hills uses pineapples from its own 300-hectare orchard as the raw material to produce pure jam for cakes. "They taste quite different from those made with white gourds," he said.
He plans to plant an additional 150-hectare pineapple orchard to meet growing demand.
"We must be prepared for future expansion," Sheu said.
Sunny Hills creates annual sales of 220 million yuan ($36 million) by selling about 30 million cakes in Taiwan and Singapore.
"The sales, although remarkable to us, is insignificant when compared with the total sales of 6.3 billion yuan in the Taiwan market," he said.
At present, it ships about 5,000 cakes by air to Shanghai every two days. The outlet is expected to sell about 20,000 pieces daily when the brand becomes known to local customers, he said.
