Monday, March 24, 2008

Food Industry & Entrepreneurialism Memo: Homeboy Bakery & Enterprises and Kinh Do Foods Show That Entrepreneurialism and Innovation Continue to Thrive

We recently read two articles which describe two food industry enterprises that despite being very different in kind and thousands of miles apart geographically, embody the spirit of entrepreneurialism that's alive and thriving in the global food industry despite the current poor international economy.

Twenty years ago, The Rev. Gregory Boyle, who is a Jesuit Priest currently assigned to Dolores Mission Church, the poorest Catholic parish in the Archdiosese of Los Angeles, California, got an idea to try using employment as a means to help the city's gang members stop their vicious cycle of committing crimes, being imprisoned and then released, only to once again return to jail.

Father Boyle launched a campaign at the time in an attempt to get local businesses to take a chance on hiring the "reformed" gang members. However, he couldn't get enough business owners to take a chance on the "homeboys," (gang members) so had to give up on the plan.

The good Jesuit Priest then had a brainstorm: Why not create a business himself and employ the "homeboys" to run it. Rev. Boyle did just that with the financial backing of the famous Hollywood movie producer Ray Stark, according to a story in the March 20, 2008 New York Times by James Flanigan.

The Jesuit Priest bought an abandoned bakery in 1992, which he named Homebay Bakery, and hired six former gang members to work at the business, making tortillas and doing routine maintainance and janitorial work.

Homeboy Industries, Inc. was born. Today, Homeboy Bakery, which bakes bread and pastries as well as makes tortillas, employees 25 former gang members, recently purchased $3 million worth of start-of-the-art ovens and tortilla making equipment, and is close to inking a "major" contract with a large cafe/coffee house chain to supply the retail operation with fresh breads and pastries.

The "homeboys" are in a growth mode. In fact, somebody at the bakery suggested to Father Boyle he should buy an automatic dough mixing machine to help keep up with all of its new business rather than having the workers continue to hand-knead the bread and pastry dough. The good--and smart--Jesuit nixed that idea however--explaining not only is hand-kneading dough therapeutic--but increased business means he can hire more gang members to hand-knead the dough so he can reach and rehabilitate more "homeboys."

Homebay Industries has diversified in its 16 years in business, according to the Times' article. Today, in addition to Homeboy Bakery, there's a silkscreening business, a maintainance company and a retail store.

There's also the Homegirl Cafe, which is run by a staff of 27 girls who were involved in various ways with neighborhood gangs. The cafe is located in the city's Boyle Heights neighborhood. It features Latino cuisine and flavors prepared with a contemperary California twist. The cafe has recieved positive reviews from the Los Angeles Times, as well as being featured on the Oprah Show.

In addition to their salary, ongoing training and the ability to advance, the "homeboys" and "homegirls" who work for Homeboy Industries get free mental health counseling services, medical care, housing assistance and free tattoo removal, which is important because the former gang members are "tagged" with their previous gangs' insignias and other related body art which makes employment and living in non-gang related society difficult for them.

According to the Los Angeles Police Department's research bureau, there are 250 gangs and 26,000 gang members in Southern California. Father Gregory Boyle, who is writing a book about Homeboy Industries and his experiences and wants to take his program nationally, is working to solve that gang problem one "homeboy" and one "homegirl" at a time.
>Read the full March 20 New York Times article about Homeboy Industries and Bakery here.
>View a slideshow of the inside of Homeboy Bakery here.
>Visit the Homeboy Bakery website here, the Homeboy Enterprises website here, and the Homegirl Cafe website here. You can learn more about Homeboy Enterprises and its the bakery and cafe businesses, as well as future plans, on the websites. You also can order shirts, sweaters, hats and other "homeboy" and "homegirl merchandise on the websites, in addition to learning how you can get involved with the enterprises.

It's been 33 years since North Vietnamese troops marched into the city of Saigon. The city fell to the North, as eventually did the rest of the then divided country of Vietnam.

After Saigon fell, a 21 year-old named Tran Kim Thanh was ordered by the North Vietnamese to stop working at his family's baking-supplies store and sent to work making bread and buns at a new, state run bakery in the unified Communist nation of Vietnam, according to a March 12 story by James Hookway in the Wall Street Journal

As we said, that was 33 years ago. Today, Vietnam remains one, unified country. But it's embracing Capitalism with a frenzy. And Mr. Thanh, who's now closing in on his mid-fifties, is one of the nation's leading entrepreneurs.

The former state-run bakery worker's Kinh Do Foods is one of Vietnam's biggest consumer companies. It has a market cap of $400 million, is publicly traded, and is backed by the U.S. investment house Citicorp, Inc., along with Britain's Prudential Insurance PLC. The country of Singapore's sovereign wealth funds are even major investors in the food company, according to the Journal article.

The iconic red and yellow Kinh Do Foods' stores, which are located all over Vietnam, are basically retail bakery/cafe type shops that carry a wide variety of native baked goods like breads and pastries, along with such local specialty items as dried-squid buns and other Vietnamese consumer favorities. In some ways, the stores are to Vietnam what McDonlads and Starbucks are to U.S. consumers in terms of their ubiquity and popularity.

Vietnam has one of the world's fastest-growing economies. It's drawing U.S. and European investment capital at about the same (per-capita) rapid clip as China and India are.--However, unlike China, Vietnam is far more liberal in terms of encouraging overseas investment. Further, the country welcomes and incourages investment from America, a country it battled in war for far too long on both sides.

Kinh Do Foods' owner Thanh, who also goes by an Americanized version of his name, Paul Tan, launched the fast food-style retail bakery chain in 1993. He has big growth plans for the food chain, backed by the investment houses mentioned above. The food industry entrepreneur is even thinking about expanding outside Vietnam.

From clerk at his parents' tiny bakery supply store, to forced worker at a Communist-run state bakery, to capitalist, Tran Kim Thanh proves entrepreneurs can come from varied--as well as oppressed--backgrounds. It's an idea, combined with a sense and spirit of adventure, a desire to succeed on ones own (and yes, at times become wealthy), along with lots of hard work that are its primary ingredients.

Out of the ashes of war and the rigidity of Communism, Vietnam is becoming reborn as a free-market economy and integrating itself with the rest of the world. It's entrepreneurs like Tran Kim Thanh (aka Paul Tan) who are leading the way. And in Paul Tan's case, one dozen dried-squid buns to-go at a time.

>Read the full Wall Street Journal article here.
>Visit the Kinh Do Foods website here.

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