Yannick Co. celebrated its sixth anniversary this past April Fool's Day, but it was no time to relax.

Recently, rising international sugar prices have sent costs for pastry suppliers soaring. After swallowing rising costs for several months, Wu Tsung-en finally decided to increase the price of Swiss rolls, the company's signature product, from NT$90 to NT$105.

"Once we had deducted costs for ingredients, personnel and equipment, we probably made a 10% profit on Swiss rolls," says Wu. The main reasons customers kept coming back to Yannick were its use of fresh and good ingredients and the low prices it offered. Most of the ingredients, including sugar, cream and cheese, are imported; 80% of what goes into Swiss rolls is imported. "Due to the rise in the price of sugar since last year, even the 10% profit we used to make on them has evaporated. The more Swiss rolls we sell, the more money we lose."

When the sugar price continued to shoot up at the beginning of spring, Wu Tsung-en was forced to hike his prices by as much as 16.7%.

After making a name for itself in Wanli Township, Yannick took Taipei City by storm. The photo shows Yannick's Neihu store.

A quick rise to success

Will higher prices turn customers away? Only time will tell. On April 1, Wu Tsung-en had no time to ponder the question.

Yannick first made a name for itself in Chinshan and Wanli Townships and opened a second patisserie in Neihu two years ago. Recently, it opened a third patisserie in a high-rent section of Chunghsiao East Road. The impact of higher prices is not immediately apparent, but whether a new pastry shop will be a success can be seen as soon as it opens for business. After weeks on a cliff edge, Wu Tsung-en finally allowed himself a smile when he saw a long line of waiting customers in front of the shop.

As a boy Wu Tsung-en didn't care for school. He recalls that when he started working in a pastry shop after graduating from junior high school, his mother said that it was okay if he didn't stay in school, as long as he learned a trade: "Having spent her whole life working as a seamstress and doing odd jobs, she told me the quickest way to make some money was to have my own business."

With its emphasis on learning by doing, the apprenticeship system teaches apprentices the skills of their trade and the ABCs of running a business. During his six-year apprenticeship, Wu always tried to learn from more experienced apprentices who were making their own way in the trade. "The key to learning the skills of the trade and starting your own business is to always give it your all. You can learn a lot by observing others. Ask yourself: why did that patisserie succeed and this one fail? Most of the nitty-gritty details can't be found in books."

Wu's father had always encouraged him to go into business on his own. When Wu finished his apprenticeship, his father figured that he would be opening his own pastry shop sooner or later, and that sooner was better than later, so he gave him NT$2 million from his pension to start a business. "But I wasn't really prepared to start my own business. All I knew was that I loved making pastries; as long as customers looked satisfied, I was happy."

Wu qualified as a master pastrycook when he was 20. As an apprentice he had focused on learning how to start his own business; now had to try to understand the market. Given his traditional training, he chose to do it the old-fashioned way.

Wu recalls thinking, "What's the best way to understand the market? Naturally, it's to listen to what the customers say about the pastries." Are they sweet enough? Do they like their shape? Are they willing to pay that much? Unlike other pastry makers, Wu did not stay cooped up in the oven room if he could help it. Whenever he had a moment's leisure, he would walk to the front, wearing a white bib apron, to listen to what his customers had to say. Wu recalls with a smile that many customers came straight out with criticism, "People don't like to be challenged, but I looked on candid criticism from my customers as a precious gift that would help me improve."

But there's also a toll to be paid for listening to your customers. Wu Tsung-en remembers being flushed with anger on several occasions.

On one occasion, a customer appeared keen to taste a chocolate cake he had made, but when he hurried to serve her, he was faced with a furious woman.

"The chocolate powder on the cake was too dry. The customer took one bite and coughed, scattering the brown powder all over the place, and all over her own face."

When they are ground, different chocolate types yield powder of varying colors and stickiness. After the mishap, this particular chocolate was consigned to limbo. Wu Tsung-en experimented with other chocolate types until he found one he was sure would not cause another disaster.

Yannick's reputation is built on quality. Its sales outlets, scattered all over northern Taiwan, are all supplied from the firm's central bakery.

Pastries customers love

In 2000, Wu spent NT$200,000 he had in savings on the equipment he needed to start making pastries in his own kitchen. He specialized in sliced cakes, and quickly cornered the coffee-shop market. Because there were not many coffee shops in Chinshan and Wanli, he spread out to coffee shops in Taipei City. But of course he did not neglect coffee shops in his own area. He even succeeded in becoming a supplier to the Juming Museum in Chinshan.

"In those days, I didn't know where the customers were. I saw every coffee shop as a potential customer and knocked on almost every door."

Every day Wu would set out with various cake samples looking for potential customers. He came home in the evening to bake more pastries, often into the middle of the night.

"Many pastry makers invest a lot of money in their first pastry shop. Rent, utilities and personnel are all very costly, and if business is slack it's easy to get into a financial tight spot. To play it safe, I decided to look for subcontracting work." For a whole year, Wu Tsung-en took sole charge of every aspect of the business, from production to sales to debt collection, and often delivered pastries by public bus. Business gradually picked up; once he could no longer keep up with all the orders he was getting every month he felt confident enough to open his own pastry shop. His first employee was his wife, who was working as a white-collar worker in a securities firm.

"Although I was subcontracting, I could still get my name out there," says Wu. When he was 25, Wu spent a couple of months studying in France; after he started his own business, he traveled several times to Japan to check out the local pastry market. Having seen how much attention is paid to quality ingredients in countries with a strong pastry tradition, Wu insisted on using the best ingredients even when he was doing contract work.

Imported dairy products are not all the same. Wu prefers good French cheese to cheaper cheese from New Zealand. Quality ingredients are important; proper use of them even more so. Cake-decoration walnuts are usually roasted. Although roasting them is easier, the walnuts tend to lose their gloss. Wu explains, "That's why we deep fry them, although it ends up costing us more because of the oil."

In Chinshan and Wanli Townships, where bread and pastry standards are lower than in Taipei City, Yannick quickly gained a reputation for quality. Long lines formed in front of the patisserie, and quite a few Taipei women made special car trips for Yannick's pastries. This was a rare sight in Wanli, where brand awareness was minimal, and it attracted the attention of the local media. News reports drew even more people to the patisserie. After 2001, Yannick opened its own patisserie in Neihu, relocated its central kitchen facilities--an eight story-building with some 2700 square meters of floor space--to the new location, and began regular pastry deliveries to more than 130 restaurants.

Because freshness is an important factor, Yannick currently only supplies restaurants and coffee shops in northern Taiwan. All its pastries start out in the central kitchen in Neihu, which Wu Tsung-en has always managed himself. Wu says, "We don't supply any department stores farther away than Hsinchu. Our central kitchen in Taipei cannot deliver to places farther south; customers are always asking us to, but we have to reluctantly say no."

Yannick's central kitchen produces a wide range of pastries, including pyramid cakes (facing page, top), Swiss rolls with black date filling (facing page, bottom), sesame chocolate desserts (above) and strawberry yogurt desserts (below). Much thought and care goes into the choice of ingredients and baking techniques.

A household name

In an age that favors the division of labor, Wu has decided to go against the current. He sums up his own philosophy with a simple statement: "To grow tall, a tree has to be allowed to grow fat." In addition to 30 types of cakes that come out of its ovens every day, in 2004 Yannick began making its own ice cream and chocolate, with Wu in charge of R&D. As the company has grown, it has branched out. Besides its own distribution company, Yannick has set up a trading company, which now dominates the import business for pastry ingredients. "We stick to what we do best and delegate what we can't do to specialists," explains Wu, who clearly excels both at making decisions and at delegating when necessary.

Outsourcing is common practice these days, but Wu Tsung-en has chosen to buck the tide. Although Yannick saves some transaction costs this way, it is also exposed to higher risk in the upper and lower reaches of the market. Wu admits candidly, "Rapid expansion put considerable short-term cash-flow pressure on us."

Business is good. In both 2004 and 2005, Yannick's sales grew by over 40%, making it a leading brand. Brand recognition and acceptance have made it easier to secure capital and find new patisserie locations. Yannick did not send out masses of promotional material to the media to announce the opening of its new store on Chunghsiao East Road. Yet on the day of the opening, the 170-square-meter store was bursting at the seams with customers.

But at 7 a.m. the following day, once the excitement had subsided, Wu Tsung-en showed up for work at the Neihu central bakery wearing his white apron, just as he has done every day for more than a decade. That day, he worked with a group of managers until noon. Although Yannick is now a major enterprise with an annual turnover of NT$260 million and has obviously come a very long way from its humble beginnings, Wu Tsung-en is as busy as ever and insists on personally seeing the pastries emerge from the ovens.

Wu says, "A lot of people forget their roots after they build a successful business. Although our enterprise is still growing, making cakes is still my favorite and most important work."

Yannick's central kitchen produces a wide range of pastries, including pyramid cakes (facing page, top), Swiss rolls with black date filling (facing page, bottom), sesame chocolate desserts (above) and strawberry yogurt desserts (below). Much thought and care goes into the choice of ingredients and baking techniques.

Wu Tsung-en had only a middle school education but succeeded in becoming a model entrepreneur thanks to his cake-making skills. 35-year old Wu says, "If you believe in yourself you can change the world."

Yannick's reputation is built on quality. Its sales outlets, scattered all over northern Taiwan, are all supplied from the firm's central bakery.

Yannick's central kitchen produces a wide range of pastries, including pyramid cakes (facing page, top), Swiss rolls with black date filling (facing page, bottom), sesame chocolate desserts (above) and strawberry yogurt desserts (below). Much thought and care goes into the choice of ingredients and baking techniques.