Financial Adviser: 5 Business Lessons Everyone Can Learn from Eric Puno, Founder and CEO of Army Navy

Eric Puno's entrepreneurial journey illustrates the power of determination, creativity, and strategic expansion in the competitive food sector. His ability to identify market opportunities and innovate has led to remarkable success.

Puno lived in the U.S. for a decade, where he was involved in a successful furniture business with his brothers until the stock market crash in 1987 and subsequent real estate decline. The family business had five stores and was growing well until the economic downturn hit. Recognizing the opportunities in the Philippines, Puno decided to return home with his family, aiming to start a new business.

When Puno returned to the Philippines, he sought to enter the food business, inspired by the convenience and popularity of American fast-food chains like In-N-Out Burger. With no prior experience in the food industry, he opted to start with a franchise to learn the ropes.

He initially applied for a Jollibee franchise but was directed to Chowking due to location constraints. He met Robert Kuan of Chowking, who was impressed by his enthusiasm and granted him a franchise. Puno's first Chowking store in Baclaran was store number 19. Over time, he expanded to five Chowking stores, but his entrepreneurial spirit pushed him to do more.

Puno felt limited by the constraints of franchising and desired the freedom to implement his own ideas. Drawing from his wife's homemade pizza recipes, he proposed starting a new food concept to his fellow Chowking franchisees, leading Puno to establish Yellow Cab Pizza. Yellow Cab quickly became a success, growing to over 80 outlets in a decade.

Two years before selling Yellow Cab Pizza to the Pancake House group, Puno launched another brand, Army Navy, inspired by his son's military training. Since then, Army Navy has expanded rapidly, becoming the largest burrito and burger chain in the Philippines with nearly 100 outlets today.

What key lessons can aspiring entrepreneurs learn from Puno's experience in launching Army Navy? How did Puno’s approach to branding and concept development contribute to the success of Army Navy?

Here are the five business lessons every entrepreneur can learn from Eric Puno, founder and CEO of Army Navy:

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1| Know how to identify growth opportunities and create innovative ideas

Recognizing growth opportunities allows businesses to stay ahead of the competition. By constantly seeking new ways to expand, companies can differentiate themselves from competitors and capture a larger market share.

Understanding and anticipating market trends enable businesses to meet the evolving needs and preferences of their customers. This adaptability can lead to increased customer satisfaction and loyalty.

Puno’s mindset was always oriented towards growth. He actively looked for potential in various types of restaurants, beyond his initial success with Yellow Cab Pizza. He noticed the potential in Mexican cuisine and burgers, seeing them as untapped opportunities in the Philippine market.

Puno didn’t just rely on theoretical research. His wife worked at Chipotle in the U.S. to learn firsthand about their processes and operations. They applied this knowledge to their own business, ensuring they could replicate successful practices.

Instead of creating separate brands for burgers and Mexican food, Puno combined them under a single brand, Army Navy, which was unique in the Philippine market.

Puno and his wife were deeply involved in the business, from experimenting with recipes at home to sourcing ingredients and formulating their products. This hands-on approach ensured they had a deep understanding of their business operations.

"I always look for growth," Puno says. "I always look for opportunities. Looking at Yellow Cab before, I knew that there was also potential in other types of restaurants, and in-identify ko yang Mexican nung una, and then burger, so sabi ko pwede ito.

"So I invited my former partners noon sa Yellow Cab, but they told me na our relationship would only extend to Yellow Cab. I wanted to grow eh, para akong hindi mapakali. I always wanted growth so sabi ko, tayo na lang ako ng sarili ko. That’s what happened. I knew at that time na, at some point, we will sell Yellow Cab eh, so nagtayo na ako, in preparation, for my own business.

"In the U.S kasi pansin ko dun yung mga brands like, like Carl’s Junior for example, naglalagay sila ng Mexican in California or TexMex. Pinaghahalo nila. Sometimes it's for a limited time offer, ganon, so sabi ko pwede siguro ipagsama sa same billing yung burger and burrito in one brand, so naghanap kami ng pangalan nun na Burger and Burrito, two names.

"I have a son who was with the U.S. Navy and I have a grandfather, maternal grandfather, who was with the Philippine Army. Sabi ko Army Navy. Instead of creating a Mexican brand and a burger brand, sabi ko pwede naman ipagsama yan eh kasi nobody has done that here in the Philippines.

"Tapos kinukwento nung son ko when he was in the U.S. Navy kung ano yung kinakain nila sa mess hall sa barko. Sabi nila there's always the burger and the burrito. Always magkasama parati, and that's the concept that we wanted to create—the burger and the burrito, American and Mexican.

"My son was telling me na maraming Filipino sa Navy eh, yung mga Pinoy na U.S Navy, kumakain ng burrito, so sabi ko yung palate ng Pinoy, kayang masanay sa burrito.

"Yung nag-start na kami, kami lang talage ng wife ko. Yung wife ko mahusay siyang magluto. Kung ano yung memory namin sa US na taste profile and quantity, pinareho lang namin. Ang ginawa ng wife ko, nagtrabaho sya sa Chipotle sa US, nung nag ke-create na kami ng Army Navy. Cashier and kitchen yung trabaho niya for several months para makita nya kung pano gawin yung process, tapos ini-apply nya dito.

"Kaya nung nag umpisa kami, even yung mga tables namin pareho nung sa Chipotle noon. That was an inspiration. Dalawa ang inspiration namin eh. Sa burger side, it’s In-N-Out, and yung sa Mexican side is Chipotle.

"Yung ginawa namin yung burger, kami rin lang. Parang sa bahay lang. Nagluto sa bahay, eksperimento kami. Nung araw bibili kami sa Mahogany market sa Tagaytay. Bibili kami ng karne dun tapos we will form it, tapos Ilalagay namin sa freezer. Pino-formulate namin on our own. Wala akong alam sa burger business eh, pizza lang ang alam ko noon."

2| Know how to use market testing to validate your business idea before expanding

Market testing helps identify potential flaws or issues with your business idea early on, reducing the risk of failure when scaling up. By addressing these problems before investing significant resources, you can save time and money.

Engaging with real customers during market testing provides valuable insights into their preferences and needs. This feedback allows you to refine and improve your product or service to better meet market demands.

Initially, Puno faced problems with product consistency when using egg and bread crumbs as binders for the meat until a friend advised him to use restaurant-grade binders to ensure consistency suitable for scaling up.

Puno chose Tagaytay for the first Army Navy store due to its forgiving customer base, as people on vacation are generally more lenient. This allowed them to experiment and make mistakes in a less critical environment.

He invited friends to try the food for free but did not ask for direct feedback. Instead, he and his team observed their body language and leftover food to gauge their reactions. This method provided honest insights into the product's reception without the bias that direct questioning might introduce.

The initial months involved extensive experimentation with the taste and formulation of their patties and meats. They continuously refined their recipes based on observed customer reactions until they achieved the desired taste profile and consistency.

After launching Army Navy in Makati, Puno monitored sales through the Christmas season and beyond. Sustained sales and increased revenue in January and February, typically low-sales months in the food industry, validated his concept's viability.

Due to limited cash for immediate expansion, Puno opted to franchise the brand. This strategy facilitated growth and increased brand recognition, providing further market validation through the success of franchisees.

"Ang naging problema pa namin, ginagamit namin nung araw to bind the meat together is egg and bread crumbs," Puno says. "Eh nasisira, hindi sya consistent, pambahay pwede until I met this Australian guy who lives in our village na food tech. Sabi nya, no you have to use binders na talagang pang restaurant, so sabi ko ganon ba? Hindi ko alam.

"Nalaman namin you need science talaga. It cannot be home style cooking if you want to scale it up to many stores, di ba? Kung one store pwede, pero if you want to scale it, which was the plan, kailangan you need to employ science.

"In 2009, we put up our first store in Tagaytay. Right beside the Army Navy was Yellow Cab. Malaki yung lote ng Yellow Cab dun eh, so kumuha kami ng maliit na parang counter type lang na walang dine-in. The dine-in was outside, malamig naman sa Tagaytay eh.

"Why did we choose Tagaytay? Kasi Tagaytay, being a vacation place, we knew that people who were on vacation, mga nasa vacation mode yan, and they're very forgiving diba? Pag nagkamali ka medyo yung mind nila, okay lang yan.

"So ang dami naming mistakes for the first few months. We were trying to formulate yung tamang lasa ng patty namin, yung meats namin. Syempre ang dami naming eksperimentong ginagawa so we made a lot of mistakes. Merong mga may nagagalit pero may mga forgiving naman. Very forgiving ang mga tao sa Tagaytay

"And then I would invite a lot of friends to come over for free burger, free burrito, mga ganyan para masubukan lang talaga. Pero ako my style kasi is I don't ask them how the food is, kasi di ba, all of a sudden, they become critics eh. Tinitignan lang namin yung body language nila.

"We give them free whatever and then we watch them. Yung mga R&D namin pinapanood nila yan. Pag maraming natira, ‘Ah there's got to be a problem here,’ tapos yung body language nila when they eat, you know, pag kinagat, ano yung mukha nila, diba? So ganon kami mag-test. Even up to today, I never tell our people na don't ask them how the food is, you watch them. Watch how they eat kasi pag tinanong mo, you know, they become critics, malilito ka eh. ‘Hey it’s too salty, hey it’s too sweet,’ ganyan-ganyan hanggang mamaya litong-lito ka na diba? I think at some point you have to trust your own instincts na itong taste na ‘to is tama.

"Yung nag open kami, I think first day sales was P1,000 pesos yata, half of that my wife pa bumili. First day, ganon talaga. I knew naman that we will not make money in the first few months. Nung nakita namin yung food cost namin tama na, nakita namin yung taste profile tama na and yung packaging and everything like yung mga supplies namin alam na namin kung san kukunin, we decided to open in Glorietta 5 after seven months.

"Yung store namin sa Glorietta 5, nag-hit agad, so from then on nagtuloy-tuloy na. We were pleasantly surprised na bumenta kami, tapos Christmas came, syempre Christmas malakas eh, so sabi ko okay to ah, ang lakas sa Christmas, may pila talaga, isang branch pa lang sa Glorietta. Sabi ko the true test is after Christmas.

"Tingnan natin kasi normally sa food business bagsak talaga yan after holidays diba? Alam mo naging franchisee rin ako ng Chowking, pag January, bagsak talaga yan, pero yung yung Army Navy na-sustain nya. Umakyat pa nung January, February more than December, so sabi ko okay na ‘to, set na.

"Now what do we do? Kulang cash ko to expand. In 2009 hindi pa namin nabebenta ang Yellow Cab noon, so sabi ko how do we grow? Nagpa-franchise muna kami para magkaroon ng growth and brand recognition. Ayaw namin magbenta ng franchise talaga. The only reason why nag franchise kami was to grow initially para kumalat nang kumalat."

3| Know how to create an iconic brand and maintain consistency in product quality

A strong brand with consistent product quality differentiates a business from its competitors. It creates a unique identity in the market, making it stand out and giving it a competitive edge.

Consistent product quality builds trust and credibility with customers. When customers know they can rely on a brand to deliver the same high-quality product every time, it enhances their overall trust in the brand.

Puno stopped franchising and transitioned to company-owned stores to maintain better control over the brand. As a former franchisee of Chowking, he recognized that franchisees often try to cut costs, leading to inconsistency and potential brand damage.

Puno emphasized creating unique and memorable brand identities. He used the technique of combining seemingly unrelated terms to form a distinctive and iconic brand such as Yellow Cab Pizza, Army Navy and Rice Rockets. These creative and iconic names helped build a strong brand identity.

Puno addressed quality issues observed in other restaurants by avoiding pre-cooked ingredients with limited shelf life. Instead, Army Navy cooked burritos to order, ensuring fresher ingredients and higher quality. Although this approach took more time, it prevented wastage and ensured better product quality during both busy and lean hours.

To ensure consistency, Puno implemented foolproof systems for portioning and cooking. He emphasized the importance of predictability in the food business, ensuring that customers would have the same experience in any location.

"When we grew, we stopped franchising," Puno says. "Mas mabuting company-owned kasi you're in better control. Naging franchisee rin naman ako ng Chowking eh. You always try to scrimp on things, di ba? So hindi ka compliant ng 100 percent. And that’s how it ruins the brand.

"Kasi franchising is a different animal. That's totally a different business and we don't want to be in that business. We'd rather be concentrating on our own.

"Nung kine-create namin ang Army Navy, it’s male, but when you attach it to a burger and burrito, it becomes its own identity. Ganun kami, parati kami nag-iisip na it has to be an iconic brand. One of my friends who used to be the marketing director of a multinational company, sabi nya, ‘Eric, we called that the genius disconnect because it’s not connected e. Yellow cab, taxi, and pizza di naman connected yan e, di ba? There’s this disconnect, pero it’s a genius disconnect.

Army navy has nothing to do with food, pero pag pinagsama mo, it creates its own identity? So even yung rice rocket. Rice rocket is in reference to a Japanese motorcycle, so we always attach an iconic name to a product.

"Pagkatapos, it has to be a very tight brand. Yung logo discipline dapat parati nandon. The colors that you use, the fonts that you use, the images, yung mga iconic lines. Yung checkered ng Yellow Cab is iconic. Eto sa Army Navy, yung parang stripes naman.

"Ako kasi, I really believe that the brand has to have its own life. Hindi pwedeng ikaw ang sikat, dapat ang sikat yung brand.

"There was this local na Mexican restaurant. Gustong gusto ko yung concept, sabi ko someday magkakaron ako nito, but I wanted to do it in a different way. The problem kasi with their style was para syang turo-turo. Luto na yung mga meats. Yung mga sauces luto na rin, tapos tinatakal na ganon. Ang problema dun kasi is kapag mahina na yung benta, the product stays, so yung shelf life nya pasama na ng pasama yung quality nun.

"The more burritos you sell, the fresher your ingredients are, but during lean hours, wala na. What do you do? Do you throw it away? So wastage yan, yung quality nagsa-suffer, so ang ginawa ko nun was to cook the burrito per order, kaya matagal.

"We made it per order but we created the system na foolproof na yung portioning. A lot of science goes through the cooking of our burrito. Consistency is very important in our business eh. Kailangan yung predictability, kailangan pareho. If you eat here or if you eat tomorrow in Cebu, you’ll taste the same, so yun ang ginawa namin. We created the system na perfect burrito, all the time.

"We were the ones who taught Filipinos how to eat burritos. In fact, alam mo nung first few months namin in Tagaytay, our very first store, when we served the burrito, ang ginagawa ng mga customers hinihiwa nila, binubuksan nila so we taught them how to eat it. Nagkaron kami ng mga signs on how to eat a burrito, like how to unwrap it, put sauce and eat it by the hand. Ganon ginawa namin hanggang natuto na ng natuto. Ngayon, kabisado na ng mga tao."

4| Know how to empower and motivate employees through teaching and learning

When employees are given opportunities to learn and grow, they become more engaged in their work. Engaged employees are more committed to their roles and are likely to contribute positively to the organization.

Empowering employees to take charge of their development leads to higher job satisfaction and encourages them to take ownership of their work. When employees are responsible for their projects and outcomes, they become more accountable and committed to delivering quality results.

Puno promoted a culture where everyone was both a teacher and a learner. This approach encouraged employees to share knowledge and continuously teach one another. If an employee did not know something, Puno held the person who taught them accountable, not the learner. This reinforced the importance of effective teaching and ensured that knowledge was properly transferred.

Puno believed in the power of empowerment and regularly praised employees for their good work, especially in front of others. This boosted morale and motivated employees to continue performing well.

Puno’s motivational style involved applying pressure to meet deadlines and expectations but also providing release and support. This approach allowed employees to perform under pressure while knowing they had room to breathe.

He also encouraged employees to learn from their mistakes. He emphasized the importance of understanding what went wrong and what could be learned, rather than simply reprimanding them for errors.

"When it comes to hiring of people, ako yung mismong pumipili nung mga key employees namin," Puno says. "Ang tinitignan ko talaga is the character and the attitude. Yung skill kasi can be learned eh, it can be taught. Meron kaming kasabihan dito sa buong kumpanya na, ‘There are no bad students, only bad teachers. Lahat tayo teachers dito. Whatever you learn, you teach. Everybody teaches, everybody's a teacher.

"Lahat kami nagtuturo, kaya ako pag pumupunta kami sa mga stores at merong hindi alam, hindi sya ang pinapagalitan namin, pinapagalitan namin yung nagturo sa kanya. ‘Sino nagturo sayo nyan? Halika dito.’ Hindi, ‘O mali yang ginagawa mo,’ o ‘Bakit mali yan?’ Hindi kami ganon. ‘Sino nagturo sayo? Si ganon ho. Halika dito, ano yung itinuro mo bakit ganito? Bakit ganyan?’

Ganon kami. It's always the teacher kasi kailangan lahat tayo nagtuturo. Wag tayong maging madamot sa information. Kaya dito, there's no such thing as, ‘Hindi ko ito tuturuan, kasi yung position ko will be delikado baka palitan ako nito.’ They don’t feel that way at all. Kasi sila mismo tinuturuan eh, saka ako mismo nagtuturo ako eh.

"From the top, anything lahat tinuturo namin. Tapos, ang hina-hire ko yung sa tingin ko may character talaga na mataas ang integrity and matalino ha, para yung mga skills ituturo mo na lang. Natututunan yun eh. Any skill natututunan yan basta kailangan willing syang matuto.

"One of the things na hinahanap ko yung hindi mo ma-identify in a few meetings eh. Malalaman mo na lang yan pag nagtratrabaho na kayo. So ni-hire mo, mamaya makikita mo na lang yung skills nya, saka yung character nya binigay.

"Kailangan may bench ka parati. Isang style dyan yung relationship mo sa kanila, yung mutual respect diba? That's the most important thing more than compensation, di ba?

"Alam mo, I always empower people. Malaking bagay ang empowerment. Pag ikaw ng ikaw ang gumagawa, alam mo unang una iisipin nila sya lang magaling eh. You have to empower them and you have to tell them na, ‘Ang ganda ng ginawa mo ha, bilib ako sayo,’ in front of other people. You have to pat their back na talagang ‘hey, ang galing mo!’ Don't lack in giving them praises when it's needed. Wag false praises ha. Pag nakita mo talagang tama yung ginawa in front of the management team, sabihin mo ang galing mo ha. Malaking bagay yun. It goes a really long way.

"Ako, I work on deadlines at saka when you empower something like for example, new product, merong accountable na tao dyan. Hindi yung the whole team. Kaninong project yan? Parating ganon, kaninong project yan? Syempre kung sa ‘yo yung project na yun, you will make sure magagawa yan di ba? Instead na the whole team, dapat may ownership. Any project has to be owned by one particular person.

"When I motivate people, pressure, pressure, release; pressure, pressure, release. You have to release at some point. You cannot push. Ganon ang style ko, we have to give them room to breathe diba?

Pag nagkamali sila okay lang na magkamali ka. Okay lang yun, basta pag nagkamali kayo, ano ang natutunan ninyo? Ang pinaka-importante pag nagkamali kayo, anong natutunan ninyo? Hindi ako magagalit na nagkamali kayo, but you have to learn from that mistake, anong natutunan ninyo? Ganon ang style ko."

5| Know how to build a family culture of humility and contentment

Simplicity and contentment help keep family members grounded, ensuring that they do not lose their sense of identity amidst wealth and success. It helps family members appreciate each other for who they are, not for their achievements or possessions.

Families that value simplicity and contentment are better equipped to handle challenges and setbacks. Parents who live by these values set a positive example for their children. They teach them that true success is not measured by wealth or status but by the quality of one’s character and relationships.

Puno emphasized the importance of hard work and simplicity. Despite his success, he continued to work hard and avoided flaunting wealth. This set a strong example for his children and grandchildren.

Puno consistently told his children that they don’t need to be rich to be happy and that happiness can be found in a simple life. This philosophy was a core message he imparted to his family.

Puno’s family did not aspire to have a lavish lifestyle. His children and wife did not own luxury items, and his children even avoided riding in his sports car, seeing it as a symbol of vanity. This aversion to materialism was a significant aspect of their humble lifestyle.

Puno emphasized the importance of relationships and finding happiness in simple, everyday moments rather than in material possessions. He believed that his children’s happiness was found in simple things and considered this a blessing.

"When I retire, I want to spend time with my children and grandchildren, teaching them what I’ve learned in the business," Puno says. "I’m doing it now, pero hindi pa full time. I try to teach them about hard work.

"I’m very lucky naman kasi my children are very humble. One time, sabi ko sa eldest son ko, ‘Why don’t you buy a car. I’ll buy a car for you, what do you want? Ang binili nya ordinary car lang, yung daughter ko naman, ganon din.

"Yung mga anak ko matitipid. They’re very humble at saka, ayaw nilang nagpapakilala na, ‘oh, we own Army Navy.’ Ayaw nila ng ganon. They’re very simple. My kids are very humble and prayerful. Yan naman ang nagugustuhan ko sa mga anak ko at saka they don’t aspire to have a lavish lifestyle. They want a simple life.

"Ang parati ko sa kanilang sinasabi, ‘You don’t have to be rich to be happy. You can be happy with a simple life and, you know, that’s what they want. Ako, baliktad kasi ako e, dami kong gusto sa buhay e, kaya ako nag mo-motor, nagse-sailing ako, pagkatapos ngayon I’m learning how to fly. Restless akong tao, walang nagmana sa akin.

"Yung mga anak ko nagmana sa wife ko, simple lang. My wife is very simple. Alam mo sinabi ko ibibili ko siya ng kotse, kunwari, ‘Why don’t you buy a European car?’ Pero ang gusto nya (Honda) CR-V. Nakailang CR-V na yan up to now, gusto niyang palitan yung CR-V niya, CR-V pa rin.

"Doon nagmana yung mga anak ko. Sobrang simple, tsaka very humble sila. Yung mga kaibigan nga ng wife ko eh nagugulat sila na kayo pala may ari ng Army Navy.

"They don’t like yung pinagkakalat yung sa kanila yung Army Navy. Ayaw nila ng ganon. Meron akong sports car, yung mga anak ko ayaw na ayaw sumasakay don kasi pang mayabang daw yung kotse.

"Yung mga anak ko very humble. Doon ako suwerte, and I think yung happiness nila is found in simple things and I think that’s a blessing. Simple lang buhay mo and happy ka, that’s a blessing.

"Hindi kagaya ng mga materialistic na tao, they like to keep buying things, e pag nakita mo yung mga bag ng asawa ko, wala kang makikitang bag ng mga Louis Vuitton doon, wala, ayaw niya non. Even jewelries, she doesn’t like jewelry. She only has one Rolex na binigay pa ng nanay niya. Very simple."

Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice [email protected] or follow him on Twitter @henryong888