Restaurant Development & Design

SEP-OCT 2018

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S E P T E M B E R / O C T O B E R 2 0 1 8 • r e s t a u r a n t d e v e l o p m e n t + d e s i g n • 6 3 because you got that call from some- one who wants to pay you a royalty to operate your brand in their country," Moralejo says. "We were probably more opportunistic than strategic when we started, but that's no longer the case. Our reasons for wanting to expand inter- nationally are solid — fried chicken is consumed and loved all over the world, we're a 65-year-old brand, we know fried chicken and believe ours is best in class, and we have an operating model that provides a competitive advantage. We can deliver our products profitably, at a low cost and with efficient use of capital and employees. It's a strong model and a compelling growth opportunity for inves- tors. Those are our answers to the ques- tion of 'why?' Every business is different, but each needs to answer that question before going down this road." David Mesa, chief development of- ficer at New Orleans-based PJ's Coffee, agrees that lack of a strategic approach is a big misstep. Founded in 1978, PJ's announced in 2016 that it would begin franchising internationally, targeting 100 locations in Vietnam, Malaysia and Kuwait over the next few years. The first step the PJ's team took, before announcing its intent to expand internationally, was to gather and ana- lyze a lot of data. "We hired a business consultant to help us do the legwork and research and also to get us thinking very strategically about this expansion," Mesa says. "We wanted to target where we wanted to go versus just announcing our desire to grow internationally and see what came in." Working with the consultant, Mesa and his team zeroed in on things such as countries that were most appealing based on the PJ's concept; brand- specific, proprietary products that the company would need to export; the level of cost and red tape involved with exportation to various countries; trade agreements; and the overall ease of doing business there. Ultimately, the relationship with the consultant and the knowledge gained from it led to targeting Vietnam for the PJ's first foray abroad and to a master franchisee who was specifically looking for a coffee company to develop in that market. In addition to the consultant, Mesa says the U.S. Commercial Service (USCS) office at the embassy in Ho Chi Minh City was an invaluable resource. The trade promotion arm of the U.S. Department of Commerce's Interna- tional Trade Administration, the USCS has offices in more than 75 countries to help U.S. companies grow sales in global markets. "They were extremely helpful in helping us identify local partners during our entry into Vietnam," Mesa says. "And they're helping in Kuwait as well. They help with everything from identify- ing vendors to market research, assist- ing you in determining which country or countries may be a good fit for your brand. They've also done market stud- ies where they'll tell you what demand for certain products looks like in certain countries. It's one of the best services I've been able to find from an interna- tional expansion standpoint." Extensive data analysis figures into Church's international expansion strategy as well. Moralejo and his team created what he calls a prioritization model and analyzed copious amounts of data in order to rank various markets in order of desirability. "This allows me and my team to as- sess all of the opportunities around the world," Moralejo says. "If an opportunity presents, I know where that market sits in relation to other potential markets. I know whether that juice is worth the squeeze, so to speak, and whether or not to entertain the inquiry or lead." Adjust and Adapt Regardless of market or country, Ainsley says most U.S. chains heading abroad should recognize that adjustments, some potentially significant, may be necessary. That applies to everything from recipes and packaging to design, footprint, equipment, operating proce- dures and/or financial models. "The rest of the world doesn't nec- essarily eat the way the U.S. eats. For example, portions are smaller in a lot of countries. You have to think carefully about that," Ainsley says. "It's easy to say, 'OK, we'll just make the portions smaller.' Sure, but then the packing has to change, as does how you're buying. You won't be using as much product, which will affect your pricing structure. If you're a full-service brand, going out to dinner is people's entertainment for the evening in many countries. That means you're not going to get the 2.7 PJ's Coffee is expanding internationally in Vietnam, Malaysia and Kuwait, shown here, where new franchisee Hesham Alroumi is developing five units. He discovered the brand while studying at the University of New Orleans. Image courtesy of PJ's Coffee

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