Article

Expanding into foreign markets requires flexibility

Chains should look within densely populated, economically-stable areas where the brand is able to make meaningful connections with consumers via marketing and public relations.

September 8, 2011

By Joe Arancio

Expanding your restaurant business into a foreign territory can be reminiscent of the start-up days of your company – overwhelming and challenging, but ultimately, hugely satisfying and rewarding. Extensive research in the early days of the process and finding the right partners will ensure you enter new markets with your eyes wide open and prepared to meet the inevitable challenges.

Franchise operators need to have the capital, the patience, the tenacity and the determination to build the business and win customers one by one. The following three tips should be considered in guiding your success through the unfamiliar territory of a new market entry.

1. A guest is not a guest ... is not a guest

When entering a foreign market, it's important to focus on regions with enough potential customers to sustain your efforts. Simply put, the greater the population density, the greater your chances of attracting and serving repeat guests and establishing a successful business.

For example, when Teriyaki Experience, a well-established chain in Canada since 1986, made the decision to expand into the United States in 2007, it was the population density as well as the demographic similarities that made the U.S. an appealing new market. Today, the Teriyaki Experience brand has locations in the states of New York, California, Georgia, Arizona, Florida, Texas and Michigan. It also operates in a number of other countries including Honduras and Italy.

2. Location, Location, Location

Even after you've has made the decision to enter a new territory, location decisions are far from over. Real estate prices, labor costs and food costs are all key components in operating a profitable restaurant. Although a market may be "hot" due to a strong local economy, this can also translate into higher operating costs.

In the end, chains will be most successful within densely populated, economically-stable areas where the brand is able to make meaningful connections with consumers via marketing and public relations.

Neighborhoods with thriving shopping malls and lifestyle centers as a part of the community's landscape are the ideal communities for development. By targeting these communities, you're able to attract a broader range of consumers from a larger radius and word-of-mouth about the new brand is more likely to quickly spread. Word-of-mouth advertising can be very powerful because so many people are made aware of the company's presence and hear the recommendation from a trusted friend or an objective third-party.

3. Know What to Expect

When you enter a new market you need to be prepared to make modifications, while remaining true to your core business, to accommodate regional differences.

As an example, Teriyaki Experience had a very successful chain in Canada before entering the U.S. market but we quickly learned that the U.S. consumer had different expectations when it came to portion size, menu variety and flavors. This even varied from state to state. Being blind to the needs of the consumer and not adjusting the menu accordingly can be a fatal mistake. As s a result of these cultural differences, Teriyaki Experience works hard to maintain an original and authentic menu – but still one that accommodates the U.S. taste and flavor profile preferences.

No Such Thing As An Overnight Success

Restaurant operational teams need to run locations in new countries as if they were running a new business. A brand leader in Canada, Teriyaki Experience is an unknown concept in the U.S. Adapting and improvising to meet these new development challenges facing the brand, as if we were a young and emerging brand, was crucial.

A major decision early in the launch process was to hire American staff and executive team members. Some of the best people in our organization were tapped through the U.S. market development efforts and these talented individuals remain important assets to the brand overall, in that their obvious understanding of American culture has helped develop the Teriyaki Experience brand.

In the end, there's no substitute for being alert and aware of the market and culture. Just because strategies and initiatives worked in one region doesn't mean they'll work in another. Learning to remain open, flexible and to adapt is the key. But once the brand has been established, and talent and finances have been committed, success will follow. Your concept will become the strong, sustainable brand consumers love calling a favorite in their communities – no matter the market.

Joe Arancio is the vice president of U.S. Development for Teriyaki Experience, a healthy quick-service concept established in 1986.

Photo provided by DonkeyHotey.