The world is your oyster
Given the challenges of the UK casual dining market, many are understandably setting their sights on the opportunity for international expansion as a growth strategy.
Several British F&B operators are succeeding internationally. In the US, smaller businesses such as Leon and Hawksmoor have opened sites recently, and larger chains such as Wagamama are becoming well established. Casual Dining Group’s international franchising platform is showing good momentum; with 83 agreements signed, principally in the Middle East, Ireland and South Africa.
These multicultural culinary offerings show that, unlike fashion brands, where the heritage and qualities of ‘Made in Britain’ are often fundamental to international appeal, offering ‘British’ food is not a key selling point in itself.
In our work with F&B operators looking to expand abroad, we have found three key areas that should underpin any expansion strategy:
Understand the local nuances
Adapting to consumer behaviour and preferences is key to successful international expansion. Pret a Manger has spent 8 years refining its US model in New York, before expanding beyond the East coast.
Accommodating the US love of filter coffee and a choice of salad dressing (as opposed to the UK, where we are happy to be given our salad dressing in a pot). Furthermore, Pragma supported Pret in researching the Parisian consumer when they first entered this market. Pizza Express has rebranded to PizzaMarzano in China and replaced characters in their Chinese name to match the expectation of the key upscale millennial target audience.
While it’s imperative to operate with sensitivity to local tastes and customs, it is all about striking a balance, so as not to become generic. In any market, having a point of difference is critical to drive buzz around the brand and encourage consumers to give it a go. Costa China is aiming to compete with market leader Starbucks with an offer tailored to local preferences but focusing on handmade coffee and the store environment as an attempt to differentiate.
International expansion needs focus, dedicated teams and cash. PizzaExpress, owned by Chinese private equity firm Hony capital, are up front about the need for cash flow investment with Global Chairman Wang Jinlong explaining, “We have set a small goal. I hope our business in China can grow by 10-fold in the next five years with all the efforts we are making. Money is not an issue.”
Stability in the domestic market is a useful foundation for this focus but Jamie’s Italian franchised international portfolio has continued to perform despite the turmoil faced by the UK business. In contrast, Carluccio’s aborted their US expansion plans citing lower than anticipated margins, despite encouraging trading.
In summary, global opportunity is rich, but the challenges and barriers to entry are high.