Cultural difference - Food - We all eat it
Food franchises, probably more than any other franchise sector, have to be aware of the cultural differences that face them when trying to bring their brand to market. This is not necessarily just the ingredients or contents in the food and drink that they need to be aware of, but even the running and operating of the business. Jamie Brown discusses the importance of knowing your market.
Everyday the world gets smaller and smaller and we become increasingly more connected to each other due to our global economy, increased travel routes and communication links. Franchisors that are targeting international expansion still need to be aware of the changes in the culture, legal issues and local business practices. However, Franchisors have to consider that, although they have a successful model that works in one country, it is not an automatic right of passage to another.
International expansion has to be carefully planned; the right people have to be involved – people that know and respect the local market. Franchise history is littered with businesses that haven’t done their thorough research and failed to succeed. In 2011 Business Insider reported that Best Buy, despite being one of America’s most successful electrical goods stores, failed to understand that Europeans, unlike our American friends, prefer smaller shops. Research Director at Planet Retail told The Guardian “It was the wrong format, at the wrong time, in the wrong market”.
If Best Buy had used its connections with British brand Carphone Warehouse, which it owns 50 per cent of, they could have foreseen the consumer distaste for larger stores.
McDonald’s is a prime example of a franchise than has conquered a foreign market by changing its approach and offerings. In 2011 McDonald’s respected the Indian market and gave the world its first ever vegetarian McDonald’s restaurant. The idea of McDonald’s without meat on the menu seems strange to us here in Britain, but to 80 per cent of the Indian market that are Hindu, there is no other way it could operate. McDonald’s recognised this importance and adapted itself, allowing it to expand into a country with 1.2 billion people.
“There is a big opportunity for vegetarian restaurants as many Indians are vegetarian,” says McDonald’s spokesman Rajesh Kumar Maini.
Understanding the consumer and allowing the business to adjust to local customs and culinary tastes allows a business to enter a market, without alienating itself from the local consumer.
This is why it’s so important that a franchisor brings in a Master Franchisee. Master Franchising offers people or corporations the chance to buy the rights to offer franchises in a specific area or country. The franchisor can use the local knowledge of the Master Franchisee to their advantage.
Robert Burton, Master Franchisee in the UK and Ireland for pretzel makers Auntie Anne’s, which has over 1,100 locations in 20 countries, explains the benefits of having local knowledge of a market: “The US franchisor is informed about the UK market, but the reality is we work within it every day and so are better placed to pick the right locations for the next Auntie Anne’s stores. In terms of product range, we have adopted most of the US products but not all. For instance the cinnamon pretzel is one of our best sellers over here.”
Even when cultures and languages are similar, you will still find that the franchise has to be adaptable and be aware some products or services are not going to be as popular in one place as they are in another. Robert Burton comments: “One of our biggest challenges has been that, in general, the UK public knows little about soft pretzels as a product, although demand for them is growing. We are in a market that is growing in terms of grab-a-snack products.”
Before considering any international expansion, a franchised business needs to determine if they are actually ready to expand. Having the knowledge of experience, economies, product differentiation, capital requirements, and location are important factors to international franchise expansion and must be considered prior to launching any expansion plan.