We are often asked “What are the key factors of success?” As franchise consultants, we ask our franchisors and new international brands that question and potential investors all across Asia often ask us. The answer is complex with multiple factors to be considered. A potential investor often needs at least some knowledge of the industry, a strong knowledge of the local area, real estate connections, and marketing. A franchisor needs to have an experienced support team, a good franchise package, and many other things.
One thing we do not talk about often is flexibility. The impression is that when you purchase the rights to open a particular brand like McDonald’s for example you are simply copying it exactly. In the world’s biggest brands like KFC, Pizza Hut, most education and fashion brands this is the case. Walking into a Levis store, Pierre Cardin, or McDonalds always looks and feels the same. This is a good thing, and a testament to the power of their brands that country after country accepts it.
The fact remains however, that countries can be very different and often cookie-cutter solutions don’t work. KFC struggled for more than 5 years in China with their standard stores, as did McDonalds in Vietnam. Asia is a very different region of the world. And India, Indonesia, Japan, Korea, and China are all very different from each other. It is my belief that both international standards/consistency and flexibility is required.
While Burger King had more than 16000 stores in 2018, and McDonald’s more than 36000, both in more than 100 countries worldwide, their performance in Vietnam has been far below expectations. In 2014 among the big hype people waited for long hours to get into McDonald’s yet many years later there are still only around 20 McDonalds and Burger King far less.
Another interesting example of struggles and the need to adapt is KFC (Kentucky Fried Chicken) which entered China in 1987. They struggled as poor Chinese translation turned “Finger Lickin’ good” into “Eat your fingers off”, locally sourced chicken had odd flavors from being fed with fish meal, supply chain had serious issues in 2012-2014, and they faced a host of operational issues in their stores on a day to day basis.
We will come back to how both brands saw the need to be flexible and adapt a bit later.
Let’s look at the following questions: Why is flexibility important? How can a brand maintain consistency and yet be flexible to localize? And finally, What should be flexible and what should not be?
In addition to the above examples of world-leading brands that struggled when they didn’t localize, we can use a simple scenario. What would happen if you tried to bring a beef-focused brand into India, or a pork-focused brand into Indonesia? It would obviously fail, as the majority of the population would not eat for religious reasons. Same with ACE trying to sell tools for do-it-yourselfers in countries where they don’t do, or Mathnasium trying to teach Math in English to students who don’t speak English. Some things just aren’t going to work without adjustments.
One of our clients is the Exquisine Global group based out of Thailand. Some of their 4 brands (Mango Tree, COCA, Mango Chili, Yenly Yours) have been around for more than 63 years and with restaurants all across the region, and they understand this need to localize and be flexible. I had a chance to ask Trevor Mackenzie, the Managing Director our questions.
Trevor says “Yes, very much so. Firstly, you need to be able to relate to the consumer at whatever level your brand can – when consumers can feel that bond, they put value on your brand and want to be a part of it. Secondly, you can’t just come in (like many brands do) and say this is what we are, too bad, take it or leave it. For example, so many people ask me, do you have the same menu and design everywhere in the World and I say no – certain countries don’t eat certain things, or maybe don’t like a specific colour in the design, or perhaps prefer a certain colour – it’s as simple as that.”
Items that define the brand, like the iconic huge golden arches of McDonald’s, the green circular logo of Starbucks, or the Pizza Pizza character of Little Caesars Pizza should never change and always be present. You want customers to feel their usual connection to a well-known brand and identify with it easily. But does it hurt Little Caesars to add more seafood pizza options on its pizza menu? No. Did it hurt McDonald’s to add and focus more on rice, chicken, and pork on its Vietnam menu? No. But how can a brand know what is okay to modify?
Trevor answers “Simple – study the eating habits and culture well, LISTEN to the locals and then take your brand standards and see how they fit in or can be adjusted. As for consistency we have our Central Kitchen that sends sauces to assist but we also never put anything on the menu that doesn’t have the right ingredients and the right taste – Phad Thai does not have broccoli in it!!!!”
As Mango Tree and their other brands are restaurants, the menu adaptation is the biggest part where they can show flexibility. Although we see from his comment above, some things are just not done, but what is okay?
Again Trevor helps us out “We always study what people eat in that country first! For example in Vietnam when we first opened COCA 12 years ago and hotpot was the buzz we saw that the Vietnamese like Pork and pork bones so we made a specific broth for Vietnam, at Mango Tree in the Middle East was where we first started adding lamb as we know that’s a staple protein in the area, and in India, Mango Tree made a vast vegetarian menu (50%) as we knew the customers in our area – as it turned out 54% of all sales was vegetarian. Finally, in Hong Kong, regular Thai food was not enough, knowing the consumers there like seafood and can’t really cook it at home, we premiumized the menu with a lot of Seafood options and it’s been a great success for almost 10 years now.”
So, without risking the brand image or its reputation, these Thai and Cantonese food brands are able to adapt to any particular market to maximize the appeal to local customers.
There are some things that should always remain consistent. Logos and other key brand identifiers, certain menu items, and key products. Also the efficient and cost-saving procedures and systems are a big part of why companies buy franchises instead of trying to do themselves.
Exact layouts and designs, menu localization, and retail items are all things that should be somewhat flexible. Remember our example of KFC in China and McDonalds in Vietnam?
With a little trial and error and some hard work, KFC overcame these initial challenges and now is one of the biggest players in their market segment in China. One of the specific things they did was launch special menu items that appealed directly to the tastes of the markets. The highest-selling menu item according to David C. Novak is the Zinger Burger, and among the top sellers the Dragon Twister, both unique items to the Asian market. This dramatic shift away from the company’s strict recipe and menu policy has led to egg tarts and congee, Peking duck-inspired dishes, and wraps with Sichuan-style seasoned beef. KFC also achieved huge success in Vietnam. While KFC took 7 years to open just 10 restaurants when they first entered, but after adjusting their menu to cater to local tastes, they are back on target to expand to 20,000 stores in China.
Vietnam McDonalds also struggled for years when they first entered the market. However, modifying the menu to include rice, more chicken and pork has helped them to achieve expected sales. After a slow start, they now are expanding rapidly across the country.
So what does all this mean for you? If you are a potential investor seeking a new business opportunity in your region, you should be asking what is flexible and what is not. Does the franchisor know the market well or do they at least intend to study it carefully before the launch? What similar markets are they already present and what did they adjust to be successful there?
As a franchisor, ask yourself what is set in stone and what can be flexible? Taking a hard look at your brand can help you both expand faster across Asia, but also be more successful in each new market you enter.
Continuing with Mango Tree as an example, both what they adapted and what they didn’t change made them successful in India, Hong Kong, Vietnam, and the Middle East. Expect some things to be set in stone, and appreciate those factors as those are the factors that help differentiate you among local competitors.
Thai food continues to be extremely popular all around Asia, the Middle East, and the Asia Pacific region. Trevor and his experienced team are always looking for great new partners around the world to help them expand further. You may read more about some of these exciting brands at the links below. If you are interested to discuss bringing any of these great brands to your local territory, please CONTACT US at email@example.com
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