Growth | February 2013 | By Sam Oches
The World Traveler (Full Transcript)
You’ve been on the job two months now. Where was Quiznos’ International when you joined, and what’s the direction you’re trying to set? When I joined, there was a significant presence of Quiznos in the world. We aspire to increase that presence significantly over the next few years. But I also have been able to build a team pretty much internally to support international, because there may not have been a proper focus on the operational aspects of the international franchisee. And that’s my goal, to support the international master franchisees and provide them the skills and proven techniques to run great restaurants. We have some very successful masters, and we have some master franchisees in countries that could certainly do better. My objective is to build a support structure that will allow these franchisees to grow faster than they are.
How long do you think that takes? I feel like, within the last two months, we’ve built a pretty good team. We’ve had a real opportunity to identify good talent in Denver, but we also have a very large operation in Toronto that supports more than 400 restaurants in Canada. So we’re using talent in Toronto and Denver and building a core team that will support our masters.
These are people with previous global franchise experience? Oh yeah. It’s amazing when you really look at the talent you have and then try to identify the needs of how it all meshes together. We had a grand opening in Brazil just a few weeks ago, and one of our franchise consultants in Canada, who’s worked in Brazil for years and won awards doing support work and speaking Portuguese, helped us in that opening. We have an excellent chef in Denver, but also one of our franchise consultants in Canada trained under Jamie Oliver, who’s one of the well-known chefs in the U.K. He’s going to pitch in and help us from an international perspective on quality of product and menu and those types of skills. I’m feel very blessed coming into an organization that has talent, but just kind of redirecting some of that talent to support the international focus.
When you came in, how significant was the international strategy for Quiznos, and where do you hope to see it go in the future? I think any U.S. brand at this stage has to have a very significant international strategy. This new ownership of Quiznos and the new management team, including myself, are very focused on not only building the U.S. domestic system, but also giving the tools and the assets to International to grow it. We have 100 percent support from ownership and management to do whatever we need to do to support our masters and grow the brand.
We’re in 30 countries now, and we’re hopeful that we can add three to four countries per year over the next several years.
You mentioned that every U.S. brand should have an international strategy. In your mind, for a quick-service brand, what should the balance be between domestic and international? What’s that balance at Quiznos? We obviously have more stores in the U.S. than we do internationally. But the potential for growth is much greater internationally. The runway may be a little bit longer because opening a new country, you do it in a structured manner and you do it in a way that will set the foundation for accelerated growth after you build the supply chain; you build the support system and the personnel assets to allow the system to grow. I think the strategies can compliment each other, both international and domestic.
At the same time, international has to have its own strategy for growth, and often times, as I’ve read in your magazine many times, the global brands coming out of the U.S. will also permit their franchisees in international markets to localize. As long as you stick to the core value of the brand and the delivery system and the consumer experience for the brand, as long as you hold very close to that, it’s appropriate to allow the franchisee to localize and support his local consumer with local-store marketing and also unique products.
We’re very much supportive of keeping certain core products on each menu, but then to see the local franchisee create a Mesquite Chicken or in India, a Spicy Tikka Sandwich. We support it and we encourage it.
Who develops those menu items? Does the franchisee have people on staff to do that, or does the Denver office help develop them? We certainly provide support in developing unique products for the market. Our chef was just in India two weeks ago looking at that menu offering and seeing how we could enhance it or provide not only what we sell in the U.S. and around the world, but also what can be added to the menu to satisfy the local palate. But as the master franchisees see growth, they can develop their own products.
Obviously, it’s all approved by the franchisor before it’s delivered to the market. But some of the large masters, particularly the one that covers most of Latin America, he’s got very sophisticated R&D department, and they work on Latin American offerings that will appeal to the consumer throughout a number of countries in Latin America.
There’s obviously a big trust factor here with the franchisees who you’re joining with, because you have to trust them to do some of that localization in an appropriate manner, and trust them to pull it off. So how do you go about looking for those partners knowing that you’re going to have to have that trust factor? That’s a good question. I don’t think there’s an absolute formula for finding the right partner. I think there’s a certain number of factors you look for and identify in a partner. You look first for passion, that the person is passionate toward the restaurant industry and to build the business. In many cases you’d like to find someone who has experience in the restaurant industry, and even multiunit restaurant experience in the industry. It’s not an absolute prerequisite, but it’s certainly preferred. And you look for someone who has the financial capabilities and assets to grow the brand.
In the case of the master franchising process we do at Quiznos, you look for someone who has business leadership skills because they will not only build a few corporate stores to start with, but they’ll also have to build a leadership team that will become a franchisor in their country, or multiple countries if they have more than one country. They will be replacing us to some degree as the franchisor, although they still will be a part of our global system, and Quiznos remains the franchisor. But the master franchisee will be subfranchising and will have to transfer the same skills that we try to transfer to them on down the path to the individual franchisee.
What’s too big of a market? What’s the most appropriate size of a region you should give master franchisees? That’s a good question. I think when the brand was just beginning to go global, there were larger territories sold. I think at this stage of this brand, it’s become a mature brand—we’re 30 years old now. We would very likely limit a territory to a country, or maybe a couple countries if they’re geographically appropriate to do so.
We’re a brand, like any brand, that intends to develop a China strategy. We’ve not yet decided how we would approach China. Would it be the entire country? Or would we divide China into the three obvious regions of North, Central, and South? But we have a good runway in Asia now; we have a very strong franchisee in the Philippines, we have a good franchisee in Singapore that’s looking at expansion into some other countries, so we may permit that, because he’s already proven himself. We also have a good relationship with HMSHost, which has us in one airport in Singapore, but we’re also looking at other airports throughout the Asian region. So that’s a cross-country type of relationship. But typically we would look at one country and the exclusive rights to that one country at this stage in a mature global footprint.
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