Industry News | September 2, 2010

Go BRIC or Go Home?

American quick-serve brands have been expanding internationally for decades, and Western fast food today can be found from Belgium to Bali.

But a panel of experts at QSR’s Dine America conference, September 12-14 in Atlanta, will discuss why four specific countries are especially smart bets for expansion today: Brazil, Russia, India, and China (BRIC).

The panel includes Rick Desai, chairman of the Georgia Indo-American Chamber of Commerce and partner with Saffron Group LLC; Bob Kaufman, vice president of business development for The Coffee Bean & Tea Leaf; Tim Howes, assistant professor at Johnson & Wales University in Rhode Island and principal with Spyglass Strategies; Madison Jobe, senior vice president and chief operating officer for Pizza Inn; and Govind Hariharan, project leader of the Coles India Initiative at Kennesaw State University’s Coles College of Business.

“Between [China and India], a third of the world’s population is covered,” Desai says. “And they all need to eat. Whether you’re catering to the upper echelon of these countries or you’re targeting the middle class or you’re targeting the lower class, they all want to feel good spending their money and want a quality product.”

“There’s so much revenue potential that even if you’re only appealing to 1 percent of the population at most, that’s still a lot of people,” Kaufman says.

Sheer size of the BRIC countries is not the only reason experts believe they are smart to move into. Howes says the economic stature of BRIC—though suffering through a recession like the rest of the world—has them ripe for new business.

“The reason why BRIC is exciting is because the social-economic conditions for the people living there are getting better,” he says. “There’s a burgeoning middle class in many of those areas. More people can afford to eat at [quick serves].”

Of course, expanding a brand into BRIC is not a move to be taken lightly—nor one that should be made quickly.

“You have to have a good team in place that understands international expansion, and have partners that you can know and trust,” Howes says. “Sometimes that takes time, just like it does domestically, to find those right partners, especially overseas.”

Jobe says a concept must first do its homework and check the viability of it concept before jumping head first into BRIC.

“You need to look at other concepts, whether they’re based in that country or whether they’re other international companies that have moved into the market, that are in your same space,” he says.

“Has there been acceptance of a pizza product? That’s where most of the work needs to come in, before the company decides to sink … millions into this.”

Kaufman says a brand interested in BRIC must be “cognizant of that market’s specific issues.”

“You’ve got to know who you are and what makes you stand out in your segment,” he says. “That’s really important. The other thing is you’ve got to understand who your competition is, as far as local competition, as far as other segments that are vying for customers at the same time and same occasion.”

To get help breaking into the BRIC markets, Hariharan suggests utilizing existing business partners that know those countries best.

“The first step in terms of entry into a country like India or China or Brazil would have to be to tap into the franchisees here [from BRIC] who run stores,” he says. “Tap into their expertise and enable them to help transitioning into these countries.”

Once the move into a BRIC country is made, Desai says many challenges unlike those found in the U.S. will present themselves, including issues with intellectual property, permitting, electricity, construction, real estate, and more.

“The one thing we know for sure is it’s not like America,” Kaufman says. “If you expect everything to be the same and everyone to follow your standards exactly, then you’re going to be sorely disappointed when you go into these markets.”

Perhaps the most important thing for quick serves moving into BRIC to remember is that these are not the markets to move into half-heartedly.

“These markets are too important to make your mistakes on,” Kaufman says. “You can make a mistake in a smaller market, and it’s not going to have a long-term impact on your business.”

To request an invitation to Dine America, click here.

By Sam Oches