When the recession hit in 2008, quick serves in the U.S. got a wake-up call: Even in the Western world, where drive thrus and combo meals were invented, quick serves are not immune to tight wallets and budget cuts.
While brands in the U.S. struggled, some had a saving grace: an international presence. Take Dairy Queen, for instance. Since the brand is still in expansion mode in China, the economic slowdown didn’t affect sales there the way it did in the U.S.
“We’re still kind of riding on that growth spurt,” says Brad Houser, executive vice president of international for Dairy Queen.
Of course, taking a concept overseas is easier said than done. That’s why QSR spoke with three brands with varied plans for international expansion to see the different challenges—and opportunities—quick serves can expect to find along the way.
Marco’s: Caribbean Vocations
Jack Butorac, CEO of Marco’s Pizza, had no plans to expand the brand internationally. In fact, when executive vice president of operations Dave Black walked into Butorac’s office and said Marco’s needed to expand into the Bahamas, Butorac said no.
“I said, ‘That’s international, and it’s something I have no interest in doing,’” Butorac says.
But Black walked into Butorac’s office the next day, and the day after that. Every day for three weeks, the message was the same: Marco’s needed to go to the Bahamas. Finally, Butorac listened.
Marco’s opened its first store in the Bahamas in November and has plans to open 30 more locations throughout the Caribbean in the next seven years.
A pair of restaurant owners from the area were what finally changed Butorac’s mind. Chris and Terry Tsavoussis—a pair of standout Domino’s franchisees more than 10 years ago, when Black was president of the company—approached him because they wanted to get back into the pizza business. They still owned numerous Wendy’s in the Bahamas, and when they were Domino’s franchisees, their stores regularly outperformed.
“When I had the opportunity to meet Terry and Chris, it was a good marriage,” Butorac says. “They just understand how to operate in the Caribbean. … That’s why I did it.”
But the pair had to promise they would provide their fair share of marital bliss. Although Marco’s granted them the right to most of the royalties because they’re doing the heavy lifting (domestically, the company gets most of any given store’s royalties), they had to agree to at least 31 stores in the Caribbean to make it worth Marcos’ while.
Arriving at that number wasn’t easy. In the U.S., Marco’s uses a system called MapInfo to consider several factors and strategically determine how many stores to open in a given market. No such data was available for the Caribbean.
“Instead, we looked at the number of direct competitors, and agreed on a number of stores that we felt could be built in that area,” Butorac says.
Site selection proved similarly difficult.
“They don’t have any demographics there,” Butorac says. “What I’m relying on is their expertise. They grew up there … and they understand who the customers are.”
Chris and Terry also knew that Marco’s stores in the Caribbean would experience significantly higher volume because many locals have two or three jobs and no time to cook. They tweaked the store’s design in several ways to accommodate the increased business.
“They added triple the number of phone lines coming in for delivery orders,” Butorac says. They also added an extra table for boxing pizzas, which quickly came in handy.
“They’ve beaten our sales record we had for a store by three times,” Butorac says. “The volume has been so far beyond what we expected, so we’re changing and making it more phone lines for the next store.” Plans for future locations in the market also include two preparation tables and a triple-decker oven instead of a double-decker.
In addition to the huge jump in volume, Marco’s was presented with another major challenge when it moved into the Caribbean.
“You go to deliver, and they don’t have house numbers,” Butorac says. “A lot of the streets don’t have names.”
Luckily, Chris and Terry had already dealt with delivery issues in their Domino’s days. Instead of giving their address, customers would give directions for how to get to their home from the store based on landmarks along the way.
Chris and Terry’s experience also came in handy when it came to the supply chain.
“They have their own warehouse where they store all the ingredients for both concepts [Marco’s and Wendy’s],” Butorac says. “It’s like they have their own Sysco.”
But while Chris and Terry might have changed Marco’s operations slightly for functional purposes, the look and menu give people in the Caribbean the experience that customers in the U.S. have grown accustomed to.
“When they opened, we sent over a number of people,” Butorac says. “We spent a lot of time and effort to make sure we delivered a consistent product.”
Since the initial store in the Bahamas opened, people from Puerto Rico and Jamaica have approached Chris and Terry, wanting to open their own Marco’s stores.
While Butorac hasn’t signed deals with any of them yet, he knows to at least consider their offers.
“If you were to talk to me 18 months ago and said, ‘International,’ I’d say, ‘Sorry,’” he says. “It was not part of my thought process, and it now needs to be part of my thought process.”