Is there any way you can test a market, or when you go into a new market, do you feel like you have to go all in? I think it’s a risky proposition to go in and put up one store and then expect one or two stores to be a proper test. I think to go into a country has to be an all-in commitment, with the right franchise partner. And not only do they have the responsibility of the investment and of following the rubric of building the supply chain and building the things necessary to support a brand, but we as the franchisor have to have that same passion to support them—the training, the grand opening support, and the people.
We definitely believe we need to send people into the market to help every franchisor, not only when they open, but also before they open and then after they open. Opening day is only one day in the life of a restaurant.
You’ve mentioned how much saturation there is in some international markets, like the Middle East. What do you consider your competition internationally? When you get outside the U.S., you’re generally competing against most of the [U.S. quick serves] and fast casuals. We’re all bringing a unique Americano experience. Who can entertain the guest to allow them to have a great food experience, but also allow them to be part of a global chain? We naturally compete against the Subways and the Arby’s of the world because we’re sandwiches, but I also think we compete against the McDonald’s and the larger players, too, that have that presence there. Again, we deliver an Americano experience, and we want people to come here for that.
In the last few years, I’ve felt like we can’t talk about anything without talking about the recession, because everything was affected by the recession. How much do you think that impacted international growth? I think it had an impact. I do think that it gave brands a moment to pause and look at their opportunities in the U.S. The consumer was being more selective with their dollars and there are emerging markets that weren’t impacted as much as the U.S. during that period of time. So I think it certainly allowed the thinking among the management of many U.S. brands to reset itself and to look at the opportunities.
I know about small brands that have two or three stores, and all of a sudden they’re in Dubai. That I find hard to understand. Still, I think every U.S. brand of any size should develop an international strategy, but should not do it in a way that they take the first person who comes in the door who shows an interest in their brand. It takes strategic thinking.
What are the markets that you’re looking into now, and what do you think will be the hot markets of the future? I think most people will answer in a similar way. I think it’s the emerging markets of Asia. Southeast Asia is certainly an excellent market for us. We’ve only touched that opportunity with Singapore, and now with India. We opened up in Manila in September; it was my first grand opening and I was just incredibly impressed by not only the franchisee that we have, but also his passion and his commitment to growing the brand rapidly in the Philippines. So we have the rest of the markets to go—we have Indonesia and Malaysia, and the other emerging markets of Thailand and Vietnam. Obviously, we’re going to develop a China strategy; not sure what that is yet after two months.
Then I think the Middle East. It’s proven that the consumer loves the American experience and American brands, and we want to touch the surface with Saudi Arabia and Kuwait and Qatar; [our franchisees] only started their operations, so they have a lot of room to grow there. But we’re not in UAE, we’re not in the Maghreb countries, which still would be a challenging market: Algeria, Tunisia, Morocco. That market also has its challenges from certain political consequences that have been going on right now. That has to be factored in.
Is there a challenge to sustaining franchisee excitement? It’s great to get that partner who’s passionate for the brand, but you obviously have to be able to sustain that. I’m not trying to belittle your question, but as long as the sales stay up, their passion stays up (laughs). So I think whatever we can do to keep the sales up. We try to help them with a marketing calendar, with promotional items. We try to make recommendations on limited-time offerings. We send them recommendations because, as a franchisor talking to a master franchisee in his own country, we know our brand better than he does, but we don’t know the market better than he does. So we can suggest an LTO that may have done well in another market, may have done well in the Philippines, did well in Singapore, but there are different taste preferences, and we still have to rely upon the local franchisee.
I think … you keep their drive going in the right direction, and also explain to them the honeymoon of any restaurant; they’re not going to sustain those same sales levels. But as they level off, we try to build a pattern that they will maintain—a consistent level of sales—and see a little bit of growth and see that positive comp year over year. That’s going to keep the passion.