For Fatburger, the willingness to try something new – and sell burger somewhere new – is crucial to the company's business model.
"We would be more than happy to open in Cuba, just like we're in a number of other emerging markets that are new and newly developing," Fatburger CEO Andy Wiederhorn told Entrepreneur. "We're in Iraq, we're in Pakistan, Indonesia...places like [Cuba] where it's not a normal next choice."
While people have been freaking out about McDonald's potentially opening restaurants in Cuba now that diplomatic relations have been restored, it's more likely that a company like Fatburger makes it there first. The burger chain is big on international franchising, with about 200 restaurants open in 32 countries (including the U.S.) and 350 more locations under development internationally. McDonald's may have more locations internationally, with restaurants in more than 100 countries. However, Fatburger's international growth has only been in the last nine years, as the company focuses on opening restaurants in areas other chains are not exploring.
Kingburger
Image credit: Jay del Corro | Flickr
"We
made the decision to expand internationally because we felt there was
an opportunity to go places others weren't with our gourmet burger
brand. That was an early decision, back in 2005," says Wiederhorn. "Fast
forward to the economic crisis that hit the world in 2007, and our
international strategy really saved us, because it gave us access to
markets to continue to develop franchise locations where they weren't
being affected by the crisis the same as the U.S. and Europe and
Canada."Since Fatburger opened its first international location in Canada in 2006, the chain has gained a reputation for opening in unexpected places, such as Pakistan, Libya and Iraq. Wiederhorn says franchising in Cuba would in some ways be similar to Pakistan and Libya, in that it's an emerging market where citizens' way of life is evolving. However, differences and difficulties remain.
"It makes sense for us to be in that market, no different than it makes sense to be in Mexico or Puerto Rico," says Wiederhorn. "But, the inhibitor for Cuba will be their economy. What's the spending power of the citizens there?"
Wiederhorn says that Fatburger sets itself apart as an international company by providing local teams for regions around the world to deal with location-specific issues. The company either has a local franchise partner or an investor franchisee who hires a local operator in new countries.
Fatburger hasn't found a franchise partner in Cuba yet, but when the right individual emerges, they'll be ready and willing. And, the company isn't worried about politics slowing down the process.
"I don't think it's a big deal," says Wiederhorn on the politics of opening a Fatburger in Cuba. "We're selling hamburgers, shakes and fries."
It would be very interesting to see if Fatburger would be able to be successful in Cuba. There are a couple of problems that I could think of pretty quickly. The main part of the franchising system is trust, so it would be pretty interesting to see if the franchisor would be able to trust their franchisee. The other problem would be if the relationship between the United States and Cuba could stay strong enough to have a business there. They seem to have franchises in exotic countries, so I believe that they would be able to be successful over there.
ReplyDeleteI like the post and it would be interesting to see how franchises of all kinds grow in Cuba. But the writer is saying that a company like FatBurger is more likely to be first in the market before huge companies like McDonald's, because they like to go to places that are "not a normal next choice." I have to strongly disagree with this. I don't consider Cuba a "not normal choice". Instead, after restoring diplomatic relations, Cuba has became a target for many big franchising and non franchising companies all around the world. Maybe FatBurger goes to Cuba before McDonald's does, but I would say this is something hard to believe. A company as big as McDonald's would never let such a big opportunity slip through its CEO's hands.
ReplyDeleteAfter reading Mark's response I agree with many things he said. Trust is a very important factor in the success of the franchise, but the fact that they have opened Fatburger in other wierd places and have been succesfull means their relationship with the franchisees has always been good, so their method has always worked. I believe that the relationship between Cuba and the US will not be a weakness, because as Wiederhorn stated they are only selling burgers, shakes and fries.
ReplyDelete