Franchisors need to build up their local network before expanding overseas, an expert says, after food franchises Muffin Break and Jamaica Blue unveiled their latest global expansion plans.
The FoodCo Group, which is the parent company of Muffin Break and Jamaica Blue, has announced its plans to establish the franchises in India and Singapore respectively.
Muffin Break will roll out in India, with the aim of opening 40 stores by 2017, and will continue to expand across the United Kingdom.
Meanwhile, café chain Jamaica Blue will gain a foothold in Singapore as it continues to grow in China and the United Arab Emirates.
In India, FoodCo has signed a regional license agreement with New Delhi-based South Asian Food and Hospitality, giving SAFH master rights to operate Muffin Break across the country.
The launch of the brand in South Delhi, in July to August this year, will bring the total number of Muffin Break outlets globally to more than 260.
With regard to Jamaica Blue, FoodCo has signed a regional license agreement with Universal F&B to establish the chain in Singapore, with the first café set to open in July.
“We also believe Jamaica Blue would be well received by Indian customers, and we continue to evaluate that opportunity,” FoodCo managing director Serge Infanti says.
“We’ve built a strong foundation for international expansion, and growth in markets we deem appropriate.”
Jason Gehrke, director of the Franchise Advisory Council, says India is an increasingly attractive market for certain franchises.
“The growing middle class in India and the evolvement of India’s retail environment has created an opportunity for Australia food franchises,” Gehrke says.
“It’s not just Australian food franchises but also companies from the US making substantial inroads.”
“The thing to consider before going to India, or any other international destination, is the extent to which the system has covered the domestic market.”
“Once you’ve passed about 60% of your capacity in the Australian market, you’re in a position to grow internationally.”
“If you’re only at 10% of your capacity, concentrate on your Australian operations before going overseas.”
Gehrke says franchisors then need to think about how their offering will be received by consumers in a foreign market such as India. First and foremost, this means tweaking their menu for the local environment and the local traditions.
“That might mean customising it to fit in with the capabilities of the local supply chain. You might not be able to source products from Australia, and locally sourced products might be of a slightly different specification.”
Gehrke says franchisors can learn from the failed attempts of US companies to crack the Australian market.
“The shores of Australia are littered with the shipwrecks of failed US franchises because American companies made the assumption that we look the same, we talk the same, so the same principles must apply.”
“It would be a mistake for any Australian system to launch into India in an absolute blaze of glory before they determine some localised proof-of-concept. That would apply for any international market.”