What is in this article?:
- Focus Brands International president outlines China re-entry
- Looking at BRICs and beyond
Mike Shattuck says the company will ‘make sure we do China right this time.’
Mike Shattuck, president of Focus Brands International
Atlanta-based Focus Brands recently reached a milestone of 400 international restaurants with its Auntie Anne’s chain, and the multiconcept franchisor plans even more aggressive international targets for the future.
Beyond developing key Asian markets like Thailand and entering countries like Israel, Indonesia and Guatemala, the biggest task on the company’s docket in the near term is re-entering China, where at one point it had 12 locations of Auntie Anne’s that eventually closed.
The parent of Auntie Anne’s, Carvel, Cinnabon, McAlister’s Deli, Moe’s Southwest Grill and Schlotzsky’s plans to go from 1,200 international units to more than 3,200 by 2018, said Mike Shattuck, president of Focus Brands International.
“You can’t do international halfway,” Shattuck said. “You have to be committed to devoting resources to deliver your supply chain and training and to be there to provide that marketing support. You’re not going to walk into international franchising and make money straightaway.”
The company will “make sure we do China right this time,” Shattuck added, noting that Focus has several brands in India, another important market that will grow conservatively over the next few years. Russia will be a more robust growth market, he said, and Brazil possibly could as well, once Focus enters the country with the right franchisee.
Shattuck, who has worked in international franchising for decades, spoke with Nation’s Restaurant News about what it takes to grow and support several brands abroad, not just in the well-known “BRIC” markets but also in emerging countries.
What did Auntie Anne’s and Focus Brands learn from their first experience in China?
The challenges there were that the guys were undercapitalized and didn’t have a local partner, and the supply chain is always a challenge. That led to the unwinding of Auntie Anne’s in China, but it was very amicable. As far as getting back in, it’s in the early stages and China remains a target market, but we’re going to do a lot more homework this time. We’ve done a market study there, and this year primarily we’re working on defining the supply chain. I wouldn’t see us relaunching in China until 2015, frankly.
Would you focus on China’s Tier 1 coastal cities, where operating costs are highest?
We’re looking at that right now. There are some places around the world where a reverse-penetration strategy in Tier 2 cities can work. But in China, we’d look at coming into the primary coastal cities like Shanghai and Guangzhou, and Beijing is one you have to do at some point. We would define a strategy specific to the brands. With Auntie Anne’s, Cinnabon and Carvel, it would be more coastal, because while the real estate is very expensive [in Tier 1 cities], with our snack brands we have the ability to come in with a smaller footprint and a simpler supply chain to put in place.
Our other big push is to get some more diversity in our international portfolio with McAlister’s, Moe’s and Schlotzsky’s. We’re looking to really put a lot of effort behind those three brands and get them out there. It would change the model for us, because those brands typically do three to three-and-a-half times the volume of snack locations. It’s definitely more challenging up front, but when you win that game you start changing the paradigm.