How Restaurant Brands is translating Western fast food for Asian markets
As Restaurant Brands International accelerates its store roll-out program across Asia Pacific, the company is focusing on enhancing the customer experience, including market-specific menu adaptations, building its own delivery network and introducing a new brand to the region. In an interview with Inside Retail, Apac president Rafael Odorizzi said the company expects that between 2020 and 2025 the global fast-food industry will grow by at least US$90 billion, with the majority of that growth in
in Asia Pacific – and the Canadian-headquartered powerhouse is determined to capture its fair share of that growth.
Even with Covid causing considerable complications for the industry, the business more than doubled its Asian store count during the past five years, adding 2000 outlets.
“We are super excited about the opportunity for our brands in Asia,” said Odorizzi. “We have been on a very strong growth trajectory, and our plan here is to accelerate even more.”
Restaurant Brands owns four banners – Burger King, Canadian coffee chain Tim Hortons, fried-chicken chain Popeyes and US subs specialist Firehouse, a brand that “went viral” last year in the US, Canada and Puerto Rico. Combined, the company has 29,000 restaurants worldwide, around 4200 in Apac.
A key challenge for any global brand expanding abroad is: how do you keep the business while being locally relevant?
“You cannot get a US brand, just place it here and be successful. You’re going to have to make many adaptations in terms of menu, in terms of size, in terms of the taste,” he said.
Odorizzi credits a commitment to regional menu variations as a key foundation of Restaurant Brands’ rapid Asian growth. “We have found a good balance between keeping global brand consistency while generating locally-relevant strong brands. And that resonates everywhere we have been.”
Of its brands, Popeyes is the one to date that has been adapted the most successfully. “We’re very proud of the food that we have, of the heritage that we put in our food. But we acknowledge that globally, we are going to have to deal with different taste profiles and different cuisines.”
When Popeyes prepared to open in the Philippines in 2018 it recognised the importance of having spaghetti on the menu, an unusual option for a fried chicken brand, but a staple of rivals. Popeyes developed its own twist on the Italian staple, with a sweeter sauce and a combination of cheeses that resonates well with locals. Initially wary about how locals would take to the dish, Popeyes now counts it among the most-ordered on the menu.
“The other massive innovation effort for us was India where you have a very, very big part of the population that is vegetarian and you have to cater to that, even though we are a chicken brand.”
The company developed a fully vegetarian menu including rice options, biryani rice, potato patties, and other vegetable patties. That ensures Popeyes can draw families where some members might eat chicken, and others only vegetables.
The level of spiciness of foods is another market variable, particularly in Asia. “For me, as a Brazilian lead in Asia, I learned about how people like spicy food and the importance of adapting to that,” he said.
Even core menu items are adapted to local tastes – two standard levels of spice globally have been augmented by a third, hotter option in much of Asia.
South Korea’s challenging sophistication
In December, Restaurant Brands opened its first Popeyes store in South Korea, adding that market to its existing footprint across India, China, the Philippines, Singapore and Vietnam.
Odorizzi describes Korea as “one of the most sophisticated chicken markets in the world” where Popeyes will be competing with many local brands, along with rival Western brands.
He credits Korean brands with great products and innovation. “They have really good products and different taste profiles. The beauty of the category is that you have many types of chicken in an expansive category. These players will help us expand the category itself and create a bigger pie for us all to go after.”
Besides the style of food, price points can be a challenge cross-border, with Vietnam an obvious example. About a decade after Restaurant Brands appointed a local partner in Vietnam, who ambitiously promised 45 Burger King stores, there are still just nine trading across Hanoi and Ho Chi Minh City. Popeyes, launched more recently with the same partner, is doing much better with around 30 stores trading already and more planned. “On the Burger King side, we haven’t had as much success as we’d hoped for,” he said, “but Popeyes resonates very well with Vietnamese consumers.
“One of the things that we have been able to do [with Popeyes] is to cater to the public in that market. If you compare the Popeyes price, for example, in Vietnam, in India and China or in Singapore, they’re going to be completely different.”
With Burger King, a challenge is maintaining a high standard of food, but keeping the check low enough to attract customers – and that can be a challenge, Odorizzi acknowledged. “There are some markets that take a little bit more time for you to get to a scale that optimises product cost and will allow you to deliver on this. Especially in Vietnam, where there is a very strong local cuisine. There’s a very different level of competition there for us, and it’s a much more informed competition that comes at a much cheaper price.”
Strength in partnerships
Besides regional adaptation, Odorizzi sees the other big advantage of Restaurant Brands as the strength of its regional partners.
“In every market that we go into, we look for partners that have strong operational expertise which is very important, especially in Asia; that they have local knowledge and they are well-capitalised.” He said there are many examples around the world of partners that are doubling down with RBI either by adding more territories or adding additional brands.
An example is Restaurant Brands Asia, a publicly listed company in India, that launched Burger King there in 2014, is now looking to launch other RBI brands there, and has acquired the Burger King business in Indonesia.
Odorizzi sees huge potential for its brands in multiple Asian markets. He cites as examples Japan, where Burger King has around 160 stores compared to archrival McDonald’s 3000-strong network; Tim Horton’s 560 stores in Mainland China compared with Starbucks’ 11,000; and KFC’s 14,000 Apac-wide store count, compared with Popeyes’ 120.
Meanwhile, Firehouse, he said, is heading to Asia.
“It’s a very interesting brand. I was in North America a few months back with one of the Asian investors and he tried the Firehouse Subs and was absolutely amazed by the food.”
Firehouse uses high-quality meats and differs from rivals like Subway by serving sandwiches hot rather than cold. A core range of 10 to 12 sandwiches used worldwide will be augmented by regional adaptations to suit local palates.
“Earlier this year, we started an extensive research process in more than 12 markets around the world to make sure that we understand the category outside [North America] and that we can adapt the brand to be successful internationally.”
Emerging from Covid stronger
The Covid era was tough for Restaurant Brands – but Odorizzi said the company has emerged stronger for the experience and its systems are now adapting to meet changing consumer demands.
One of the biggest learnings from Covid, he said, is that in challenging times, people look for brands that they trust.
“That creates even more demand for our category. We were seeing before the crisis a shift from unchained brands to chain brands and during Covid, we saw an acceleration of that shift. When consumers see international brands coming in, they know that the [food safety] standards are much higher and they can eat safely.”
With stores in many countries closed to dine-in for extended periods, home delivery boomed across Asia. Having expected home delivery to decline once restrictions were eased, the company has been surprised to find that while dine-in is recovering, deliveries are not declining, which means the delivery volume has become incremental to the business it had before.
“In Apac, for example, we have many markets that when you compare sales today versus 2019, we are comping double digits in growth and part of this growth is driven by delivery,” he said.
Drive-thru also boomed during Covid and again, sales levels have been maintained in the post-pandemic era, prompting the company to broaden its focus on drive-thru as a channel and engaging with franchisees to put more emphasis on drive-thru facilities when designing new stores.
With guests demanding a better digital experience, RBI is investing heavily in developing digital channels, be it via their own app, with aggregators, or allowing customers to order at kiosks in restaurants. In just a few years the company has built from scratch a global tech team of 250 people.
Odorizzi said the company’s customers are embracing omnichannel more and more. “Our intention is to get to close to 100 per cent in digital sales. So the drive-thru will have to be digital, the experience in the stores will have to be digital and today when you go to the restaurants you should see five, six, eight kiosks so you don’t need to go to the counter to order.”
Digital ordering kiosks are now present in about 70 per cent of Restaurant Brands’ Asian stores.
New stores will feature separate areas where drivers from delivery partners can wait for and collect orders, separate from where dine-in and takeaway customers gather to order or eat.
A move towards own delivery
Odorizzi said third-party food-delivery apps – or aggregators – have become an important part of the fast-food and QSR industry and the company is mindful of the need to improve its relationship with them as a means of improving the level of service to its customers.
But a new, emerging strategic pillar for the business in multiple markets is developing its own delivery channel – from apps to delivery teams – so people can order direct from the brands. The benefits include controlling the customer experience, the additional margin for the franchise partner, and the data access. He said the company is in discussion with partners in several Asian markets on own-delivery pilots.
“Consumers prefer to be served by branded drivers because there’s this level of trust so it is a path we are moving forward with. It’s not easy to execute, but we have markets around the world that have done it very successfully.”
Whether menu, digitisation, or delivery, Odorizzi said Restaurant Brands’ approach comes back to a single core philosophy: “In every market, the most important point for us is how we become relevant to our guests.”
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