Wendy’s franchisee in Japan is making a big move to expand its footprint in the country, saying Wednesday that it has acquired the 136-unit First Kitchen chain, with plans to create a hybrid concept.
Wendy’s Japan has acquired First Kitchen Ltd. from Suntory Holdings Ltd. To finance the deal, The Longreach Group, a Hong Kong-based private-equity firm, has acquired a majority stake in the Wendy’s franchisee, which is a subsidiary of Higa Industries Co. Ltd.
The operator plans to create a hybrid chain, Wendy’s First Kitchen, with a blended menu from the two concepts. First Kitchen is a burger restaurant with an expanded menu that includes items like fried chicken and pasta.
“The First Kitchen restaurant brand is well established, with a presence in many desirable, busy locations throughout Japan,” Bob Wright, executive vice president, chief operating officer and international for Dublin, Ohio-based The Wendy’s Co., said in a statement. “We anticipate the acquisition will leverage the strengths of both Wendy’s and First Kitchen, while providing a springboard for growth in the coming years.”
The acquisition comes at a time of intense competition in Japan among major burger players McDonald’s and Burger King. McDonald’s is recovering from a brutal sales slump in the country following a number of food safety and logistical issues. And it is now working to sell a stake in the operator there in a bid to gain more local knowledge of the market.
American brands have been getting more aggressive in their attempts to grow in specific markets. Burger King’s operator in France, for instance, acquired the 500-unit Quick Group.
At Wendy’s, the First Kitchen deal is part of a strategy to boost that chain’s international presence. While Burger King, Yum! Brands Inc. and McDonald’s have all rapidly added international locations over the past couple of decades, Wendy’s has remained largely a North American concept, where all but about 500 of its 6,500 restaurants are located.
Wendy’s is working to aggressively expand its presence in specific markets.
“This is an example of how we are bringing our ‘narrow and deep’ international strategy to life by initially focusing on four key markets — Japan, India, Brazil and the Middle East — where we see considerable upside potential over the next few years,” Wright said. “We believe our best approach is to support our franchisees in building Wendy’s brand strength in local markets and enhancing the economic model of their restaurants.”
At Wendy’s, the First Kitchen deal is designed to create a concept that could resonate with consumers there while giving the brand a bigger presence in the market.
Wendy’s has already tested a hybrid concept at two locations in Tokyo with a refreshed décor and a menu revamped to reflect the combined concepts. The locations opened last year and “have performed well,” the company said.