John D. Harkey Jr., CEO of Dallas-based Consolidated Restaurant Operations Inc., said U.S. restaurants are in a great position for “exporting America” to the rest of the world.
Many American restaurants have expanded overseas, and Harkey said CRO’s El Chico and Cantina Laredo brands have shown strength abroad. The company opened its first units overseas in Egypt, in 2008.
CRO has 109 units across eight brands in the U.S., Egypt, Saudi Arabia, the United Arab Emirates and the U.K. The company’s first unit in Turkey is under construction, Harkey said, and its first unit in Puerto Rico will open in June.
Harkey discussed international expansion with Nation’s Restaurant News:
How did you get started abroad?
It wasn’t so much a vision as a pull. We were approached to go there. We had hired a franchise sales person. It was a bit of an afterthought. We didn’t have a franchise department. We had a few franchised stores, all domestic. That was in 2004, 2005. We didn’t even think to give him a defined territory. He found someone in Cairo, but I said no. He asked what it would take to be convinced. I said, tell them to wire me $100,000, non-refundable. It cost that much money to attempt what is a very hard thing to do. … It took months to get all the documents prepared.
Why do American brands do so well in the Middle East?
The Middle East approach is that brands matter. That’s similar to Asia. They have found that branded restaurants — rather from the deliver mechanism, or from the way the food is the prepared, or the service model, or the quality of the ingredients — get more sales than local [brands]. Diners, whether they are expats or locals, see it as a way to get a better quality dining experience, so restaurants do better.
What do you liken the growth to?
It’s a lot like the U.S. was in the 1960s. In the ’60s, it was a field of dreams. You opened it; they would come. Women were entering the workforce. The trend of more meals being eaten outside the home was starting. That’s where the Middle East is. That’s where Asia is. They are underserved.
What cautionary signs do you see for international development?
We’ve had a change in America’s position. As I visit with friends around the world, there is a cautious eye about how easy it will be to transact business and whether there will be additional obstacles. But we are continuing business as usual and going forward with our partners. We’re exporting American technology and know-how. We’re on the right side of the trade equation.
How are your restaurants positioned for further expansion abroad?
Casual dining, which is where a lot of our restaurants are, is one of the toughest, challenging sectors. While that’s happening domestically, we still see a lot of opportunities to American around the world.
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