As with any new venture or startup, how well a new food and beverage business performs remains an unknown. This is why some business owners would opt for importing an international food brand that has proven track records. Even so, this strategy is not without its challenges. Here we look at some of the advantages and disadvantages of this approach.
Proven track record
With importing a foreign brand, investors have the luxury of choosing amongst brands that have a proven track record of success instead of solely relying on gut instinct. Combined with necessary groundwork and feasibility research, one is able to easily nail down a food concept with the right product-market fit.
Brands that are already popular in another country will naturally generate marketing and social media buzz before they even reach the shores of their new outlet. Consider the case of Tim Ho Wan, which had already been wildly popular amongst Singaporeans who travel to Hong Kong long prior to opening their first overseas outlet in Singapore. This has contributed to its ridiculously long queues that sustained for months after its launch.
Lower directing marketing cost
Building upon shared creative resources from the master brand, one need not reinvent the wheel when it comes to marketing and would have existing frameworks to reference. Combined with a solid digital influencer strategy, this significantly lowers overall marketing cost needed to drive initial demand, which helps the initial cash flow.
Suffice to say, if a brand is performing well, it is likely costly to import, be it through franchising or licensing. From a pure investment perspective, this ultimately adds to the breakeven period. We have encountered rares cases, however, where the brand owner charged minimal fees, out of sheer passion and joy to share the love for his food with a wider audience.
Generally, Japanese and Korean concepts tend to perform very well in the Singaporean market. Business owners have a much easier time in capturing the market. Even so, operators still need to undertake steps to localise the flavour of signature dishes. For instance, Ramen chefs localise the heavy flavour of the broth by adjust the level of saltiness, while Korean concepts tweak the spiciness level of their cuisine.
For the same reason an imported brand is popular, it can be boycotted due to its foreign status as well. China’s exploding middle class has huge market potential for foreign F&B establishments. Yet, its population displays a tendency boycott certain brands in times of political instability.
Consider also the case of Quick Service Restaurant Jollibee. The strong presence of 200,000 Filipino migrant working population in Singapore opened up demand for brands from their native country. While this gives it a captive audience, it is the chain’s popularity with both Filipinos and locals alike that has fuelled its global expansion plans with much success, underscoring the need for cultural fit.
Legal & Regulation
If an establishment has never gone overseas, chances are it wouldn’t be familiar with necessary frameworks and regulation that would expedite this process either. Being the first mover in importing a foreign brand has its advantages, but to do so also mean circumventing challenges before everyone else.
In summary, one might feel replicating a successful foreign brand locally is a straightforward path to success. Yet, it is not without its share of due diligence requirements. With proper guidance and industry expertise, business owners will easily sail through the challenges.