Franchises draw up and implement expansion plans

International catering brands, from fast food franchises to cafe chains and pastry shops, are continually entering and expanding rapidly in China, with their sights set firmly on young customers.

They usually launch in Shanghai, then Beijing, and are nearly always located in busy shopping malls.

Even though the coronavirus pandemic forced these brands to hit the pause button for two months, it has failed to dent their overall expansion ambitions.

This month, Peet's Coffee, a 54-year-old brand from San Francisco, opened its first store in Beijing's central business district. Two weeks earlier, French bakery Gontran Cherrier made its debut in the capital at Chaoyang Joy City.

However, the launch of Taco Bell's first branch in Beijing on Aug 21 drew more attention. In addition to the long lines that formed after it opened, when the branch was being built, inquisitive onlookers were drawn to the site by a large poster hanging over the frontage.

The branch joined the ratings platform Dazhongdianping after many people uploaded photos of decoration work at the premises, even though they had not yet had the chance to sample any food at the outlet.

Taco Bell, one of the world's largest Mexican-inspired restaurant chains, operates more than 7,000 restaurants in the United States alone and has over 600 outlets outside the US.

In 2016, it opened its first restaurant on the Chinese mainland in Shanghai near the Oriental Pearl Tower in the Lujiazui area. The decor features a classic Californian-inspired look and design, including guitars, graffiti art and surfboards hanging from the ceiling.

In addition to the Beijing branch, it recently launched outlets in Shenzhen, Guangdong province, and Ningbo, Zhejiang province, and now has 11 restaurants on the mainland.

The Beijing branch, at Hello Mart, Liangmaqiao, features a locally inspired graffiti wall celebrating the city's landmarks and culture.

The menu includes the brand's favorites, adapted to cater to local tastes, as well as new items developed exclusively for the Chinese market, such as a rice bowl dish, seasoned chicken bone and taco pizza.

Jim Boyce, a Canadian working as a consultant in the alcoholic beverage industry, who moved to Beijing in 2008, has fond memories of Taco Bell from his days as a college student in Waterloo, Ontario, as the franchise offered him a "cheap, reliable and delicious option".

He likes the new products at the Beijing branch, but hopes that more-original items will be included on the menu.

"It's actually pretty upscale compared with some Taco Bell outlets I've seen. I like the fact that they have seating outside," Boyce said.

Liu Xiangheng, the founder of Hello Mart, said Taco Bell signed a deal for the location after Spring Festival and decoration work started at the branch in about May.

"The brand positioning of Taco Bell fits with Hello Mart, as many of the customers who live nearby have overseas backgrounds, and there are also many embassies in the area," Liu said.

He has noticed that long lines, which have been a rare sight since the onset of the pandemic, have formed since the branch opened.

Due to the outbreak, customer footprint at Hello Mart in February dropped to less than 5 percent of the normal level, and has only since recovered to about 65 percent.

In addition to Taco Bell, Liu is bringing a German restaurant, an outlet specializing in French cuisine, and a Malaysian eatery to Hello Mart. A beer garden with a night fair has also been launched.

Liu said a Starbucks Reserve outlet will open at Hello Mart at the end of this month.

Just 3 kilometers away, in the capital's Sanlitun area, another US catering brand, Shake Shack, has just opened its first branch in the city. Even though it rained heavily on opening day, long lines formed to sample the outlet's burgers.

Shake Shack opened its first China store in Hong Kong in May 2018 and launched in Shanghai in February last year.

The news website Jiemian quoted Lou Wei, general manager for Shake Shack from Maxim Group, which operates the brand in China, as saying that Shake Shack plans to open 55 branches on the mainland by 2030. "We will be in Shanghai and Beijing and then expand to other cities," Lou said.

Shake Shack aims to set up branches at locations with indoor and outdoor space. The brand targets customers in the 25 to 35 age group, but also focuses on connecting with local communities.

Lou said it will aim for more cooperation with local Chinese brands.

Due to the pandemic, Shake Shack launched ordering though the WeChat Mini program.

"We were not planning to go digital, as we are a new brand entering China. Self-ordering may reduce communication between our staff members and customers, and we want to interact more with our clients," Lou said.

Taco Bell and Shake Shack took more than a year to expand from Shanghai to Beijing, but Popeyes, a fried chicken fast food restaurant chain from the US, has had its foot firmly on the accelerator.

It opened its first China outlet in Shanghai on May 16, now has five branches in the city and will shortly open one in Beijing, according to Sami Siddiqui, Asia-Pacific president of Restaurant Business International Inc.

The company, one of the world's biggest specializing in fast food, owns the Popeyes, Tim Hortons and Burger King franchises.

Siddiqui thinks Shanghai is a strong market for Western brands. "Consumers in the city have shown they have the taste and affinity for Western fast food restaurants. It's a good place to launch before we expand to other cities," he said.

He added that preparations for the launch of Popeyes in China took nearly two years, and a lot of time was spent on creating a menu tailored for a Chinese clientele.

From roast chicken sandwiches to spicy chicken wings, the menu also features milk shakes, which are not served at any of Popeyes other outlets worldwide.

To cater to Chinese tastes, Popeyes has made minor reductions to salt content and added a little more spice to its food.

It aims to launch more than 1,500 restaurants in China, Siddiqui said.

RBI operates 27,000 restaurants worldwide, and about 1,500 of them are in China, according to Siddiqu.

"The important thing to look at is that the company is opening at a faster pace in China than any other market in the world," he said.

First impressions

To make a good impression when they launch in China, overseas brands pay great attention to the decor and menus at their outlets.

Some choose to retain their original style of decor, while others feature local culture in the design, such as on menus. Some stick with their original menus, while others feature local dishes to attract customers.

Italian coffee company Lavazza launched its flagship store in Shanghai at the end of April－its first branch outside Italy.

The store, located in Jing'an, an old district in the heart of the city, boasts high ceilings, artistic murals and marble decor, as well as the 125-year-old brand's iconic Moka Carmencita coffee maker.

The outlet is run by Chinese restaurant giant Yum China, which operates the KFC brand in the country.

Joey Wat, CEO of Yum China, said: "This is great news for consumers seeking a premium coffee experience. We see great potential for coffee in China, and Lavazza shares this enthusiasm. By using our deep understanding of Chinese consumers, we look forward to working together with Lavazza to explore the coffee market in China."

According to Statista, the German statistics portal, this market is expected to grow annually by 11.6 percent, with revenue this year reaching $11.65 billion. The International Coffee Organization said that over the past five years, coffee consumption globally grew by an average of 2.7 percent.

Canadian coffee chain Tim Hortons opened its first store in Beijing at The Place shopping mall at the end of July, where it offers its signature coffee, sandwiches and desserts. The decor integrates Canada's maple leaf symbol with Chinese cultural elements.

Tim Hortons, which opened in Shanghai a year ago, is expanding rapidly in China, and now has 70 branches in the country and is aiming to have 1,500 in the next decade.

Siddiqui, from RBI, said, "When we think about expansion, we concentrate on specific areas before going to new cities."

He said Tim Hortons prides itself on having a high-quality product and affordable prices in convenient locations. "The more restaurants we open, the more convenient we become," he added.

He thinks the coffee market in China is becoming more competitive, but is also growing so quickly that there is room for more brands.

"I think Chinese customers see good value for money when they purchase Tim Hortons coffee," he said, adding that restaurant designs have been tailored to attract local customers.

The company's coffee beans are roasted in Canada before being shipped to China, where, apart from the coffee, most of its ingredients are sourced.

In May, internet giant Tencent decided to invest in Tim Hortons. The two are collaborating on a range of digital and marketing activities, including e-sports, and are also working on new restaurant locations and communication through WeChat and other platforms.

The brand was founded by Canadian hockey player Tim Horton, and many of its customers are sports lovers.

Local inspiration

In addition to its burgers, the newly opened Shake Shack outlet in Beijing offers the Hutong Hawthorn milkshake, inspired by the traditional street snack tanghulu, and the Beijing Blush Concrete shake, which features vanilla custard blended with rose pastry made by the city's time-honored snack brand Daoxiangcun.

On Sept 10 in Tianjin, the New York cake brand Lady M opened its latest branch on the mainland, where it now has 23 outlets.

Founded in 2001, Lady M has more than 40 branches worldwide. The brand entered the mainland in Shanghai in 2017, expanding to Beijing a year later.

Each year, it launches a limited number of mooncakes to celebrate Mid-Autumn Festival. Demand for them is always high.

This year, the mooncakes feature in the animated musical Over the Moon, a collaboration between Netflix and Pearl Studios. The film tells the story of a bright young girl who builds a rocket ship and blasts off, hoping to meet a mythical moon goddess.

The packaging for the mooncakes features an illuminated lantern depicting scenes from the film. The lantern also contains six mooncakes in two flavors－sweet egg custard and chocolate custard.

Ken Romaniszyn, the Lady M CEO, said it is fun creating the collectible packaging for the mooncakes every Mid-Autumn Festival.

Xu Xitong, chief executive of Kotobuki Spirits (China), introduced the cheesecake brand LeTao, to China in 2018. The brand's store in the small Japanese port city of Otaru, where it was founded, is a must-visit destination for Chinese visitors.

"Our team visited LeTao in Japan many times before we finally brought its cheesecakes to China," Xu said.

The first LeTao store in China opened in the Xintiandi area of Shanghai, "a place that fuses Chinese and Western culture and is one of the city's landmarks," Xu said.

Long lines formed at the store for a month after it opened.

Xu soon opened two other stores in Shanghai before expanding to nearby cities, including Nanjing and Suzhou in Jiangsu province, and Hangzhou, Zhejiang province.

The first LeTao store in Beijing, at Taikoo Li, Sanlitun, was due to open on Feb 14, but the date had to be postponed to May due to the pandemic.

Xu said the cheesecakes are made in Japan and shipped to China. The pandemic has meant a longer transportation time, but supplies have not been affected.

"The summer season has passed. As our main products are frozen cheesecakes and ice cream, we will continue our expansion plans in Beijing next year," Xu said, adding that he is also planning to bring more Japanese dessert brands to China.