Experts debate profit potential of burgeoning foreign markets - fast food industry

Nation's Restaurant News, Oct 22, 1984 by Rick Telberg

Experts debate profit potential of burgeoning foreign markets

Translating American fast food into foreign profits is a costly, often hit-or-miss thing, according to international operations experts.

"There truly is no easy money over there,' said Fred Parkin, a consultant and moderator of the panel on the topic at Nation's Restaurant News' Multi-Unit Food Service Operators (MUFSO) conference. "But those with staying power will make it.'

"It's definitely not a get-rich-quick scheme,' agreed Robert Hiatt, president and chief executive of Kentucky Fried Chicken's foreign division.

"For the first six years in Japan, up until we had about 100 units, profits were insignificant. And that's stretching a point,' Hiatt said.

But Hiatt was quick to add after the session that KFC plans on taking advantage of the strong dollar to accelerate its development plans. KFC operates some 1,500 foreign restaurants and about 6,000 in the United States.

Giles Gallant, Wendy's senior vice president for international operations, griped about jet lag in crossing 17 time zones at a clip and the continuing uncertainties of running Wendy's 170 foreign outlets: "We budget conservatively, add a big fudge factor, and I'll be darned but it's not enough.'

Sylvain Leveque, general manager of a Parisian firm, Syjac S. A., which underwrites development by non-French companies, urged operators to move soon to capitalize both on the strong dollar and France's political climate, which could shift antibusiness at the next election in two years.

Parkin said United States companies are rapidly moving overseas. In 1971, he explained, 156 companies of all sorts had 3,000 foreign operations. Today 300 companies have 20,000 operations.

But he warned that American fast food does not always translate well. Pizza Hut was surprised early in its Japanese foray to find a franchisee serving eel pizza, he said.

Parkin said one operator sought to open a fast-food concept he wanted to call Saco's Taco, "until I explained that taco means octopus in Japanese.'

Photo: Fred Parkin