Foreign Market Entry

What seems to be the most common reason for market failures across different countries for fast food chains?

It seems as if a reoccurring theme with those fast food restaurants that fail is that they do not adapt to the culture enough. While much of the appeal of the foreign fast food brand is their foreignness, these American-based fast food restaurants still need to acclimate to a minimum standard in the market they are entering. It is a balance, and it is an uphill (frequently un-winnable) battle if you are trying to break cultural habits. A prime example is Dunkin’ Donuts. The market in India looks at donuts as a dessert and not something to begin the morning eating. The country is very health conscious relative to the west and would only indulge in such foods if celebrating or as a treat. Dunkin’ then adapted to offer foods that were out of their wheelhouse, like burgers, but Indian customers didn’t want to go to an American fast food chain that was selling food that they weren’t known for. It was not authentic to the brand and was not of interest to the average Indian consumer. Dunkin needed to stick to their core competency, but its core competency wasn’t a great fit in the market. Add on that India has been indulging in Baskin Robbin's ice cream for quite a while, and Dunkin’ was going into head-to-head competition for the indulgent-eating food market.

Another brief example is in Israel, where eating chicken at home is very common. To take families out of their homes and eat chicken out, it must be both kosher (for the 70% of the kosher population) and taste delicious. KFC could not master making their kosher fried chicken taste great. It is clear why KFC failed to remain in Israel three times previously, and unclear why they keep attempting to enter the market where their protected recipe cannot be served.

Did any particular aspect of these countries (Vietnam, India, Bolivia, Iceland, UAE, Israel) strike you or intrigue you? What’s your thought?

This series of videos had many intriguing aspects. At the risk of seeming culturally ignorant, learning about kosher and halal foods was the most interesting. Within the discussed industry, fast food, the product served, must abide by specific rules to appeal to the practicing Jewish and Muslim markets. This means that not only do the animals need to be treated to a higher ethical standard before and during slaughter, but within the Jewish faith, you cannot serve dairy with meat (life & death cannot be served simultaneously). The COGS will inevitably be higher than non-halal or non-kosher meats. This factors into pricing strategy and potentially profits depending on what the market is willing to bare. As a side note, it was also fascinating that within some countries, fast food was more expensive than other options available (I.e., street vendors). In the U.S., fast food is considered an inexpensive option when dining out. My last thought involves trust. A consumer must have confidence in the establishment to deliver on its promise of sourcing the proper meat. I find this fascinating and wonder if individuals in some cultures are weary of the U.S. and do not trust their fast food establishments to deliver on their kosher and halal promises.