Appetite for expansion
American burger franchise Carl's Jr wants to open 300 stores in Australia.
Carl's Jr is set to launch in Australia with the American burger chain announcing its intention to open 300 stores in the next 10 to 15 years.
The franchise is the fifth largest fast food chain in the United States and is owned by CKE Restaurants.
It has 3,300 restaurants across 27 countries and is currently in the process of expanding to the Dominican Republic, Brazil, Puerto Rico, Malaysia, Denmark, Costa Rica, Singapore, Russia, Vietnam, Turkey and China.
Carl's Jr first floated an Australian launch back in 2010 but is now advertising for franchisees following its launch in New Zealand, where it has opened eight stores in the past 18 months.
Andy Puzder, chief executive of CKE Restaurants, told SmartCompany Australia is a highly attractive market for Carl's Jr.
"We have doubled our number of international restaurants since 2007 and we are close to hitting 500 restaurants internationally and we would love to see Australia be a part of it," he says.
"Our research shows that the strong economy here, combined with our positioning and premium food offering complement what we've seen in New Zealand."
Puzder says the key to being successful internationally is finding the right master franchisee.
"We have been very diligently trying to find the right individual with significant economic backing and industry experience and in Australia we have not found that person yet," he says.
"We hope our success in New Zealand will inspire a number of Aussies to get on board and we have interviewed a number of people and we are pretty enthusiastic. "
Puzder admits his plans are ambitious when compared with McDonald's, which has opened 840 outlets in Australia over 40 years, while other international brands which are now household names, such as Subway and Domino's, struggled when they first opened in Australia.
"McDonald's as the first brand into the country probably got off to a slower start than we would as now Australians are familiar with the concept of American burger chains, so McDonald's has helped us out," he says.
The burger chain's target market is an 18-to-34-year-old male audience, which Puzder described as "young hungry guys".
"Australia just feels like our kind of country," he says.
However, Jason Gehrke, director of the Franchise Advisory Centre, told SmartCompany it may take Carl's Jr longer than it thinks to get to 300 outlets.
"When it comes to future predictions of franchised outlets to be opened, ambition rarely aligns with reality," he says.
"For any system to have such a significant growth trajectory, a franchisor has to be prepared to invest significant sums of money to make it happen and unless they grant the master franchise to some incredibly wealthy individual or deep pocketed organisation then that kind of trajectory might not come to pass."
Gehrke says 15 years is more realistic than 10 and these kinds of growth trajectories don't go in a straight line; it is very slow at the outset and then progressively accelerates.
Gehrke says while Carl's Jr has achieved success in New Zealand, the burger chain's franchise partner there is a "very deep-pocketed organisation" and it will need a similarly resourced partner in Australia.
Gehrke says there are a lot of local burger offerings as well as the established American outlets such as McDonald's and Burger King so there will be serious competition for sites.
"Aside from all the capital constraints that an organisation that wants to open 300 outlets might face, one of the most significant barriers to growth will be the availability of suitable locations," he says.
"International brands frequently underestimate the challenges of the Australian market, there are some household names which failed on their first attempt in the Australian market or suffered near-death experiences."
Source: SmartCompany, 5 March 2013
