PUBLISHER'S VIEWPOINT
April 2001
Going Global Isn't Easy

Successful foodservice is hard. Jennifer Hicks and I have just returned from the Internorga Show in Hamburg, Germany. In addition to many European and some intrepid American manufacturers, we saw Howard Schultz, founder of Starbucks, and three folks from an American casual dining chain, who remain nameless because I didn’t clear this with them. Schultz was a keynote speaker at the annual Foodservice Forum, held each year before the show. The unnamed gang was attending the forum.

Schultz’s presentation was eagerly awaited because Starbucks is expanding into the heart of Europe, where the coffee bars on which Schultz modeled the Starbucks concept can be found on nearly every corner. The week of Internorga, the chain opened its first continental outlet—it is already established in the British Isles—in Zurich, Switzerland. It plans units in other European countries “in the near future.”

It’s a gutsy move, though not the first one for the company. As Schultz pointed out during his address, the firm ignored consultants who had advised the concept to stay out of Japan, where Starbucks has been wildly successful. Management obviously thinks its concept and operating systems, including unusually enlightened human resources practices, can work in sophisticated coffee-consuming countries.

The casual dining chain folks, on the other hand, told us part of their purpose in Europe is to work on the concept. With their broader menu, the labor cost differentials between Europe and the U.S., plus the simple reality that Europeans eat away from home less often, impact the profitability and return models. They are hardly the first U.S. chain folks to run into these problems.

In fact, a salesperson for a large U.S. manufacturer told us on the show floor that he had a very good year in Europe last year mostly because European operators are learning from U.S. chains. They are tweaking their own systems, including specifying sophisticated high-volume equipment such as his. “They are learning to replace labor with technology,” he said. By adding the technology edge to their close knowledge of their customers and markets, they often end up beating the interlopers.

We wish Starbucks and our casual chain friends good fortune. As KFC’s Dick Mayer explained to me more than 20 years ago, to make a successful chain, you must succeed in every store, in every market. That’s as true in Hamburg as it is in Hartford.

Cheers,

Robin Ashton
Publisher