Good news for anyone daydreaming of opening an outpost in another country: The global game is no longer just for large franchises. The catch? While the thought of travel and international dollars is enticing, an overseas operation is no vacation.
Even if you can overcome the mounds of paperwork, tax codes, financing and legal fees, everyday stateside challenges are likely, such as sourcing food and hiring practices. And after all that, local tastes might not even dig your best dishes that are top sellers back home.
Operators who have been through the international wringer, however, say overcoming these challenges can pay in dividends for those who play their cards right. Here’s how.
Dollars and Sense
Restaurateur and Chef Brad Farmerie and his team at AvroKO Hospitality Group weren’t looking to make an international jump. Global Point, a Russian restaurant and branding firm that had 11 operations under its belt, originally approached the Saxon + Paroleteam for help opening a restaurant in New York. After several meetings, Global Point decided that a spin-off restaurant would be perfect for Moscow instead.
“Despite the disparity in our cultures, we just seemed to hit it off,” Farmerie says. “They didn’t want to open a restaurant in Moscow, they wanted to be part of changing the food scene. Who else are you going to partner with that has that same goal?”
Saxon + Parole’s story is not unlike many in the industry. An investor from the Philippines, Hong Kong or the United Arab Emirates approaches a restaurant and the team gets “so excited about going international that they do not perform the due diligence” necessary, says Karen Spencer, CEO of Fran-Systems, a franchise education and consultant company.
Look before you leap, warns Spencer. Research your partner and the country you plan to do business in. The move needs to be strategic and affordable. Spencer estimates a restaurant entering a new country should expect to pay at least $100,000 in legal work, including trademark and franchise or licensing agreements, and $200,000 for market and product research.
Securing capital can be the most challenging part of going international, she says. You’ll need it to learn about the country, do product research and be able to travel and support the team while they’re getting up and running.
Friends with Benefits
Having someone in the country is key, says Rick Camac, CEO of New York-based Fatty Crew Hospitality Group, who has opened locations in St. John and Hong Kong. “It would be almost impossible for a group like ours to perform the due diligence necessary to scope out a place abroad without having a local partner or licensee,” Camac says.
Farmerie says he would have never been able to figure out all the legalities and avoid pitfalls of opening in Moscow without the help of his partners at Global Point. “I would not recommend that anyone tackle that, especially in Russia,” he says. “You need local intelligence when it comes to law and regulations. We just felt lucky that we had that source.”
Besides preparing paperwork, a local partner is essential for tapping talent and finding the best products. In Moscow, Farmerie left a lot of the hiring up to Global Point. “We chose the infrastructure of the directors and to some extent the chefs and the general manager, but we really didn’t want to touch the hiring because these weren’t people that we were going to manage directly on a day-to-day basis,” he says.
The Importation Game
Sourcing food also can be tricky, particularly finding area producers, figuring out availability and translating menus. Buying local products was a necessity for Dino Borri of international food market Eataly when the company opened in Brazil because getting imports was nearly impossible.
“In Brazil, importing food is really complicated because of customs, duties and rules. All of the papers you have to produce to import Italian food—it’s really a headache,” Borri says.
In 2014, shortly after Saxon + Parole opened in Moscow, Russia placed a ban on food imports from the United States, the European Union, Norway, Canada and Australia. The impact was noticeable, as the country imports about one-third of its consumption. “There’s officially still an import ban, but almost all of our essentials come in. But it’s about two or three times the price,” Farmerie says.
If there’s flexibility with translating the concept, sometimes the easiest fix is to work with substitutes. When crab wasn’t available for the opening of their St. John island outpost of Fatty Crab, lobster stepped in for the restaurant’s signature crab dish. New locations also can yield new ingredients. In Hong Kong, the Fatty Crew team took advantage of certain vegetables that were not readily available in New York, like fresh green peppercorns.
Farmerie’s local chef has helped lead him to some impressive local affordable finds to offset the cost of imports. They recently started working with a family of Italian immigrants living in Russia who make a burrata-style cheese, replacing the pricey Italian import. “It’s not the exact cheese, but it’s very unique, and it’s a very beautiful cheese. Guests are loving it,” he says.
Lost in Translation
“The food habits are different in every city in the world. You have to adopt everywhere to the local food customs.”
-Dino Borri of Eataly
Eataly currently has outposts in 29 worldwide locations. Borri makes culinary adjustments in each restaurant based on availability, but it’s not just about what they can get—it’s about what local eaters want.
“The food habits are different in every city in the world,” Borri says. In Japan, cheese often is replaced with tofu, while U.S. customers consume large quantities of dairy, he says. “You have to adopt everywhere to the local food customs.”
“There were some recipes that just didn’t translate,” Farmerie says. “We had a rhubarb dessert [in New York], and it was always one of the top two or three desserts. Literally no one ordered it [in Moscow] and when people did, they didn’t like it. It was the exact same recipe.”
Advantages of Adventure
Understanding subtle cultural differences may become increasingly important as more restaurants pursue growth overseas. In the same way that the American food scene has evolved over the past decade, the interest in unique culinary experiences is changing abroad. “The overseas markets want U.S. brands; it’s as simple as that,” Spencer says. “The ROI is there. You just have to do it right.”
Rather than open another restaurant in New York, where he’s had to shutter a few, Camac has his sights on licensing new Fatty Crabs nationally and internationally. “If we go just about anywhere else, [Fatty Crab] is going to be new and interesting,” he says. “For the most part, the population has never really tried food like ours. That’s where there’s an advantage to going to other places.”
It’s a challenge that can be very rewarding—and not just financially. “Every time you tell somebody that you have something going on in Moscow, they’re always like, ‘Why? What are you doing? What are you thinking?’” Farmerie says. “But it’s been such a cool experience. I feel very lucky.”
Gloria Dawson is a freelance writer based in New York City. She would love to visit all 29 Eatalys.
Heading abroad? Take a look at these U.S.-born restaurants you might run into.