#111 Chinese Chili Cheese Fries?
According to a variety of news outlets, California-based restaurant chain Johnny Rockets is planning for a major expansion in China. The 1950s themed chain currently has more than 300 corporate- and franchise-owned restaurants, about a third of which are in international locations. For the expansion, the company already entered into a joint venture agreement with its operator and franchise partner in Malaysia and a Malaysian owner-operator of department stores (that will also serve as locations in China). Beginning in 2016, Johnny Rockets will put approximately 100 stores into various locations throughout China. China definitely has an appetite for foreign fast food, especially if it is tied to a unique experience, but the road may be bumpy. The chain is following the likes of McDonald’s, KFC and Burger King, which have all had to manage steep, painful and expensive learning curves. It is to be hoped that Johnny Rockets will learn from their competitors’ mistakes, and make important adaptations to their business model and their menus. This author is not so sure if the chili cheese fries will catch on in China. Maybe we’ll read about Johnny Rockets again in the not too distant future…
April 13, 2015 @ 10:41 pm
Neither I have been to Johnny Rockets nor have I heard about them yet. According to the video statements of their franchisees on their website, Johnny Rockets is more than just having great food in a diner. Johnny Rockets is singing, it is dancing, it is enthusiasm, a place where customers feel happy and comfortable, a place where experience is sometimes more important than money and speed (last statement was made by Bill White, a franchisee with spots in NY, NJ, PA).
However, unselfconscious about the taste of their food and free of any lasting misimpression about their locations as well as acceptance of their classic all-American approach in the various markets, at first sight, I have really thought they should focus harder on their franchisees in their two dozen international countries (actually 25 or 27 when comparing with the homepage), their 11 (probably 12) Cruise Ship locations and last but not least, their domestic market (32 states) and not opening a new international building lot. After all, in case there are just a handful stores per country no economies of scale are achievable for Johnny Rockets.
Nearly 30 years after formation of the company, the chain appears to be unequally distributed, somehow accidental. Having had a look on the location amounts in the countries they are still in, it is very hard to believe that China is going to become the second biggest area regarding the locations after US. For sure Johnny Rockets does not focus internationally on Europe, but still on Arabic countries and an asian country selection. For me it looks like they are going everywhere where a more or less well-heeled master franchise partner that is willing to be responsible for the expansion within an entire geographical area has been found.
The Parkson Retail Group with its 123+ Parkson’s department stores is a partner that opens more malls per year than other ones single branches, a partner that has a good food traffic in its mall’s restaurant spaces. Finally, it is the first partner that is really able to push Johnny Rockets by understanding its culture and providing an appropriate environment for selling international food/experience. Anyhow, going through the franchising concept, the financial risk is very low for Johnny Rockets. It is hard to tell at this point, whether they will succeed. At least the new partner seems to be strong, while Johnny Rockets just allows its franchisees to submit menu ideas to their american R&D in order to control the fit to the brand and local culture..
References:
http://www.johnnyrockets.com/locations/locations.html
http://www.johnnyrockets.com/franchise-with-us
Johnny Rockets UAE: http://youtu.be/ItHia6egPEk
Johnny Rockets Philippines: https://youtu.be/QyamYrEy3Qw
Johnny Rockets Toronto: https://youtu.be/kICGtnGjndU
http://www.wsj.com/articles/u-s-burger-chain-johnny-rockets-bets-on-china-1428374343
http://www.parksongroup.com.cn/html_en/about_parkson/Profile.php
November 24, 2015 @ 9:55 am
According to the news from the last months, even the most successful fast food holding company in the world Yum, with its mayor brands KFC and Pizza Hut, is splitting off from the china market, after years of difficulties and loosing money.
Therefore, it is very surprising to me, that in comparison the small fast food company Johnny Rockets takes the risk entering the very complex Chinese market.
Even though Chinese people appreciate American fast food, I am not sure if they go along with the company-style. Johnny Rockets offers their typical American fast food (hamburgers, sandwiches, milkshakes…) in restaurants based to the 1950s diner-style: chrome and red vinyl seats, jukebox stations, cardboard illustrations of women in World War II armed services uniforms. Furthermore, the staff is singing, dancing and performing while serving the food. I have doubts, that this very offensive customer strategy works in a reserved society as China.
Referring to Hofstedes dimension of Individualism, China is at a score of 20 a highly collectivist culture, where people are group-orientated and don’t want stand out of the crowed. Especially the Chinese are rather introverted. I think, beside the difficulty to convince Chinese customers, it could be problematic to find suitable Chinese waiters, how are willing to be very outgoing every day and are happy for a long term in such an employment relationship.
An advantage, according to Hofstedes dimension of Uncertainty Avoidance, is that Chinese people are, at a rank of 30, adaptable and entrepreneurial. They are willing to take the risk of starting up a franchise. Being successful in the work life has a big importance in China. But considering the new business strategy of Yum – Yum China will become a separate, publicly traded franchisee of Yum, Chinese businessmen will probably prefer working together with them or the strong, very well known competitors Mc Donalds and Burger King.
Moreover, Johnny Rockets should consider the following before entering the Chinese market:
The affaire of the KFC chickens, full of antibiotics and growth hormones, led to a bad image of the whole American food industry in China. Additionally, according to an article, the Chinese people generate more and more health-awareness. So, a very important question is: Is in China at the moment at all a demand of a further fast food chain?
To sum up,
• the danger, that a completely different culture in China could dislike the Johnny Rockets company, management and working style;
• a very strong competitive environment;
• the bad image of American food industry and
• the trend to more health-awareness in China,
led me, such as the Author of the blog article, doubt on the success of Johnny Rockets in China.
References:
http://www.johnnyrockets.com
http://www.johnnyrockets.in
http://geert-hofstede.com/china.html
http://www.chinadaily.com.cn/world/2015-04/08/content_20024406.htm
https://www.deadlysins.info/wordpress/?p=722
http://www.wsj.com/articles/yum-brands-to-spin-off-china-business-1445338830
http://boerse.ard.de/aktien/yum-brands-und-das-ende-des-china-traums100.html
December 10, 2015 @ 10:58 pm
In general I think that a joint venture and starting a franchise business is a good way for a company to enter in a new and unknown market like China. Through this solution you have the possibility to gain insider information about the market, customers, competitors, trend and technology from your partner in this country.
But maybe it`s a disadvantage that Johnny Rocket offers the typically American fast food like hamburgers, sandwiches and steak. I would be surprised if such an American food would convince Chinese people, because normally they tend to avoid unhealthy food and prefer fish like jellyfish, shrimps and also Tofu. In addition it`s still a high proportion of lactose-intolerance among Han Chinese, so people who suffer under lactose-intolerance won`t eat the chili cheese fries.
Concerning the dimension of Hofstede “Individualism”, in China the score is low (20). So it exists a domination of integration into a network. Furthermore, the group is more important than the individual. So the “we-feeling” is more important than the individual. The loyalty to a company is high and the family and friends are very important for them.
Relating to Hofstedes dimension of Uncertainty Avoidance the score is 30 and so the Chinese people are willing to take the risk of starting up a franchise. But you shouldn`t fail in such a culture like the Chinese culture, because then you will suffer a long time under your bad reputation.
For a company it is important to have a good image in the foreign country to increase the purchasing power. Furthermore, the masculinity is high in China (66). This means that for advertising values like competition, achievement, success and aggressiveness should be also communicated in the food industry. Moreover, in order to increase the purchasing power also a product adaption is necessary. Johnny Rockets should adapt their business model and also their menus in terms of the taste of Chinese people. In addition, it would also be important to work together with people from the foreign country to decide about a marketing-mix which is adapted for the local customers to be more successful.
Finally, it can be said that it is important to understand the different culture from the other country before entering it. It is necessary to adopt the marketing-mix on the customer’s needs to be able to increase the purchasing power and attract their interest.
References:
http://www.johnnyrockets.com/menu.html
http://dc.eater.com/2011/11/4/6639107/10-chinese-dishes-real-chinese-people-do-eat-and-where-to-find-them
http://kaleidoscope.cultural-china.com/en/8Kaleidoscope13919.html
http://geert-hofstede.com/china.html
June 29, 2017 @ 4:44 pm
In my point of view, it is a very brave movement of Johnny Rockets to open about 100 stores in China at once. Also, because other Fast Food giants like McDonald’s did not succed at the first attempt and Johnny Rockets can be sure to have a lot of expenses due to adaptions they will have to make in all of their stores. However, as I could read in the article below, the Fast Food restaurant did prepare themselves for this roll-out regarding topics like menu and customer experience. Because of the latter, they might be able to prove themselves in the fight against McDonald’s and Burger King. However, a spokesman of Jonny Rockets seems to understand China as one single culture. This worries me a little bit, since China has so many differences within its borders.
http://www.chinadaily.com.cn/world/2015-04/08/content_20024406.htm
August 8, 2017 @ 2:15 am
According to me, Johnny Rockets needs a concrete Business Model prior to entering China. Chinese people are extremely picky about their Tastes & Preferences. They would not care about the Company’s Reputation globally, if they think that the Food Menu and Prices are not suitable to them. Johnny Rockets should enter China only if they can serve the Chinese People the type of Food they usually consume. They would have to alter their Menu and add dishes that wouldn’t be the ‘Typical’ American Style. For example: Chinese People like their meat cut into small pieces, which they can easily eat with their rice. They are not fond of Big Patty’s stuffed into their hamburgers. It is a different thing for a Chinese Student to eat the Patty Burger in USA, the same person wouldn’t prefer eating the same back in China.
The major reason why KFC, Burger King and McDonalds had a difficult time in sustaining in China, was due to their stubbornness in adapting to the Chinese Market and serving the Same Limited Menu options in China. There was no shortage of Fast food chain Restaurants in China, which served their customers well, with healthier options to choose from and this was a Reality Check to KFC, Burger King and McDonalds.
To predict whether Chili Cheese Fries would work in China is a tough call. Chinese people are not really fond of Cheese and have for years stayed away from Dairy Products. Chinese food mainly consists of Noodles, Rice, Tofu & Egg-Fried Rolls. Johnny Rockets should rather introduce a Signature Chinese Dish just for China, which would help them to get some Market Presence and get people more attracted to their Food Brand.
September 8, 2017 @ 11:07 pm
Johnny Rockets entered the Chinese market based upon a “strong demand in China for American brands”. They joined many other American burger brands in expanding into China. The question is: will Johnny Rockets learn from other’s mistakes? Other fast-food restaurants have had difficulty along the way because they did not offer enough local cuisine to satisfy the Chinese palate, and had to alter their menu to add on additional items. For Johnny Rockets, that may be even more difficult to do due to their distinct menu of “50’s fare”, including their signature chili-cheese fries. Perhaps finding a more Chinese topping other than chili and cheese will help, but that still leaves whether or not China will be receptive to the image that Johnny Rockets embraces. For Americans, Johnny Rockets brings back memories of a nostalgic time in American history – the 1950’s, when everything was wholesome, affluent, fun and American. I’m not sure how well this will translate to Chinese culture. Will they understand the meaning of the poodle skirts and juke boxes at each table? And if so, will they embrace it. Changing the décor and culture of the Johnny Rockets restaurants to accommodate for Chinese sensibilities may change the theme of the restaurant too much. According to the 4/18/15 edition of China Daily, Senior Vice President of International Development, Johnny Rockets addressed many of these concerns. He stated “Our partners have a keen sense of consumer preferences and shopping habits. While they will be showcasing Johnny Rockets all American menu including our world famous made-to-order hamburgers and hand-spun shakes as well as our unique signature guest experience that includes dancing servers, they will also be able to offer regional tastes and flavors to our extensive menu items.” One benefit that Johnny Rockets has is that it is a sit-down dining experience, which differentiates itself from other burger offerings such as McDonald’s. That distinction, the Chinese perception that sit-down dining is inherently provides safer and higher quality food, along with the other issues, such as including local fare, that Johnny Rockets has seemingly already addressed, could be enough to create success for the company. I attempted to find data on how Johnny Rockets is currently doing in China, but was unable to find any information. I’m not sure if that’s a bad sign, or not.
References:
He, A. (4/8/2015). “Johnny Rockets to Open Restaurants in China”. China Daily. http://www.chinadaily.com.cn/world/2015-04/08/content_20024406.htm
Dodillet, L. (4/14/2015). “Johnny Rockets Blasts Off to China”. Chinese Business Review. https://www.chinabusinessreview.com/johnny-rockets-blasts-off-to-china/
September 24, 2018 @ 7:49 pm
I believe that forming a joint-venture agreement may be a good step towards flattening the learning curve in China. Given the level of trade being exchanged between China and Malaysia; it seems Johnny Rockets has selected a partner with the right experience. In the prior six years, Malaysia has been China’s highest trading partner out of all the Association of Southeast Asian Nations (ASEAN) (“Malaysia Remains Top”, 2015).
I would caution Johnny Rockets to carefully consider the pace at which they open stores in China. I’m sure there will be different challenges within the different regions of China. A slower and systematic approach will help them minimize their financial risk exposure. Although it was stated that China has an appetite for foreign fast food, I’m sure there will be some menu adaptions to support local tastes. I do not think successful menu adaption would be possible if the expansion is too rapid.
They also need to be mindful that when forming relationships with prospective Chinese business partners, as trust is established differently in China. Westerners typically give trust until given a reason to not trust. Conversely, in China, trust must be established before a business relationship can be born (Cremer, 2015). Trust and relationship-building will take time and cannot be rushed.
References
Cremer, D. D. (2015, February 11). Understanding Trust, In China and the West. Retrieved from https://hbr.org/2015/02/understanding-trust-in-china-and-the-west
Malaysia remains top among Asean in trade with China | Malay Mail. (2015, January 13). Retrieved from https://www.malaymail.com/s/818799/malaysia-remains-top-among-asean-in-trade-with-china
January 22, 2022 @ 2:52 am
I personally do not eat much fast food, let alone Johnny Rockets. I do find it interesting that Johnny Rockets out of all the fast-food chains available in 2016 was approved by China. Not that I have ever heard any negative news or criticism about the Burger chain, it is just not that popular in my opinion or at least here in Southern California. In researching Johnny Rockets current international expansion, it seems as though there is neither positive nor negative news about the China expansion, in fact when looking at the locations on the site, I do not see any locations. The closest locations to China on Johnny Rockets website is in South Korea. Despite the minimal news of expansion in China, it is very popular in other countries. CEO of FAT brands mentions, “Johnny Rockets has become incredibly popular across South America, and we’re proud to start off the year with the addition of three new locations in Brazil and Chile with an impressive development pipeline for 2022.”
February 10, 2022 @ 5:17 am
I think launching a chain in a foreign market is always a struggle, and make that a fast-food chain in a complicated market like China- that’s even worse. China is an interesting market I have noticed. They allow any company to enter but make it very hard for them to stay. While Mc Donalds was so established, they had so many issues when they entered China. I think this is due to the fact that China is so different than the USA. They obviously have different customs, different food palettes, etc. It will be interesting to see what Johnny Rockets will do and if they actually succeed.
February 19, 2022 @ 5:17 am
Johnny Rockets entering the Chinese market as a joint venture and franchises is a good business strategy for expansion. Johnny Rockets 1950’s theme gives them a different uniqueness compared to the major corporations such as McDonalds and Burger king who were first in market and have a repetitional brand that expands the globe. The Chinese market will go to Johnny Rockets for the experience that is not offered at McDonalds or Burger King. By expanding via franchise, that will reduce the risk associated with expanding to a new market and the Joint Venture with local Chinese business will allow management to place their locations with high foot traffic and a chance to succeed. Johnny Rocket will need to adjust their menu slightly to account for local taste but keep what makes them unique.