Background and challenge

A leading quick service restaurant (QSR) chain had experienced success in a limited number of international markets but was significantly underpenetrated vs. competitors and other leading QSR brands. The company’s ambition was to catch up with, and eventually surpass, the leading international chains in its category. The business had conducted internal market prioritization work and identified 11 key markets to pursue in the near term. The company asked L.E.K. Consulting to support them in developing their go-to-market strategy and identifying the best franchisee partners in these key markets.

Approach and recommendations

L.E.K. analyzed the client’s performance across existing international markets to understand the relative success by market type and franchisee model, evaluating metrics such as market penetration (units), unit performance and growth. We worked collaboratively with management to understand franchise model guardrails, successes and challenges to date.

The next step in the project focused on determining the preferred business model for each of the 11 markets. We focused our analysis on “best practice” brands that had expanded into each country, looking at factors such as total units and growth, AUV and AUV growth, and an operational model that was similar to the client’s model. Using primary and secondary research, we developed deep insights on each brand to understand its go-to-market strategy and to extract key lessons to drive future success. Insights from both the internal and external fact base were then leveraged to develop our recommended franchise model and guiding principles for go-to-market strategies.

From there, we conducted a thorough franchisee partner screen by market. We started with a feasibility test for conflicts of interest, other QSR brands managed and presence in key cities. Increasingly detailed later stages allowed us to prioritize partners further and with more nuance, considering critical success attributes such as access to capital, local expertise, proven operational ability, in-country capabilities, reputation and comfort/fit with the client’s value proposition. Finally, we developed detailed profiles on each of the potential franchisee partners to enable the client’s new market development team to quickly engage potential partners and begin discussions.

Results

Collectively, this work provided the client with a clear go-to-market strategy in their most important near-term new international markets. With actionable direction on preferred business models and prioritized franchisee partners, the client was able to accelerate their international expansion while increasing their success rate in these countries.