How to Seal International Franchise Deals
How to lure brands like Din Tai Fung into the country? Trust and a lot of convincing.
For all the hype and excitement surrounding the launch of international franchises, it’s quite easy for the innocent bystander to take for granted all the work that goes into getting these blockbuster food concepts to our shores. From endless flights to the franchise’s headquarters to really slugging it out with competition tooth and nail just to get the founder’s elusive “yes,” you may want to offer a moment of gratitude to the individuals whose massive efforts it took to get that delectable little dish you’re about to devour.
Between Eliza Antonino of The Moment Group and Bryan Tiu of iFoods’ retelling of their respective journeys to get Din Tai Fung and Tokyo Milk Cheese Factory to Manila, it took a combined total of 3,000-plus words and 40 minutes just to cut the long story short. The thread that tied their stories together? Tireless, often years-long wooing, and an appetite for taking huge risks.
“You really need the passion and the love for that brand you’re trying to chase,” says Antonino, whose team went to great lengths to convince Din Tai Fung chairman Warren Yang to establish his brand’s first branch in the Philippines. Known to be one of the most difficult franchises to acquire, Din Tai Fung opened its doors to Filipino diners in December 2015−a feat that took Antonino and her business partners almost three years to accomplish.
“When Abba (Napa), Jon (Syjuco) and I first got together, we knew we wanted to develop restaurants. And we knew we wanted to do things on our own, but there were also brands out there that really impressed us. One common restaurant we liked and in fact said if we were to bring to the Philippines, was Din Tai Fung. So we decided, for the heck of it, to just write. Of course, we didn’t get an answer,” she laughs.
It would take numerous visits to Taiwan, constant prodding over e-mail, and attending DTF’s annual franchisee party, before Yang told them over lunch at Taipei 101 to go home and start looking for a space. “The moment we exited the restaurant, Abba and I started jumping around. People were looking at us like we were crazy, but we really didn’t care,” Antonino excitedly shares, her memory of that day still clearly fresh.
Tiu, on the other hand, was actively seeking a foreign food brand to bring to the local market—legitimately this time. “I have this shop in Greenhills called Konbini, and it’s really the gray market. Kami ’yung pinaka kinakabwisitan ng mga Hapon. It would’ve been easier to just bring in the brand I wanted to Konbini (his Japanese grocery in San Juan), but I wanted to do it properly this time,” admits Tiu, who ended up setting his sights on perhaps the most reluctant Japanese company to expand its footprint globally.
While there has been a surfeit of Japan-born concepts aggressively entering the Philippines in recent years, Seigo Kawagoe’s holding company Kotobuki Spirits Co., under which Tokyo Milk Cheese Factory operates, wasn’t one of them. A leading player in Japan’s omiyage or premium gift market, Tiu shares Kawagoe didn’t really need the international exposure.
“They’re a really proud brand and protecting their image was even more important than what they would earn by expanding to the Philippines,” says Bryan Tiu.
“They’re a really proud brand and protecting their image was even more important than what they would earn by expanding to the Philippines. In fact, the founder was really blunt about how hindi siya yayaman sa amin,” reveals Tiu. “Kasi while most Japanese food businesses were failing, sila angat pa rin. They were earning billions. But I really felt it was a good opportunity for us. Being in the restaurant business (he owns Ichiba and Peri-Peri Chicken, among many others), the premium gift business is a different category entirely and we are really looking forward to learning what we can. It’s just like learning how a Lacoste becomes a Lacoste—we wanted to learn the tricks of the trade.”
DONE THINGS THEIR WAY
If money is your main motivator, there are easier ways to turn a profit than going into the international food franchise business. With the glut of restaurants opening on a monthly basis, it’s quite easy to assume that anybody can just get a franchise and succeed. “There’s always been that connotation that a franchise is turnkey—it’s so not,” assures Antonino. “Maybe the turnkey would be having a menu already, and a service system is already established, but training the people is different; sourcing out ingredients is hard. If you don’t have the passion to do it, it’s not the business you’d want to get into,” she says.
Even after they successfully acquired the Philippine franchise for Din Tai Fung—which, according to a report published in Forbes in 2011, rejects as many as 20 letters a week from prospective franchises in places as unlikely as Mongolia and Russia—the hard work did not end for The Moment Group. Acquiring the franchise was one thing; learning the ropes was a different animal entirely.
“I’m just following his process at the moment because the gift business category is something I don’t know my way around yet. While I do have the local perspective and have opinions on how I want the products priced, I’m trusting Mr. Kawagoe’s judgment,” says Tiu.
“Din Tai Fung is one of the most well-run restaurants in the world. They’re very, very meticulous. Everything they do has a reason behind it, down to the way they arrange the soy sauce and vinegar and the chopsticks, to the exactness of each xiao long bao. I, along with a team of 20, had to go to Taiwan and really learn how everything is done.”
Set to launch Tokyo Milk Cheese Factory’s lineup of delectably addictive milk cheese cookies this October, Tiu isn’t without his own share of apprehensions. The unstinting entrepreneur behind iFoods admits he is currently acceding to his international partner’s every directive as to how the omiyage business is to be run. “I’m just following his process at the moment because the gift business category is something I don’t know my way around yet. While I do have the local perspective and have opinions on how I want the products priced, I’m trusting Mr. Kawagoe’s judgment,” says Tiu, sharing that Kawagoe had spent some time going around Manila to survey the market.
REELING ‘EM IN
Beyond having the necessary expertise and portfolio to entice Din Tai Fung and Tokyo Milk Cheese Factory into granting them the privilege of running the Philippine franchises, it was the strong relationships Antonino and Tiu established with their respective business partners that sealed the deal.
In Tiu’s case, honesty about his dealings in the gray market went a long way in convincing Kawagoe that he was the man for the job. “I think my approach of being honest from the very beginning was the right thing to do. I disclosed that my company was in the gray market, and that we didn’t want to go that route anymore, especially with their products. And I think he appreciated that,” shares Tiu. By the time Kawagoe went to Manila, his first visit to the country, the partners had established a solid foundation to do business together. “During the course of working together, he even said that he wanted to help me succeed.”
Antonino’s group, being owner-operators, had that in common with the family-run Din Tai Fung. “Mr. Yang still operates the business personally, sometimes even making surprise visits like how we do it in our restaurants. I think that was one thing,” she surmises.
“You really need the passion and the love for that brand you’re trying to chase,” says Antonino.
Putting their best foot forward also didn’t hurt. “When Mr. Yang brought his team here to the Philippines, we really showed them all our restaurants, let them meet our key employees, and feel the day in our lives and how we ran our business. I think he saw that we shared much of the same values,” says Antonino, adding that the training she and her team had undergone in Taiwan has since enhanced the way they run their other restaurants. Din Tai Fung’s almost-obsessive attention to detail and business practices eventually trickled down to The Moment Group’s other brands.
“I’ve never met anyone as detail-oriented as Mr. Yang, but he always does it with a big smile. We’ve termed this as ‘Happy O.C.’ and it’s what makes Din Tai Fung special—beyond the food, the brand’s service and style is known worldwide for both its happiness and consistency, and we’re now trying to implement these practices in our other brands as well,” she shares.