International expansion strategies and the role of cloud-based mapping

In conversation with Prisila, correspondent, Asia Business Outlook Magazine. Tim Shaw shares his views on the international expansion strategies employed by fast food and QSR retail networks. In the conversation, he also discussed about the use of cloud-based mapping software transformed the way businesses and government agencies make decisions regarding locations

What are the key trends and developments currently shaping the fast food and QSR retail network industry? How has the fast food and QSR retail network industry evolved in recent years?

Key Trends & Evolution

Sector growth

Continued growth in GDP per capita and incomes means the addressable market for QSR continues to expand in India and across most of Asia. This growth continues to attract established western QSR and Café brands to India and is also driving the emergence and expansion of strong local brands.

In recent years, western brands have begun testing growth opportunities beyond the relative safety of the large shopping malls. Revenue potential is relatively easy to estimate in the large malls that are extremely successful at attracting greater numbers of high spending consumers. However, retailers pay handsomely for the security and prominence attached to major mall tenancy opportunities through expensive rental and other lease costs. The High Street offers lower lease costs and the potential for greater profitability. However, there is also greater risk.

"The presence of local and global QSR brands in a market (whether that’s a city or a country) gives confidence that there is an established and growing consumer market for the sector"

Network growth in large shopping malls provides low risk access to new sites, but the number of growth options is finite. The High Street offers abundant growth opportunities for QSR brands with the market planning and location feasibility skills required to identify and prioritise high revenue and low risk new store locations.

Delivery

Pre-COVID the delivery service was becoming an established and important channel for many QSR operators. But during COVID the customer demand for delivered food exploded. Whilst the rate of growth has diminished, the sector hasn’t reverted to pre pandemic behaviours, and the delivery is now an established and very significant channel to market.

Expansion beyond Tier 1 cities

Improving transport logistics and low-cost digital marketing means QSR businesses are seeing increasing opportunities to expand their presence in smaller cities and towns. This trend is evidenced in many countries throughout Asia. The percentage of the population with an income level enabling the purchase of premium branded food and beverages may be lower in the small cities. However, in many instances, there are more than enough consumers to support continued successful growth beyond the Tier 1 mega cities.

Can you discuss the international expansion strategies employed by fast food and QSR retail networks? What are some of the key considerations when entering new markets? How do fast food and QSR retail networks manage their supply chain and ensure consistent quality across multiple locations?

There are a great many global QSR brands successfully expanding in Asia – Domino’s, Pizza Hut, KFC, Taco Bell, Subway, Burger King, McDonalds, Starbucks, The Coffee Bean and Tea Leaf, amongst others, and there are many more brands entering or planning to enter Asia.

Key considerations that global brands consider when planning to launch in a new market include:

Supply Chain and Logistics

Confidence that global brand standards will be achieved in a new country is a mandatory and minimum deliverable. This requires careful assessment of importation processes, local production options, warehousing and delivery infrastructure and capabilities. If there isn’t 100% confidence that global brand standards will be achieved in a new country it’s very unlikely to progress.

The Addressable Market

What is the size of the consumer market being targeted? Careful consideration of the resident populations, worker populations, income levels, food preferences and the retail hierarchy across a country are all important.

Once it’s determined that the market will provide enough customers, the next and important question is whether these consumers are clustering together in sufficient numbers to create a catchment with revenue potential that creates profitable new store opportunities. If the potential consumers are dispersed over a wide area, then it’s unlikely they’ll be regular customers at a new QSR location no matter how much they may enjoy the experience.

The Competitive Landscape

In this context, the presence of competitors is generally seen as a positive rather than a negative. The presence of local and global QSR brands in a market (whether that’s a city or a country) gives confidence that there is an established and growing consumer market for the sector.

The Retail Hierarchy

What is the opportunity to successfully establish the first 10 or 20 locations with relatively low risk within a single market area. QSR businesses, whether they’re local or global brands, require economies of scale and establishing a network of four or five locations in a large city will never be enough. Are there large shopping malls providing new store potential? How many High Street retail precincts exist and how many QSR brands are they currently supporting?

How has the use of cloud-based mapping software transformed the way businesses and government agencies make decisions regarding locations? What are some of the specific features and functionalities that make cloud-based mapping software a valuable tool for fast and accurate decision-making based on location intelligence?

The use of cloud-based mapping software to inform location decisions has grown significantly over the past few years. Ten years ago, only well-financed global brands could afford to invest in in-house platforms to access the insights needed to inform their location decision making. However, with recent innovations in cloud computing and big data, location intelligence insights like population data, demographic data, competitor data and point of interest data have become more accessible through simple, easy-to-use and cost-effective cloud-based mapping platforms like GapMaps Live to help inform site level decision making for many businesses across the globe.

In less mature markets across Asia and the Middle East where access to these datasets isn't readily available, we're seeing many brands turn to cloud-based location intelligence platforms to help them make decisions on where they should grow the business and how they should grow the business across one or multiple countries. Getting these decisions wrong can have a significant impact on their bottom line so having access to accurate and granular insights to inform optimal location decisions quickly is becoming more and more critical.

In markets like India or Indonesia where many global brands have high concentrations of stores in major cities, they need to understand where expansion opportunities exist without cannibalising sales of their existing networks. They also need to identify whitespace opportunities in other untested cities where international brands have yet to establish a footprint. Cloud-based location intelligence platforms can be utilised to visualise their existing store networks relative to competitors, and also identify the most attractive opportunities for store expansion by understanding catchments with high growth in consuming class populations or households that can afford to purchase that brand's product. The granularity of digital data means that demographic and consuming class insights are possible for retail stores with the smallest of catchment areas. Even café catchments, which are typically no larger than a radius of 250 metres (or a walk-time of a few minutes), can now be assessed to determine the count of residents and the count of workers as part of a location feasibility process.

Additionally, clients can seamlessly blend a combination of their own data, such as sales, performance, and customer locations with demographic data available within cloud-based mapping platforms to better understand their customers and where to find more of them.

Can you elaborate on the integration capabilities of cloud-based mapping software with other business systems and data sources? How does it streamline workflows and improve overall efficiency? What are the security measures and data privacy considerations that businesses and government agencies should be aware of when utilizing cloud-based mapping software?

Data inventory continues to grow in businesses, so it is important to provide stakeholders with multiple options to easily consume, analyse and interrogate that data depending on their needs.

The challenge with this is avoiding fragmented or duplicated data across multiple repositories so having a user-friendly way of integrating data between environments is essential.

For cloud-based mapping software specifically a business can harness the power of ‘real-time’ data transfer and updates. For example, if a business has a specified area that they service as a delivery zone and an event occurs that makes parts of that area inaccessible, they could use a cloud-based mapping solution which integrates with their commerce platform to react and respond in real time and update the service area.

As spatial data is dynamically updated with store openings and closures a real time integration means that a business always has the most up-to-date view of the competitor landscape, which is crucial in making optimal network planning decisions. 

Security within any cloud-based application is paramount so it is important to ensure that the vendor has recognised certifications like ISO27001 and SOC2 Type 2, for example. Continuous monitoring and regular vulnerability scanning should also be conducted by the service provider to ensure that new versions of the product remain compliant.

A major benefit of cloud-based mapping software is providing a single-login for all users across the organisation regardless of their location. This ensures seamless access for everyone involved in network strategy planning to efficiently visualise and manage their locations worldwide. However, this also introduces a security consideration of access control, so it is important the software has role-based permissions that helps protect data from unauthorized access. Only authorized personnel should have access to sensitive mapping data and functionality.