WHY SALATEIRA Failed IN SPAIN: FULL Parsing
Why did you decide to enter the Spanish market
We analyzed all countries of the world according to different criteria. Based on this analysis, a roadmap for the development of Salateira was developed – Spain has taken a high position. The initiators of the opening of the restaurant there were our partners. The cost of the franchise was $ 20 thousand – it is the same for all countries.
We decided to launch a franchise in the city of Alicante. The choice was influenced by several reasons:
– the cost of opening a restaurant in Alicante is lower than in Madrid or Barcelona, and the solvency of the population, plus or minus the same
is a tourist city, and tourists spend a lot of money
– in Alicante, the partners had acquaintances who helped to open a business and correctly execute all the documents
Together with partners, we began to analyze the city in detail. Interested in everything:
– number of guests and average checks in restaurants
– taste preferences
– availability of products
– supplier search
– the cost of construction work
– salary costs
– utilities and rental rates
Having decided on the city, they began to look for a place and count traffic. Finding a room in Europe is much more difficult than in Ukraine. In all the malls, the vacancy was zero, so they searched in street retail.
Made up a forecast financial model. Investments in opening were higher than in Ukraine. But due to the lower cost of dishes, the financial model showed good return dates.
The launch of the restaurant took more than a year. With a successful start, the partners planned to scale the business throughout Spain.
When they realized that the project was a failure
The first thoughts that the project may not reach the planned speed appeared 3 months after the opening. There was no increase in guests, and current was not enough to reach the breakeven point.
In Alicante, the population is more than 300 thousand people, and in the tourist season the number increases to 1 million. We planned to open a restaurant in the peak tourist season (July-August).
Features of a franchise business abroad. 0
But an unforeseen situation occurred. A car that brought furniture from Ukraine was stuck at customs in Spain for a month and a half. We opened at the end of the season – September 20.
The partners were sure that with the start of the new season there would be enough guests. So the restaurant worked for a year. But nothing has changed and the institution had to be closed.
What conclusions did you make
There are three of the most important factors for success in the restaurant industry:
If you missed the spot, then the chances of success are very low. I think this happened in Alicante.
#1. In our case, it is better to focus not on tourist cities, since a tourist is looking for local flavor.
# 2 If you open the first restaurant in the country, and even with a new concept, open in places with maximum traffic to the target audience. Rent will be higher, but less risk.
# 3 Our restaurants work well in malls in food courts. They take up less space and require less investment. A stable flow of visitors minimizes the risks of an unsuccessful opening. Therefore, we are now opening the first restaurant in the country in the shopping center on a food court.
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#4. Marketing activities must begin much earlier than the opening of the restaurant itself. We were late with this and tried to unwind after the opening. If you are an unknown brand for the country, you will have to win the loyalty of the guests.
The Spaniards are specific to the new. The first month they can look out the windows, stand near the restaurant, actively discuss it, but they will not come.
#5. A lot of furniture and equipment was brought from Ukraine – it was cheaper. But as a result, they encountered problems at customs. Later there were problems with the maintenance of equipment and spare parts that were not in Spain – had to be brought from Ukraine.
This complicates the work. The conclusion is – look for products, services and equipment in local markets.
# 6 It is better to start a business in a top and large city (and this is not always the capital).
What are the risks for starting a franchise abroad
There are a lot of them:
– the market must be ready for your product, otherwise it simply will not be understood
– it is much more difficult to control the work of a franchise abroad than in Ukraine
– personnel risk (availability of qualified personnel)
– a concept that is not adapted to the market – from the product to the loyalty system
– legislative differences or changes
– it is difficult to properly control product quality
– incorrect assessment of opening dates
– incorrectly calculated investments
But we are 100% sure that Salateira can work in Spain efficiently, and we will certainly build a restaurant chain there. Our dishes were to the taste of the Spaniards. In addition, we now know what mistakes to avoid.