International Expansion Proposal
By: Yona Weisleder
Country Selection As Five Guys continues its international expansion, it should consider entering Costa Rica as its next market. While proposing Costa Rica might seem biased since I am Costa Rican and I would love to have Five Guys in my home country, the idea is rooted in my understanding of the Costa Rican food industry and the relations between the United States and Costa Rica.
Costa Rica’s Food Industry
It has been over 30 years, since the first food franchise –McDonald’s– entered Costa Rica and the number of new franchises keeps increasing. According to Ratcliffe (2013), by the end of last year, there were a total of 180 foreign franchises in the country from all sorts of industries such as food, hospitality and retail, most of them of American origin. The food industry represents about a quarter of all franchises in the country and includes a variety of chains from fast-food (Wendy’s, Subway and Carl’s Jr.) to fast-casual (Così and Smashburger) and sit-down (Applebee’s, Denny’s and Hard Rock Café).
Facts & Economic Indicators Surface: 51,100 km2 Location: Central America Capital: San Jose Population: 4.85 million (2012) GDP: $45.10 billion (2012) GDP per capita: $5,716.05 (2014) Unemployment rate: 8.30% (2014) Inflation rate: 3.75% (2014) Consumer spending: $829 per quarter (2014) Sales tax: 13% (2014)
Costa Rican’s familiarity and high-regard for foreign food franchises has led chains similar to Five Guys to consider the country as one of their first markets to enter as they expand internationally. For instance, in 2012, Così chose Costa Rica as its first in the American continent and second international market –the first being United Arab Emirates–. Così currently has three restaurants in strategic locations and plans to open two more. Around the same time, Smashburger opened its first restaurant in Costa Rica, soon after Canada and Kuwait, and expects to open 18 locations in the following years (Tristano, 2013). As fast-casual restaurants are quickly becoming a trend in Costa Rica, Food Industry Consulting Company, Technomic (2012, cited in Brenes Quirós, 2012) predicts an 8% growth for this segment, which nowadays represents 14% of total sales in the fast-food industry. Additionally, government support for foreign investment has translated into a very welcoming stance towards foreign franchises (Ratcliffe, 2013). Costa Rica’s strong democracy and long-term investment in its people, has made the country “an ideal regional or global business hub” with a highly educated labor force (GLC Abogados, n.d).
Furthermore, the country’s geographic location offers great benefits like proximity to the United States and the possibility to expand to other countries in the region, especially if Five Guys partners with shopping center Multiplaza, which has two locations in Costa Rica and at least one in each country of Central America. Lastly, Costa Rica’s agriculture is highly developed and its products are of optimal quality, which would allow Five Guys to get local food supplies, for example, potatoes from Cartago.
Relations Between the United States and Costa Rica United States and Costa Rica’s diplomatic history dates way back and has only grown stronger as they have partnered to promote democracy, improve human rights and develop free trade; this deep respect for one another is also shared by their people. Middle and high-class Costa Ricans tend to travel to the United States with certain regularity and are constantly exposed to the American culture through movies, TV series, music and the Internet, which has led them to know many franchises even before they enter the country. Most of my acquaintances have tried Five Guys at least once and the brand has already been featured in one of Costa Rica’s major media outlets, La Nación.
According to franchise legal expert, José Andrés Masís (2012, cited in Levin, 2012), “the No. 1 factor for foreign chains, is the openness of Costa Ricans toward foreign brands, especially U.S. ones”. Costa Ricans are known to emulate American fashion and trends; and the large number of American restaurants in the country demonstrates an affinity towards these type of food, especially hamburger venues. The United States and Costa Rica also share close commercial ties. The two countries share a free-trade agreement (CAFTA-DR) and the United States is Costa Rica’s major trading partner, representing 38.3% of exports and 45.6% of imports (United Nations Statistics Division, 2011).
Marketing Communications Strategy Target Market and Positioning
Five Guys should aim towards the middle and high-class young professional segment ages 18-26. This segment tends to have lunch in the office or go out to eat and even though they like fast-food, they prefer a healthier choice, but do not want to overspend on a sit-down restaurant for their daily meals. They are very familiar with American culture and brands and have travel to the United States at least three times in their lives. Many people in this segment may already know Five Guys and could help spread the word to their friends and colleagues.
“Simple food in a friendly environment” Five Guys’ promise of “simple food in a friendly environment” would be appealing to this target audience, which seeks this type of comfort food and enjoys the experience of a different place that offers great non-expensive food and amicable service.
BTL Marketing and Social Media
The brand can manage to use alternative marketing communications tools to engage the Costa Rican market, as long as it chooses strategic locations in shopping centers and plazas in some of the hippest parts of San Jose like Escazu, Curridabat, Santa Ana, San Pedro and Moravia. This way the restaurants themselves would become conversationstarters and would attract people living or working in the surrounding areas. Five Guys could also benefit from publicity articles and stories in print and broadcast media, which should begin as soon as the franchise decides to enter the country, to generate expectancy from both those who know the brand and those who do not know it yet. The people that are familiar with Five Guys would act as brand ambassadors or advocates by sharing their experiences with the brand. The opening event would be the main focus of all initial marketing communications. The idea is to have the original Five Guys come to the opening as part of a BTL marketing and social media campaign named #ConoceALos5Guys (“#MeetThe5Guys”), where people who participate online and through Twitter and Facebook for a chance to be one of the first customers; they would answer questions about the brand, share stories
and find the hidden peanuts. The latter would be a rally-style contest that would roll over a couple of weeks leading to the inauguration and would be supported by radio messages to prompt drivers to go find the peanuts.
#ConoceALos5Guys The campaign and the opening event would be covered by the press and would have their own landing page inside the Five Guys Costa Rican website. An important feature of the event would be to have the original Five Guys cooking the first burgers, in order to show the down-to-earth and kind mentality of Five Guys. After the opening, the social media activity and the point-of-sale messages should be geared towards the story of Five Guys, their use of fresh potatoes, the origin of the peanut tradition and the recognitions received, to create a deeper connection between consumers and the brand. The social media strategy must include branded-content as well as ads that would get more people to follow the brand. Similar brands that have less than three years in the Costa Rican market have managed to attain substantial followers in social media; for example, Smashburger Costa Rica has 12,155 Facebook followers, Chiliâ€™s Costa Rica 61,832 and Carlâ€™s Jr. Costa Rica 28,669.
References AFP. (2007, Enero 07). Cadena Five Guys Reanima la Historia de Amor de EEUU con las Hamburguesas. Retrieved April 01, 2014, from Nacion.com: http://wvw.nacion.com/ ln_ee/2007/julio/01/genteya-070701122822.74dx004i.html Brenes Quirós, C. (2012, December 05). Così Abre Primer Local en Multiplaza Escazú y Apunta al Este Para el 2013. Retrieved March 31, 2014, from El Financiero: http://www. elfinancierocr.com/negocios/Cosi-primer-Multiplaza-Escazu-apunta_0_203379661.html Carl’s Jr. (2014, April 01). Carl’s Jr. Retrieved April 01, 2014, from Facebook: https:// www.facebook.com/CarlsJrCr Chili’s Costa Rica. (2014, April 01). Chili’s Costa Rica. Retrieved April 01, 2014, from Facebook: https://www.facebook.com/chiliscr GLC Abogados. (n.d.). Doing Business. Retrieved March 30, 2014, from Lawyers of Costa Rica: http://www.lawyersofcostarica.com/doing-business Jorge, K. (2012, December 03). Smashburger Opens First Latin America Restaurant in Costa Rica. Retrieved March 31, 2014, from Smashbuger: http://smashburger. com/2012/12/smashburger-opens-first-latin-america-restaurant-costa-rica/ Levin, M. (2012, May 03). Are U.S. Chains Taking Over Costa Rica? Retrieved March 31, 2014, from Tico Times: http://www.ticotimes.net/2012/05/04/are-u-s-chains-takingover-costa-rica Meyer, P. J. (2009, June 02). Costa Rica: Background and U.S. Relations. Retrieved April 01, 2014, from FAS: http://www.fas.org/sgp/crs/row/R40593.pdf Ratcliffe, R. (2013, November 08). American Food Chains Booming in Costa Rica. Retrieved March 31, 2014, from Economy Rent-A-Car: https://www.economyrentacar. com/blog/travel-guides/american-food-chains-booming-in-costa-rica Smashburger Costa Rica. (2014, April 01). Smashburger Costa Rica. Retrieved April 01, 2014, from Facebook: https://www.facebook.com/SmashburgerCostaRica The World Bank Group. (2014). Costa Rica | Data. Retrieved March 30, 2014, from The World Bank: http://data.worldbank.org/country/costa-rica Trading Economics. (2014, April 01). Costa Rica | Economic Indicators. Retrieved April 01, 2014, from Trading Economics: http://www.tradingeconomics.com/costa-rica/ indicators Tristano, D. (2013, January 09). Is Costa Rica the New Hot Spot? Retrieved April 01, 2014, from Technomic Blog: https://blogs.technomic.com/is-costa-rica-the-new-hot-spot/ United Nations Statistics Division. (2014). Costa Rica. Retrieved April 01, 2014, from UNdata: http://data.un.org/CountryProfile.aspx?crName=Costa+Rica
Yona Weisleder Froimzon M.A. Global Marketing Communication and Advertising
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