International Expansion: Papa Bello Moves to China
The upstart pizza chain goes upscale to cater to China's growing middle class and their children.
By Maya Norris, Managing Editor -- Chain Leader, 1/6/2009 1:49:00 PM
 |
| Papa Bello will open its first restaurant in Shanghai, China, on Jan. 15. |
Why venture into China when Papa Bello is a small company and hasn't really established itself in the United States?
No. 1, China's middle class is the fastest growing middle class in the world. And they have a very entrepreneurial spirit and a sense of urgency for capitalization, and franchising has become one of the main interests of the Chinese investor. Food just happens to be the flavor of the year right now--food franchising.
This is not a fly-by-night, shoot-from-the-hip transaction. We've taken considerable efforts to forming relationships with our partners there--legal counsel, government officials, city officials--and really getting our strong foundation before we made the final decision to go ahead and jump in.
 |
| Unlike its fast-food service model in the United States, Papa Bello's restaurants in Shanghai will feature a full-service approach and an upscale look that includes white marble, wenge wood (a dark brown wood from West Africa), high-gloss patent-leather seating and chrome fixtures. |
It's just so huge. I didn't want to pass up on the opportunity and to be able to get in this early of a stage. I recognize it as the perfect timing.
The reason why is, No. 1, pizza has already been accepted. We're not the guinea pig. We're not the brand new guy coming in with pizza. Pizza Hut is well established there. Papa John's went in three years ago. They've built 100 locations in about three years. So pizza has been well accepted there.
No. 2 is just the sheer opportunity of volume and critical mass. There's so many locations, so many people, and they've accepted pizza--and not just accepted it, but embraced it.
The Chinese seem to have an affinity for Western brands given the success of McDonald's, KFC and Pizza Hut in the country. How do you differentiate your brand vs. those competitors, specifically Pizza Hut and Papa John's?
We are much more upscale than, say, your Papa John's in China. Pizza Hut in China is very different than Pizza Hut in the U.S. It's more of an upscale restaurant, full service, fine-dining experience. Where here it's more of a fast-casual dining experience. There's a big difference between the two concepts.
And to really differentiate ourselves, we really are focused on kids. That's one of the reasons why Papa Bello man looks like he does. We spent a lot of time even from the beginning with focus groups and formulating our character and a logo.
 |
| The company will play up its Papa Bello character to cater to kids. |
Well besides a kid friendly menu, the Papa Bello character is kind of someone that will become a real person to them--an actual character. Just like you go out to eat here, interactive coloring books and things like that. You don't really see those kinds of things in China.
It's very much in [the Chinese] culture to spoil their children. They really indulge their children because they don't have the two, three, four kids that most American families have. We really wanted to make sure that we made it a fun, memorable dining experience for kids.
In the U.S. the Papa Bello brand is quick service. You're taking the Papa Bello brand upscale and full service in China. Why did you decide to go in that direction?
The Chinese are very value oriented. And they associate price with value and price with prestige. Their spending mentality is much different than ours. In fact, I would say it's completely opposite. They don't mind paying for quality. They actually like to. They like paying for the best. And so we felt like our U.S. menu was inadequate to meet the higher standard. We had to bring in more items that would cater to their needs and tastes and make it more of a fine-dining experience.
How does the menu cater to Chinese palates?
We actually have kung pao chicken pizza. We have a shrimp scampi pizza. We even brought in some other Asian flavors like a tom yum sauce, which is more Thai, on one of our pasta dishes. And so we've actually expanded into a wider Asian palate than just China. Even within China the ranges of flavors and tastes are equivalent to the difference of southern food and food in Boston or California. There are regional differences. We'll continue as we expand to keep that in mind.
The safety of China's food supply has come into question over the last couple of years. How are you going to deal with the supply-chain issue, particularly in regards to sourcing, quality control and food safety?
Our sauce and cheese are going to be exported from the U.S. into China. So they will be under U.S. standards and conditions. And there in China we have aligned ourselves with four food distributors that have an extremely high reputation in quality and safety.
How do you ensure the food safety?
There's several checks and balances that the food distributor has to go through. And because China has been receiving a lot of negative publicity regarding their food safety and issues, there really has been a lot of immediate action and progress and steps from their government to improve those systems.
As a small company, how are you going to provide support to franchisees in China as well as ensure that franchisees are upholding the brand integrity?
We have our own in-house legal counsel, which represents us there in China. And we're fortunate that our law firm there also has a law practice here in the United States. And so it's a nice connection for us and helps with our communication process. We have an accounting department set up through our law firm, which also helps with documentations, registrations, intellectual property and compliance issues.
So your legal counsel is going to provide franchisee support?
They're going to provide a lot of the compliance, but I also have a full-time regional director that will live in Shanghai.
So he'll do the field visits and the training?
Exactly. It's really important that we have that especially in this early stage. It would be very impractical and unrealistic to attempt to manage that from Las Vegas.
The Chinese middle class has more disposable income and access to cars than they had even five years ago. As a result, other American chains in China are playing up their drive-thru and delivery capabilities. Are you considering those options or other ways to drive sales?
We are. Where our first restaurant location is located there's actually an average of 50,000 people per square block. And that's residential. And then there's an enormous business population during the day. Once we get open and get going, absolutely the delivery and catering program will be put into place.
What's the long-term expansion plan for China? How many do you think you can open there?
The plans for Shanghai alone and the two provinces that surround it--our area developer is planning on assembling 10 franchisees within three years that will each build two to three locations per year. So the expectation is really high. I don't want to say that we're so confident and positive that we're going to build 60 locations in three years, but it's definitely something that's possible.
Related Content
Related Content
View All Blogs
