It almost goes without saying that, even for the savviest company, overseas expansion is a tricky proposition. But opening thirty overseas locations in a very short time? Some would say it’s all but impossible, with or without large amounts of capital.
But that’s precisely what Mad Group, the folks behind Kiwi restaurant chains Habitual Fix and Mad Mex, plan to do.
The company hopes to open at least 30 Habitual Fix restaurants in the United States, beginning in Los Angeles with its first location set to open its doors in the first half of 2016.
“The market is very competitive but is dominated by junk food and huge corporations that act slowly,” says Mad Group chairman and group managing director James Tucker.
“US consumers are taking more notice of what they put in their bodies, and we want to be part of that shift towards ‘quality’ and ‘healthy’. By being a newcomer we think we can react quickly and also push the boundaries on new ideas.”
Image: James Tucker, Mad Group chairman and group managing director
To help break into the ultra-competitive American market, the company has signed a 10-year Memorandum of Understanding (MoU) with an unnamed American partner. The deal is worth over $6 million in franchise royalties over the initial term. It can be renewed for another 10 years after the initial term expires at a franchise royalty rate of more than $1 million per year – making the deal potentially worth $16 million over 20 years.
“Signing this deal and opening in the United States will add to our credibility and, we believe, will assist in securing other international master franchise deals,” he says.
Tucker says he hopes there will be Habitual Fix locations in at least five different US states within five years. He adds that Mad Group has signed a MoU for Japan, and is also looking at possibly expanding to other countries. He also says Habitual Fix locations – which currently can only be found in the Auckland and Wellington areas – could soon be coming to the South Island.
Rapid growth is nothing new for Mad Group, which was founded in 2008. In 2014, the company placed eighth on the Deloitte Fast 50 list of New Zealand’s fastest growing companies, with growth of 723 per cent.
So could other Kiwi companies thinking of expanding abroad learn from Mad Group’s ambitious expansion plans? In borrowing from sportswear giant Nike, Tucker has simple advice.
“Just do it,” he says.
In pushing into the US, Tucker says changing trends in the land of Big Macs and super-sized sodas have helped create an opportunity.
“There is growing consumer awareness in the United States about what people are eating and the fast food giants are battling headwinds,” he says.
“Habitual Fix is well positioned to take advantage of this changing trend, and turn Americans into food junkies, not junk foodies.”