| Both Wetzel’s Pretzels, top photo, and Rocky Mountain Chocolate, below, were greeted by long lines when they opened stores in Japan. |
Japanese love American brands, but even two snack-centric franchisors didn’t know exactly how much that love would impact their grand openings. Sometimes love means having to say, ‘Sorry, you can only have five.’
In the U.S., Wetzel’s Pretzels looks for "grab- and-go" real estate in the main mall, as opposed to locating in a food court. That tried-and-true approach worked even better than expected when the company opened its first in-line store in Japan that produced almost nonstop lines. But for a different reason than was anticipated.
"Culturally, they don’t eat on the run," says Bill Phelps, CEO and co-founder of the 260-unit, Pasadena, California, chain, about the Japanese consumer.
That overlooked fact impacted more than the real estate. The first unit opened in Tokyo and staff wasn’t prepared for customers to order 10 pretzels at a time to take home to share. The American style of pretzel eating is to buy one to nosh while wandering around the shops.
The large orders were creating a 45-minute wait, Phelps says, until they finally posted a sign limiting the number of pretzels that could be ordered by each person to five. Ironically, that figure became the average order—even for the person who may have only planned to buy one.
If they had to do all over again, Phelps and cofounder Rick Wetzel say they would have slowed down the process and taken a more "thoughtful" approach.
But besides not anticipating a buying frenzy, the team at Wetzel’s did a lot right.
Once they realized sales were going to be in multiples, they designed a variety pack of five pretzels to speed up decisions. To help customers order more quickly, the menu used large pictures with prices, rather than written descriptions of the products.
After the initial grand opening, the long lines continued. "They came off a little bit," Phelps admits, "but they came off a little bit of crazy."
The master franchisee, who signed a 40-store deal, will develop several stores before sub-franchising. They already have experience as a master of several brands outside of food.
"We always felt like Japan would be our No. 1 (international) market, because in Southern California we get a lot of Asian customers who are tourists," Phelps says.
Most popular pretzel choices at the first unit, which opened in April, are tracking identically to U.S. stores, Wetzel says. The best-seller is the original butter-and-salt pretzel, with pepperoni twist a close second.
The Japanese like American brands, Phelps says, so there has been no need to change the product, except to make it smaller. Wetzel’s pretzels in Japan are 30 percent smaller than their U.S. counterparts—four ounces versus six.
The sweet smell of success
Rocky Mountain Chocolate had a similar experience when it went into Japan, but with a different twist. The Durango, Colorado-based company had identified a strong franchise partner—Aeon, a $64 billion company that owns 70 percent of the malls and supermarkets in Japan. The mall developers decided not to become a franchisee itself, but instead introduced the franchisor to one of its premiere tenants, according to Greg Pope, senior vice president, franchise development and operations for the chocolate maker.
Rocky Mountain then did an unusual thing. Rather than rush to sign a franchise agreement, Pope says they decided to open a test store first in a joint-venture arrangement. Pope "loaned" the prospect a 240-square-foot kiosk he had closed in another location to open in a busy mall to "see what it does," he says. It did well, and "after 60 days, we were ready to enter into a master agreement," he says, adding, "No one really knows how consumers are going to react" until you test it. Which is why Rocky Mountain believed a test store was invaluable in avoiding a costly mistake for both sides.
Little was done to localize the franchise, Pope contends, because the master wanted everything exactly like the U.S. stores, from signage to product. Signage, however, did include both Japanese and English translations.
Dark chocolate outsells milk chocolate—the opposite of the U.S.—and the grandiose chocolates are an oddity that attracts attention. While Wetzel saw the need to downsize their product, the extra-large size of Rocky Mountain chocolate was a selling point.
Most of the product is shipped in from the Colorado factory, but a few products, such as dipped strawberries and apples covered in caramel and sliced in front of customers, are finished in-store as part of the entertainment value.
While customers peruse the menu, employees offer samples to keep the line moving—and customers happy.
Like Wetzel’s, Rocky Mountain learned quickly that Japanese do not want to walk around the mall eating large snacks. Rather than eat a whole caramel apple on a stick, customers receive an apple sliced into eight pieces to be shared or eaten discreetly.
To date, the master franchisee has 20 locations teed up for over the next 12 months, with plans to open at least 100, Pope says.
Mall locations have proven to be winners for both concepts. In their first location, Pope says as many as 200,000 people walk by their kiosk on a weekend. "Malls are their entertainment," he points out.
Another source of entertainment is hosting master franchisees back home in Durango. Foreigners who have grown up watching Westerns are treated to an experience right from the movies when they visit headquarters for Discovery Day. "We tell them, ‘please, please dress casually. It’s very western,’" Pope says. "We’ve taken them zip-lining, fly fishing, snowmobiling."
And on top of all that, they get to go back to Japan and eat all the oversized chocolate they want.
Who says international expansion isn’t a win-win?
