Yet another US fast food business is eyeing off Australia with interest, hinting at the possibility of hundreds of franchises in coming years.
Wendy’s, the international fast food chain hailing from Ohio and known for its square beef patties, could become a common sight in Australia, after previously running a pop-up Sydney restaurant in 2021.
Abigail Pringle, Wendy’s president, international and chief development officer, told the The Australian Financial Review the company believes Australia is a lucrative market for long-term growth.
“We think that the Australian market could be hundreds of restaurants,” she said.
“We have to be careful with what that timeline is exactly because we want to pick the right partner. And that takes a little bit of time. But we think that we can have hundreds of restaurants in the market over time.”
The franchise company, which is already in New Zealand, wants to increase its global restaurant numbers from 7000 to 8500 by 2025.
Australia currently has a fast food and takeaway food services market worth $7.4 billion, according to Ibis World.
If Wendy’s makes the move, it will follow other US imports Carl’s Jr, Five Guys and Taco Bell, who all arrived in Australia during the past few years.
Cheaper options
The Retail Solution founder Roger Simpson said it could be a good time for Wendy’s to break into the local market, with rising cost-of-living pressures encouraging Australians to look for cheaper options when eating out.
The Australian fast food landscape is dominated by McDonald’s, Hungry Jack’s and KFC, all of which have roots in the US (Hungry Jack’s is a franchisee of Burger King Corporation).
But Mr Simpson said there’s plenty of room for competition, especially in the low-budget market.
“Across all retail … particularly the more expensive brands, the higher-quality brands are still doing quite well,” he said.
“The budget ranges … are now starting to actually grow their sales. That mid-tier, [they] are the ones that are going to actually find it quite challenging.
“So I think anything [in] the lower price range is in a good place in the market right now.”
Need to adapt to local market
KPMG Australia head of retail Lisa Bora said there is an undersupply of competition in certain regions of Australia, especially where there has been a growth in housing.
But incoming fast food chains should avoid “assuming a global ‘cut and paste’ is a slam dunk across all international rollouts”, and should instead make decisions based on clear insight into the specific consumer market, such as suburban rollout versus high street metro.
KPMG sees stronger growth in “perceived healthier” fast food brand choices by future generations, so how retailers plan and respond will be key to their success in Australia.
Part of this is locking in a sustainable supply chain – which Wendy’s appears to already have its eye on, as Ms Pringle said the company would use Australian ingredients when it launches locally.
Failing to adapt to local market needs and wants has been attributed to the relatively subdued success of Starbucks in Australia.
Despite, or likely because of, Australia’s strong coffee culture, today the American coffee giant has only 56 stores in the eastern states after being forced to close 61 of its initial 84 stores across the country in 2008.
