Golden Chick bets on Pakistan
Golden Chick’s first two attempts to take its brand internationally were strikeouts, for reasons outside their control. But the Texas-based franchise is betting its third attempt to cross the continents will pay off handsomely, thanks to a new team in place.
The company first headed south to Mexico in the 1990s, only to have its business seriously impacted by the peso crisis—one of the first truly international financial crises. More recently, its first Chinese store was hijacked last fall by the collapse of a subway tunnel that ran outside its front door. Sales cratered, and soon afterward, doors of the first Golden Chick in China were closed.
After retreating back to the States, the company focused on adding units throughout its turf in the Deep South—now up to 148 units and counting—diversifying its menu and remodeling its stores to convey a more contemporary presentation.
More confident in its brand and the state of the international market, Golden Chick is once again taking its chances with an upcoming expansion to Pakistan. While Pakistan is not exactly known as a country ripe for American investment, Golden Chick CEO Mark Parmerlee is confident that lessons learned and a newly added international team will ensure its third international foray will be the charm.
“We wised up and said, ‘You know, if we’re going to be serious with international development, then we need a more professional international team,’” he said. “We started with a clean slate after Mexico and China, and said let’s first start with getting the team in place.”
One key hire was Raja Joshi, now director of international franchise support at Golden Chick. Although the company was already gearing up for another international move, Parmerlee said this opportunity was a result of being contacted by the investment arm of Pakistan’s Crescent Star Insurance.
Monty Whitehurst, senior vice president of development at Golden Chick, said the franchisor has further plans to expand in the traditional Gulf states like Saudi Arabia and the United Arab Emirates. In Pakistan, he added, Crescent was “very well capitalized” and was particularly interested in bringing another chicken-based U.S. brand to counter the weight of KFC in the country.
“They were on the ground floor with establishing KFC and the Yum Brands in Pakistan, so we had the combination of resources, capital and experience on that team,” he said.
Aside from being approached by a lucrative partner, Joshi stressed that Pakistan is a relatively young nation (median age of 22.6 years) with a rapidly developing economy and increasing political strength.
“With a change in political leadership the last few years, the country’s becoming more and more stable both politically and socially, and it’s a resurgence of the middle income class,” he said.
Agriculture and natural resource extraction have partially fueled the income and employment gains as well as foreign investment from China, the international investment juggernaut with which it shares a 325-mile border.
Joshi said Golden Chick’s first phase of development will be establishing the brand’s presence with 10 stores in and between the cities of Lahore and Karachi—the capital city of the Punjab province and one of the largest metropolitan areas in the world, respectively.
Its first stores will be a mix of locations in malls, inline centers and freestanding stores with room for drive-thrus. The first three locations will open simultaneously, with the rest following 30 to 45 days afterward. Joshi added malls are the primary focus due to increasing interest and buying power from young people, and a lack of development capitalizing on this nascent trend.
Whitehurst said Golden Chick’s biggest challenges have been adapting to different international and local franchising laws, specifically differences in withholding taxes. He acknowledged that moving into Pakistan includes an element of risk, but said that’s the case with any such move.
“Obviously the risk will always be either a local situation that politically or economically changes the climate within the country,” he said. “We feel that it’s a strong enough economy that we can overcome that, but you always have those risks.”
Parmerlee echoed the sentiment by stressing the company hasn’t “bet the farm” with this expansion, and that it’s added international experts and learned lessons from its previous international moves.
“We will provide all the support—this support costs money—but we are happy to have Raja focused on this,” he said. “We have made the investment in people, in legal expenses, in travel, and we believe we’ve done the due diligence on our partners… so all the moons seem to be aligned.”
Back in the States, Parmerlee said the company will continue to expand in concentric circles around its existing territory, with an upcoming wave of development in South Carolina and Georgia.
“The obvious place for us to look and develop is along Interstate 20 between Texas and South Carolina where we have a nice growing concentration,” he said. “We are happy to consider other areas provided the operator has some decent infrastructure and can do a multi-store agreement.”