Pinkberry goes to Japan, signing for 50 stores in ‘tart’ deal
Pinkberry began expanding internationally early in the brand’s life. “We were in our third U.S. city when we entered the Middle East,” CEO Ron Graves said. Now they have 60 stores there.
The brand, which claims to have reinvented the frozen yogurt category back in 2005, currently has 250 stores.
Japan, which Graves calls a “terrific market,” is the 20th country for the brand. Management had interviewed several groups in Japan over the years, but never found the right partner. Now Graves thinks they’ve found it.
Royal Holdings Co. has signed on to develop 50 stores, starting in the country’s capital, Tokyo. Royal operates 722 restaurants across several brands, including U.S.-based Sizzler and Shakey’s Pizza. It also runs a Japanese-style fast-food restaurant, Tenya, and a family restaurant chain called Royal Host. In addition, their umbrella includes institutional restaurants at locations such airports—and airplane food—contract-food services and a hotel. They are based in Fukuoka City, Japan.
What was impressive about Royal, Graves said, is its breadth of relevant operational experience, deep local knowledge and financial wherewithal to develop the market. The group’s leaders also have “like-minded values” to Pinkberry’s, which Graves said is essential in all business relationships, but crucial in international ones. Like-minded values are described as quality of their employees, and the quality of the customer experience.
Localization is the trademark of international expansion, but for now Pinkberry plans to keep the brand “as intact as possible,” Graves said. “Eventually we will localize, but that takes time.” One of the first changes to a brand overseas, he added, was to modify the offerings of the toppings bar. In the Middle East, for instance, they added more dates and nuts, and in Peru, the chain includes lucuma, a local fruit that’s described as a cross between maple syrup and sweet potatoes.
The taste of the yogurt is not “sour,” according to Graves, but rather the taste of real yogurt, which happens to be tart. “We didn’t want it masked by sweet,” he explained. The taste profile is inspired by the European taste, he said, and by the fact that it “actually has yogurt in it.”
The ‘real’ problem
Real estate is always a challenge, and prices are higher in Tokyo than other metropolitans. “We’re careful with real estate,” he said. “We think it has a huge impact. We give extensive real estate training and we’re tenacious and creative.” Royal’s existing real estate holdings and knowledge of the market will be a boon. They are investigating the possibility of offering Pinkberry as a dessert option in Royal’s existing restaurants, Graves said, adding it is not the focus of their expansion plans in Japan.
Finding a partner is tricky. Pinkberry is not looking for individuals to roll out their brand in foreign countries, but for large companies such as Royal Holdings. “Our strategy is to find the largest company to develop a country,” he said. “They’re hard to find. There’s a limited number of these entities out there.” Fortunately, Pinkberry is a brand with cachet around it, he adds.
But that doesn’t mean Pinkberry didn’t have to do its due diligence before the negotiations ever got to the table.
All international consultants warn finding good partners involves face-to-face meetings, via social as well as business meetings.
In “Kiss, Bow or Shake Hands,” a guide to doing business in more than 60 countries, the authors advise against public displays of emotion, which the Japanese dislike. Also, senior executives should lead the discussions, as the role of the junior members of the team is to go out to drink with their young counterparts. “The Japanese like to convey important information via junior members,” the book says. We didn’t ask if this was Pinkberry’s experience. But to attract such an established franchisee, Pinkberry’s executives must have been doing by-the-book negotiations.