Market Entry Is Won in Practice, Not on Paper
Give a restaurant operator a list of 50 potential markets and the temptation is obvious: rank them. GDP. Population. Disposable income. Market growth. Tourism. Put the numbers into a spreadsheet, apply a weighting, and eventually a winner emerges. It feels rigorous. It can also be completely wrong.
The variables that are easiest to measure are not always the ones that determine whether a restaurant will succeed. Cultural fit, competitive dynamics, operational complexity, regulatory friction and, perhaps most importantly, the quality of the local partner can be much harder to quantify.
Starbucks discovered this in Australia. The company accumulated $105 million in losses in its first seven years after underestimating the strength of the country's independent coffee culture and rolling out too quickly. Dunkin' encountered a different version of the same problem in India, where assumptions around demand and pricing failed to translate. In Saudi Arabia, by contrast, the brand found a much more receptive market. Same brand. Different market. Very different outcome.
Market entry can become a data exercise when it is really a judgement exercise. The challenge is to evaluate where the numbers, the brand and the conditions on the ground line up well enough to give you a chance of winning.
Data still has an important role. It should narrow the field. Start with GDP, market size, geographic proximity and cultural alignment, then look at competitive intensity, demand density, tourism flows, margin potential and category-specific consumption.
Tourism is a good example. Globally, food and dining account for around 30% of in-destination tourism spending, making tourist volumes an indicator of revenue density and average spend. But tourist demand is transient and rarely tells you how well a concept will perform with local customers.
The spreadsheet gets you to the shortlist. Then the harder work begins.
Two markets can look almost identical economically and be worlds apart operationally. Can you recruit the right people? How difficult is licensing? Can you source the ingredients you need at the right cost and quality? Does the proposition translate culturally? And is there a local operator you would trust with your brand?
Markets can play different roles in an expansion strategy. Some are quick wins, where the economics are attractive and execution is relatively straightforward. Others are strategic bets, where complexity is higher, but the potential prize is larger. Learning labs offer a lower-risk environment in which to test the model and build international capability. Then there are the traps, where neither the economics nor the execution case is compelling.
That might mean starting somewhere culturally familiar, using a tourist or expat audience as a bridge to local demand. It might mean working with an experienced local operator, or testing the concept through a pop-up before committing significant capital.
For some brands, testing several markets in parallel can also reveal which potential franchise partners actually perform. Because partner selection can matter more than the market itself.
Jane O’Riordan perfectly echoed this point in recent conversation in relation to the expansion of Red Engine: “We’ve actually done a lot of strategic work prioritising our markets and have a very focussed list of territories. However, having done this a few times it’s the relationship with, and capabilities of, any potential partner that provides a further filter on priorities.”
A great market with the wrong partner can become a bad market very quickly. Like a marriage, a franchise relationship can be expensive and painful to unwind. A partner who understands the brand, can execute it and has the appetite to invest behind it can create an advantage that no market-ranking model will capture.
Regional clusters can also conceal important differences. Germany can look straightforward on a European expansion map, yet its franchising landscape can be fragmented. Belgium, the Netherlands and Luxembourg are often treated as a single Benelux market, despite differences between the individual countries.
The GCC presents an even clearer example. The UAE is relatively small compared with Europe's largest economies, yet unusually dense, high-spend and heavily concentrated around Dubai and Abu Dhabi. Around 81% of GDP is concentrated across those two cities, compared with an average of roughly 29% across the largest European economies.
Saudi Arabia is often placed beside the UAE in a GCC expansion strategy. Commercially, however, it is a very different proposition: much larger, more domestically driven, less reliant on tourism, more price-sensitive and requiring greater localisation. Treating both simply as “GCC” can hide important decisions around pricing, proposition, partner selection and sequencing.
There are brands that have used sequencing to their advantage. Big Mamma Group built its international footprint largely within Europe, opening 15 sites across France, the UK, Ireland, Spain, Italy, Monaco and Germany before moving into the UAE and considering the US. It built capability across markets with enough common ground for learnings to compound before taking on greater complexity.
AlphaMind has taken a different route, keeping its core portfolio in the UAE while using selective outposts such as London and Ibiza to access highly international customer bases.
Then there is Hawksmoor. Its first international market was the US, entered directly and without a local partner. That is a much bigger bet.
The upside is obvious. The US has a huge affluent consumer base, a familiar dining culture and the potential for strong unit economics. But it is geographically distant, operationally complex and intensely competitive. Regulation, labour and costs vary by state, while the domestic restaurant landscape is particularly competitive in steak.
Hawksmoor's first New York site performed exceptionally well. Yet the US has historically been difficult for UK restaurant brands. Wagamama, YO! Sushi and Pizza Express are among those that have struggled to build meaningful traction, while Pret A Manger's eventual success followed a long and difficult initial entry.
Hawksmoor chose to place a very large bet before building an international portfolio. That can work. It just requires a different appetite for risk.
There is no universally “best” market. The answer depends on what the brand is trying to achieve and what it can absorb. A young brand may value a forgiving market where it can learn internationally. An established operator with proven economics may accept greater complexity in exchange for scale. One business may need a profit engine. Another may need a flagship.
The spreadsheet can tell you where the opportunity appears to be. It cannot tell you whether your brand will belong there, whether your team can execute there, or whether the person sitting across the table from you is the partner who will make it work.
That part happens on the ground. And sometimes the most attractive market on the map is the one you should leave for someone else.
