Taipei, Sept. 23 (CNA) For many of Taiwan’s restaurant chains, 2023 was a peak year domestically because of renewed consumer spending after a nearly three-year consumption slowdown due to COVID-19 restrictions.
With only minimal prospects for continued growth at home in the future, however, several companies in the industry are looking abroad to drive sales growth, and the United States has emerged as the top target, in part due to persistent Chinese economic weakness.
Unlike the previous wave of bubble tea brands that went global prior to the pandemic, this time larger restaurant chains are the main players eyeing the American market.
Among them are bakery chain 85°C operator Gourmet Master Co., dumpling restaurant chain Bafang Yunji International Co., Thai Town Cuisine operator TTFB Co., Ltd., and steak house restaurant brand operator Wowprime Corp.
Another is restaurant brand operator Kingza International Co., Ltd., which runs several chains, including beef noodles specialist Duan Chun Zhen.
Kingza International President Lin Tzu-heng (林子恒) launched the brand in the U.S. in 2021, opening a store in Cupertino, California.
Lin said a bowl of Taiwanese beef noodles can fetch US$18 in the U.S., triple the price in Taiwan.
At the same time, while labor costs in the U.S. are two or three times higher than in Taiwan, “renting space is more or less the same as in Taiwan, and the costs of ingredients are cheaper,” Lin told CNA.
That pricing and cost structure has made it possible for a single store to flourish on its own, Lin said.
Cognizant of the risks of expanding in a new market, however, Lin is hoping to gain a bigger presence in the U.S. through franchising or licensing and revenue sharing.
Meanwhile, Bafang Yunji, which branched out into the U.S. market in 2022, has focused on going it alone.
It has opened nine outlets in the U.S., mainly in California, and sells its products for around NT$21 (US$0.66) a dumpling, compared with NT$7 per dumpling in Taiwan.
With 7 percent of its first-quarter revenue generated from the U.S., the chain is planning to inaugurate 11 outlets in Texas by the end of the year.
Another chain, Thai Town Cuisine, is poised to break into the U.S. by the fourth quarter of 2024, opening outlets in prime shopping malls in five cities in southern California. It aims to open over 100 stores by the end of 2030 across the U.S.
TTFB Chairman Charles Hsu (徐承義) is confident that the U.S. will become his group’s new “blue ocean,” referring to an uncontested market.
Hsu said there were 50,000 Asian-style restaurants in the U.S., but only a few have expanded into branded chains, and that is even more so the case for the 6,200 Thai restaurants, none of which have been scaled up into individual brands, Hsu said.
He said the wide variety of ingredients, complex cooking methods and hard-to-replicate cooking skills have made it challenging to develop Asian restaurant chains, but he was confident Thai Town Cuisine could overcome those barriers and emerge as an important niche for his company.
Gourmet Master’s 85°C, which has been overseas longer than many other Taiwanese brands and started in the U.S. in 2008, has generated more revenue in the U.S. than China this year for the first time in its history, making the U.S. its largest overseas market.
Aside from continuing to expand in the U.S. by adding eight to 10 new stores this year, the group also plans to set up a central kitchen and warehousing system in New Jersey in 2025 to prepare for the opening of its 100th store.
U.S. challenges
One restaurant owner contended, however, that while the U.S. may seem like an attractive market with a high level of consumption, the prepaid rent system, rigid and lengthy license applications, and a lack of manpower and training are factors potential investors need to assess.
“These all put significant pressure on small and middle-sized groups,” the restaurant owner said on condition of anonymity, noting that luring non-Asian Americans customers was an even more difficult barrier to overcome if Taiwanese companies wanted to stand firm in the U.S.
Restaurant chain operator Wowprime Corp. (王品), which is best known for its steak brands but also operates Chinese, Japanese and international restaurant brands, understands the perils of the U.S., having failed there twice previously in 2000 and 2017.
Yet eager for growth, it recently announced a new NT$160 million plan to return to the U.S. market.
Sources speculated that Wowprime would promote its Chinese cuisine and hot pot brands there, but it was unclear if it would try to go it alone or seek out a local partner to push for a higher market share.
In a related development, the Kanpai Group, a famous restaurant operator and meat importer headquartered in Taipei, opened its first-ever overseas branch in London in mid-September, selling set meals costing NT$7,500-NT$8,400 per person.
“Overseas expansion will be a key growth engine driving the group in the future, and London is the first location for it to go international,” Kanpai Group Chairman Soji Hiraide said.
As part of its global expansion plan, the Kanpai Group has been assessing the possibility of opening outlets in the U.S., Southeast Asia and Middle East countries in search of its next overseas market, he said.
