Yum! Brands International CDO on Going Global: Food as an experience
Tesla Martinez of Terra Nova Insights, LLC, a boutique international development consultancy firm, interviews Nicolas Boudet, Chief Development Officer for Latin America and the Caribbean Business Unit of Yum! Brands on going global. Yum! Brands is the world’s largest restaurant company with more than 37,000 restaurants globally. Yum! Brands is the parent company of Pizza Hut, Taco Bell and KFC.
June 27, 2012 | By Tesla Martinez
TNI: How did you get into the business
Boudet: My father inspired me and passed on to me at an early age a passion for the service industry, most specifically the hotel/restaurant business. My father conducted and completed his entire career traveling around the world for large international hotel chains in countries such as Egypt, Togo, Nigeria, Saudi Arabia, and the U.S. I found the experience to be very valuable and foundation for growth. After graduating from high school, I took some jobs at three star Michelin restaurants. I went on to graduate with an MBA in real estate and finance. I worked for companies such as Jones Lang LaSalle, Club Med, and Starwood. My predecessor later on introduced me to Yum! Brands.
TNI: How did you stay in tune with market needs, adapt to business models needed to fit those markets?
Boudet: From Yum! Brands perspective, we have a company proprietary system, which promotes and facilitates an exchange of information within the company on a number of any given topics. Our unique system links us with all four corners of the globe, as well as with each other, and enables us actually share and analyze information and collaborate on ongoing projects. Moreover, Yum! Brands system helps us to identify market trends and consumer reactions to certain products and innovations. We put in place a very powerful tool.
In addition, we formed a formidable network of franchisees. The network keeps us abreast of the realities of the marketplace and consumer behaviors regarding our assets and product innovation. Our franchisee network is a singular advantage that Yum Brands enjoys.
And personally, I remain current with a wide source of newspapers and magazines that are general and industry focused. I explore and go out to eat to keep tabs with what our competitors or innovators are doing.
TNI: What advice do you have for companies choosing which brand to take into a new market?
Boudet: First, know the competition level in the market you want to expand into. Secondly, support it with evidence from a consumer study. Actually test your brand to determine consumer acceptance/ consumer interest into your company brand.
The competition and the findings gained from a test of consumer acceptance/ or expectation of the brand that you are likely to introduce are the two key factors that will determine your choice. Be very attuned to the market place (good or bad) and master the art of responding quickly. Those two key elements supported with solid and sustainable consumer insights is my first piece of advice.
Also, since there are very few industries that are as competitive as Quick-Service Restaurants (QSR), consumer studies are constantly changing; therefore, I don’t believe a one-size approach fits all market situations. My second advice is to adapt your approach to new operational complexities. That applies to us, at Yum! Brands, where we force ourselves to sometimes think like start-ups because of the space and speed by which consumer tastes are changing as well as the increasing levels of competition. Businesses need to be very agile and nimble.
Lastly, learn about local tastes and customers in every market you attempt to enter. Once you crack the code, be prepared to invest on a large scale. This is a business where scalability is important. Once you know the consumer composition, what consumers expect, and are confident you are delivering on that expectation, than go big to reach a certain scale. That is why we performed well in China.
TNI: With regard to International franchising, how do you find partnerships in other markets?
Boudet: Since Yum! Brands enters into long franchisee network relationships, we put a lot of attention on selection and screening; we take our time. We rely extensively on our existing network of franchisees and pay close attention to recommendations and referrals. At times, we keep tabs of certain entrepreneurs in various markets and evaluate who we might feel comfortable with teaming up with. But in the end, we ensure the individual is either referred or comes with a strong recommendation and a track record of success in previous businesses.
These individuals are well capitalized, know how to attract talent within their own organization, and are people who will respect the franchise or franchisee relationship.
TNI: What is the biggest challenge you face?
Boudet: Good people are hard to find. Finding the right talent is my biggest challenge as well as the biggest challenge for my colleagues. We are all fighting for the same talent.
To overcome a lean pool of potential candidates, I find it essential to track talent from other industries. Since QSR share similarities, skills are transferable from industries such as hospitality, retail, Fast Moving Consumer Goods (FMCG) into QSR. If you recruit talent from the outside, you will ensure a good mix of different perspectives. This will provide you depth and diversity in being able to crack different codes, and, by cracking the code I mean international markets where things are being done differently.
I believe it is a mistake to rely solely on growing from within your company. The idea is to be balanced; that is, to have a strong pool of talent within the same industry but also to refresh and complement it with other perspectives and talents from different industries. In my opinion, this is where you build a strong organization that is geared to enter new markets/international markets.
TNI: What is a typical workday like for you?
Boudet: I travel a lot. Nothing replaces being on the ground, touching the restaurant, speaking with the franchisees or doing impromptu surveys with consumers on whether they enjoy the food and are happy with the assets. During my travel, I conduct business reviews with franchisees to understand their challenges and try to bring solutions and stimulate the network to grow.
TNI: In your opinion what is the most exciting development emerging in the foodservice industry in the last five years and where would you like to see the industry evolving in the next 10 years?
Boudet: The perception of QSR is changing in what I refer to as developed markets; this is where there is already a hyper-inundation of food concepts and mostly QSR. So the food we serve on a daily basis needs to be food with integrity and we need to remain contemporary while understanding consumer needs and expectations. Furthermore, the industry needs to continue striving to create and deliver healthy alternatives. We, at Yum! Brands, continue responding to healthier alternatives, which is very important to us. As consumer taste and occasions of eating change, if you can come up with a business model that can actually cater to this, I think you will be successful.
Moreover, I believe technology is changing and it will be very important to stay on top of this. For example, in South Korea there exists “wall ordering” where you can swipe your smart phone over a quick read code and actually order your groceries while waiting for your train at the metro station. This is an example of the type of technology we need to remain on top of in order to be relevant in the marketplace.
Additionally, one thing that is changing, which our company is fully embracing, is Corporate Social Responsibility (CSR). We know that consumers pay as much attention as who we are as a company and what we stand for, than what our business proposition is. Above and beyond our products, they want to know where we stand for on certain issues. I believe it is important that we communicate these values to them while serving our product.
Words to remember
Embrace the fact that food as fuel has changed into food as experience. We at Yum! Brands no longer serve a product; we actually propose an experience!