The FINANCIAL — The expected 5-6% GDP growth rate of Georgia in 2015 has assured US brand Dunkin’ Donuts’ entry into the Georgian market. The number of US brands in Georgia totals 30. Out of them the largest share, 10%, is made up by brands in the restaurant industry. While EU markets have been going through hard times, the recovery of some of its countries is expected to have a positive impact on external countries, including Georgia.
After Moscow in the Russian Federation, Georgia will be the second post-Soviet country where Dunkin’ Donuts will develop. “Georgia is growing with quite a promising GDP growth rate right now. We believe that we have made the right decision to enter the Georgian market. My estimation of the Georgian economy is absolutely positive. We are confident that we can achieve great success on this market,” Carlos Vidal, Dunkin’ Donuts Managing Director for Europe, the Middle East and India, told The FINANCIAL.
Wissol Group will be developing 35 Dunkin’ Donuts restaurants in Georgia. Dunkin’ Donuts is an American global baked goods and coffee chain that was founded in 1950. Since its foundation, the company has grown to become one of the largest coffee and baked goods chains in 37 different countries. The chain has grown to include over 1,000 items on their menu, including a big variety of sandwiches, croissant-based fish and meat products, bagels, over 100 different doughnuts, other baked goods, and a wide variety of hot and iced beverages.
“We want to be present in all countries. We want to take the Dunkin’ Donuts experience to all of the customers in the whole world. That is our main vision in the long term. We thought that Georgia is no different. There is a lot of receptivity for American brands in this country. However there is not much development. There are not many American brands present here. So we thought that we had the perfect combination, a very strong brand and a lot of experience in Europe. We have been very lucky to find a good partner in Wissol Group. This is not very common, to find a partner with such depth of experience in the retail business, with such motivation and ambition. They have already demonstrated huge success with Wendy’s which is in the same industry as Dunkin’ Donuts. We thought that it was the right moment now,” said Vidal.
Q. In 2014 Dunkin’ Donuts entered just three markets. Can we conclude that the current economic conditions are less attractive for business development?
A. When we get to a new market we want to do it the right way. We are not aimed at just opening and putting another flag on the map. We want to do it properly. We dedicate a lot of resources from the brand to support the market entrees. We have limited resources. We cannot open in ten or twenty markets a year. We have to focus our shots, and the fact that Georgia has emerged at this moment of time means that it has been selected to be among the handful of countries where we think that the brand deserves to enter now. We entered Austria, Sweden, and Luxemburg in 2014 and in 2015, besides Georgia we think we will enter another 4-5 new markets in Central and Northern Europe. So, we are pretty bullish and optimistic about this.
Q. The EU is facing various difficulties at the moment. What will be the impact of this on the Georgian economy?
A. Europe is very diverse. All the countries are interdependent and at the same time they are different. Even now the economy of Spain is weaker than that of Germany or France and the UK. So, each country is different and has its own financial momentum. It is true that Europe is going through hard times, but we can still find countries, like Spain, that are bouncing back from the recession. Spain had quite bad economic conditions over the past five or six years. It has currently started to grow though, and the whole macroeconomic numbers are getting better. We think that Spain has already touched the bottom and now the recovery will start in big macroeconomic figures. This will be slowly impacting on countries outside of the EU as well.
Q. In some countries, including the Russian Federation, DD has shown a practice of closing down some of its stores as a result of failing to succeed there. What are your main recommendations for your partners to ensure the survival of the enterprise?
A. In Russia we have 31 stores. We entered the market three years ago and we are successful there. We have closed some stores but opened up new ones. We have some relocation going on which is pretty normal for brands. A total of 31 stores is quite a good result. All of them are in Moscow. We are going to continue growing. We are quite satisfied with our business there. Success in the countries comes from having a great brand, which we already have. We have 11,000 stores all over the world. Having a good partner for executing operations on a daily basis is another key factor for success. The brand alone is not enough. You also need fantastic operation and execution with each customer each time. That is what retail is about. It is not rocket science, however you need to get the details right every time. So it is hard enough in that way. You do not need to over complicate it even more. From our experience we know that with a good brand, that has lots of heritage and has proven success, with the cooperation of a good operator only good things can come. That is what we have seen in Europe very recently when we took the time to make the right choices with the right partners. That is what we certainly know that we will see in Georgia. History has proven that at times we have failed as brand and had to close some businesses. That has happened in the past. However, we learned from our past mistakes. That is also a sign of maturity for the brand.
Q. What are the main features necessary for building a multinational company?
A. You need to have a strong brand first of all. Then you also need to understand the adaptation and flexibility which a brand needs to have for different markets, in order to adapt to different consumers, habits and cultures in the end. Although we are already in 37 countries, including Georgia, the brand is not perceived and used by customers in the same way in all the countries. In the US Dunkin’ Donuts is much more about the morning part and coffee convenience bought through the drive-through (when you buy products without having to get out of your car). On international markets it is more about sweet drinks and doughnuts. Although there is huge brand awareness consumers do not know the breadth of the brand. When they come to the stores and buy doughnuts they understand that we have a strong coffee culture, a very strong coffee heritage. We also have lots of sandwich offerings, which are very relevant for them. It is a snacking option. We call it “Dunkin all day”. We have offers for each part of the day and each consumer in line with their solvency level. We believe we are wide-ranging enough to be relevant in any country, in any culture and to any customer at any time of the day. This is something very few brands can say even if they are multinational.
Q. Your arrival on the Georgian market – what does this mean for both the market and the company itself?
A. The entrance of DD to the Georgian market is quite important. Our operators here are creating jobs, we are bringing international concepts to the market. I am sure that people will appreciate this. Looking for multinational brands is a natural appetite for people who travel, who see a brand on TV, or who go to other countries. This is the second country of the post-Soviet states in which we have entered. Europe is not only about Central or Western Europe. There is another part which also exists. We are well aware of that and we have a very broad mindset. The Georgian market has many more similarities with Western Europe than you might think, even more with the Latin culture and mindset. We are very happy to be here and we did not think twice when we had this chance.
Q. As you mentioned, Dunkin’ Donuts is perceived differently by each country. What will be the main distinguishing local feature of DD Georgia?
A. We have tried to elevate the concept in terms of stores’ “look and feel” brand image. The stores that we opened in Georgia are among the best and most modern in Europe and also in the US. That is very important for the brand. We did not feel that there was a great need for adaptation of the products. We are taking the bestsellers of the US, of Europe and we are bringing the same thing all over the world. We believe that we have the right product combination. The fact that we are adapting the value, that we are taking care of service and elevating the look and feel of the stores all combines to make a difference to the elevation and execution of the brand.
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