US retro-themed burger chain Johnny Rockets is making its first foray into China, planning 100 restaurants with the first ones scheduled to open in 2016.
The restaurant chain has entered a joint venture partnership with AUM Hospitality and Parkson Retail Group, it announced on Monday. The former is a Malaysia-based food and beverage developer that works as a franchise partner and operator with Johnny Rockets, and the latter is a department store operator also based in Malaysia, with more than 60 stores in China.
Scott Chorna, senior vice-president of international development for Johnny Rockets, said that there is strong middle-class demand in China for American brands.
“Our partners have a keen sense of consumer preferences and shopping habits. While they will be showcasing Johnny Rockets all American menu including our world famous made-to-order hamburgers and hand-spun shakes as well as our unique signature guest experience that includes dancing servers, they will also be able to offer regional tastes and flavors to our extensive menu items,” he said in a statement.
Johnny Rockets has launched in the Philippines, Malaysia, South Korea and Indonesia. The brand will initially focus on Parkson-owned malls and other retail areas in Shanghai and Beijing, the company said.
China’s fast food industry generated $108 billion in 2014, up 9.7 percent compared to 2013, according to market research group IBISWorld, and makes up a big percentage of the $574 billion that the global fast-food industry generated last year.
US fast food chains have aggressively expanded into China as the domestic market faces stagnant growth, and Johnny Rockets’ going into China makes strategic sense, said Darren Tristano, executive vice-president at Technomic, a foodservice research firm.
“The burger market in the US has become quite saturated, not just with fast food but within full service. There’s quite a bit of limitation on the ability to grow as a burger brand. Most of the brands are looking abroad,” he said, citing burger chain Shake Shack’s foray abroad.
The chain, based in New York City, went public in January and has been opened dozens of locations across the Middle East, Turkey, Europe, and announced that it would be opening in Japan by 2016. The company currently does not have plans to open in China, according to a spokesman.
“There are greater growth opportunities outside than inside. Johnny Rockets has had success outside of the US, and is seen as a more retro diner-style American burger brand,” Tristano said, “so there’s great relevance within other countries. I think Asia is a great place – especially China – for a brand like that to find its way, because in Asia there seems to some affinity towards more iconic American brands.”
US fast food chains have hit roadblocks in China due to safety concerns over food supplies, and companies like McDonald’s and YUM Brands – parent company of KFC and Pizza Hut – have seen sales drop due to negative press attention.
But Tristano said that Johnny Rockets’ image as a full-service restaurant as opposed to a fast-food chain will help its growth in China, with customers more likely to see its food and food preparation as safer than competitors’. “They’ll be more cautious of the supply chain and certainly more careful on food-handling procedures because the sensitivity levels are very high today,” he said.