Foreign dining brands flourish in Korea; Family restaurants, led by Outback Steakhouse, are recording stellar growth even amid the economic recession in Korea. What is the secret behind their success?

2013-11-08 14:52

Foreign dining brands flourish

By Kim Hye-sung
Family restaurants, led by Outback Steakhouse, are recording stellar growth even amid the economic recession in Korea. What is the secret behind their success?
Global brand companies such as Outback Steakhouse, TGIF, and Baskin Robins’ 31 have succeeded in glocalization: partnering with local agents, diversifying its products to suit Korean consumer’s needs, and marketing its products through aggressive advertisement.Outback’s total revenue from 110 stores in Korea jumped 8 percent, from 330 billion won in 2011 to 356.4 billion won in 2012. TGIF’s total revenue from 90 stores soared 11 percent, from 70.4 in billion won in 2011 to 78.6 billion won in 2012. Baskin Robins has over 50 percent of market share in the ice-cream industry, topping 85 billion won in revenue in 2012, according to industry sources.
Korea is a difficult market for multinational companies due to fierce competition against domestic rivals and Korean consumers’ picky tastes. Global retail giants such as Walmart and Carrefour shut down their businesses after 8 years and 10 years of operation. P&G and GM have failed to gain a foothold in the Korean cosmetics and automobile market. Even fast food chains, McDonalds and KFC are continuously slashing the number of chain stores in Korea. In this context, these family restaurants’ success in Korea seems even more remarkable.
So what is their marketing strategy? It is glocalization, a combination of leveraging their global brand value with localized products and services.
First, these companies found local partners with expertise by leveraging their global brand value. For instance, Outback Steakhouse partnered with CEO Chung In-tae, who had the experience of opening 17 TGIF chains.
Second, these companies succeeded in diversifying their products to meet Korean consumers’ needs. For instance, Outback Steakhouse added barbeques with more garlic to the menu to target Koreans in their 30s and 40s, who dislike the greasy taste of steaks. “Outback also reduced servings per dish, cut menus with meat, increased menus with salad and pasta while adding kimchi and squids as new ingredients.” CEO Chung said.
Pizza hut continuously developed new menus and products to attract Korean customers. Its menus: bulgogi pizza, rich gold pizza, and cheese crust gold pizza, specifically designed to suit Korean customers who prefer sweet potatoes and bulgogi sauce, are re-exported to South East Asia, the U.S., China, and Japan. In 2012, its new “wow box”, composed of crispy chickens (one of Korean’s favorite dishes), salad, and pizzas, made 10,000 orders per day, selling one box every three seconds.
Baskin Robins Korea introduced ice-cream cakes called “incredible garden” to attract Korean consumers during off-seasons. Sweet and cold, it captured the hearts of people in UAE, the U.S. and Saudi Arabia.
Koreans are very picky in tastes and sensitive to market trends. But here’s the good news: companies that succeeded in localizing their products in Korea will blossom in the global market.