ELECTRONIC HOUSE CALL - July 26, 2002

As I feared, I was not able to get my computer hooked up to the Internet while I was in China, so I had no way to send the house call last week. I am still in transit home but since I had a few minutes, figured I would try to get somewhat back on track. I will return to the regular routine on Friday.

WHAT'S IT LIKE?
The immediate question, I suppose, is what was China like? The answer is that it is like nothing I could ever imagine. Talk about a sleeping giant that is waking up, I believe that China's economy will dwarf that of the US before the end of the decade. As Max Hitchins so neatly put it, "Every time I go to China, I smell money!"

There is money to be made there and a number of US restaurant companies are after their share of it. McDonald's is a global brand at this point, so I hardly count them as an unusual presence. KFC is probably doing the best business, largely because their food and presentation are closer to what the Chinese are use to seeing. However I saw A&W, Domino's, Popeye's and Friday's ... and I know there are others. Some are here because their concepts are on the decline in the US and this is a way to grow without having to change anything. Some are here because they are quick to jump on any opportunity. But all are here because they have a concept that can be transplanted.

WHY THEM?
Leaving the depth of corporate pockets out of it for a moment, the reason these players are there and you aren't is that they are selling systems, not restaurants. The ability of their concepts to function successfully is not dependent on the presence, knowledge or vision of any one individual. You can argue that there is a price to pay for this standardization -- and I will grant you that there is a certain spark and spirit that can be lost when the personal factor is removed. You may not be planning to expand to China but even if you just want to open the second unit, you first need to set things up so that the business will operate successfully if you are not there calling the shots every day.

The gut check test: image calling the restaurant right now to tell them that you have to leave the country suddenly and will not be reachable for three months. How would they feel receiving that call? How would you feel about making it? If your gut tells you that there would be reservation or reluctance anywhere in the system, you have work to do.

I'll give you the next installment on Friday.

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