T.G.I. Friday's Turning to Company-owned in China

By Anita Shen,
FranChina & www.franchising.cn

The head Carlson Company has raised his shares in Beijing T.G.I. Friday's Restaurant Co., Ltd. from 20% to 65%.

America-based Friday's, with a long history of 40 years, is altering his marketing strategy in China, hoping to be company-owned by means of regaining shareholding in this area.

It is learned from one working at Friday's that Beijing T.G.I. Friday's Restaurant Co., Ltd. is the master franchisor within Beijing territory, having 4 Friday's restaurants under control. While, his head company Carlson purchased more shares this year so as to get the ownership back.

''There will be another 12 Friday's in Beijing by the end of 2008.'' said he.

Dated back to Dec 18, 1995, the first Friday's Restaurant settled at the North Road of Eastern Third Ring, and ten years later, there comes out totally 5 restaurants of which 4 are in Beijing and the rest is in Shanghai and to whom they belong is different.

The story begins in 1995 when Carlson Company and CATIC Beijing Co. became cooperative partners; they established Beijing T.G.I. Friday's Restaurant Co., Ltd. who took charge of the franchising business of Friday's. And Carlson possessed only 20% of shares in this joint venture.

However, Friday's did not run smoothly as we expected. The first Friday's is sitting in embassy district in San Li Tun and the sales volume there is about 300 thousand RMB per week, which is not as good as before for parking cars near third ring is forbidden now, according to the workers.

On the other hand, Shanghai Friday's is operated by Shanghai Honghua Friday's Restaurant Co., Ltd., 95% shares of which is belonging to Grace Profit Company who is under the leadership of HK public company Asia Standard and holds the management power of Friday's in Hong Kong and Eastern China. It is 7 years since Friday's first appearance in Shanghai that he is still alone and that in Hong Kong experiences the same fate.

There is no news coming out that Friday's will expand in Shanghai, though it goes well these days.

Friday's aims to expand through being company owned.

Friday's will be less likely to be satisfied with what he has achieved now for he is such a great catering enterprise with 763 restaurant altogether around the world. It is recorded that Friday's has 10 outlets in Japan, 34 in S-Korea and 11 Taiwan (China).

In 2003, Carlson Company bought out the shares of a catering company in Taiwan, whose ownership was transferred to a Carlson's franchise partner in Taiwan. Now, Carlson draws the blueprint that the number of Friday's in Taiwan will increase one time as much as before amounted to 20 in the near future.

Carlson is trying to alter his conservative opinion about developing franchise in a burgeoning market, which might restrict foreign companies to tap into a new market without any help from local partners.

Marilyn Carlson Nelson, Chairman & CEO of Carlson Company, once said:'' You must create a solid foundation of customer basis, which plays a pivotal role in building the brand image, as a result a large demand will be evoked, but one or two outlets in such a huge market seems to be too far away from such an expectation.''　　　　

Nelson also added that holding most of the shares would conduce to controlling brand's quality and unification.

Franchise is not mature enough in Chinese market, which is regarded as another reason for Carlson withdrawing shareholdings. The operators cannot provide satisfactory brand protection and effective management.

On the other hand, Friday's in Japan and S-Korea, having 43 in total, are mainly franchised restaurants, for people in these developed areas are more accustomed to western food. Nelson expressed that if the brand image deeply roots into people's heart, he were going to re-consider about franchise in China.