South Korea and the Philippines have always been the most welcoming markets in Asia for USA restaurant concepts.  Strong cultural ties forged by war and colonialism certainly helped not to mention the growing Korean and Filipino diaspora on the West Coast of the USA. But while the Philippines continues to embrace new American concepts like Wingstop and Jamba Juice, the Korean market has become far more difficult for new market entrants.  Pizza Hut was forced to retrench a number of years ago due to over-expansion and Outback Steakhouse has experienced a similar fate last November with the decision to shutter over 25% of their existing store base.  Overall American casual dining has been in decline for the past five years.

Outback was a huge success story in Korea with its blend of Korean and American culture, affordable pricing and localized menus, but Koreans tastes have been changing to more Korean style western foods like Made For Garlic and Blacksmith. Street foods are also regaining popularity with the young and American cuisine has become less aspirational and less appealing. Strong Korean restaurant competitors and slowing dining out consumption are not making it any easier as well.

Perhaps not surprisingly, while USA brands are struggling in Korea, Korean brands are gaining widespread appeal in other parts of Asia due to K-Pop and Korean TV dramas, and these trends are not likely to change anytime soon.

USA operators need to be more entrepreneurial and less arrogant when approaching new potential partners.  Potential franchisee partners have many brands to choose from and no longer just consider the American ones.

It is becoming a war out there!


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