Friday, February 23, 2018
Business

Beef 'O' Brady's to open a restaurant in Mongolia

TAMPA — When investors wanted to bring an American restaurant to Mongolia, a place so cold and dry it can't grow crops, they looked for a menu that reflects the country's appetite for meat.

One immediately stood out: Beef 'O' Brady's.

The Tampa-based sports bar and neighborhood pub has signed a deal to open multiple locations in Mongolia, starting in Ulaanbaatar, a capital city most Americans can't locate on a map.

"They are meat-lovers. A brand that has 'beef' in the name makes a lot of sense to them,'' said James Walker, Beef 'O' Brady's chief development officer.

The Mongolian venture is part of the company's move into international markets, starting with Saudi Arabia, where a restaurant is set to open in early 2013. Others are planned for Qatar and Kuwait.

Mongolia seemed ripe for opportunity, Walker said. The economy is growing rapidly, but there still isn't much competition from other U.S. companies. Even Starbucks and McDonald's haven't taken root. "We think it's a great time to come into the marketplace,'' he said.

It's not an obvious choice. Mongolia has a population of just 2.8 million in a land mass about four times the size of California, making it one of the most sparsely populated countries in the world. It has a density of about five people per square mile, compared with about 2,970 for the city of Tampa.

Landlocked between Russia and China, Mongolia is probably most known for its founder Genghis Khan, the ruthless leader of the Mongol Empire who conquered much of Asia in the early 13th century. The country's appetite for meat stems from the hard, brittle terrain unsuitable for crops.

Capitalizing on its mining resources has given the country a big economic boost, resulting in higher incomes and more discretionary money for things like shopping and eating out. The recent construction of a major copper and gold mine — one of the five largest in the world — upped Mongolia's gross domestic product by 17 percent last year, according to the World Bank.

The Mongolian investor company, Cedars Group, discovered Beef 'O' Brady's while researching franchise opportunities on the Internet. It had experience with U.S.-based Cinnabon and liked Beef's sports concept and track record. The chain was founded in 1985 in Brandon and has 214 locations in 22 states.

"Mongolia is an untapped territory for many American brands, but we do know the demand is there based on our research,'' said Malek Seifeddine, business development manager with Cedars Group, based in Beirut, Lebanon. "There's also a big demand for … a menu that offers quality meat products.''

Beef, for its part, was looking to expand internationally and wanted franchisees with the resources and desire to promote their community-friendly brand, Walker said. It helped that the group spoke English. U.S. franchisees typically pay a $35,000 franchise fee, plus $200,000 to $450,000 for the buildout. International locations cost varying amounts more.

The first Beef 'O' Brady's in Mongolia will be a standalone restaurant in the heart of Ulaanbaatar, the coldest capital city in the world. (Today's forecast was a high of minus 9 degrees) No opening date has been set — the harsh winters make an exact timetable difficult — but it will likely be in 2013 or early 2014, Walker said.

The restaurant will have the same menu as its stateside counterparts but with more lamb and steak dishes. It will show U.S., British and other international sports on TV and sell alcohol, unlike locations in the Middle East. Most menu items, from chicken wings to burgers, will be grown and bought locally, giving Beef a competitive advantage over places that ship in their food frozen.

More than 7,200 miles — and typically three airplane hops — will separate the restaurant from its Tampa home base.

Seifeddine expects the restaurant will attract students, teens and executives and managers of international companies working in the country. The staff will be Mongolian, but the menu will be in English. Transactions will be done in tugriks, the local currency.

Expanding to far-flung outposts isn't that remote of an idea for local restaurant chains. Outback Steakhouse has locations in 18 countries, including Brazil, Japan and Taiwan. Last week, it expanded to China with the first company-owned restaurant in Shanghai.

Three years ago, Tampa-based Front Burner Brands, which owns the Melting Pot, hired a consultant to research its international potential. The fondue restaurant chain had nearly saturated the major U.S. markets and was seeking ways to grow, said Dan Stone, vice president of franchise development.

The company started with restaurants in Canada and Mexico, then set its sights on more distant locations. The first Melting Pot in the Middle East is set to open early next year in Riyadh, Saudi Arabia. Another 29 are in development in 12 countries.

"The entire Middle East region is one of the hottest markets out there today,'' Stone said.

While the time changes, language barriers and cultural differences pose challenges, the benefits can be substantial, he said. Many foreign outposts enjoy high traffic seven days a week and can boost a U.S. chain's bottom line during tough economic times at home. Most important, perhaps, it can solidify a company's spot on the global scene. "When you're outside of North American, it sends a much stronger message about the brand," Stone said.

Even for a Beef 'O' Brady's opening in Mongolia.

Researcher John Martin contributed to this report.

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