More American food chains tipped to take on Australia
ONLY the best American fast-food companies who understand the Australian consumer will survive in a crowded and changing market down under, a business expert believes.
More greasy and sugary treats from the United States of America are landing in the mouths of Australians, with the number of fast-food chains trying their luck down under at an all-time high.
Australia's robust economy, shared values and the love for Uncle Sam has resulted in recent success for American food chains making the jump, with Taco Bell, Carl's Jr and Cinnabon recording strong interest and listing plans to expand.
Griffith Business School Dean Fabrizio Carmignani expected more American fast-food chains would open in Australia, but said eager CEOs needed to understand the market to prevent overcapitalisation and trouble down the line.
"We've had a number of American chains that have come to Australia and some of them have been successful and some of them have not," he said.
"American chains coming to Australia tend to over-estimate the number of shops they need and they grow too big, too fast.
"There are mistakes in strategy and assessing demand and understanding Australian consumers."
This month American flatbread chain Sandella's Australia was put into liquidation following the closure of its Caboolture store.
It had high hopes of expanding throughout Australia, but the quick service chain closed owing $983,626.
U.S. pizza giant Little Caesar's was put into liquidation last month after its rapid expansion across New South Wales failed to yield results.
At its peak the pizza chain had 14 stores dotted across the state, half of which closed due to cash flow problems late last year.
The remaining stores were closed when the company succumbed to its $8.5m debts on December 19.
For 27 years Australia's uninterrupted economic growth had lured American fast-food giants to our shores, Professor Carmignani said.
But now high unemployment, mortgage debt levels and sluggish wage growth has tightened the sector and resulted in closures.
"There is a bigger problem in Australia and the problem is our economy is not doing as well as we'd like to think," he said.
"Households and people have less disposable incomes to spend."
Bucking the trend however is Tex-Mex chain Taco Bell and burger joint Carl's Jr.
Collins Foods plans to build 20 new Taco Bell stores this year while Carl's Jr has announced its desire to build on the 17 stores operating across Australia.
Both companies have recorded strong sales.
Professor Carmignani expected only the best and most strategically-minded businesses would make it in Australia's crowded food market.
"Competition now is strong," he said.
"I wouldn't be surprised if we continue to see chains to close down and other chains to expand.
"That's the nature of the economy."