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Saturday 20th August, 2022

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Five lessons to learn from international missteps

Insight

Five lessons to learn from international missteps

Overseas growth doesn’t always work out, but the best brands use their failures to double-down on future success

Overseas growth doesn’t always work out, but the best brands use their failures to double down on future success.

It takes months, if not years, to build a brand on social platforms – and only a second to raze it to the ground. Just a couple of clicks, and all your accounts will be deleted. All the comments, reviews, and stars you’ve worked so hard to earn will disappear. Like they never even existed.

We made those clicks in April. We deactivated all the Dodo Pizza accounts on WeChat, AliPay and Dianping. There was no use keeping them. The board had decided to shut down our entire China branch.

In trying to adapt our brand of pizza delivery to the local market, we’d deviated too much from our core global business model, they explained. In other places, we could succeed without making such sacrifices.

Our team had been developing our China brand for five years. The entire company was invested in this undertaking. The founder named it his pet project. Yet the board had a point. In April, we closed the shop for the last time – never to open it again.

A few weeks later, we also ceased operations in the U.S. The American market proved to be too hard a nut to crack. So even though we continued to expand in 12 countries (with a few new markets in the pipeline), this spring turned out to be one of the saddest in the history of our company.

Admitting defeat is no fun. Yet we have no regrets. Presented with the opportunity to go back in time, we wouldn’t change one bit. In fact, both closed projects taught us a lot and fueled the engine of our current growth. As we have learned, trying and failing in new markets can bring a lot of value – at least in five ways.

1. Load up with insights when you leave

When you launch in a new country, you inevitably begin to learn a lot – simply by exposing yourself to different conditions. Customer preferences, most popular products, marketing tactics – all this can differ from what you already know. And you can always draw on this new information to propel your growth in other regions.

Having done proper customer development for our shop in Hangzhou, we realized that folks in China find our traditional pizza too heavy a product. This research prompted us to shop around for lighter types of pizza. We started getting rave reviews from the local crowd only after we switched to a Roman-style crust.

At the same time, a separate team was developing our branch in Great Britain. They faced a different problem there: cutthroat competition. Our brand desperately needed a point of differentiation. The China project offered exactly that.

The premier of our new concept in Leamington Spa in December – based on the same Roman-style crust – was off to a promising start. And we now consider the U.K. our primary market, with 50 units planned for 2023 (company-owned and franchised). This wouldn’t have happened if not for our “failed” China venture.

2. Stress-testing always hurts – and it should

Some markets are way ahead of others in terms of trends, and launching in new countries gives you the opportunity to see what’s coming next for the entire industry. Even when you fail, you get valuable data that enables you to better prepare for the future. It’s like sending your business in a time machine a decade ahead – and testing if it’s future-proof.

The food service industry is being disrupted by delivery aggregators all over the world. In China, this process has already reached its apex. The aggregators now have total control of the market.

After numerous attempts to crack this market, we realized that having your own source of new customers – in the form of a well-placed unit in an area with high footfall – is the key to survival. And we have adopted this approach all over the world.

While millions of dollars are now being poured into dark kitchen projects, we at Dodo are aiming for top locations in every city, be it Moscow, Warsaw, or Ho Chi Minh.

“Admitting defeat is no fun. Yet we have no regrets”

3. One step back, ten steps forward

When you launch in a new region, it opens up an uncharted world of opportunity. Nobody knows where this path could lead you. You might close one market today but open a few others tomorrow – thanks to your first failed attempt.

How, for example, did we find ourselves in Great Britain? Our brave launch across the Atlantic – in Oxford, Mississippi – inspired an entrepreneur based in Britain to bring the Dodo brand to England. He figured the U.S. and the U.K., being so different in so many aspects, were not that different when it comes to their craving for pizza.

Thanks to his efforts our team started digging around Great Britain, became intrigued, and eventually grew the desire to conquer this market. Something similar happened in Asia – closing China led to our arrival in Vietnam.

“When you launch in a new country, you inevitably begin to learn a lot – simply by exposing yourself to different conditions”

4. If you want muscles, you better lift those weights

There was a time when our international master franchising team targeted only countries that could accommodate dozens of units. And there was a logic behind this decision that seemed sound.

It’s a costly affair, launching your brand in a new market. Study the competition. Tweak the product. Train your partner’s crew. Going to all this trouble – for just a handful of units? It seemed that the juice wasn’t worth the squeeze.

Then it dawned on us that the ability to launch new countries was a muscle – and we simply had to work out to make it stronger. So there was value in launching new regions beyond the size of the pie we got to eat. This value was the experience our team could gain and the global infrastructure it would develop when evaluating a new market, assessing potential franchisees, and preparing the launch itself.

5. Adventurous people need adventures

Although there’s an entire magazine devoted to international growth (Global Franchise, highly recommended), in reality only a minority of companies get to grow globally. Some find their local market big enough not to bother with any other. Some simply don’t have the bandwidth to deal with all the challenges involved.

Those brave ones who do grow internationally can reap the benefits in the job market and attract the most gifted and ambitious. We definitely see it playing out in our favor – since in our home market, we’re among a handful of retail brands that have succeeded in growing internationally.

Who wouldn’t want to explore new cultures and test their abilities in a new reality? Any launch in a new market is a challenge – and an adventure. And the most gifted team members tend to be adventurous. Even screw-ups don’t dissuade them – true players simply consider failures part of the game.

The author

Maxim Kotin, chief storyteller at Dodo Brands, an international foodservice group developing a portfolio of digital-first QSR brands (Dodo Pizza, Drinkit, Doner 42). dodobrands.io

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