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Turkish chains get the bigger bite in fast food business

ISTANBUL - Radikal | 5/1/2011 12:00:00 AM |

Domestic fast-food restaurant chains, new to Turkey just 15 years ago, are now increasingly strong competitors to foreign chains.

Domestic fast-food restaurant chains, new to Turkey just 15 years ago, are now increasingly strong competitors to foreign chains due to their offerings of traditional tastes, their low investment costs and their experience with economic crisis.

Domestic chains constitute 74 percent of the Turkish franchising sector, which has a total volume of $35 billion. Some foreign brands and chains that cannot fight the competition have begun to withdraw from the market, according to 2010 data provided by the Turkish Franchising Association, or UFRAD.

Some foreign brands, such as South African restaurant chain Nando’s, global ice-cream chain Baskin-Robbins, the Hard Rock Café and sandwich shop Quiznos, all of which entered the Turkish market with great expectations, have now withdrawn or are withdrawing from the market one by one.

Meanwhile, domestic brands such as Simit Sarayı, Bay Döner, Pizza Pizza, Bonny Food and Kahve Dünyası are registering strong growth trends.

“Our biggest power is our Turkish taste. Foreign chains should make great efforts to be able to meet Turkish tastes,” said Haluk Okutur, chairman of Simit Sarayı, a restaurant chain offering “simit,” a local savory pastry product topped with sesame seeds, and other savory and sweet snacks.

It is very hard for foreign brands to compete with domestic chains today, Okutur said.

Incorrect location choices are the biggest reason why foreign companies are losing power in the sector, according to Mengü Evrensel, business development coordinator for Bay Döner, a fast-growing domestic restaurant chain.

“Our priority is the location choice in our investments,” Evrensel said, adding that Bay Döner places great importance in this matter.

Bay Döner, founded in 2006, currently has 26 restaurants. The domestic chain plans to reach 40 restaurants over the next five years.

Having reached 200 outlets, Simit Sarayı aims to increase the number of its branches, in both the foreign and domestic market, to a total of 325. The company sees global giant McDonald’s as its primary rival. The number of McDonald’s restaurants across Turkey is nearly 140.

According to UFRAD data, the number of chain restaurants in Turkey has reached nearly 1,876. Foreign companies constitute 24 percent of that total.

In 1995, the total opposite was true: The share of foreign brands in chain companies operating in Turkey was 75 percent in 1995, while domestic companies constituted 25 percent. In 1998, foreign and domestic companies each held 50 percent of the market.

Turkish entrepreneurs are proving able to rapidly close the gap in the market, said Osman Bilge, director general of Franchise & More Consultancy.

“When they see a correct point, Turkish entrepreneurs are able to orient themselves and reveal a similar one,” Bilge said.

Simit Sarayı, Kahve Dünyası, Bay Döner, Çıtır Usta and Pizza Pizza are the leading domestic restaurant chains in the sector, which is growing with each passing day. Competing against international coffeehouse chain Starbucks, Kahve Dünyası, a domestic brand founded in 2004, currently operates at a total of 64 locations. The company plans to open 15 more shops at subway stations in Istanbul in the upcoming period.

The number of branches of Starbucks in Turkey is 138.

İzmir-based Pizza Pizza, founded in 1995, offers service at 142 locations across Turkey. International pizza delivery corporation Domino’s Pizza, which entered the Turkish market in 1996, reached a total of 161 restaurants last year. The U.S.-based company aims to increase this figure to 211 this year. Operating with 25 branches, Çıtır Usta aims to open 40 more branches in 2011.

Nando’s chicken restaurants, Hard Rock Cafe, Baskin Robbins, Wendy’s, Quiznos and 7-Eleven are some of the foreign brands that failed in the Turkish market and decided to withdraw.

In addition to these restaurant chains, other foreign brands from various sectors that have decided to withdraw, including Best Buy, Jani King, Printemps, Mr. Bricolage and Style on Video.

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