(Editor’s note: See a related post here if you’re interested in becoming a franchisee of an American restaurant brand.)
It has been a long time since the French sniffed at “le hamburguer” or the Italians were driven to agita by the implication that pizza was somehow “Italian food.”
Never before have Europeans been gobbling up American food at such a rapid rate. And it’s not gourmet fare, either.
According to the web site FranchiseEurope, 12 of the top global franchises are American, and six of those are fast-food purveyors. Not surprisingly, McDonald’s, KFC and Burger King lead the list.
McDonald’s reports that it has 8,400 restaurants in 39 different European countries, 79 percent of which are franchised – 1,469 in Germany, 1,423 in France, 1,270 in the UK, 610 in Russia, 555 in Italy, 500 in Spain, 385 in Poland, 246 in The Netherlands.
Prague-based education blogger Jakub Marian has estimated that there are 23.4 McDonald’s outlets per 1 million Swedes; 19.7 per 1 million French; 19 per a million residents of the UK; 18.3 per a million Irish; 18.2 per a million Germans. A lot of “fries with that.”
Troubles ahead in Europe?
However, McDonald’s preeminence might be slipping.
Earlier this year, antitrust complaints were filed in France, Germany and Italy, accusing McDonald’s of charging franchisees in those countries more than it costs the company to directly operate its own stores – which, of course, means higher prices passed onto consumers.
Bloomberg reported the allegations as McDonald’s “abusing its market power to harm franchisees and customers,” according to Indecosa-CGT, a consumer organization affiliated with a French trade union.
“The group estimated the excessive pricing practices by McDonald’s French franchisees cost consumers an extra 232 million euros ($247.2 million) in 2015.”
McDonald’s is “forcing customers of its franchised restaurants to bear unjustifiable price increases,” Martine Sellier, the association’s president, told Bloomberg by email.
Terri Hickey, a spokeswoman for McDonald’s, said the company invests heavily in programs to help franchisees succeed. “McDonald’s and our franchisees operate in a highly competitive marketplace, and our franchisees set their own menu prices,” she said, also by email.
That’s not all, however.
McDonald’s is under investigation by French authorities over allegations it shifted revenue to Luxembourg and Switzerland to avoid taxes. McDonald’s could also face a hefty tax recovery bill as European Union regulators put the final touches on a decision in a parallel case.
Yum! Brands arrives in Central Europe
McDonald’s issues have by no means stalled the wave of American fast-food companies looking to get into the European market.
Yum! Brands, the Louisville, Ky.-based company that owns KFC and Taco Bell, recently announced that its Pizza Hut division will expand its presence in Central and Eastern Europe over the next five years through a master franchise agreement with its European partner, AmRest Holdings, based in Wroclaw, Poland.
During the next five years, more than 300 new restaurants will be developed – owned and operated by AmRest, under license in the Czech Republic, Slovakia, Hungary, Poland, Bulgaria, Serbia, Croatia, and Slovenia.
Currently, Pizza Hut and AmRest operate 80 restaurants in the Czech Republic, Poland, and Russia. There is a total of more than 700 Pizza Huts in 24 nations throughout continental Europe.
Nor is Yum! Brands finished. It has also announced plans for another 45 restaurants in Spain with its Madrid-based franchisee partner, Casual Brands Group.
By 2020, Spain will be home to more than 70 Taco Bell locations, the Mexican-themed fast food restaurant’s largest market in Europe. Casual Brands has built Taco Bell restaurants in Barcelona, Valencia, Zaragoza and, most recently, Seville.
It’s not just the giants making eyes at Europe, either.
Obama’s a fan
Five Guys Burgers and Fries, a moderate-size but expanding fast-casual operator, is already in five European countries – and with plans for more.
John Eckbert, who heads the company’s European operations, told The Telegraph he’s trying to convince the U.S. parent in Lorton, Va., to keep expanding.
Eckbert said the company had growth plans for the UK, France, Germany, Spain, and Portugal, where it already has sites, but also in Scandinavia, Austria, Switzerland, and Italy.
The British side of the joint venture includes Carphone Warehouse founder Charles Dunstone.
UK business is a joint venture between the original U.S. company, which was founded in 1986 and counts President Obama as a fan as well as Dunstone.
