TGI Fridays a gamble in Kiwi market
Global casual dining chain TGI Fridays' plans to open in New Zealand by the end of next year, but an analyst says it is unlikely to succeed.
Australian-based Kiwi Andrew Cox is in New Zealand this week looking for suitable locations for TGI Fridays restaurants with the first expected to open in the fourth quarter of next year.
His private investment firm, Imperium Group, holds the Australasian franchise rights for the Texas-based chain that has about 1000 restaurants in 61 countries, including nine in Australia.
Cox is evaluating two potential sites in Auckland, one in the downtown/waterfront precinct and the other in a suburban location.
The company estimates that each new restaurant will create about 80 full and part-time jobs.
However, retail analyst Tim Morris said fast food casual dining chains did not work outside Canada and the United States.
"Chain casual dining hasn't demonstrated an ability to scale globally," Morris said. Other casual dining chains like Denny's, Cobb & Co and Pizza Hut had not worked in New Zealand, he said.
It is understood that a TGI Fridays has previously operated in Christchurch.
It was not clear why casual dining struggled in other markets, Morris said. But prices were higher than fast food chains and the food tasted different between restaurants due to a lack of continuity in the supply chain, he said.
Director of stockbroking firm Hamilton Hindin Greene, Grant Williamson, said competition in the restaurant market was tough and TGI Fridays would struggle.
The sector had high costs and was vulnerable to dining trends.
"I think a lot of it will come down to the state of the economy."
While the Lone Star chain had done well, some of their success could be attributed to the significant bar element of the business, he said.
Imperium Group also owns Eichardt's luxury hotel in Queenstown, and the company is looking at opening a similar hotel in Auckland. Eichardt's is widely regarded as one of the most luxurious boutique hotels in this country. Cox is considering expanding the Eichardt's in Queenstown to increase its capacity.
He is also talking to boutique hotel and lodge owners around the country about taking over the management of their establishments and operating them under the Imperium Collection banner.
Cox grew up in Christchurch and moved to Australia in 1994.