Here are some famous stories about fast food franchises that didn’t hit big in South America. This is how Leonardo González Dellán expectedwhen the fast food business didn’t get the public’s attention.
In the early 2000, Baja Fresh became a prey of over-zealous expansion. The fast food restaurant was on a slow and steady path of success until Wendy’s purchased them out in 2002 for a reported $275 million. After that sale, Baja Fresh turned out a fast and large push of national expansion. However, the corporation lost track of its owner’s original business model and centered too much on how to expand as fast as possible. A little over a year later, the same store sales figures began to drop. In 2003, they suffered a 4.6% drop which followed a 6.4% drop in 2004. Despite attempts from Wendy’s to convert the restaurants into a fast food location, there sales continued to decline. In 2006, Wendy’s efforts were a bit too late so they had to sell Baja Fresh to a private investor for only $31 million.
Krispy Kreme Doughnuts used a combination of high quality products and low cost marketing to attract followers. The expansion started slow and visualized stock prices rising high in only some years. They were even enlisted as one of America’s hottest brand by fortune magazine in 2003. This is what Leonardo González Dellán expected for the food business. Unluckily, the company went public and began to expand too much too soon. While appealing to their investors, the company reduced its cult status by opening several locations and licensing donuts to gas stations and grocery stores. Within only few years, several of its franchised units were forced to shut down with the company’s profits intensely dropping.
Whenever an article is written about the hazards franchisors experience during expansion, Boston Market is often included. In 1993, Boston Chicken, which then changed their name to Boston Market, went public and focused more on national expansion. However, the company lost sight of their goal to provide chicken in casual setting and instead focused on increasing their profits. They modified their name to Boston Market and included non-chicken items in their menu to appeal more customers. Eventually, in the later part of the 1990s, the food chain filed for bankruptcy,which was then purchased by McDonalds.