Franchises feed Guam’s gigantic appetite

 

Guam’s commercial districts and thoroughfares showcase the island’s booming chain restaurant scene. Franchise owners say market is far from saturated.

 

 

 It’s hard to imagine a Guam without generous amounts of food being served. Whether the occasion is a village fiesta, a government meeting or a backyard barbecue, food in quantity isn’t just a possibility, but a requirement.

 

Locals joke about statesider “chip and dip” parties by comparison to the calorie laden events they expect. Guam’s never sated appetite is increasingly served by franchise restaurants, which have expanded dramatically in recent years, compared to the fiercely competitive stateside market, where some food franchises have closed the doors of outlets in recent years.

 

Keeping close track of the local dining scene is Richard Hart, president of Apple Pacific, which has brought Appleby’s, IHOP, Pieology and, most recently, Olive Garden to Guam. Hart is a former general manager of Outback Steak House and has some serious chops in his chosen field.

 

He said some franchisers in the states just look at the numbers, without seeing the potential of a unique market. It took three years to woo Olive Garden. “They at first had no interest in Guam, because the population wasn’t high enough. Pieology and Applebee’s were gung-ho. They wanted to come right away, as soon as we talked to them.”

 

Elements of the market are a high military population with more to come as the long-awaited military buildup proceeds, the high percentage of food oriented resident Filipino-Americans and tourists who are increasingly Korean rather than Japanese. All these market features require managers to keep on their feet.

 

The military members, far from home, are a natural market, since they’re familiar with franchise brands. “They enjoy U.S.-style brands like ours. It helps people feel a little more comfortable while deployed on Guam,” Hart said

 

Tourism is important to restaurants. “2018 was a tough year for everybody. The downturn in the Japanese market hurt everyone and everyone felt it. You can speak to anybody in a tourist-related industry and they’ll tell you the same thing.”

“The challenge is getting the right size of restaurants and products in for those restaurants. Saturation will only occur when there is too much duplication,” Fong said.

The boom of Korean tourists to Guam has helped to offset the loss of Japanese visitors, though it has been necessary to adjust to the change.

 

“The old days of walking into Outback and seeing five 80-lbs. Japanese girls all eating a porterhouse steak are gone, as compared with the Koreans who tend to share more, but they’re customers and they’re paying for their meals. They spend relatively less, but that’s OK. They’re a customer.”

 

Franchises on Guam may be a little different than stateside customers are used to. KFC for years has had red rice on its menu and the IHOP in tourist-oriented Tumon Bay sells a lot of lobsters, quite a contrast to its stateside counterparts. Hart said there’s enough room in franchise agreements to make local adjustments. The IHOP in Tamuning doesn’t have lobster on the menu. Hart said it’s really both a function of restaurant location and consumer demand. “If they stop buying it, we’ll stop selling it.”

The basics of a franchise must be maintained. Hart said Pieology isn’t going to start selling pasta any time soon. “We’re a pizza place.”

 

New restaurants on Guam such as Olive Garden tend to enjoy big crowds as diners check out this novelty. Olive Garden opened Oct. 9 at Tumon Sands Plaza.

 

 Hart said part of the trick is keeping the customers coming back and maintaining and motivating the folks who do the work in the kitchen and waiting on tables.

 

 “I’m not the one who’s here at 7 o’clock in the morning making alfredo sauce, the soup, the bread sticks. That’s what they’re doing.” He says that by contrast to a retail sales operation selling cars or other manufactured products, a restaurant is doing it all, from start to finish.

 

Anyone who has patronized Guam restaurants has noticed the generous portions served and likely taken advantage of the opportunity to take the extra food home. Hart said the franchise relationships have allowed prices to be kept down in competition with home cooking. “In a lot of instances, that’s cheaper than going to the store.” For many on the island working two or three jobs, cooking dinner at home is just one more task in a long day.

It seems as though every month brings about another grand opening for a dining establishment, to fill a gap —if there is still any gap left — in the increasingly busy market. Walk down any one of Guam’s commercial districts or thoroughfares and one won’t miss the obviously booming American chain restaurant scene on island. Some of them have somewhat similar menus.

 

The growth of this industry is reflection of Guam’s expanding economy, which was pegged at $5.1 billion in 2017. According to the Bureau of Economic Analysis’ November 2018 report, the growth in the Guam economy reflected an increase in consumer spending, which rose for the seventh year in a row. Visitor spending on Guam grew 8.5 percent in 2016 and surpassed $1.75 billion. Twenty  cents of every visitor dollar went to food and beverage expenditures in 2016.

 

Restauranteurs won’t miss out on this expanding market. As Tumon Sands Plaza revamps its brand, two more restaurants — Red Lobster and Chili’s Grill & Bar — are soon to open this year.

 

Triple J Restaurant Group, the brand franchise operator in Guam, is adding Red Lobster to its diverse portfolio. “This is an exciting time for our restaurant group, we will be bringing a seafood experience to Guam that you won’t find anywhere else, with the highest standards of quality, service, and great taste,” Dan Murrell, senior vice president for Triple J Enterprises Inc., said in a March 2018 press release.

 

Red Lobster Guam is scheduled to open in March this year. Triple J also manages and operates Outback Steakhouse in Guam, Bubba Gump Shrimp Co., Surf Club, Tony Roma’s, Capricciosa, Great Harvest Bread Co. and Truong’s Vietnamese Restaurant in Saipan.

 

  Marcos Fong, CEO of Foremost Foods Inc., which holds the local franchises for Chili’s and Subway, said his company is constantly looking at opportunities for new locations to be more convenient and meet the demands of customers. He said Guam has an appetite for more restaurants as local palates become more discerning and sophisticated. “The needs are constantly evolving and we want to keep up with the changes in population shifts, new centers,” Fong said.

 

Amid the meteoric upturn of the chain restaurant business on Guam, somehow one might speculate a creeping sense that the bubble may be about to burst. Can the Guam market accommodate more?

 

“The challenge is getting the right size of restaurants and products in for those restaurants. Saturation will only occur when there is too much duplication,” Fong said.

 

Foremost recently opened its 15th Subway Restaurant on Guam and will be relocating Chili’s Grill and Bar from Gam Premiere Outlet in Tamuning to Tumon Sands Plaza.

 

 In the United States, the $309-billion chain restaurant industry has been erratic over the years. According to the Technomic Chain Restaurant Index, total industry traffic has averaged a 3.8 percent decline in the past five months. That includes a 5.6 percent decline in September.

 

Why does Guam see the opposite trend? “Chain restaurants on Guam have a stronger reputation than their counterparts in the U.S.,” Fong said. “You will find that generally, most of the national chains here operate closer to brand standards and in fact, are held to a higher standard than a non-national branded restaurant. This level of food quality and trust gives national brands an advantage.”

 

While national chains on Guam tend to have the credibility of the brand name, Fong said, they are still largely judged on their local execution. “That’s why we see some chains that do poorly in the U.S. thrive on Guam and others fail to impress. It takes a balance of taking the national chain and localizing the experience with our hospitality and atmosphere.”

 

 Not to be outdone, McDonald’s opened its seventh Guam outlet in Yigo on Nov. 17, 2018. Saipan businessman Jose “Joe” Ayuyu, who acquired six McDonald’s restaurants on Guam from McDonald’s Corp. in 2016 and has since begun renovating and rebranding its existing locations.

Amid the meteoric upturn of the chain restaurant business on Guam, somehow one might speculate a creeping sense that the bubble may be about to burst. Can the Guam market accommodate more?

“The burger business is very competitive and anyone looking to enter the market must really be prepared,” said Mable A. Glenn, executive assistant at McDonald’s of Guam and Saipan.

 

 McDonald’s is one of the most popular American burger chains along with Wendy’s and Burger King — the familiar fast lanes for those craving some quick bites. Jollibee, the Philippines’ burger chain, will enter the field as it opens an outlet at the Micronesia Mall premises in Dededo this year.

 

In an increasingly competitive market, complacence is not an option. “McDonalds thinks ahead in terms of technology and finds innovative ways to improve the customer experience,” Glenn said.

 

McDonald’s thus gets smart. The company seeks to make McDonald’s more convenient for customers through mobile order & pay app and self-order kiosks. “Mobile Order & Pay allows our customers to order when they want and how they want. They can pay for their order through the app and choose where they’d like to pick up their order, whether in-store, drive-thru or curbside,” Glenn said.

 

 McDonald’s has also launched its self-order kiosk at its Tamuning location, where customers get to skip the line by placing their orders and paying through the kiosk.

 

In the later part of 2018, McDonald’s introduced “guest experience leaders” or GELs in the lobby area of its restaurants. “Our GELs help greet our customers, assist with our kiosks and answer any customer questions,” Glenn said. “All these things help us really set ourselves apart from other quick service restaurants on island.”    

 

Want fries with that?

 

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