Monday, November 12, 2012

Potato Corner Conquers US Market

Successful Filipino-owned Potato Corner has trained its eyes on the more lucrative US market with 1,000 total outlets by 2013, more than triple the Philippines' 300 outlets. "By 2013, the US will have bigger net income than the Philippines," said company CEO Jose "Jomag" P. Magsaysay Jr. at a press conference marking the 20th year of this popular flavored potato company. At present, there are only 13 Potato Corner stores in the US and is expect to open 7 more to end the year with a total of 21 stores. The Philippine operation would have slower growth because it has already reached a saturation point in the Luzon area although there are opportunities in the Luzon and Visayas, Magsaysay said. According to Magsaysay, it helped that it has established a joint venture in the US that does the franchising for that market unlike other franchise firms that directly handle the franchising back in the Philippines. To facilitate its US expansion, Potato Corner has put up a wholly owned US based company, Potato Corner International Inc. (PCI), which in turned formed a 60-40 joint venture - PCJV LLC - with a Jewish group. The joint venture is now a full fledged franchisor company that can franchise Potato Corner in the US. This makes Potato Corner one of the two Filipino franchising firms that have established a US based franchising company. The other firm is Max's restaurant. All the other Filipino franchisors are operating in the Philippines. "The US is where Potato Corner will be seeing most of the action in the coming years," Magsaysay said. Unlike most of the franchise stores in the Philippines, which are kiosks or quick service restaurants, the US stores are all big ones. The estimated cost of one Potato Corner store in the US is $200,000 including advance rental, construction and franchise fee. Potato Corner has also 26 outlets in Indonesia and one each in Malaysia and Panama. They are now processing master franchise applications for 7 more countries, Magsaysay said. "In the past three years, we have been experiencing growth of 20 percent," Magsaysay said. This year, the company is looking at 12 percent growth. Magsaysay said they employ 200 people for the 80 company owned stores. The company has been aggressive in their franchising operations to fund the acquisition of other small food brands to diversify its product portfolio. "We are talking to three brands now," he said. They are looking at quick service restaurants or kiosks with a price of P20 million. Potato Corner has gone a long way since it started operation 20 years ago when Magsaysay and his three partners actually struggled to raise meager capital for the venture. "We had to find a way to grow the business given that we did not have enough financial resources to pen other outlets after the first store. We also had to compete in an environment with increasing number of competitors in the same business model, which is the kiosk business, and maintain the right cost of goods for our merchandize," he said