Global Business Development

EGS Biweekly Global Business Newsletter Issue 60, Tuesday, July 12, 2022

Edited and curated by: William (Bill) Edwards, CFE, CEO of Edwards Global Services, Inc. (EGS)

I am on a two week business trip to Australia and New Zealand which are fast coming out of two years of pandemic lockdown. This issue we look at where China’s economy is going for the rest of 2022, more foreign brands fully exit Russia, the cost of living around the world, the COVID-19 pandemic impact on global executive sentiment and beating supply chain challenges for food brands. And my favorite airplane – the Airbus 380 – has returned to service. And India will surpass China’s population next year.

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First, A Few Words of Wisdom From Others

Change something by even the smallest percentage and your outcomes will be different.”, Elaine Harrison

“Adapting does not mean permanent changes, it just means making small, quick adjustments.” Hany Kubba, The Teaching Blueprint

“Disruption is the new order. The only constant is change.”, Rob Moore

Highlights in issue #60:

  • Brand Global News Section: Checkers & Rallys®, Dominos®, Holiday Inns®, KFC®, McDonalds®, PoolWerx®, Restaurant Brands, Starbucks®, YUM Brands,

NOTE: Bolded headlines are live links to published articles where the article is freely available

Interesting Data and Studies

The coronavirus effect on global economic sentiment – Just one quarter after geopolitical conflicts and instability overtook the COVID-19 pandemic as the leading risk to economic growth, (global executive) survey respondents’ concerns over inflation now exceed their worries about the effects of geopolitical issues on their countries’ economies. In the latest McKinsey Global Survey on economic conditions, respondents most often cite inflation as a risk over the next year.”, McKinsey & Co., June 29, 2022

Global Supply Chain, Energy, Commodities, Inflation & Trade Issues

“Europe is preparing for Russian gas to be cut off this winter – An EU-wide plan is needed to cope. Gazprom, Russia’s state-controlled gas goliath, has been squeezing the Europeans for months. s&p Global, a research firm, reckons that in June Russia piped just 4.7bn cubic metres (bcm) to Europe, barely a third of the level in early 2021. Now Russia is squeezing even harder. On June 16th it slashed exports via ns1 to 40% of capacity, citing technical snags. On the morning of July 11th Russia shut down all gas exports via ns1 for about ten days of maintenance.”, The Economist, July 11, 2022

There’s a massive pile-up of car, furniture exports bound for U.S. and it’s spreading across European ports Labor slowdowns and strikes at the German and Netherland ports are creating a massive pile-up of export containers bound for the U.S. that will take months to clear out. “U.S. importers need to look four to five weeks in advance to see if there is a vessel available,” said Andreas Braun, Europe, Middle East, and Africa ocean product director of Crane Worldwide Logistics. “This is not normal. Also, if you are lucky to book a slot on a vessel you then have to locate an empty container which can be in the hinterland.”, CNBC, July 1, 2022

How inflation is flipping the economic script – The liftoff in fertilizer prices, along with other fallout from the war in Ukraine, has pushed prices for basic foods much higher. Since 2021, food prices have risen to their highest level since the United Nations’ Food & Agriculture Office began its index. And the war in Ukraine has lifted food prices to an entirely new level.”, McKinsey & Co., July 6, 2022

How to fight supply chain issues in food service – When asked what issues plague operators the most, among the answers are supply chain disruptions, which affect suppliers and distributors, too, said Brian Warrener, an associate professor at Johnson and Wales University, at the National Restaurant Association in May. Warrener teaches food & beverage hospitality and management. Warrener said that food costs are up 13%, industry wages are up 11% and industry prices are up 8%. When it comes to food costs, beef is up 23%, eggs 31%, chicken 27% and cooking oil 44%.  He said 96% of operators report delays in the supply chains.”, QSRweb.com, June 29, 2022

Global, Regional & Local Travel Updates

Three British bosses plot a ‘golden age of air travel’ in the Gulf – The chief executives of Emirates, Etihad and Dubai airport have different plans for luring passengers, going green — and making money. These three British chief executives handle more long-haul international passengers than the bosses of any other airlines or airports. As rival operators, notably British Airways and Heathrow and Manchester airports struggle to cope with rising demand, they want to cash in and “create a new golden age of travel,” as Griffiths puts it.”, The Sunday Times of London, July 10, 2022

Swiss travel retailer Dufry to acquire Italy’s Autogrill – Duty-free retailer Dufry said on Monday it would acquire Italian airport and motorway caterer Autogrill expanding the Swiss company’s growth opportunities in international markets as travel rebounds. Basel-based Dufry operates around 2,200 shops at airports, cruise liners, seaports and other tourist locations worldwide. Autogrill runs bars, cafes and restaurants at 139 airports internationally, including 80 in North America, as well as on motorways in Europe. Dufry said the combined company will cater to 2.3 billion passengers in more than 75 countries….”, Reuters, July 11, 2022

A380 Superjumbo Makes Return as Travel Demand Skyrockets – Qantas, who parked all 12 of its A380s in the California desert, said when the pandemic began that it wouldn’t need any of them for at least three years and now, just over two years later, the carrier says it will begin to return to service. British Airways has already begun to fly the A380 again and plans to ramp up service over the coming months. Asiana Airlines announced it would bring back its A380s within a month and Lufthansa announced on Monday that its A380s would make a return to service in 2023.”, AirlineGeeks, June 28, 2022

Flying will become more expensive for passengers’, warns former British Airways boss – Flying will become more expensive because of soaring oil prices, the former head of British Airways has warned. Willie Walsh, the former chief executive of the airline, also said passengers are set to face problems at UK airports as they try to go away this summer…..The aviation industry is suffering major disruption as a surge in demand for travel coincides with staff shortages across roles such as airline crew, ground handlers, airport security staff and air traffic controllers.”, Yahoo! News, July 11, 2022

Country & Regional Updates

Canada

Canada’s unemployment rate fell to record low in June, despite losing 43,000 jobs – Financial analysts were expecting a gain of 22,500 positions. The job losses were concentrated among the self-employed and those 55 and older. Hiring conditions remain challenging in Canada, and at last count employers were recruiting for about one million positions – far higher than job-vacancy levels before the pandemic.”, The Globe and Mail, July 8, 2022

China

Where Analysts Think China’s Economy Is Going This Year – In late May, policymakers rolled out a stimulus package containing 33 measures, including tax and fee cuts, favorable loans for certain sectors and accelerated local government bond issuances for infrastructure investment…..It’s possible that there will be further regional outbreaks and lockdowns due to the harder-to-contain omicron variant, while low confidence is likely to be more persistent, they said.”, Caixing Global, June 24, 2022

Record 274 Companies Apply for IPOs in Last Week of June – A record number of companies are rushing to submit applications for initial public offerings (IPOs) on China’s A-share market even as a rising number of others are withdrawing flotation plans. In the last week of June, 247 companies submitted IPO applications, the highest weekly number on record. A total of 921 companies are in line to raise money by selling shares on the Shanghai, Shenzhen and Beijing stock exchanges.”, Caixing Global, July 7, 2022

Coffee is fragrant again about 800 Starbucks Shanghai stores resume dine in – On June 29, 2022, the first day that Shanghai opened its dine-in restaurants in an orderly manner, the long-awaited coffee shop also opened its doors to welcome guests. On the same day, about 800 Starbucks Shanghai stores took the lead in fully resuming dine-in.”, Yical, June 29, 2022. Compliments of Paul Jones, Jones & Co., Toronto

Germany

The German Trade Deficit Is No Cause for Alarm – Germans have long placed too much emphasis on the importance of a surplus to their country’s prosperity. In May, for the first time in more than three decades, Germany’s storied trade surplus disappeared. Not only is imported natural gas more expensive, but demand in China is falling — neither of which is good news for Germany. Nevertheless, the fallout will be more manageable than many people expect, the Germans included.”, Bloomberg, July 7, 2022

Greece

Greek Tourism Boom Means Growth May Top 3.2%, Stournaras Says – The Greek economy may grow more than expected as tourists return to the country in greater numbers, according to the central bank chief. The country also is in a better situation than some of its euro-area peers in regard to the threat of Russia cutting off energy deliveries. Greece will likely avoid a recession should shipments halt completely, Stournaras said.”, Bloomberg, July 10, 2022

India

India to Surpass China as Most-Populous Nation in 2023 – UN had previously estimated India to cross milestone by 2027 Report pegs global population growth at 8.5 billion by 2030. The UN expects global population to hit 8 billion on Nov. 15 and grow to 8.5 billion by 2030. More than half the projected rise between now and 2050 is expected to be in just eight countries: Congo, Egypt, Ethiopia, India, Nigeria, Pakistan, the Philippines and Tanzania….”, Bloomberg, July 12, 2022

Japan

Why most overseas visitors to Japan are on business trips, with the country opening up cautiously. Japan is allowing in overseas visitors on official tour groups, but most arrivals are there on business trips and fitting in some sightseeing. Some of these ‘bleisure’ travellers said they had no problem getting into Japan, while others complained of having to jump through too many hoops.”, South China Morning Post, July 11, 2022

Russia

Russians served mouldy burgers in McDonald’s replacement restaurants – Now diners at the new Vkusno & Tochka outlets (translated from Russian as “tasty and that’s it”) posted photos of their food on social media, New York Post reports. The disturbing images show mould on the hamburger buns. Other customers have reported finding insect legs in the meat patties, according to the Daily Mail.”, News.com.au, July 6, 2022. Compliments of Jason Gehrke, Publisher & Editor, Franchise Advisory Centre, Brisbane

McDonald’s simplifies franchising policies to attract more diverse candidates – Starting in 2023, the fast-food giant will evaluate every potential new operator equally. In the past, the spouses and children of current franchisees have been given preferential treatment. The company recently came under pressure for a plan to roll out a new grading system early next year that rankled some franchisees, who have concerns about potentially alienating workers.”, CNBC, June 23, 2022

Starbucks found a buyer for the Russian business – Restaurateur Anton Pinsky will most likely become the new owner of the chain. The deal can be closed as early as the 20th of July, it will include lease rights to all areas of Starbucks coffee shops with renovation (but without the possibility of using Starbucks products and technologies), as well as premises in the Pushkino Park shopping center, which is located at the company owned, say the interlocutors of Vedomosti. The new owner of the network will also have to rebrand it, as happened with McDonald’s earlier (renamed to “Tasty – and that’s it!”)…”, Vedomosti, July 7, 2022. Compliments of Paul Jones, Jones & Co., Toronto

Fast Food Giant Yum Brands Announces Plans to Leave Russia With KFC SaleOne of the world’s largest restaurant companies, Yum Brands Inc, announced Tuesday it is “in advanced talks” to sell its KFC restaurants and franchise in Russia. The American company plans to fully exit the Russian market after selling the brand to a local buyer, state-run news agency Interfax reported.  The company has already sold its Pizza Hut business to a Russian company Noi-M.”, The Moscow Times, July 5, 2022. Compliments of Paul Jones, Jones & Co., Toronto

IHG Hotels and Resorts To Cease All Operations in Russia – On April 8, the company shared it was in discussions with the owners of its 28 IHG-branded hotels in Russia “regarding the complex, long-term management and franchise contracts under which these hotels operate,” according to the statement. The InterContinental Moscow – Tverskaya opened in 2011 and is the company’s highest-profile branded hotel in the country. Crowne Plaza and Holiday Inn hotels are prevalent across the country, and a Staybridge Suites and a Hotel Indigo round out the company’s portfolio there.”, Hotel News Now / Costar, June 27, 2022. Compliments of Paul Jones, Jones & Co., Toronto

Singapore

Singapore’s Sky-High Car Prices Are Warning for Global Cities – City-state’s taxes have pushed car prices to as much as a flat Government restricts sales to prevent congestion, pollution. Singapore media professional Ellie Lim gave up her plan to buy a new Volvo SUV to ferry her newborn baby when she realized it was going to cost her more than S$200,000 ($142,000). ‘I was quite shocked,’ said Lim, 34. Coupled with high interest rates on car loans, fuel prices and maintenance fees, buying a new car is ‘a financially unsound decision,’ she said.”, Bloomberg, July 6, 2022

Turkey

Turkey hit with soaring prices as inflation nears 80% – Growth in annual prices rose from 73.5% in May to 78.6% in June, but real rate could be double official figure. The growth in annual prices rose from 73.5% in May to 78.6% in June, according to the Turkish statistics agency. However, opposition parties and economists said recent hikes in oil and gas prices meant the real rate of inflation was almost double the official figure.”, The Guardian, July 4, 2022

United Kingdom

UK Tax Cuts Feature at Heart of Race to Replace Johnson – The contest to succeed Boris Johnson as UK prime minister is likely to become a battle over hand-outs for households, with limited interest in fiscal restraint. Tax cuts and aid for families struggling with a surge in the cost of living are already at the heart of the political debate, and pressures for largess from the Treasury will only increase during the next few weeks. By September, when the ruling Conservative Party aims to install a new leader, the government is likely to face strike threats from public sector workers demanding higher pay.”, Bloomberg, July 10, 2022

United States

Supply Chain Taking Toll on US BusinessMore than a third of US retailers are just two months away from running out of cash, according to a new survey from Brightpearl. There’s more. The study of 500 retailers also found 80 percent have been hit with supply problems in the last year; 52 percent have experienced stockouts, resulting in a loss of sales; and the supply crisis has added 23 percent to retailers’ costs over the last year, with 51% saying they have increased prices as a result.”, Franchising.com, July 2022

Workers in America’s biggest cities are defying their bosses and avoiding the office – In-office visits in San Francisco, New York City, and Chicago still aren’t as frequent as they were before the pandemic, according to new research from locational analysis software Placer.ai that analyzed foot traffic data in nearly 200 office buildings in all three cities. If any trend has emerged from the Great Resignation and the past two years of remote work, it’s that white-collar employees generally like workplace flexibility. What they don’t like as much—the office. Research from McKinsey & Co. found that 58% of Americans have the option to work remotely at least one day a week.”, Fortune, July 2, 2022

A Small Business Hiring Surge – Owners fear recession but are still adding workers. The owners of small U.S. firms went on a hiring binge last month and continue to raise compensation to attract and retain scarce workers. That’s according to the latest monthly employment survey from the National Federation of Independent Business, due out later today. What makes this strong desire to hire especially odd is that it is occurring  even as the owners of small firms are more pessimistic about future business conditions than they’ve been in at least 48 years, according to NFIB.”, The Wall Street Journal, July 7, 2022

Brand News

Checkers & Rally’s Taking a Big Bite Out of Franchise Fees and Royalties – In 2022, the brand is offering incentives of as little as 2% royalties for the first year for franchisees opening one or two restaurants on schedule, to 0 percent royalties for franchisees who open three restaurants on schedule and within a set time period. Beyond those enticing incentives, there is also a reduction in franchise fees for veterans and women entrepreneurs interested in franchising with the Tampa, Florida-based brand.”,  Franchising.com, July 2022

Domino’s (Australia) adds pizza delivery charges as costs bite fast food sector – Pizza chain Domino’s has introduced a 6 percent delivery fee for online orders as rising food and fuel costs begin to bite across Australia’s fast food industry. The ASX-listed pizza maker told The Sydney Morning Herald and The Age it had introduced the fee to cover the increasing costs of doing business.”, Brisbane Times, July 5, 2022

Global investment firm Norwest invests in Poolwerx pool and spa franchise network – US-based global venture and growth equity investment firm Norwest has invested a substantial amount in Poolwerx to support the franchisor’s plans for ambitious growth. Poolwerx founder and CEO John O’Brien says the investment will bring additional expertise and opportunities to enable Poolwerx to grow bigger and faster in Australia, New Zealand and the US.”, Splash Magazine (Australia), July 7, 2022

Restaurant Brands International – Second Quarter Results Likely To Beat Expectations On Strong Business Momentum. The opening up of Canada and the firm’s international markets was possibly a continued predominant tailwind for sales. Digital, delivery, and increased dine-in sales which drove upside over the first quarter, probably delivered during the second quarter as well. Burger King U.S. likely continued to recapture market share due to turnaround efforts.”, Seeking Alpha, June 30, 2022

Yum Brands is completely exiting Russia – After Yum completes the transfer of ownership of all KFC restaurants in Russia to a local operator, the process of exiting the contentious country will be complete.”, Nation’s Restaurant News, July 5, 2022

Articles & Studies For Today And Tomorrow

Comparing the Cost of Living Around the World – The amount of money that’s needed to pay for day-to-day expenses like housing and food varies greatly from city to city. And some cities, like New York City, are known as especially expensive places to live. This graphic by Victor Dépré (hypntic.data) uses 2022 data from Numbeo to compare the cost of living and purchasing power in 578 different cities around the world, using New York City as a benchmark for comparison.”, Visual Capitalist / Numbeo, July 8, 2022 NOTE: The graphic at the link is interactive for the 578 cities.

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Our Mission, Information Sources & Who We Are

Our biweekly global business update newsletter focuses on what is happening around the world that impacts new trends, health, consumer spending, business investment, economic development and travel. We daily monitor 30+ countries, 40+ international information sources and six business sectors to keep up with what is going on in this ever-changing environment. Our GlobalTeam™ covering 43 countries provides us with updates about what is happening in their specific countries. 

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William (Bill) Edwards has a four-decade career successfully accelerating the international growth of more than 40 brands. He has directed projects on-site in Alaska, Asia, Europe and the Middle and Near East and has lived in China, the Czech Republic, Hong Kong, Indonesia, Iran and Turkey. Edwards Global Services, Inc. (EGS) provides a complete International solution for companies Going Global. From initial global market research and country prioritization, to developing new international markets, providing in-country operations support and problem solving around the world. EGS has twice received the U.S. President’s Award for Export Excellence. For advice on doing business successfully across 40+ countries, contact Bill Edwards at bedwards@edwardsglobal.com or +1 949 224 3896. 

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