Global Business Development

EGS Biweekly Global Business Newsletter Issue 65, Tuesday, September 20, 2022

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

We say goodbye to Queen Elizabeth II. Chinese consumers get frugal, China’s energy imports decline and Starbucks will add 3,000 more stores in China. The war weighs down European Union country economies. And a new study says 90% of franchised businesses in the USA are negatively impacted by inflation.

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First, A Few Words of Wisdom From Others

“What you think, you become. What you feel, you attract. What you imagine, you create.”, Buddha

“The way I see it, if you want the rainbow, you gotta put up with the rain.”, Dolly Parton

“Perpetual optimism is a force multiplier.”,  Colin Powell

Highlights in issue #65:

  • Brand Global News Section: Hard Rock Café®, KFC®, Nandos®, Starbucks®, Tim Hortons®, TGI Fridays®, Wendy’s®

NOTE: Bolded headlines in this newsletter are live links where the article is freely available

The Passing of Queen Elizabeth II

Queen Elizabeth II – The long reign of Queen Elizabeth II was marked by her strong sense of duty and her determination to dedicate her life to her throne and to her people. She became for many the one constant point in a rapidly changing world as British influence declined, society changed beyond recognition and the role of the monarchy itself came into question. Her success in maintaining the monarchy through such turbulent times was even more remarkable given that, at the time of her birth, no-one could have foreseen that the throne would be her destiny.”, BBC News, September 8, 2022

Elizabeth II: an appreciation by Simon Schama – The UK’s longest-serving monarch was so much more than a head of state — she was quintessential Britain. 

Interesting Data and Studies

New International Franchise Association Report Shows Inflation is Negatively Impacting 90% of Franchised Businesses. The most impacted sectors include lodging (90%), quick-services restaurants (83%), and child-related services (61%), which report a substantial increase. 89% of (franchised) units have had to raise their prices of goods and services to absorb cost increases. 64% of respondents reported lower earnings due to rising prices, with quick-service restaurants, retail stores, and the beauty-related industry being the top three industries to feel the impact on their bottom line. The most significant cost increases are driven by rising fuel prices, increases in labor cost and inventory costs. 60% of franchisees expect increases in cost to get worse in near future. 92% of franchisees with 11+ units say growth is constrained by labor issues.”, The International Franchise Association, September 15, 2022

Growth moderates globally in an inflationary environment – High inflation is eroding household budgets, leading to a decline in consumer sentiment and, outside the United States, static or declining retail sales in real terms. Production is flattening under persisting supply chain pressures, high input costs, and softening demand. Investor uncertainty over rising interest rates is roiling financial markets. GDP growth in China was 2.5% in the first half of 2022 but slowed to 0.4% in the second quarter, with output constrained by pandemic restrictions, softer external demand, and the financially troubled real-estate sector. In the eurozone, GDP growth outpaced expectations at 0.6% in the second quarter and 1.1% for the first half.”, McKinsey & Co., September 9, 2022

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

UN FAO’s global food prices fall for fifth month in a row – The index fell to 138 in August and is now lower than it was before Russia’s invasion of Ukraine. The countries were both major exporters of crops including sunflower oil, corn and wheat. The UN’s Food and Agricultural Organisation says July’s UN backed deal to re-open Ukrainian ports has eased cereal and vegetable oil prices.”, BBC News, September 2, 2022

Global & Regional Travel Updates

“Singapore opens up to travellers – During the pandemic Singapore’s national carrier, Singapore Airlines, was so short of business that it sold locals dining spots on board a grounded double-decker A380 plane. Between 2019 and 2021 passenger numbers at Changi airport, the main air hub, plunged by 96%. But since the government began loosening border restrictions late last year, tourists have started returning. This summer traffic at Changi reached 50% of pre-pandemic levels.”, The Economist, September 13, 2022

Country & Regional Updates

Asia

Casino Suppliers Quit Macau for Resurgent Singapore, Philippines – Companies move staff, inventory out of city as slump continues. Casino revenue collapses on Covid policies, China crackdown. Suppliers of slot machines, baccarat table systems and other casino equipment are moving out of Macau to more welcoming markets, evidence of the damage China’s Covid Zero policy has wrought on the formerly bustling gambling hub.”, September 5, 2022

Australia

Australia’s Jobless Rate Climbs for First Time in 10 Months – Australian unemployment unexpectedly rose in August, the first increase in 10 months, a result that supports the Reserve Bank’s signal of a potential shift to smaller interest-rate increases. The jobless rate’s rise to 3.5% came even as employment advanced by 33,500, the Australian Bureau of Statistics said Thursday. That was slightly below economists’ estimates for a 35,000 increase.”, Bloomberg, September 14, 2022

Canada

Prices at Toronto restaurants to soar by up to 15% — as industry deals with ‘anything but normal’ situation. Higher prices are on the menu as inflation drives up operating costs, while industry continues to see closures.  Half of restaurants were operating at a loss or just breaking even as of July 2022 — typically one of the busiest months of the year, the report found. As a result of higher costs, more than a third of full-service restaurant operators plan to raise their prices by more than seven per cent, and many between 10 and 15 per cent.”, Toronto Star, September 15, 2022

China

“China’s Economy Beats Expectations in a Range of Areas – New Chinese data showed better-than-expected results for August in a swath of sectors, all while Covid cases finally began to fall, giving hope of a rebound or at least stabilization in an economy beleaguered all year. Compared with the previous month, improvements were seen in retail sales, industrial production, fixed-asset investment, and unemployment….(Retail) Sales leapt to 5.4% year-on-year, compared to July’s 2.7%, and well above consensus forecast of 3.4%.”, Barron’s, September 16, 2022

Frugal is the new cool for young Chinese as economy falters – Before the pandemic, Doris Fu imagined a different future for herself and her family: new car, bigger apartment, fine dining on weekends and holidays on tropical islands. Instead, the 39-year old Shanghai marketing consultant is one of many Chinese in their 20s and 30s cutting spending and saving cash where they can, rattled by China’s coronavirus lockdowns, high youth unemployment and a faltering property market. This new frugality, amplified by social media influencers touting low-cost lifestyles and sharing money-saving tips, is a threat to the world’s second-largest economy, which narrowly avoided contraction in the second quarter. Consumer spending accounts for more than half of China’s GDP.”, Reuters, September 18, 2022

China’s plunging energy imports confound expectations – A revival would cause problems—and not just for Europe. With the price of fuels surging, the collapse in Chinese purchases of natural gas and other forms of energy has been an unexpected boon to countries around the world.  Arrivals of seaborne liquefied natural gas (lng) have declined most markedly. China remains the largest lng importer in the world but, between January and August, imports dropped by a fifth compared with the same period last year. That shortfall, at roughly 14bn cubic metres, is roughly equivalent to the entire annual lng imports of Britain.”, The Economist, September 15, 2022

European Union

Ukraine War Weighs Down European Economies – The countries closest to the war in Ukraine saw their economies shrink in the second quarter.  Europe is bearing the brunt of the economic war raging between Russia and the West. On the whole, European economies grew in the second quarter of the year, driven by household consumption and government spending. However, the countries closest to the Russia-Ukraine war, such as Poland and the Baltic states, saw their economies shrink for a variety of reasons.”, Geopolitical Futures, September 16, 2022

India

93% Indians Used At Least One Mode Of Digital Payment In Last Year – Digital payments are rising rapidly in the country and more and more Indians are adopting the cashless payment method. According to a survey commissioned by Mastercard, 93% of Indians are likely to have used at least one mode of digital payment in the past year.

Indian consumers are among those who are most open to digital payments methods in the Asia-Pacific region, Mint reported citing the survey. Compared to Indians, only Chinese consumers are more open to digital payments (98%).”, INC42, September 19, 2022

Travel Etiquette: 10 Things to Consider When You Visit India – Saying that India is vast is an understatement. Its population of 1.38 billion ascribes to many different religions and beliefs. People are spread across 28 states and eight union territories; they communicate in hundreds of languages and local dialects and practice diverse cultural norms. The myriad cultural and religious differences, and the contrast between the urban and rural areas, mean there are a lot of dos and don’ts in order to be respectful and considerate of the local people and their customs.”, Fodor’s Travel, September 14, 2022

Italy

Italy’s Draghi presents new aid package – Italy approved an aid package worth some 14 billion euros ($14 billion) on Friday to shield firms and families from surging energy costs,….The latest measures come on top of some 52 billion euros already budgeted since January to soften the energy crisis in Italy. They will be funded by higher value added tax revenues as a result of rising electricity and gas bills and by adjustments elsewhere in the state budget, without resorting to extra borrowing which had been requested by some parties.”, Reuters, September 16, 2022

Switzerland

Swiss to dial down thermostats in government buildings – Swiss bureaucrats will need to dress warmly this winter after the government decided public buildings would be heated to no more than 20 degrees Celsius (68°F) to save energy. The measures agreed by the cabinet on Friday cover federal office buildings and universities and military properties. They aim to save 6-10% of the energy used to heat federal buildings.”, Reuters, September 16, 2022

United Kingdom

Kentucky Fried Crisis: How surging chicken costs hit Nando’s and KFC – The rising cost of chicken is turning customers away, while farmers are leaving their sheds empty. The Office for National Statistics said last week that the price tag for chicken in shops had jumped by 14.9 per cent on average over the past year. The Producer Price Index, which measures the cost of goods for factories, showed that imported chicken and red meat from the EU had shot up 69 per cent. Feed prices for livestock were up 61 per cent, and fresh red meat and poultry was 21 per cent higher.”, The Times of London, August 21, 2022

Pound hits new 37-year low as retail sales slide – The larger-than-expected drop in sales volumes of 1.6% prompted fresh concerns over the state of the economy. Sales across all retail sectors fell in August as households cut back in the face of rising prices. One analyst suggested the figures showed the UK is already in recession. Sterling fell more than 1% against the dollar to $1.1351 at one point, its lowest since 1985, following the release of the retail sales figures. The pound recovered later to climb above $1.14.”, BBC News, September 16, 2022

United States

“Women are reentering the workplace, but employers will have to do more for them to stick around – Last month, U.S. women saw a major gain in labor force participation, with the proportion of women in the workforce between the ages of 25 and 54 finally rising to a pre-pandemic level of almost 75%. But researchers say such celebration is premature if structures aren’t put in place to ensure women stay in the workforce.  Fewer than 30% of women say they feel included in the workplace, according to a recent report from Bain & Company. This poses a major retention risk, considering a lack of belonging is one of the top reasons employees say they’d leave a company.”, Fortune, September 15, 2022

Small business revenue doubles, but profits are flat – Seventy-five percent of U.S. small business owners say they are being impacted by inflationary pressures— prompting them to modify their practices in order to grow, according to a new study……’47% of all small business respondents reported that inflation is impacting their labor market by pushing them to accommodate and compensate for higher health care, enriched employee benefits and more frequent pay raises,’ said Brett Sussman, VP head of sales & marketing for Kabbage from American Express.”, Yahoo! Finance, September 14, 2022

Brand News

Hard Rock CEO makes $100M employee wage investment: We wanted to ‘really thank them’ –  Reporting that the Hard Rock brand “has been doing very well this year,” (Hard Rock International Chairman Jim) Allen announced an initiative Tuesday to thank the company’s line employees with a $100 million investment to raise starting wages for half of its U.S. workforce at company-managed hotel, café and casino locations nationwide.”, Fox Business, September 16, 2022

Starbucks Plans to Add 3 000 Stores in China by 2025 – In the next three years, Starbucks China aims to accelerate its development potential through six growth engines and a series of major investments. By 2025, the total number of Starbucks stores in China is targeted to reach 9,000, while the number of employees will increase by 35,000, totaling more than 95,000.”, Pan Daily, September 14, 2022. Compliments of Paul Jones, Jones & Co., Toronto

Starbucks (USA) to revamp stores to speed service, boost morale – The company also said it plans to open 2,000 net new stores in the U.S. by 2025, with an emphasis on meeting the growing demand for new types of service, including drive-thru, mobile ordering and delivery. Starbucks — ringing up record sales but struggling with low employee morale — plans to spend $450 million next year to make its North American stores more efficient and less complex.”, Chicago Sun Times, September 16, 2022

TGI Fridays signs historic deal to expand chain to South and Southeast Asia – The development agreement is for 75 new restaurants over the next 10 years. The casual restaurant company said Friday that it expects the 10-year deal with Singapore-based Universal Success Enterprises Ltd. to boost its annual revenue by $500 million.”, Dallas Morning News, September 16, 2022

Cartesian Capital Pushes Massive Growth of Tim Hortons China – Zero to 450. Less than four years after opening its first store in Shanghai, Tim Hortons China crossed the 450-unit mark this summer with plans to continue its dizzying development push on the way to 2,750 stores by 2026. It’s a pace necessary to compete in a consumer market that Peter Yu, chairman of Tim Hortons China, called the most compelling in the world.”, Franchise Times, August 29, 2022. Compliments of Paul Jones, Jones & Co., Toronto

US burger chain Wendy’s is coming to Australia – The US Wendy’s burgers brand is heading to Australia and is on the hunt for a master franchisee. The iconic brand is reportedly the world’s third largest quick service restaurant burger chain, with about 7000 outlets worldwide….Now the chain is readying to hit the market Down Under, with consultancy firm DC Strategy tasked with recruiting master franchisees.”, Smart Company AU, September 15, 2022

Articles & Studies For Today And Tomorrow

Franchising Isn’t for Entrepreneurs, It’s for Systempreneurs – First determine if you can follow a system, then find the right system for you. The franchise model leverages a system and business approach to help entrepreneurs start and run their own businesses. But a franchisee is really more of a systempreneur than an entrepreneur. True entrepreneurs invent a business from scratch and develop everything from the ground up. Systempreneurs use leverage of all types — debt, an existing operating system, best practices and information — to build their business.”, Entrepreneur Magazine, September 12, 2022

These are the top 10 healthiest countries for digital nomads – Lemon.io, a marketplace of software developers, analyzed data from the 2022 Global Health Security Index by the Economist Intelligence Unit to determine the healthiest countries for digital nomads. The study ranked 195 countries based on their preparedness for epidemics and pandemics.”, CNBC, September 18, 2022

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Our Mission, Information Sources & Who We Are

Our biweekly global business update newsletter focuses on what is happening around the worldthat 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 40 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 worldwide. 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. 

www.edwardsglobal.com

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