Wendy's/Arby's Group of Atlanta has signed a joint venture agreement with a food distributor and importer to develop and operate Wendy's restaurants in Japan, the world's second-largest fast food market.
The deal with Higa Industries will bring an end to the brand's self-imposed exile from one of its most important international markets. In December 2009, Wendy's did not renew its franchise agreement with its then-franchisee in Japan, and 71 restaurants closed.
Now, the company thinks it has a solid partner: Ernest Higa, who owned and operated 180 Domino's Pizza units in Japan before selling that business a year ago.
The first new restaurant is expected to open in Tokyo later this year. Additional units are planned around the country for later years.
Within five years, Wendy's/Arby's wants to have 71 restaurants in Japan, a nation of 127 million people. The company cited research that suggests Japanese demand could eventually support 700 restaurants.
The move back into Japan is a "huge step" for the Wendy's brand, said Roland Smith, chief executive of Wendy's/Arby's.
Smith said he wants international restaurants to be a meaningful part of the earnings at Wendy's/Arby's, which had revenue of about $3.4 billion last year. The company has 341 restaurants outside the U.S. and Canada. If all of the development agreements on the books are brought to fruition, it will have more than 1,000 international units, not counting Japan and other markets under negotiation.
Smith and other executives have said they believe there is potential for 8,000 restaurants outside North America. Most of those would be for the Wendy's brand.
"We've done our homework," Smith said. In Japan, "we think we have a pretty loyal base of Wendy's customers that are anxiously awaiting our return."
The company's executives have also spent time in Brazil and China meeting with potential partners who could open those markets to the Wendy's brand. Smith said he hopes agreements can be reached this year with partners in those countries.
