Gelato chain to ‘dip toes’ into US market

Inside Franchise Business: Gelatissimo plans US expansionThe massive US market is in the sights of gelato franchise chain Gelatissimo, which is busy expanding across Asia with its third Singapore outlet just opened on Sentosa Island.

Why does Singapore work? It’s a fairly affluent demographic, comparable to Australia. It has a favourable climate and of course gelato and sunshine go well together, says CEO Filipe Barbosa.

The next major push is across the Pacific, into the US.

Barbosa plans to ‘dip toes’ into the market, wary of overextending the brand in a complex overseas expansion. First up are likely to be Hawaii or Los Angeles or San Francisco in California.

“We’re doing a lot of work in the background to find the right match. We’re open to the idea of doing it ourselves but prefer to take on local partners. But if an opportunity for the right site comes ups, we’d be prepared to go out on our own with a pilot store.”

Barbosa insists the expansion is about being slow, steady and considered rather than fulfilling any grand plans. It is expected to take up to 12 months to open one store.

What will be important to learn is how local idiosyncracies will relate to the Australian consumer. Changing the offer to suit the local market will be a crucial step, he says. This will be a focus not so much re-designing the store, but more about the service delivery and product range.

As an example, Barbosa points out the Singapore clientele is not so comfortable being greeted in the familiar manner typical of Australia. “They like a selling focus, a task focus, not individual,” he says.

Apart from the consumer preferences, there are other differences in the franchise operation for Gelatissimo. In the Asian market, the franchisees are commonly not the owner operators but corporate firms employing managers.

“Most franchisees have a little bit of money, so working in the business is not prestigious,” says Barbosa.

“In Australia, you’ll be talking about managing costs and operational standards. In Asia it’s more likely to be about how to improve the culture and managing teams, how to help you grow the business.”

Gelatissimo is also in the Middle East however expansion has stalled under the current set-up.

Barbosa says the focus now is “how we structure to get more rapid expansion. We’ve got the right fundamentals but we haven’t got traction. We have to work to overcome existing obligations”.

Simon Cook was appointed international franchise development manager to take on responsiblity for global growth.

It’s inevitable that overseas expansion will be the future, says Barbosa. “A population of 26 million has natural limitations. Can we have hundreds of stores? No. We’re about to open the 43rd store, there might be 20-30 more.”

Major Australian cities demand six-digit rents so a smaller footprint is the way forward to minimise fit-out costs, says Barbosa.

“We want to get franchisees on board in the best financial position. Getting in low entry costs is the way to make business successful.”