In our previous blog post, we explored the numerous advantages Brazilian companies receive by expanding their business to the United States. While Fogo De Chao may not be the first Brazilian company to discover success across seas, it is worth the efforts to examine why this restaurant chain is successfully generating roughly $60 million in annual earnings.
Credited with popularizing churrasco style dining in the U.S., Fogo De Chao was founded in Porto Alegre in Brazil by two sets of brothers in 1979. Since then, the company has grown its business to 9 locations in Brazil and 27 restaurants in the U.S. With the help of GP Investments, a leading private equity firm in Latin America that acquired full ownership of the steakhouse in 2011, they began to expand by 2-3 restaurants a year. The $4 million to $5 million Fogo De Chao invests in opening costs are financed typically by cash flow and usually recouped in two years.
The Brazilian steakhouse’s rapid growth and success in the U.S. didn’t take long to attract the attention of one of the world’s oldest and most experienced private equity firms: Thomas H. Lee Partners, L.P. The Boston equity firm quickly acquired Fogo De Chao from GP Investments Ltd. for $400 million in 2012, and it isn’t difficult to see why. Developing a business internationally can be risky but it can be profitable if you consider these 3 strategies that assisted Fogo De Chao’s success in the U.S:
1. Selective timing and location. Although Fogo De Chao has grown exponentially across major U.S. cities today, the restaurant was successfully established for 18 years in Brazil before it considered testing its brand internationally. The founders decided to open the doors of the first U.S. restaurant in Dallas, Texas where they knew the residents would share a love for barbecued meats. Both the timing and location of their first North American restaurant was critical in the future of their international enterprise.
2. A distinctive product. While there were many Brazilian restaurants long established in the U.S. by the time Fogo De Chao opened its first doors, their unique churrasco style dining provided Americans with an experience that wasn’t offered in the market before. Their large menu is kept interestingly concise by focusing on barbecued meats, which is their specialty. Providing this unique experience to the U.S. market helped Fogo De Chao stand out from their competitors.
3. Authentic company culture. Even with all the attention, Fogo De Chao still remains faithful to the people who are really responsible for their success: their employees. They invest in hiring genuine gaucho chefs, pay staff well above the industry average and only promote from within. This kind of commitment to authenticity and positive company culture is important for the long-term health of the company, where management consists of those who are truly invested in the business.
Fogo De Chao’s success can be attributed to all the right moves they made early in their decision to expand to the U.S. With over 20+ plus years of management experience in assisting businesses from all over the world establish and significantly grow in the U.S., ReachOut can assist your business achieve international success.
ReachOut is committed to offering effective business strategies and providing avenues your company can explore to further distinguish your product. As a business consulting firm that assists international companies achieve success entering the US market, ReachOut specializes in the areas of sales and marketing, technology, e-commerce, operations, distribution, accounting and human resources.
