Blue Ridge Restaurants Corporation
Blue Ridge Restaurants Corporation, founded in Virginia in 1959, is best known for their quality fast food. The restaurant chain found itself extremely successful and popular, opening over 500 locations throughout the United States and Canada in its first 15 years in business. This success naturally led them into overseas markets. At first, Blue Ridge had no distinct international strategy. However, after being purchased by a large international beverages company, significantly more focus was placed on international strategy.
The initial implementation strategy was entering joint ventures with local partners. This method allowed Blue Ridge to “enter restricted markets and draw on local expertise, capital and labor” (Appendix). This strategy offered success in countries like Australia, Southeast Asia and the U.K., and failure in France, Italy, Brazil and Hong Kong. During this time, Yannis Costas worked for Blue Ridge as the European regional director. Here, he was responsible for joint ventures and franchises across many European countries. His experience working in London as director as well as his experience working in Singapore and working directly under the president of Blue Ridge Asia, allowed him an in depth understanding of international market entry, joint ventures and teamwork with people from different cultures.
In 1988, the decision was made to enter the Spanish market. This posed significant market entry problems for Blue Ridge, as the typical Spaniard attitude is distrusting of foreigners. In order to overcome this, Blue Ridge found a family- owned company, Terralumen, whom they partnered with. The hope was that partnering with a local company would provide insight into local customs and give them access to these typically restricted markets. This partnership posed challenges, though. As European director, Costas had a difficult time convincing Terralumen to focus on fast growth and the joint venture. Francisco Alvarez, Terralumens vice-president, supported the rapid growth, although the Terralumens manager opposed it.
Blue Ridge was later bought again, by Delta Foods, one of the largest fast-food chains in 1996. With this acquisition, Delta hired an inexperienced outside marketing manager, Mikael Sodergran, as regional VP. He had no background in restaurant management, no experience in joint ventures or managing international operations. Soon after Deltas acquisition at a directors meeting, all key players from Terralumen, Blue Ridge, and Delta met to discuss five-year target growth rates and discuss a consultants report that was put together by a U.S. firm. At this meeting, tempers flared and no one could seem to agree on anything.
There are a variety of issues that come to light from this meeting, all which are vary based on whose point of view is considered. Deltas management team does not understand the intricacies of doing business in Spain. Their U.S. consultants report projects significant expansion potential for Blue Ridge in Spain, so considering only that fact, they feel the aggressive growth strategy is both necessary and possible. However, they are not considering what Terralumens management feels is acceptable and realistic growth. Terralumen has the most in depth and first-hand knowledge of the Spanish market, so Delta should consider their opinion in conjunction with the consultants report. Delta also should not have assumed that Terralumen was content to keep growth where it was. This assumption caused Sodergran and others to go into the meeting feeling they needed to be aggressive.