Johnny Rockets Enter Belgium

Johnny Rocket's invades Belgium! Restaurants continue to play a significant role in the Belgian franchise market, and their presence is increasing rapidly, with the fast food franchising market growing at an annual rate of approximately 12%. American fast-food franchising concepts, such as standardized restaurant chains that offer a limited but popular range of dishes served in packaging for on-the-spot consumption has been widely adopted. We plan to bring Johnny Rocket's to Belgium with a twist of catering to business people, by catering lunches.

Every Johnny Rockets restaurant boasts great-tasting food from a menu of All-American favorites including juicy hamburgers, hand-dipped shakes and malts and freshly-baked apple pie. Guests also enjoy an All-American diner look and feel, servers who know the secret behind getting ketchup out of the bottle, tabletop jukeboxes that belt out tunes for a nickel and authentic dйcor. Johnny Rockets is the place where every Guest can enjoy All-American favorites served with a smile! OUR GUEST PROMISE:

* Say "hello" and "goodbye" to everyone passing through our doors.

* Serve the freshest, highest quality simple All-American fare.

* Cheerfully serve guests promptly in a sparkling clean store.

* Always dance on the half hour, twirl straws and serve ketchup with a smile.

* Handle guest needs right here and now.

The hamburger market is the strongest of all franchised food chains. In this market, McDonald's, the second largest hamburger chain, hopes to expand from its current 64 restaurants to well over 100 in the next two to four years. Pizza Hut controls twenty percent of the pizza restaurant market. Chi Chi's and Dominos are also present in the Belgian market, but they have experienced much difficulty in successfully penetrating it due to the high cost of labor in

Belgium.

Belgium has one of the highest percentages of inbound franchises as a proportion of franchise systems in the European Union, which helps contribute to the strong competition present in the fast-food sector. The market leader is the GIB group, Belgium's largest retailer, which are the owner and franchiser of the Quick Hamburger Restaurant chain, Lunch Garden and Crock'In Sandwich restaurants. The Quick chain, with one hundred-five outlets, is the sales leader in the

hamburger market. GIB originally owned the Pizza Hut master franchise. It is now owned and operated by the Tricon group of Belgium.

The decision to enter into a direct foreign investment was made on the basis that Johnny Rockets wanted to maintain controlling interest over operations, avoid transport costs and trade restrictions. This also allowed for a long-term investment that would acquire fixed assets such as land, equipment and buildings. Labor is also considered to be a key aspect because labor costs are substantially lower than in the United States. In researching which corporation to establish a joint venture Johnny Rocket's decided that GIB group was the ideal choice because of its established reputation, and had hired the U.S. investment bank JP Morgan to find a partner or buyer for its Quick operation.

In 1998, the last year in which figures were available, Belgium had the highest growth in franchise turnover in the European Union. With an actual growth rate of 52.1%, Belgium is far higher than the E.U. countries with the next highest turnover rates, Sweden (31.6% growth) and the United Kingdom (14% growth). Food is a major component of Belgian culture, as evidenced by the fact that Belgians spend about twenty percent of their disposable income on food and

beverages, the highest rate in the E.U.

Informal dining continues to be a major form of entertainment for Belgians. Fast food restaurants have provided a relatively inexpensive eating and social opportunity for groups such as students and families with young children. Marketing messages are increasingly directed at these groups. McDonald's decision to include play centers for young children in their units is proving

to be a successful initiative.

Despite the fact that Quick is the largest hamburger chain, American companies have set the pace in the Belgian fast food market. Fast food only represents about five percent of restaurant sales, which means that the Belgian fast-food sector still lags behind many of its European neighbors. As traditional eating habits change with an increasingly diverse Belgian population, an excellent opportunity exists for American fast food franchises to expand into Belgium.

Fast food has been able to compete with other restaurants because of their perceived fast service, clean facilities, reliable taste and affordable prices. The most popular fast-food items are hamburgers and pizza, but Belgians are generally open to new tastes and are willing to support new fast-food concepts. The best sales prospects are products delivered to the home and office.

Restaurants, cafes and taverns, and friteries are the three basic types of Belgian establishments that serve meals, as defined by the Royal Decree of June 13, 1984. HORECA is a trade association that represents the interests of hotels, restaurants and cafйs/bars. The Trade Association of Friteries, NAVEFRI, represents friteries.

Establishments where the serving of meals is the primary activity are classified as restaurants. Owners and managers of these establishments must comply with strict professional qualifications. Establishments where the serving of beverages, light meals and snacks is the primary activity are classified as cafes and taverns. Qualifications for these places are not as strict as those for restaurants. The average cafй or tavern offers cheese, ham, pate, sandwiches, salads, omelets and Italian-style foods such as spaghetti and lasagna. In Belgium, many cafes and taverns are owned by or are contractually linked to breweries. Belgian breweries produce four

hundred of the most unique beers in the world and are frequently the exclusive beverage providers to cafes and taverns. In such situations, cafй and tavern owners are free to choose their food supplier(s).

Friteries, which are establishments serving carryout deep fried snacks, are subject to "market stall" trade regulations, as described in Council Directive 94/43/EEC of 14 June 1993. These hygiene regulations are less strict than those applied to restaurants, cafes, and taverns. If, however,