FINNISH FAST FOOD CHAIN HESBURGER TAKES ON THE CHALLENGES OF EAST EUROPEAN MARKETSMarch 13th, 2019
BY JOHN PAGNI, in HelsinkiA FINNISH burger chain that has taken the plunge into some of Europe’s most challenging eastern markets now has almost as many outlets abroad as in its home market.
Turku-based Hesburger is now building sales in Belarus, having announced it would move into this country in 2017. This follows launches in Ukraine in 2015, and Bulgaria in 2016. Having branched abroad into Estonia first in 1996, now has 207 overseas outlets in eight countries (also including Russia, Latvia, Lithuania, as well as Germany, close to 271 it has in Finland. “Now we have four outlets in Ukraine, 15 in Bulgaria and one in Minsk,” said Heini Santos, Hesburger’s communications manager. “We saw that in those countries there was room for Hesburger in the fast food market and for the most part, we own the outlets in those countries.” Hesburger’s most remote outlet is Nakhodka, in the Russian far east.
As for inputs, “to ensure the quality of raw materials, we are constantly auditing our suppliers,” said Santos. Sources vary. Bulgaria’s branches, for example, source meat from across the European Union; while in Belarus, Hesburger buys meat from Russia; Ukraine outlets use Polish suppliers.
Heburger’s product offering in foreign markets differs little from that in Finland, being largely uniform throughout the group. “The cheeseburger is very popular everywhere. There are local language websites (with an international one in English) for all the countries with the price list as well as nutritional values and allergy information. However, sourcing information of ingredients is not available in all languages yet.”
The price of Hesburger’s cheeseburger reflects local standards of living and costs EUR2.60 (USD2.94) in Finland; EUR1.60 (USD1.81) in Estonia; and EUR1 (USD1.13) in Latvia and Lithuania. In Bulgaria that price drops to Bulgarian Lev BGN1.50 (USD0.87), and Ukrainian Hryvnia UAH27 (USD1.02), in Ukraine.
Hesburger wants this overseas expansion to continue, with the goal of opening two to four restaurants each year in most of its countries of operation. This costs about EUR300,000-EUR1 million per branch, with 19 established last year (2018). The chain serves 180,000 customers daily, with the largest sales growth between 2017 and 2018 seen in Latvia (+16%) and Lithuania (+25%).
Santos said: “Hesburger relies on high product quality, good customer service and the cleanliness of our facilities. As we become more and more international and operate in a larger geographical area, we must consider that in all aspects of our business, but currently there are no plans to enter any new countries.”
Its 2018 total sales were EUR325 million, of which nearly EUR100 million came from outside Finland. It employs 5,000 Finns and 1,700 overseas staff. Finnish workers include management and ingredient department staff making – for instance Hesburger’s in-house mayonnaise.
The company has a home delivery deal with Foodora in four Finnish cities and operates its own ordering app in Finland and the Baltics. Reflecting consumers’ environmental concerns, it will this year replace plastic with paper straws.