Is Costa Rica the New Hot Spot?

Three American fast-casual concepts have recently opened new restaurants in Costa Rica. Does this indicate that the country is a new hot spot for the segment? Or perhaps an entry point into the South American market?

  • Cosi entered the Costa Rica market with a location in Escazu operated by franchisee Fast Casual S.A. The unit in the Multiplaza Mall is the first of five that Cosi expects to open with Fast Casual S.A.
    (Fast Casual.com 12/11/12)
  • Moe’s Southwest Grill entered the Costa Rica market with a unit in Escazu with franchisee Roberto Ricciardi. The franchisee plans to open five additional locations throughout Costa Rica over the next five years. Ricciardi is also a multiunit franchisee of Cinnabon, and has developed the brand in Costa Rica, Venezuela and the Dominican Republic. (Franchising.com 12/19/12)
  • Smashburger opened its first Latin American restaurant in Costa Rica under a new partnership with restaurateur Richard Eisenberg and his company, QSR International. Located in Moravia, San Jose, the restaurant features a menu that caters to Costa Rican tastes. Items include a burger topped with chorizo, grilled Turrialba cheese, refried black beans, fried potato sticks and Lizano cilantro mayonnaise on a classic egg bun. Sides include portobello mushroom fries and Pejibaye Frites—flash-fried and seasoned peach-palm fruit served with cilantro mayonnaise. The restaurant is the first of 18 locations planned for the area under the new franchise agreement. QSR International is seeking multi-unit operators to open other Smashburger locations in Central America, South America and the Caribbean. (Business Wire 12/3/12)

Costa Rica has a lot going for it as a business destination. First, there are the swarms of American tourists who fly south for a winter reprieve. But the numbers of Costa Ricans who are upper middle class are also appealing. And the World Bank has noted that the country has improved in recent years in the ability to get credit, gain construction permits and trade across borders.

However, as with other Latin American countries, there are still complexities about taxes and protecting contracts, as well as the usual challenges that go with opening in a new market.

Chains such as Cosi, Moe’s and Smashburger illustrate the good example of finding a strong partner who already does business in the country. Fast-casual operators who are considering expanding into Costa Rica—or any international market, for that matter—would be wise to follow their lead.

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Darren Tristano

Darren Tristano is Executive Vice President of Technomic Inc. Since 1993, he has led the development of Technomic’s Information Services division and directed multiple aspects of the firm’s operations.

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Comments

  1. American chain restaurants have long been part of the dining landscape in Costa Rica. Ticos are way into American food. And with the opening of Moe’s and SmashBurger this trend continues. As this developing country becomes more prosperous so too do the opportunities for entrepreneurs grow.

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