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Foreign convenience food retailers like OBriens Irish Sandwiches are going after Chinas sophisticated set.

AN Irish restaurant chain selling sandwiches in China seems a fair, if ambitious proposition, given that Chinese takeaways do business in every Irish town from Bantry to Belfast. The Chinese appetite for bacon and lettuce sandwiches is weaker, however, than the Irish appetite for toned down, sauced-up Chinese cuisine.

Price and novelty are two reasons why. The bestselling Chicken Bacon Triple Decker at OBriens Irish Sandwiches in the Silk Market, downtown Beijing, costs RMB 49 – more than most Chinese spend on food in a day. Sandwiches are relatively new here, though more established competitor Subway sells them for RMB 22 a pop in malls around China.

Theres traditional Irish music over the rattle of plates at OBriens, which is in China to offer an up-market alternative to Subway. Theyve started with two stores in the Chinese capital. “China is the single biggest growth market in the world for our type of food and beverage offering,” says Hugh Hoyes-Cock, Asia CEO of OBriens Irish Sandwich Bars.

Wait staff at the Silk Market look like those at any other OBriens outlet, only here theyre more pushy. They can be seen on the footpath shoving menus at passing shoppers. The Silk Market is a location to die for. Now a three-story mall rather than the earlier set of narrow lanes, fortunes have been made here by traders hawking a mix of fakes and cheap clothing to tourists and visiting diplomats.

Both OBriens stores in Beijing are franchises, and the companys biggest headache in coming to the capital was finding the right franchisees. “The biggest problem is attitude. We want people to not only invest in their business, but to devote themselves to the operation. We had plenty of inquiries from Chinese with the capital [to invest], but without the willingness to dip their hands in a pot of mayonnaise,” says Hoyes-Cock. In Singapore, home to OBriens Asian headquarters, the typical franchisee is a burnt-out investment banker “who wants to take control of his life, and run his own business.”

The companys target customers are Chinese working in the financial services or multinational industries. “The franchisees chose areas where they believe there is development potential.” Additional stores will be opened in central malls. Local customers are predominately female. “Tourists and local expatriates are a bonus.”

Aside from the Silk Market, the company has opened an outlet in residential Shunyi, a zone of villas near Beijings airport. “The Silk Market store can compare favorably with any OBriens in Asia, whereas the Shunyi store has a market niche with the residents and the educational establishments in the area.” The average amount spent per customer is RMB 40.

Having a foreign identity is an important ingredient of success among locals in the greater China market, says Hoyes-Cock. The “Irish” in the OBriens logo “shows that we are a foreign brand and something new to the market.” The firm learned its lesson when it opened its first store in Taiwan in 2003. Menus printed in Chinese were easy for locals to read and understand, “but we were not perceived as being foreign, exotic or part of a global brand. Instead, we were perceived as a local operation putting up some Irish photos and signs.”

Hugh Hoyes-Cock is adamant that OBriens is more than fast food. “We are a lifestyle café offering fresh produce and quality coffees and juices in a relaxing Irish ambiance. We are not in the fast food market, and we pick our locations accordingly.” Other companies are positioning themselves similarly, locating in a wave of new malls and office blocks to appeal to a middle class with increasing spending power. Annual per capita disposable income reached RMB 20,185 in Beijing at the end of 2007, a 14 percent year-on-year rise.

At Pacific Coffee, a Hong Kong-based company that has eight coffeehouses on the Chinese mainland, customers drink cups of coffee brewed from Arabica beans sourced from around the world. “Chinese customers are willing to try new products,” claims Marketing Communications Manager Carol Yung. Best-selling products at Pacific Coffees Beijing stores are the café latte and cappuccino.

Pacific Coffee has opened 50 coffeehouses in Hong Kong since its establishment in 1992. Its parent company Chevalier Pacific, which acquired Pacific Coffee in 2005, expanded the company into the Chinese mainland, sticking to a formula of locating in office towers populated by multinational financial services companies. Tourist areas and “good quality shopping centers with high footfall and similarly focused lifestyle retailers” are also favored Pacific locations.

The company has chalked up five store openings in Beijing and three in Shanghai, and plans to accelerate expansion over the coming years. “We opened two stores in Shanghai within a few weeks last year,” says Yung. In-house baristas, she explains, are professionally trained. Wait staff are taught to be chatty in Chinese and English with customers, who can choose to take their coffee and toasted sandwiches while sitting on big red sofas. Price is not a deterrent to the Chinese urban customers who frequent the store. “They seem to be looking for something new to the market, and once they have tried our sandwiches and wrappos, they come back.”

Yet footfall is less than the average in the firms Hong Kong and Singapore cafes. The average amount spent per customer is also “slightly less” than the figure in Hong Kong. Yung says this is to be expected in an emerging economy: “Our target customers are those who appreciate the finer things in life, who have a discerning taste for quality and wish to invest in their lifestyles. They are mostly well-educated, with an interest in literature, art and culture.”

The company is now looking beyond Beijing. OBriens also wants to open stores in other mainland cities. “Definitely, once enthusiastic franchisees come forward,” says Hoyes Cock, “expansion will depend on individual site opportunities, most likely in commercial centers.”