According to Philippines publication, Business World, Ayala Corporation may tie up its restaurant chain Burger King with arcade operator Time Zone to create a one-of-a-kind partnership locally.
The tie-up will be unique in the sense that it will go beyond the usual marriage of food brands or restaurants - such as Jollibee and Greenwich, Pizza Hut and Pepsi, McDonalds and Coca-Cola, or even Kentucky Fried Chicken and Mister Donut.
Philking Restaurants Development Corp., an Ayala subsidiary and local Burger King master franchisee, is working out the terms of the planned venture, including legal issues that may later arise.
"We are exploring the possibility of putting up Time Zone arcades in our Burger King stores. Our main concern, however, is that a number of our stores are near schools and churches. Since local governments have ordinances prescribing distance between schools and churches and arcades, we are consulting authorities on how we can pursue the concept without violating laws," Philking president Raul B. Nazareno told BusinessWorld.
In Quezon City, for instance, a city ordinance prohibits the establishment of arcades within 500 meters from schools and places of worship.
Ordinances providing for minimum distance were specifically passed to prevent the proliferation of so-called videokareras and to discourage betting among students.
Mr. Nazareno said Time Zone arcade games were "generally wholesome," and would not fall within the prohibitions set in local laws.
"It [Time Zone] will definitely help Burger King. It may prove to be an effective marketing tool...to differentiate us from other players. Moreover, it will result in a more productive use of space," Mr. Nazareno said.
Philking owns all 30 Burger King stores in Metro Manila and nearby provinces. It cannot sub-franchise under its licensing agreement with the mother company. It plans to open between six and 10 new stores this year.
Time Zone arcades are owned and operated by Leisure & Allied Industries Philippines Inc., a joint venture company between property developer Ayala Land and Time Zone of Australia. Time Zone has a 900 sq.m. amusement center in Glorietta in Makati City and several other Ayala-owned malls.
Amusement centers are regular fixtures of shopping malls and favorites include shooting, basketball, and driving games. Video games are also in demand.
Mr. Nazareno said there would be more co-branding ventures in the Philippines in the near future. The tie-ups will be in various forms, such as food and games, food and internet, and even food and banking services.
"As long as operations complement and customers are given more choices [it will work]. It will mean less cost. But of course, there should still be segregation if the co-branding involves different franchises. There should be a defined space for each brand," Mr. Nazareno said.
In the United States, the pairing of Kentucky Fried Chicken and A&W restaurants has been so successful that franchise owners have announced plans to open 300 co-branded restaurants over the next five years.
Co-branding can generate higher visit frequency and consequently, significant increase in sales. If franchises have two different owners, co-branding requires franchise holders to make the appropriate investment in facility to represent the new brand properly.
The Burger King and Time Zone tie-up, Mr. Nazareno said, could start within the year.
SOURCE: Business World.
