Swedish hamburger chain Max is struggling to flip profits in Norway. The company has lost nearly NOK 20 million (USD 2.3 million) in its new market, but it’s not giving up yet.
Max, long a successful chain in its native Sweden, opened its first burger restaurant at Egertorget in Oslo in 2011. Four years later Max only has four restaurants in the country, far fewer than what initial expansion plans called for, and profits are yet to be seen.
“We have too few restaurants to cover overhead expenses,” Max president Richard Bergfors told Norwegian newpaper Finansavisen recently.
Max’ costly first years in Norway are a letdown, especially considering the company’s own ambitions before the launch. As early as 2007 the Swedes envisioned having 20 restaurants in their neighbouring country by 2010, expanding up to around 40 during the next four to five years. That hasn’t happened.
“It took us longer than we anticipated in the early stages, because we among other things chose a franchise-solution with only one franchise taker in the entire country,” Bergfors told Finansavisen.
According to the Swedes, the problem is not the restaurants themselves, as all four of them are showing positive results. Bergfors blames high overhead costs and a need to have more restaurants to share them. Max recently opened a free-standing restaurant just north of Hamar and is planning another at Danebu in Vestfold County. Both are in conjunction with the openings of a new Ikea store, no coincidence since Max has had a business alliance with the Swedish furniture giant for years.
To try to turn things around financially, Max is now taking control of its restaurants in Norway, thus abandoning the old franchise solution. Bergfors remains optimistic.
“The next step is to expand even more in Norway,” he told Finansavisen. “We are in talks with several potential business-partners, but it’s the availability of premises that is limiting us now.”