American dream: how Kazakhs opened a confectionery shop in Texas - ForumDaily
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American dream: how the Kazakhs opened a confectionery shop in Texas

Kazakhstani confectionery Happy Cake opened on June 9 in Houston, Texas. Forbes talks about why a family of confectionery businessmen from Astana decided to go overseas, what local peculiarities they had to deal with, and how much it cost to open a confectionery shop in the USA.

Showcase with cakes

Photo: iStock.com/Andrii Borodai

The first Happy Cake confectionery appeared in Kazakhstan in 2013. In 2017, the company launched a franchise, and in 2020-2021 there was explosive growth: confectionery shops began to open in all regional centers of the country and even in small towns.

Where do ambitions lead?

“By 2022 we were present in 35 cities Kazakhstan, opened in Tashkent and Orenburg. And it was as if we naturally came to the conclusion that we needed to look at foreign countries. Ambitions emerged - to become a global cake franchise,” says company founder Askhat Soltanov.

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Geographically, the choice fell on the USA. The explanation is this: eight out of ten global franchises come from there. America is generally the birthplace of such a thing as a “franchise”; it is here that the standards for franchising business were developed. In addition, the founders of Happy Cake had often been to the USA before, visiting specialized exhibitions and conferences there, taking courses and master classes.

Having confirmed their choice, the business family hit the road.

Austin Trial

Why Texas?

“We studied the business environment and tax nuances in different regions. We chose a state with a strong local Kazakh community: being away from the Motherland is very important. Texas met all the parameters,” explains Soltanov. The family received a business visa: it is valid for three years, allowing them to run a business and eventually apply for a green card.

“We have another year to decide on the final move,” adds the owner of Happy Cake.
The dream city of Astana confectioners - Austin, a regular in US ratings for comfortable living - seemed compact and more suitable for a start than Houston, where Happy Cake eventually settled. But only when they arrived in Austin did the Kazakhs realize that this city is quite difficult for doing business. The supply of commercial space is low and the demand for it is huge, but landlords are generally reluctant to contact a business that does not yet have a presence in the United States.

“Americans generally do not recognize your success if it is not “made” in America. You must have weight in the American market so that locals will talk to you and trust you,” Soltanov shares his experience. — In the end, we still found several suitable premises, but things went slowly. The owner of one of them sent us a lease agreement, under the terms of which it became clear: we are a “dark horse” in his eyes, and he wants to protect himself as much as possible.

American developers are like this: they are ready to look for a candidate for years without renting out the premises and suffering losses, because they want to find a tenant once and for all - one so that the value of their company increases along with the growth of his business.”

After this story, the family immediately moved to Houston.

“Once we found ourselves in this city, we realized: what happened in Austin was a purely Austin story,” concludes Soltanov. “But living there helped us adapt.”

"Milk Girl" became "Cloud Cake"

In Space City, the idea of ​​Happy Cake landing on American soil is finally coming to fruition.

“We found the location quickly. The confectionery was opened using our own funds. We didn’t spend that much - up to $100 thousand. We were lucky with the premises: there used to be a bakery here, so we made do with cosmetic repairs and opened in just a month,” the entrepreneur recalls.

In the USA, the Soltanovs created a separate company - not a “daughter” of the Kazakh one. The format of the establishment - a cafe-confectionery - was retained. But we had to slightly adjust the types of products: if in Kazakhstan consumers prefer cakes, then in the USA they prefer cakes and portioned pieces.

“Americans really appreciate the opportunity to try it on the spot and then decide whether to buy a cake or not,” explains the owner of the confectionery shop.

The Happy Cake assortment includes 30 items, but the confectioners brought only five or six with them to Texas - to begin with, to study preferences and demand.

“Milk Girl,” which confectioners consider their flagship cake, also came to “conquer America.” True, we had to rename it “Cloud Cake”: the name “Milk Girl”, familiar to the ears of the Kazakh buyer, could be interpreted incorrectly by local residents.

Must be tasty and in large portions

Regarding the tastes of the new audience for Happy Cake, Soltanov believes: America is a country of emigrants. Houston has large communities of Mexicans, Arabs, people from Southeast Asia, China, and Vietnam. The entrepreneur allocates two to three months to “test” the preferences of local residents and select an assortment to suit their tastes.

"It's important to 'get into the product,'" he says. “Basically, it should just be tasty and in large portions, just like the Americans like.”

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But entrepreneurs would not want to rely only on certain communities. They see their typical customer as a family who came to the cafe to spend time together.

“In the US, it’s very important to get into a daily, weekly ritual. If you noticed, even in films this often happens: the hero says that since childhood he went with his father to some cafe, then his own child grows up - and he also visits the same cafe. Americans are very fond of rituals; they have everything on a schedule. Therefore, the most successful businesses are those that fall into these rituals, into the daily routes of Americans (when, for example, every time on the way to work a person stops at a coffee shop and gets coffee),” Soltanov shares his observations.

How to conquer America

The Houston Happy Cake cafe has about 30 seats. More than in some coffee shops in the chain in Kazakhstan. There are only five people in the team so far: three in the kitchen, two serving customers.

The first day brought Happy Cake $4 thousand.

“We sold everything we prepared, that is, we only worked at the cash register. In Kazakhstan, the revenue of the entire network in 2023 amounted to $26 million. In the USA, we would like to start with reaching $80-100 thousand in monthly revenue. Of course, we understand that this requires a lot of work on marketing. We are still forming a staff; the service speed is not as fast as we would like. For example, we take a minute to prepare a cup of coffee, when we need it faster,” Soltanov opens the door to the business kitchen a little. — Of course, increasing speed does not mean increasing sales. But we must cook a lot, quickly and efficiently.”

As for the cost of production, according to the businessman, in the USA it develops differently than in Kazakhstan. If there the costs for ingredients are higher (30-40%), and for personnel – less (15-20%), then in the USA it’s the other way around.

The entrepreneur also shared his strategy for “charming” the American market.

“Now we are interested in establishing and standardizing all processes in the USA the way it works here in Kazakhstan. Train the team and give them enough confidence that they can work independently. This, I think, will take four months. After that, we’ll start looking for new locations,” Soltanov shares his plans.

But by that time, according to him, the Kazakh Happy Cake should become a ready-made concept in the United States with a clear product and well-established processes for service, production, and work with suppliers.

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