CASE STUDY – HR BUSINESS PARTNER PERSPECTIVE

LEON RESTAURANT: GLOBAL EXPANSION OVERVIEW

Contents
1 Introduction........................................................................................................................................ 3
2 Background of the company ................................................................................................................. 3
2.1 Global Expansion Opportunity ....................................................................................................... 4
2.2 Challenges Faced in Global Expansion .......................................................................................... 5
3 Resourcing Opportunities in Asia .......................................................................................................... 6
3.1 China ........................................................................................................................................ 6
3.2 India.......................................................................................................................................... 7
4 Talent Management Challenges for Leon ............................................................................................... 7
4.1 Cross Cultural challenges............................................................................................................. 7
4.2 Labour laws and employment ....................................................................................................... 8
5 Conclusion ....................................................................................................................................... 9
6 Talent Management Recommendations .......................................................................................... 9
6.1 Talent Management Strategy ........................................................................................................ 9
7 References ...................................................................................................................................... 11
1 Introduction
Globalization has changed the dynamics of the business world and has necessitated the integration of
innovation in core business models. An example of this phenomenon is Leon which is one of the leading fast
food restaurants chain in the UK that continues to grow and expand internationally across different regions.
For a global brand such as Leon, it is critical to understand the differences of conducting business even within
the same industry across various international markets (Lutrario 2015). In accordance with that, in an event
of an international expansion, an organization not only needs to conduct market researches to gather
consumer data, but also needs to conduct labour market research in order to understand the best way to
attract, induct and retain relevant talent. Likewise, it is equally important to develop grasp and compliance
with the local legal and environmental laws before entering into a different territory.

The case under analysis in this report presents the scenario of Leon expanding in the international markets.
The report highlights the challenges and opportunities there from the context of HR that the company might
face. The selected international markets for the study are Asian countries India and China. Both the countries
provide opportunities for international fast food company to enter their market but pose certain challenges as
well while recruiting from their regions. Furthermore, it discusses how HR practices can be developed to in
fact capture more market in the new markets.

2 Background of the company

Leon is one of the biggest restaurants brands in the UK founded in 2004 by Henry Dimbley and John Vincent.
As the he success of the brand lies in its unique selling proposition i.e., of inculcating healthy eating through
vegan food. According to the information providing in the case brief, Leon has approximately 73 restaurants
across the world with 60 restaurants in the UK, 10 in the Europe while three restaurants in the USA with
international expansion. It has become the fastest growing chain of restaurants with operating revenue of
£58.4 million in 2019.

Though it is operationally a fast-food chain, it differentiates itself from other fast-food franchise by offering
vegan, fresh, and healthy food. The menu is based on Mediterranean diet i.e. comprising of fruits and
vegetables, seeds, whole rains, fresh herbs, nuts, fresh spices, good fats from olive oil and carefully
resourced chicken and fish meat. As far operations are concerned, Leon operates on the similar business
model like the fast food giant, McDonalds however it is important to note that given the increase in demand
for vegan meals, competitors like McDonalds and KFC have also launched vegan products in their menus
(Jones, 2020).

The company’s culture revolves around current hot issues prevailing in the world like healthy eating,
environment friendly and sustainability. Their sustainability strategy takes holistic approach and revolves
around three fundamentals i.e. Society, Sourcing and Environment (Leon, 2020). Their aim is to carry out
their business operations in a better way by increasing vegan and plants in their menu, making use of
renewable energy and minimizing the use of plastics. The company keep on supporting the community and
come up with The School Plan that brought drastic changes in the school food menus. The plan brought a
cultural shift by taking initiative to bring cooking on the national curriculum by teaching how a food is grown,
prepared and eaten in schools.

2.1 Global Expansion Opportunity

Consumers today are upgrading their lifestyles and their preferences and way of living is changed. There is
growth inclination towards clean, cruelty free and healthy eating which directs the consumer towards, vegan
and fresh food rather than packaged or meat-based diets. Before moving forward, it is vital to present some
key statistics about the growth of clean eating markets:

Clean Eating Market

Organic Market 2018 (UK) +5.3% , £2.5 billion (Ledsom, 2019)

Clean Label Ingredient Market (USA) +6.8%, $38.8 billion (Global Newswire, 2020)

Global Sales of food with Health Benefits 800 billion Euros

Moreover, given that vegan products are an important overlap with clean eating, it is important to view its
market stats as well (The Vegan Society, 2020; Jones, 2020):

Veganism Market Statistics U.K

Estimated Sales of meat-free foods £740m

 Demand increase for meat free foods in UK 987%

% of population (vegans and vegetarians) ~25%

Semi converts (try to eat less meat) 44%

According to The Vegan Society (2020), the U.K. has the most vegans in the world followed by Australia and
New Zealand.

Leon is taking advantage of the opportunity and increasing revenues by offering more vegetarian dishes in
its menu. The company’s mission is to provide fast food that is not only naturally healthy but also taste good
improving consumers’ lives with a vision “For everyone to eat well and live well”.

According to reports (2017), 53% of the company’s sales come from vegan food items with sales growth of
15% in 2018. Consumers like this brand because of fresh and vegan food variety in the menu, tremendous
service and attractive locations. Leon is the market leader of the restaurant industry in the U.K. but plans to
take the share in international market as well. Currently, it is operating in Netherlands, Norway, Gran Canaria,
Dublin and the USA but as an organization it faced some critical challenges in doing so especially finding
human resources who were committed to the cause.

2.2 Challenges Faced in Global Expansion

Because Leon offers on-the-go meals in the form of fast food that is freshly prepared, healthy, affordability is
a key concern. As the case presents, the management is aware that selling food at the competitive price
points requires meeting large volume of sales. This led to problems such as decline in product quality for the
purpose of decreasing costs and increasing profitability.

To counter this, the company relies on gross margin, seasonal production and most importantly creativity in
optimizing operations, supply chain, manufacturing processes and unique recipes. The company strives on
introducing new food that should do well to its consumers and taste good too.

Though Leon faced many challenges and struggles initially, yet it has proved itself as the market leader in
the UK. It has successfully tapped the international markets as well by expanding its business to the US and
Ireland and the company aims to expand further in other parts of the world. However, since Leon aims to
source everything locally it is becoming very difficult to optimize the supply chain given the international
expansion. In the aim to support the local community, Leon needs to incorporate local ingredients, adapt to
local tastes and maintain stable growth of the business. Getting the right people onboard locally is key to any
international success for Leon.

3 Resourcing Opportunities in Asia

According to (Sum and Ngai, 2005) human resource management functions becomes increasingly difficult to
manage as an organization attempts to expand internationally. Not only is the development of local HR
processes time taking and expensive but also intricate. With the growing number of organizations exploring
international market following Brexit, HR in an international context is set become a dominant business
concern (Cascio and Boudreau, 2016). Sparrow (2007) stated that there are some key factors that HR
professional need to take into account while expanding internationally. These factors include 1) identifying
and adapting to the cultural similarities and differences, 2) forming successful leaders and 3) forming success
metrics for tracking people management like employee satisfaction.

Leon is one of the companies among many that have planned to expand internationally and thus needs to
consider the aspect of resourcing opportunities and challenges in the overseas market.

3.1 China

China is one of the countries in which Leon plan to expand on internationally. According to (Brown, 2009)
China being one of the fastest growing economy in the world offers attractive business and investment
opportunities for both existing business and new ventures. However, the author also states that doing
business in China implies moving through the intricacies that come from the nation’s novel political, cultural
and historical background. The economic growth of China peaked at 14 percent and recording growth of 10
percent in the year 2010 (Cyrill, 2019). Until the year, 2015, it had been one of the fastest growing economies
in the world; however, since then China has recorded a growth rate of average 6.5 percent in the last five
years. A direct outcome of this growth trajectory has been in the increasing living expenses, particularly in
major cities, resulting in increase in labour costs. Cyrill (2019) further mentions that as the economy of China
is maturing, it is also producing highly skilled labour that is also leading to overall increase in wage growth.
The average wages in some cities of China has now exceeded relative to some part of Eastern Europe.
Other than growth in skilled labour, (Cyrill, 2019) stated that the service sector is now becoming a leading
employers in China across all industries. As per the national bureau of statistics, the services service sector
accounts China’s half output in the year 2018’s third quarter. This is because Beijing has been trying to direct
economy of China towards the service sector apart from developing abilities in upstream manufacturing along
with innovation-based enterprises. Employees in China are looking for increasing flexibility and freedom and
exit from production line’s long hour (Zhao, 2018). The younger generation in China are reluctant do steady
jobs in factory and are looking for work for organizations and culture that provide increasing flexibility and
freedom along with work – life balance (Schmitz, 2019). Furthermore, the highly skilled labour of China
aspires for their careers and aim to work in white-collar jobs. All these factors provide many opportunities to
Leon in terms of HR management when expanding their operations to China.

3.2 India

According to (Brown, 2016) the Indian market is known as the most renowned invading economies in the
world. By the year 2020, the labour association of India is expected to increase by 250 million implying an
addition of over 18 million annually, which is much higher than the workforce of the Germany is. This is one
of the reasons that India provides many opportunities while being a key concern related to the human
resource management. Over the past decade, India has risen prominently as a key economic player (Tanzi,
2019). As per IMF, India is ‘the bright spot in the global landscape’ (Business Standard, 2017). Over the next
decade, India is expected to produce USD 2.1 trillion in GDP becoming the third biggest economy in the
worldwide ranking (Brende, 2020). By this time, India will have the largest and the youngest workforce
implying a big opportunity for companies planning to expand into this region.

4 Talent Management Challenges for Leon

International expansion means adapting to factors including consumer lifestyles, cultural shifts, language
barriers, consumer taste and preferences. Like other companies entering into the Asian region, Leon too has
to adapt to the local consumers of the region in order to be accepted by the locals. However, there are many
challenges while expanding in Indian and Chinese market. Some key issues have been highlighted below.

4.1 Cross Cultural challenges

According to an interview with Vincent, HR plays an important role in their restaurants. He wants to setup an
HR leader in each restaurant that has a strategic approach working closely with restaurant people who could
actually highlight, relate to and solved the issues arising in the field (Connect, 2019). The cultural challenge
arises when traditional ingredients and food preparation methods comes face to face with Leon’s U.K.
standards. For example, even though Indian consumers are more acceptable to try out new on-the-go healthy
food options (Gupta and Bhaskar, 2016), they value to their traditions and examine the ingredients used in
the food. Therefore, Leon management has to hire a local nutrition director to scrutinize the nutritional science
ingredients used in their food and highlight the nutrition.

Similarly, China has a distinct and much less flexible culture and, in this regard, the biggest challenges that
international companies experience while going to China market is that there exist a language barrier. Since
ineffective communication is one of the key reasons for organisational failures, consideration of this challenge
in local talent recruitment is critical. Leon would face challenges while recruiting from China as potential
employees could find it difficult to interpret and comprehend the company’s policies and practices to Chinese.
Without local employee support, the necessary local expertise and market information would be limited for
Leon.

One of the biggest challenges that international companies face is that there is imbalance in business
opportunities and qualified talent. According to a survey, almost 89% of workforce is recruited via internal
referrals (EUSME, 2018) which means that the opportunity to induct talent from the wider labour market is
difficult. In continuation of this, maintaining close personal relationship with supervisors is highly valued in
organizational culture of China. Chinese are more loyal to their managers than to their company. Therefore,
it is very important for any international firm to give importance to establishing positive relationship with
employees to develop loyalty and dedication among Chinese workforces.

4.2 Labour laws and employment

In India several legislations protect the labour rights and guide employers in their HR policies. However
according to a World Bank Survey in 2014, Indian Labour Law was noted to be too rigid and ambiguous
(Deakin and Haldar, 2015). Moreover, individual states and central government have their own laws and
legislation regarding labour and employment making compliance even more difficult for a company that seeks
to be present through the country. However, Leon HR must consider various Employment Contracts and
labour laws governing employment conditions to avoid any legal issues in future. When international company
or brand enters Indian market, it needs to follow a certain procedure or model to hire employees from India
(Partner, 2019). The company might engage a representative or agent through agency (which would provide
particular service through identified employees) or through independent contract (service contract where one
party provides services for the other party and does not exercise control but exercise professional knowledge
over other party) (Global, 2020).

According to LinkedIn Talent Solutions (2015), online recruitment databases are becoming increasingly
popular in India. Unlike restriction of the worldwide web in China, India’s labour market is connected globally
which means that Leon has the opportunity of using online databases for finding the right talent for a particular
position.

Foreign companies investing in China have to face fierce regulations and legislations governing labour laws
and employment contracts. According to Employment Law Overview China (2020), the PRC (People’s
Republic of China) law is not implied on the employment relationship between foreign/international employer
and Chinese employees. This means that hiring employees directly is not allowed in China, the companies
need to hire specific HR agencies for recruitment. Leon has to incorporate subsidiary company or a separate
corporate office in China as per the law. That subsidiary would then directly hire the employees without
intervention of the foreign company meaning that Leon cannot take decision directly or independently to
recruit employees (Global, 2020).

5 Conclusion
Leon, with its innovation and creativity has up the game of fast food industry in the UK and is now expanding
to other parts of the world. International firms like Leon need to do comprehensive research about consumers’
preferences and cultural differences while establishing a franchise or their own corporate head office in Asia.
Though the region seems attractive to invest and attract Asian consumers with their healthy, fresh and vegan
food, nonetheless, the organisation cannot ignore the challenges present there while recruiting in China and
India.

6 Talent Management Recommendations

6.1 Talent Management Strategy
Market Analysis
Leon needs to conduct a marketing research to have an understanding about the culture among consumers
and analyse the macroeconomic and labour market factors of the country. Key HR indicators to be noted are:
 - Salary range for different positions
- Talent acquired by relevant competitors
-

Recruitment
- The first step would be to hire and train heads for the two regions. It needs to be a local employee
who is integrated with the vision and mission of the organisation.
- India: It is recommended that recruitment for expansion in India be conducted using online
databases such as LinkedIn.
- China: The preferred method for hiring in China is internal referral and Leon must adhere to that in
order to have a team that is loyal to the manager.

Onboarding
- There is increasing emphasis on the value of balancing work life within the global corporate culture
and Leon needs to take this into consideration for both China and India
- For the Chinese employees, non-verbal cues are considered important. A small, carefully placed
gift for new starters along with necessary work equipment is considered best practice in China
(Morgan McKinley, 2020). Leon needs to ensure its implementation.
- For the Indian market verbal cues such as a warm welcome and a team engagement session
would be beneficial.

Training & Retention

- Leon’s management must strive to maintain a balance between company’s business practices, HR
policies and local norms of the country. For this a mix of technical training and employee engagement
needs to be regularly practiced.
- Retention of key employees can be ensured by continuous market research and improvement of
issues within Leon’s HR system.
7 References

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Cannuscio, C.C., Weiss, E.E. and Asch, D.A., 2010. The contribution of urban foodways to health
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Connect, H., 2019. The importance of company culture at LEON [Interview] (21 January 2019).

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<https://www.bighospitality.co.uk/Article/2015/06/08/Business-Profile-Leon>

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https://www.vegansociety.com/news/media/statistics#worldwidestatistics

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