Why Bolivia Allows KFC and Starbucks, but Bans McDonald's

In May, 2014, Starbucks announced that it will open its first location in Bolivia soon, while Yum! Brands said that it will do the same. McDonald's previously failed in the country, closed all of its stores, and was later banned. What will its competitors do differently?

Jul 11, 2014 at 4:30PM

McDonald's (NYSE:MCD) failed in Bolivia. It operated in the country for 14 years and eventually closed all of its locations by 2002 amid cultural rejection from locals and the government. 

Aside from Cuba, Bolivia is the only Latin American country without golden arches. This failure was a surprise, since Bolivians love eating hamburgers. Turns out they just prefer to buy them from local street vendors instead of giant fast food chains. 


Anti-American government
Following the McDonald's failure, Bolivians elected Evo Morales as their President in 2006. He has deep anti-American sentiments and is extremely cautious on allowing western products, brands, and culture into the country. His strong stance specifically against giant US fast food chains even included a plea to the United Nations in which he called their influence "a threat to humanity." 

These are pretty strong feelings. Even Venezuela, an ally of Bolivia with similar political and ideological beliefs, has around 140 McDonald's locations. 

Bolivia rewrote its constitution in 2008 with specific measures to protect the country from foreign interests and place a focus on local businesses and investment. It also included measures to protect the country against large-scale industrial agriculture. 


Inverted clock in La Paz, Bolivia

In fact, the government is so anti-Western that the clock on the constitution building in the city of La Paz is anti-clockwise. Yes, you read that correctly--the clock has inverted hands. Bolivian Foreign Minister David Choquehuanca calls it the "clock of the south," saying that the country is being creative and does not have to obey or follow Western principles.  


It's the end of the world as we know it
In August, 2012, Bolivia even proposed banning Coca-Cola from the country in an effort it called the "end of capitalism." The ban would take effect on Dec. 21, 2012, which just so happened to be the end of the Mayan calendar (remember all of that end of the world talk?). However, after a few months, the country had not made the ban formal or enforced it. 

Two western giants entered the country at around the same time. This unprecedented move came as more of a surprise to investors than if the Mayan apocalypse actually happened. What's the reason for the sudden change of heart?

Changing policy?
Many investors were taken by surprise last month when Starbucks (NASDAQ:SBUX) announced that it would soon enter the Bolivian market. It will have a small presence there, as it will only add 10 locations over the next several years. Earlier last week, Yum! Brands (NYSE:YUM) announced that it will enter the country as well and attempt to do what McDonald's could not: create a profitable fast food business that appeals to locals.

A local partner is the key 
Starbucks will open its first location in the commercial business center of Santa Cruz via its subsidiary Delosur. The company has had a relationship with Latin America since it opened its doors in 1971, as it buys coffee beans by the ton. It only makes sense for Starbucks to build a presence in the region after decades, which includes Panama and Columbia as well.

Yum! will open its KFC branches with Delosur as its franchise partner as well. It will open a location in Santa Cruz and has another one planned for later this summer.

In the Yum! press release, Delosur CEO Sergio Hanna stated: 

Chicken is extremely popular in Bolivia and consumers are excited about the new restaurant. We're committed to serving our customers delicious products, providing excellent customer service and growing the KFC brand in Bolivia. 

Foolish takeaways
Regardless of the size or success of a company, it can only enter certain markets by finding and working with a local partner. Opening a handful of new locations will not move the needle for any of these Western giants, but it is an important step toward building long-term relationships in new markets.

Leaked: This coming consumer device can change everything
Imagine the multi-billion dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.  


Mike Fee has no position in any stocks mentioned. The Motley Fool recommends McDonald's and Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers