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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information