‘IHOP, Applebee’s must buy local’

The economic impact of new franchises like Applebee's and IHOP in Trinidad and Tobago hinges on their commitment to local integration, according to economist Dr. Vaalmikki Arjoon. He emphasized that the true value of these investments extends beyond job creation and tax revenue, particularly if they actively engage with the local economy.

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If local sourcing, supplier development, worker training and broader commercial linkages are built into the business model, the investment could generate wider and more lasting benefits for Trinidad and Tobago.

Arjoon explained that franchises heavily reliant on imported food and equipment, coupled with substantial overseas royalty payments, offer limited benefits. He pointed out that even purchasing supplies through local distributors often involves imported goods, thus not significantly reducing foreign exchange outflows. The key, he argued, lies in maximizing the sourcing of inputs from local farmers, agro-processors, and manufacturers.

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Even if food is purchased from local distributors or supermarket chains, many of those products are themselves imported.

To foster wider and more lasting benefits, Arjoon proposed building local sourcing, supplier development, and worker training into the business model. He suggested implementing long-term purchasing agreements with farmers to ensure stable demand, provided local suppliers can consistently meet international franchise standards for quality, traceability, and food safety. This requires making local producers "franchise-ready" through certification, improved packaging, cold storage, and better logistics.

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Instead, he said, the focus should be on sourcing as many inputs as possible from local farmers, agro-processors and manufacturers.

Arjoon also recommended local-content incentives, such as tax benefits for franchisees that source a significant portion of their inputs domestically. He believes that enhancing the competitiveness of local agriculture and food processing sectors through these measures could position them to supply not only these franchises but also hotels, supermarkets, and export markets. The broader conversation, he added, should focus on increasing foreign exchange earnings, potentially through export opportunities like data centers, rather than solely restricting outflows.

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The broader conversation should focus on increasing foreign exchange earnings rather than simply restricting outflows.