Sweet Success at Long Last: Franchise Sugar Daddy's

by Venture Magazine, July 27, 2010

It hasn’t always been an easy ride for Fadi Jaber, founder of Sugar Daddy’s bakery. Despite its unique concept, the business aspect of running an American-style bakery in Amman has proved to be a trying experience. But today, with a number of franchises ready to be rolled out across the Middle East, Sugar Daddy’s stands as a testament to the power of a good idea.

By Laith Abou-Ragheb

Fadi Jaber of Sugar Daddy's

Fadi Jaber wants the whole Middle East to share his passion for cup cakes. Not content with merely having his already popular Sugar Daddy’s bakery confined to Amman, the 31-year-old entrepreneur has his sights set on ex- panding his lovingly-crafted concept to major cities around the region.

So will this young entrepreneur be able to produce a brand to match the reach of other successful Middle Eastern food and beverage franchises, such as Lebanon’s Zaatar W Zeit Jordan’s very own Tche Tche? Well, he appears to be on the right track so far: Sugar Daddy’s franchises were recently opened in Dubai and Beirut. While Qatar, Kuwait, Bahrain, Saudi Arabia, Egypt and Syria are also being lined-up for branches, which, as well as baking brightly colored cup cakes, also produce a wide variety of other American home-style deserts, such as pecan pies and chocolate brownies.

Jaber said he was inspired to set up his business in 2004 after visiting New York’s famous Magnolia Bakery, which was featured in an episode of the Sex and the City television series. “I literally just took one look at the shop and thought this is what I’m going to do,” he told Venture during an interview in his distinctively designed bakery located in Abdoun’s upscale Al Kurdi shopping precinct. “There’s nothing like Magnolia’s in the Middle East. All we have are these French patisseries that make deserts which are kind of contrived and lack soul. They’re made using huge buckets of cake mix and are then taken home for a birthday party. But nobody really eats them. They’re just there for decoration.”

Since opening his Abdoun branch in late December, Jaber said he and his eight-strong staff have been run off their feet trying to satisfy their customers’ sweet tooth. Furthermore, he said his franchisees in Dubai and Beirut have also reported making brisk business from when they opened their doors at roughly the same time.

But up until very recently, the outlook for Sugar Daddy’s was anything but sunny. Having quit his brand manager job of five years with Unilever in Saudi Arabia, Jaber shelled-out a considerable sum of money to attend a culinary school in New York. After living life on a strict student budget for a year, he managed to convince family members to help him open the first branch of Sugar Daddy’s next to Amman’s Mecca Mall in 2007, a process he readily admits failed to go entirely to plan.

“It was such a cursed shop from the start. It took me from summer 2006 to summer 2007 to set everything up, but it should have taken much less time. All the bad things that you hear happen (to new business owners) in Jordan happened to me,” he said. “The architect I hired was awful. He ripped me off. I was losing money from day one because rent was accruing and I still didn’t have a shop. The landlord was unaccommodating and brutal. I was also in a bad location. Nobody came to the shop. We would literally sit around all day and maybe six customers walked in. We were just nowhere near making ends meet. It was a really bad chapter in my life. But the only good thing to come out of it was that it basically paved the way for the franchises in Dubai and Beirut.”

Jaber was certain the bakery’s poor performance lay with its location rather than its product. With this in mind, he began to seriously consider moving his operation to an alternative site in Abdoun, one closer to his target customer type. He eventually managed to fund the move by giving a slice of his company to a group of investors, who were so taken with Jaber’s idea that they also went on to run the Sugar Daddy’s franchise in Dubai.

“I agreed to the deal because I wanted to save my business. We were only making enough money to cover payroll, utilities and food costs. We were not making enough money to pay rent. Nowhere near it. We would literally have to sell four times the volume that we were doing, just to make ends meet,” he said.

The move has so far appeared to be a smart one. As Jaber said, his Abdoun bakery is now conducting a healthy 40 transactions per day. He puts the bakery’s turnaround in fortunes down in a large part to its move to a far more personal and ‘cozier’ location.

Sugar Daddy's“I always wanted it to be an accessible neighborhood bakery. This part of Abdoun is definitely a neighborhood and customers can easily pull up outside my shop. It was never meant to be on Mecca Street with a shop next door that sells kitchen appliances,” he said. “I have to be in a neighborhood that has residents who are familiar with my deserts. Abdoun is the most affluent neighborhood in Amman and has residents that have studied in the US and Europe.”

Around the time of his Abdoun branch opening, Jaber was also embroiled in the establishment of Sugar Daddy’s in Dubai and Beirut. “My ambition was always to have a shop in every main city in the Middle East... I’m not doing this on my own now. My business partners are now really spearheading things. I’m kind of burnt out now as I opened shops in Beirut, Dubai and Amman within a span of three weeks.”

In the case of Sugar Daddy’s, the franchisee pays Jaber a lump sum at the start of their partnership, and from then on a regular percentage of the bakery’s sales. He is very specific about the interior layout of each branch of the bakery. Each franchisee must adhere to a strict set of fitting measurements, color schemes and furniture designs.

Having had no experience of setting up franchises before, Jaber said he poured over a simple business case study to grasp the basics. He then tried to feel his way through the rest of the process, one which has been fraught with challenges to overcome and learn from.

He helps the franchisee source all the supplies they need to get up and running, such as specialist kitchen equipment, business cards, menus and uniforms. But one of the most difficult tasks has been finding the right ingredients for Jaber’s myriad of desert recipes. For example, Jaber still has to dispatch regular consignments of vanilla extract to his Beirut branch.

“Because we work with such a unique product, wholesale suppliers don’t source the kind of ingredients we need, such as dark and light brown sugar, semi-sweet and coconut flakes and Grandma’s Molasses. It’s like a treasure hunt,” he said. “These kinds of ingredients can only be found at upscale supermarkets. I buy them at the same price as an average customer, but I need them in bulk. I take whatever is on the shelves and then ask if they have more boxes of the ingredient around the back.”

Jaber also said training staff has been a big undertaking. He has found himself exhaustingly flitting between Dubai and Beirut to make sure all the Sugar Daddy’s employees are able to properly make each individual desert. “We have something like 40 recipes. The training process so far has basically just involved me standing with a mixing bowl in front of group of employees. Hopefully I’ll hand over this responsibility to someone else in the business soon,” he said.

Jaber has always had a very specific idea of what Sugar Daddy’s should be. So is he worried about conceding more control to investors and franchisees who might dilute his vision for the business? “I don’t feel threatened anymore about losing control. I’m very happy for people to take control, because it just means they’re going to take my baby to places I probably wouldn’t have been able to do on my own. The most important thing is that the look and feel of the shop, as well as its recipes, remains mine.”

Apart from Sugar Daddy’s and Tche Tche, there seems to be scant few other Jordan-based food and beverage firms that have managed to branch out abroad. Jaber appears bemused as to why this is. “I see some amazing restaurants and bars here and I wonder why they haven’t set up franchises,” he said. “People have been fighting over the Sugar Daddy’s franchise and I can’t understand why they haven’t been fighting over the other exciting concepts we have in Amman.”

But for any local restaurant or café that is considering expanding internationally through franchising, Jaber believes they should follow one golden rule at all times. “Be sure of your concept. Everything has to be carved in stone. You don’t want to hand over to a franchisee something which isn’t complete, whereby they have to fill in the blanks themselves. Then you don’t have a true franchise.”

© Venture Magazine 2010

 
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