4 tips for cracking the F&B market
The Arab region is teeming with local and international restaurants offering various types of cuisine to match the increasingly demanding palates of locals and expats. On the one hand, the region is witnessing a surge in new companies specialized in the food and beverage (F&B) industry, and on the other hand, international restaurant chains continue to expand in the region and to develop their presence in the market.
This growing interest has contributed to the launch of a number of local companies that seek to bring franchises of famous international restaurants to the region, including Gourmet Gulf, founded by Sami Daoud in 2006 in Dubai. In a meeting at one of his restaurants, Daoud told Wamda: “Before Gourmet Gulf, I opened YO! Sushi which made me notice the gap in the market and discover an opportunity to establish a larger company, so I started acquiring other brands.” He adds that the choice of franchises is not “a science neither it is objective.” It is, rather, a search for what is missing in the market.
Gourmet Gulf currently comprises eight restaurants, having doubled its number in late 2013. These include Morelli's Gelato, California Pizza Kitchen, Dalloyau, Azkadenya, and Panda Express. Daoud told us that the F&B sector is growing due to the changing demographics and because many people are finding this sector “attractive,” because no matter what your economic status is, you will still go to restaurants.
When asked about data and statistics related to the F&B sector in the Arab world, Daoud expressed his desire for more openness and transparency. “In this region, it is difficult to get any information, because everyone is so secretive and does not want to disclose any data, unlike what is happening in the West,” he explained. Due to this lack of concrete information, Daoud relies on his knowledge of the market’s requirements and needs, acquired from personal experience. He also depends on the expertise of the people he deals with in every country. “We largely rely on our instinct,” he says.
Daoud believes that the large number of emerging F&B companies in the region is a good thing, “because entrepreneurs are resorting to innovation and establishing distinctive trademarks.” Moreover, this diversity gives customers a wide range of options. “There is no doubt that competition is good because it urges everyone to improve their services,” Daoud notes.
Thanks to his experience and plans to expand in Lebanon, Egypt, Oman, and Qatar after he’s tapped into the markets of the UAE, Saudi Arabia, Kuwait, and Bahrain, Daoud suggests that every entrepreneur who wants to work in this sector to be aware of the following:
1. Choose the right brand. Opening a franchise restaurant does not necessarily mean success. “When you choose a certain franchise, make sure to choose a company that supports you, because many of them are ready to give you the franchise, take your money, and collect the revenues only, while you pay to benefit from the name and experience. Make sure as well you choose a restaurant compatible with the market of the country or the region where you would like to launch your business,” he says.
2. Find the appropriate location, even if this means that you wait for an additional year. “I see a lot of brilliant ideas that are not doing well because their owners have chosen the wrong location. Every restaurant owner must think about the kind of location he wants before taking any step,” he says.
3. Prepare a detailed business plan and be realistic. “You must think about the volume of the sales you want, the number of customers you wish to have, and when you would like to begin reaping the profits,” he says. He adds that most businesses rely on guesswork only; however, when you know the market, you can avoid a lot of problems. “I turned down many franchises after the feasibility studies showed that they will not succeed. I adore this sector, but, at the end of the day, reaping profits is what we are here for. If you cannot see the light at the end of the tunnel, close the restaurant,” he explains.
4. Focus on the operations. “Even if you offer the best trademark and the best location, if you have bad operations, you will fail because customers will come once but won’t return.” Daoud says. He advises not to economize much when it comes to operations, especially since the staff is the most important thing. He cites the restaurant California Pizza Kitchen as an example, saying, “1,000 customers visit us every day, and our job is to satisfy the different tastes and requirements of those 1,000 customers. You should think of the restaurant as a shop and a factory at the same time. While the store buys the final product to sell, you do everything from the A to Z, and you must ensure that the business runs as smoothly as possible.”