2015 International Top 25: M.H. Alshaya CEO talks franchising U.S. brands
Nov 26, 2015
This story is a part of NRN’s International Top 25, an annual look at the 25 largest restaurant chains and companies based outside of the United States and Canada based on their worldwide foodservice sales. Sales and figures were calculated by London-based Euromonitor International.
Foodservice chains from the United States and elsewhere looking to expand internationally often turn to franchising. Increasingly, they are hunting for sophisticated, in-country, multiunit operators to be their partners in new markets.
The M.H. Alshaya Co. of Kuwait — with more than 1,000 franchised food locations flying dozens of different brand flags throughout the Middle East, North Africa, Russia, Turkey and Europe — has made a name for itself as a regional expert.
When the Raising Cane’s Chicken Fingers chain of Baton Rouge, La., opened its first restaurant outside the United States in September, in The Avenues mall in Kuwait, CEO Todd Graves acknowledged franchisee Alshaya for helping make that “important moment” a reality.
Wassim Arabi, CEO of M.H. Alshaya Co., recently corresponded with Nation’s Restaurant News by e-mail about the role of organizations such as his.
What does your company see as its most important value to U.S.-based franchising partners?
With over 70 leading international brand partnerships in our portfolio, includingStarbucks, The Cheesecake Factory, P.F. Chang’s, IHOP, Shake Shack and Raising Cane’s, Alshaya offers a wealth of experience and market knowledge to its partners. In economic terms, there are some obvious benefits: the opportunity to increase market scale and the addition of a new revenue stream in which financial risk is minimized [as] investment in the required operating infrastructure (stores, product, employees, marketing, etc.) is carried by Alshaya. Equally important to the value proposition is the confidence our partners can have that they are working with a trusted, proven operator who understands the sector and the region, who has the relationships required to deliver the right locations, and who is committed to protecting and enhancing the value of their brand to mutual benefit.
What is the most challenging part of working with U.S. franchisors?
Our partners have to trust that we can deliver an authentic brand experience — one that a customer would not be able to tell apart if they visited the U.S. Every partnership is unique, and as the relationship is established, a dedicated brand team works closely with the franchise partner to reach a full understanding of the brand and how it should be operated in the region. Everything from product to supply chain to service standards to brand positioning is explored and tested against our knowledge of the region and of its consumers. We also have to ensure that our franchise partner understands the regulatory and cultural differences of the region that need to be accommodated. Acquiring this level of detail is time intensive for both partners, but fundamental to the successful launch of a brand into the region, as well as to its long-term success.
How do the various markets in which you operate U.S.-based restaurant concepts differ, and how do those differences impact operating and development strategies?
While countries in the Middle East region have a lot of characteristics in common, each has its own laws, regulations, culture and consumer behaviors which we must respond to. However, any necessary local adjustments are taken with care — as a franchise business our job is to deliver the brand exactly as the customer expects. Operationally we apply common processes across all markets, ensuring that our operations teams can deliver the consistency and standards that our customers look for. What that means in practice is that a Kuwait customer who flies to Dubai for a weekend break should experience the same brand quality in either market.
How did your company’s comparable-restaurant sales do in 2014, and how are they trending in 2015?
We don’t comment on sales performance, but, as an indication of the growth opportunity, we opened around 150 cafés and restaurants in 2014, and we expect to open a similar number this year. We have a very strong opening pipeline looking out over the next few years, both for our current brands and for new brands that will appeal to local consumers. A number of our restaurants in flagship locations are regular global top performers.