Upcoming trade mission to Mideast countries
Tarakli Village in Sakarya, Turkey. While included in the Middle East trade mission, Turkey is largely located in Western Asia, but it is bordered by Iran, Iraq and Syria. To check out the agenda on the upcoming trade mission go to http://www.franchise.org/GCCTurkey2016
Rod Boyer, director of franchise operations for Smashburger, was visiting their partner is Kuwait for the first time and thought he’d go out on the restaurant’s patio and get some work done. It was July and the temperature was 126 degrees. “I didn’t stay long,” he said needlessly.
His advice for franchisors thinking about developing in the Middle East is no surprise: Don’t visit in the summer, he said.
Fortunately, the upcoming franchise trade mission to four countries in the Middle East takes place in May—not exactly non-air conditioner weather, but still a far heatstroke away from mid-summer. The certified trade mission is being led by the U.S. Commercial Service in conjunction with the International Franchise Association, May 17-27, to Doha, Qatar; Abu Dhabi in the UAE; Muscat, Oman; and Istanbul, Turkey. Franchise Times will be along to cover it.
One of the reasons the Middle East has remained an attractive region for U.S. franchisors is that it is home to major partners who have both the experience in foodservice and retail operations and the capital to expand rapidly in more than one country. In addition, many of these large family-run groups own malls, which helps with finding good sites.
Wetzel’s Pretzels partnered with the Fawaz Alhokair Group out of Saudi Arabia to build 75 stores throughout the region over a 10-year period, starting in Saudi. “We’re extremely excited,” CEO Bill Phelps said. What’s got them excited is that the group already has cut its teeth on another American snack brand, Cinnabon.
“It’s all about your partner. You see a lot of tire kickers,” he said about other groups from the Middle East. “They all have the money, but do they have the infrastructure?” And do they have the skill set?
In the case of Fawaz Alhokair, Phelps said they have the experience, infrastructure and the locations—they also own several malls. “They are the major player” in the region, he said.
Taking nothing for granted, part of Wetzel’s vetting process included talking to at least one other player in the group’s portfolio, Cinnabon, he said.
Supply and demand
A plus to going to the Middle East, he added, is the major investor groups there have traveled in the U.S. and are familiar with the brands here.
So for the brands on the trade mission, the investors they meet one on one should be familiar with their concepts and already have a sense if they will work there. While the U.S. Commercial Service’s in-country team vets investors, they also vet the U.S. franchises that are accepted on the mission to ensure there is enough interest in their brands.
Boyer with Smashburger said another boon to food franchisors heading to the Middle East is the supply chain is well established.
Smashburgers’ proprietary products such as beef, buns and some special sauces are shipped, but produce is sourced locally. On a side note, he said the color and texture of some of the produce is different than what we’re used to, but tastes the same. For instance, the leaf lettuce is a lighter green and tomatoes are more pink than red.
Menus boards are in both English and Arabic and the only change to the menu is to include a local version of the burger, the same as in other countries and states. Drink sizes are smaller there, Phelps added.
Why these four countries?
For companies that don’t want to wait for investors to come to them, the May trade mission provides an economical way to sample four of the cultures and opportunities in this region, since they can’t all be painted with a broad brush. Each country has its own set of rules and expectations, as well as personality.
Doha, Qatar, the first stop, has the highest per-capita income in the world and is poised to spend nearly $100 billion in infrastructure in the next 10 years. They are opening malls at a fast clip, and American brands are popular there, according to a U.S. Commercial Service brief.
While Dubai is the pretty sister, Abu Dhabi is the richer one. The modern city boasts five major malls, with an additional 15 just down the road in Dubai. In addition to being a regional business center, its lavish buildings and malls are an international tourist destination.
Muscat, Oman, has a young population (median age is 25) and a growing middle class. The government is focused on creating more jobs for its citizens, something franchises are known to produce.
Turkey, which is profiled in more depth in our at a glance section, has an economy that grew at one of the highest sustained rates in the world over the last decade.
On an earlier trade mission, participants learned there are more commonalities between the Middle East cultures and the U.S. than meets the eye.
Boyer said he’s never had any fear for his safety there. “They are the most kind and wonderful people,” he said.