Arby’s Makes Middle East Move Amid Urban Push in U.S.
The new look of Arby's.
Paul Brown sees the potential for 6,000 to 7,000 Arby’s units in the U.S., “if not more.”
It’s that positive outlook which he said actually helped set the stage for the restaurant group’s international expansion into the Middle East.
“The reason we’re able to be so methodical [in choosing international franchisees] is because we have such huge growth potential in the United States,” said Brown, Arby’s CEO, when I caught up with him earlier this week at the National Restaurant Association Show in Chicago.
The chain just announced an agreement with Kharafi Global to open 25 locations in Kuwait and Saudi Arabia over the next seven years. It’s the first international move for Arby’s since 2010 when it inked a development agreement to open 100 restaurants in Turkey over 10 years.
“We’re going to take a very thoughtful and strategic approach to international expansion,” said Brown, who noted Kharafi Global is “a great example of the type of franchisee we want to work with.” The company also operates Johnny Rockets restaurants in Kuwait and has developed additional foodservice concepts locally.
Meanwhile in the U.S., Arby’s continues its brand revitalization that includes an urban push and the remodeling of existing stores.
“We want to prove that Arby’s can work in an urban location,” said Brown of Arby’s return to Manhattan, where it opened a location in December. The country is moving toward a more urban environment, he continued, which pushed Arby’s to develop a drive-thru-free option and give the company “the flexibility to offer something different to the franchisee.”
That Manhattan location, with a smaller footprint of 850 square feet, is doing two times the system average in sales, said Brown, and Arby’s will add a second New York City restaurant later this summer.
As it continues to advertise its protein-heavy sandwiches—the bourbon bacon and brisket version, for example—and use new marketing to attract younger customers, the chain is also conscious of the need to update its physical appearance.
“One of the challenges of brick and mortar is, they’re brick and mortar,” said Brown as he acknowledged the slower process of remodeling. About 200 of the chain’s 3,200 U.S restaurants have been given the new “inspired look” at a cost of between $300,000 and $375,000, with an additional 300 slated for completion in 2016. By 2018 Brown expects 40 percent to 50 percent of locations to be remodeled.
Franchisees have generally been onboard with the remodeling effort, said Brown, and restaurants with the new look are seeing a 15 percent to 20 percent increase in sales.
“Guests like it, franchisees like it and they have a sense of pride,” said Brown.