One hot June day in Barcelona last year, Mohamad Bitar decided that Just Falafel, the company he founded in 2007 with a group of investors including the Lebanese-British entrepreneur Fadi Malas, would become JF Street Food – and meat would be back on the menu.
Just Falafel had recently opened its first American outlet, in Fremont, San Francisco – with plans to open a further 168 stores in North America and 1,000 stores internationally by 2020.
Mr Bitar decided he wanted to scrap this goal. Instead, with the firm’s rapid growth proving more troublesome than anticipated, he imagined himself as the owner and operator of a smaller chain of restaurants: 500 profitable restaurants would be better than 1,000 loss-making branches.
“It’s safe to say that we made mistakes,” says Mr Bitar. “We wanted to be the next McDonald’s. Later on, we found out that McDonald’s doesn’t want to be McDonald’s any more.”
Just Falafel’s franchises were having particular difficulties in the UAE. A number of branches in unsuitable locations lost money when it turned out foot traffic was not high enough. One Just Falafel manager in Abu Dhabi described his customer base as “vegetating”.
Just Falafel’s international expansion was also difficult. It closed its branches in Jordan and Lebanon last year and the practical difficulties of offering a single brand in more than 10 different countries were starting to hit home.
“Not all of the franchises were profitable,” Mr Bitar says. “Some were opened in the wrong location and some we shut down.”
Mr Bitar took his concerns to Mr Malas in August. Mr Bitar argued that while the franchise model had advantages, he thought Just Falafel should focus on operating its own, high-quality restaurants – abandoning the strategy of rapid growth pursued under Mr Malas.
Mr Malas agreed with the strategy but told Mr Bitar he did not want to run the kind of company his partner was proposing. He said he was a dynamic entrepreneur who wanted to launch new enterprises and did not see himself as the chief executive of a restaurant operator.
Mr Malas resigned in October but remains on the company’s board and remains a stockholder. Just Falafel described his departure as “amicable”.
“My passion is to spend more time on entrepreneurship, rather than operations,” Mr Malas says.
This month, Mr Bitar unveiled his new big idea: JF Street Food. The menu, the decor, the logo and the target market would all change. The company would no longer accept new franchise requests but would aim to expand the number of restaurants directly owned by the company.
“[Just Falafel’s] franchising model was opportunistic, rather than strategic,” says Michael Biggins, who became Just Falafel’s chief operating officer in January last year. Mr Biggins was previously a senior director at McDonald’s and is the author of a book about franchising.
“We were doing everything for the first time,” Mr Bitar says, reflecting on the early days of the company. “It’s not like another UAE brand did this before and we were following suit.
“There’s a learning curve in retail, and mistakes are inevitable – even if you do the research. When you open your doors, there’s only so much you can do.”
Just Falafel did not fully weigh the implications of moving into so many international markets at once.
“Before you enter a market, whether in franchising or operating, you need to do the research,” Mr Bitar says. “But we had such high growth and we wanted to keep up with that growth.”
Mr Biggins says there were other considerations, too. “There was a cost associated with providing support, marketing, and the supply chain for a new franchise store internationally – and we needed to take that on board.” He promises things will be different from now on. Before entering a new country, JF Street Food will “do all the good homework, launch restaurants ourselves, confirm we have a replicable model, and then issue the franchise”. Mr Biggins previously ran Just Falafel’s UK restaurants. He learned that, despite the United Kingdom’s large vegetarian market segment, “when we actually began opening and operating restaurants, there weren’t enough people visiting with enough frequency to make the topline strong enough.”
This lesson was quickly learned at home, where the company had not been thinking through its property deals.
Rapid growth meant Just Falafel was buying up new sites in the UAE at great speed – even when this did not make good business sense, Mr Biggins says.
“We had a vision of opening a lot of restaurants in the UAE, so we started to accumulate sites – even where that would cannibalise sales from our existing restaurants.” The difficulty of buying up prime retail space in Dubai also caused problems for the company.
“In Dubai most of the prime retail space is in shopping malls. But mall operators look for known names when allocating retail space, which can make life harder for individual operators,” says Enrico Clementi, the managing partner of Tribe Creators, a restaurant consultancy.
More than one Just Falafel franchisee bemoaned the difficulty of getting prime retail space in Dubai.
But there was another thing missing from Just Falafel’s formula – meat.
“There just aren’t enough people who love falafel enough ... [for us] to end up with profitable restaurant volumes,” Mr Biggins says.
Mr Bitar commissioned a survey of 1,000 Just Falafel customers in August, the results of which he described as “mind-boggling”: 87.5 per cent of Just Falafel customers are regular meat-eaters, and the remainder eat meat occasionally.
When one branch in Dubai recently introduced meat and chicken shawarma, “sales went through the roof”, Mr Bitar says.
“How do you widen your appeal? The product offering is always key,” says Mr Clementi.
“You need to identify what the demographic wants, change the product, then market and package that in a way that is appealing.”
What Just Falafel did initially was to take a well-known, popular street food, make it a chain and package it properly,” says Mr Clementi.
“The key was to make sure the branding was up to date and that the experience was on par with what you’d find in food courts and competitors,” he says.
But there have been some grumblings that the food was exactly that – on par but no better, than its competitors.
We “forgot about the food”, Mr Bitar told Arabian Business in October. A new menu and a new name could give the brand a lift. But Mr Bitar will have to make sure not to turn off existing Just Falafel consumers.
“I wouldn’t mess too much with a very well known name – because it has existing value,” Mr Clementi says. “If you’ve been in business for a long time and the crowd knows you for what you are, you might as well change the concept altogether.”
Mr Biggins admits the name change is a worry. “It’s a careful balance of clearly communicating to the consumer that something significant has changed. The name change creates some new interest and curiosity.
“On the other hand, we have had seven years of the Just Falafel brand. How much do we give up?”
abouyamourn@thenational.ae
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
COMPANY%20PROFILE
%3Cp%3E%3Cstrong%3ECompany%20name%3C%2Fstrong%3E%3A%20ASI%20(formerly%20DigestAI)%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202017%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFounders%3A%3C%2Fstrong%3E%20Quddus%20Pativada%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%2C%20UAE%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EIndustry%3A%3C%2Fstrong%3E%20Artificial%20intelligence%2C%20education%20technology%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EFunding%3A%3C%2Fstrong%3E%20%243%20million-plus%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EInvestors%3A%3C%2Fstrong%3E%20GSV%20Ventures%2C%20Character%2C%20Mark%20Cuban%3C%2Fp%3E%0A
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
THE BIO
BIO:
Born in RAK on December 9, 1983
Lives in Abu Dhabi with her family
She graduated from Emirates University in 2007 with a BA in architectural engineering
Her motto in life is her grandmother’s saying “That who created you will not have you get lost”
Her ambition is to spread UAE’s culture of love and acceptance through serving coffee, the country’s traditional coffee in particular.
Famous left-handers
- Marie Curie
- Jimi Hendrix
- Leonardo Di Vinci
- David Bowie
- Paul McCartney
- Albert Einstein
- Jack the Ripper
- Barack Obama
- Helen Keller
- Joan of Arc
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
If you go…
Emirates launched a new daily service to Mexico City this week, flying via Barcelona from Dh3,995.
Emirati citizens are among 67 nationalities who do not require a visa to Mexico. Entry is granted on arrival for stays of up to 180 days.
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
How Filipinos in the UAE invest
A recent survey of 10,000 Filipino expatriates in the UAE found that 82 per cent have plans to invest, primarily in property. This is significantly higher than the 2014 poll showing only two out of 10 Filipinos planned to invest.
Fifty-five percent said they plan to invest in property, according to the poll conducted by the New Perspective Media Group, organiser of the Philippine Property and Investment Exhibition. Acquiring a franchised business or starting up a small business was preferred by 25 per cent and 15 per cent said they will invest in mutual funds. The rest said they are keen to invest in insurance (3 per cent) and gold (2 per cent).
Of the 5,500 respondents who preferred property as their primary investment, 54 per cent said they plan to make the purchase within the next year. Manila was the top location, preferred by 53 per cent.
UAE currency: the story behind the money in your pockets
One-off T20 International: UAE v Australia
When: Monday, October 22, 2pm start
Where: Abu Dhabi Cricket, Oval 1
Tickets: Admission is free
Australia squad: Aaron Finch (captain), Mitch Marsh, Alex Carey, Ashton Agar, Nathan Coulter-Nile, Chris Lynn, Nathan Lyon, Glenn Maxwell, Ben McDermott, Darcy Short, Billy Stanlake, Mitchell Starc, Andrew Tye, Adam Zampa, Peter Siddle
Turning%20waste%20into%20fuel
%3Cp%3EAverage%20amount%20of%20biofuel%20produced%20at%20DIC%20factory%20every%20month%3A%20%3Cstrong%3EApproximately%20106%2C000%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EAmount%20of%20biofuel%20produced%20from%201%20litre%20of%20used%20cooking%20oil%3A%20%3Cstrong%3E920ml%20(92%25)%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3ETime%20required%20for%20one%20full%20cycle%20of%20production%20from%20used%20cooking%20oil%20to%20biofuel%3A%20%3Cstrong%3EOne%20day%3C%2Fstrong%3E%3C%2Fp%3E%0A%3Cp%3EEnergy%20requirements%20for%20one%20cycle%20of%20production%20from%201%2C000%20litres%20of%20used%20cooking%20oil%3A%3Cbr%3E%3Cstrong%3E%E2%96%AA%20Electricity%20-%201.1904%20units%3Cbr%3E%E2%96%AA%20Water-%2031%20litres%3Cbr%3E%E2%96%AA%20Diesel%20%E2%80%93%2026.275%20litres%3C%2Fstrong%3E%3C%2Fp%3E%0A
READ MORE ABOUT CORONAVIRUS
Bio:
Favourite Quote: Prophet Mohammad's quotes There is reward for kindness to every living thing and A good man treats women with honour
Favourite Hobby: Serving poor people
Favourite Book: The Alchemist by Paulo Coelho
Favourite food: Fish and vegetables
Favourite place to visit: London
How Voiss turns words to speech
The device has a screen reader or software that monitors what happens on the screen
The screen reader sends the text to the speech synthesiser
This converts to audio whatever it receives from screen reader, so the person can hear what is happening on the screen
A VOISS computer costs between $200 and $250 depending on memory card capacity that ranges from 32GB to 128GB
The speech synthesisers VOISS develops are free
Subsequent computer versions will include improvements such as wireless keyboards
Arabic voice in affordable talking computer to be added next year to English, Portuguese, and Spanish synthesiser
Partnerships planned during Expo 2020 Dubai to add more languages
At least 2.2 billion people globally have a vision impairment or blindness
More than 90 per cent live in developing countries
The Long-term aim of VOISS to reach the technology to people in poor countries with workshops that teach them to build their own device
