Fast food outlets in the UAE are looking to franchise overseas amid intense competition at home.
One such outlet is Operation Falafel. After opening just three- and-a-half years ago in Dubai, it quickly added seven branches and is now seeking franchise partners to grow.
Franchising allows food- and-beverage brands to break out of their home base and test how a concept that has proved itself in one market performs in another.
The UAE’s F&B market appears to be booming, but the rapid growth of the sector has created overcapacity in some parts of the country.
Glee Hospitality Consulting closed two of the 10 outlets it owns this year because of falling revenue and stubbornly high rents.
“It’s a very risky business to be involved in,” said Manhal Naser, the chief executive of Awj Investments, which owns a portfolio of F&B concepts from street food to casual dining.
He said the price point of Operation Falafel, with an average ticket price of Dh38, makes it recessionproof. “When the economy has struggled we have seen our business go up because people still need to eat. We see franchising as a way of opening up new geographies with people who know the local landscape. Saudi Arabia will be a very big franchise market for us in 2017 and we have had a lot of interest from Abu Dhabi.”
Franchising allows entrepreneurs to license a concept paying the master franchiser for the rights to its menu, its theme and its decor. Traditionally there will be an upfront buy-in cost and the expense of outfitting the restaurant. The revenues will also be shared and an annual payment to the master franchiser for marketing costs. While a franchise is not as profitable as an original concept, it is less risky and many of the problems of starting an F&B business can be averted.
The tightening economy has resulted in a slight slowdown in the pace of new restaurant openings, from 4 per cent growth in 2015 to 3 per cent growth in 2016, according to Euromonitor.
There were 16,720 F&B outlets in the UAE at the end of last year, with 19,000 outlets expected by 2020.
The fast casual sector with restaurants such as The Cheesecake Factory boomed by 30 per cent in 2015 – eating into the bottom line of high-end restaurants.
Such growth attracted the master franchiser of Clinton Baking Company, a New York franchise which opened in Dubai Downtown in 2015. It added another outlet this week in City Walk. It has two food trucks in Dubai and with an average ticket price of Dh80 to Dh120, it is now also looking to franchise across the GCC.
“It’s a very competitive market,” said Hisham Samawi, the co-founder and master franchisee of Clinton Street Baking Company. He says he believes in Dubai and could not turn down the opportunity of a location like City Walk. “We may be in City Walk for 50 years. New York is simple compared to Dubai. We have to compete internationally in our own city. We have a couple of food trucks that do well for a portion of the year, but we see growth in franchising and we hope for some movement on that this year.”
Although franchising is a low-risk way of expanding a brand, sharing costs and expertise, there are also downside risks.
“While franchising generates income it also generates extra work and extra staff,” said Sary Hamway, the chief operating officer of the World Franchise Associates. “Franchising has pluses and minuses. You can dilute your brand. Communication is vitally important. You can create rebellious franchisees who feel that they can do it on their own, and that can be disastrous for the brand.”
ascott@thenational.ae
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WWE TLC results
Asuka won the SmackDown Women's title in a TLC triple threat with Becky Lynch and Charlotte Flair
Dean Ambrose won the Intercontinental title against Seth Rollins
Daniel Bryan retained the WWE World Heavyweight Championship against AJ Styles
Ronda Rousey retained the Raw Women's Championship against Nia Jax
Rey Mysterio beat Randy Orton in a chairs match
Finn Balor defeated Drew McIntyre
Natalya beat Ruby Riott in a tables match
Braun Strowman beat Baron Corbin in a TLC match
Sheamus and Cesaro retained the SmackDown Tag Titles against The Usos and New Day
R-Truth and Carmella won the Mixed Match Challenge by beating Jinder Mahal and Alicia Fox
ENGLAND%20SQUAD
%3Cp%3EFor%20Euro%202024%20qualifers%20away%20to%20Malta%20on%20June%2016%20and%20at%20home%20to%20North%20Macedonia%20on%20June%2019%3A%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EGoalkeepers%3C%2Fstrong%3E%20Johnstone%2C%20Pickford%2C%20Ramsdale.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EDefenders%3C%2Fstrong%3E%20Alexander-Arnold%2C%20Dunk%2C%20Guehi%2C%20Maguire%2C%20%20Mings%2C%20Shaw%2C%20Stones%2C%20Trippier%2C%20Walker.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EMidfielders%3C%2Fstrong%3E%20Bellingham%2C%20Eze%2C%20Gallagher%2C%20Henderson%2C%20%20Maddison%2C%20Phillips%2C%20Rice.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EForwards%20%3C%2Fstrong%3EFoden%2C%20Grealish%2C%20Kane%2C%20Rashford%2C%20Saka%2C%20Wilson.%3C%2Fp%3E%0A
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
How green is the expo nursery?
Some 400,000 shrubs and 13,000 trees in the on-site nursery
An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo
Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery
Approximately 340 species of shrubs and trees selected for diverse landscape
The nursery team works exclusively with organic fertilisers and pesticides
All shrubs and trees supplied by Dubai Municipality
Most sourced from farms, nurseries across the country
Plants and trees are re-potted when they arrive at nursery to give them room to grow
Some mature trees are in open areas or planted within the expo site
Green waste is recycled as compost
Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs
Construction workforce peaked at 40,000 workers
About 65,000 people have signed up to volunteer
Main themes of expo is ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.
Expo 2020 Dubai to open in October 2020 and run for six months
Bombshell
Director: Jay Roach
Stars: Nicole Kidman, Charlize Theron, Margot Robbie
Four out of five stars
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
FIRST TEST SCORES
England 458
South Africa 361 & 119 (36.4 overs)
England won by 211 runs and lead series 1-0
Player of the match: Moeen Ali (England)
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Duterte Harry: Fire and Fury in the Philippines
Jonathan Miller, Scribe Publications
The specs: 2018 Harley-Davidson Fat Boy
Price, base / as tested Dh97,600
Engine 1,745cc Milwaukee-Eight v-twin engine
Transmission Six-speed gearbox
Power 78hp @ 5,250rpm
Torque 145Nm @ 3,000rpm
Fuel economy, combined 5.0L / 100km (estimate)
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
