Having secured developmental rights for the 'California Pizza Kitchen' (CPK) for Middle East, Gourmet Gulf Company (GGC) is on expansion spree. In an interview, Sami K. Daud, CEO, GGC shares further growth plans.
Namita Bhagat (NB): Could you share what is the idea of securing Master Franchise for CPK in multiple countries by GGC?
Sami K Daud (SKD): Headquartered in Dubai, GGC has the development and franchise rights for CPK throughout the Middle East markets. In India, the joint venture between GGC and JSM called JSMGGC has acquired the development rights for India. The founders and owners of JSM are very close friends and people in whom I have great faith and trust for operating and developing restaurants as they have done with Hard Rock, Shiro and other restaurant brands in India. India is a very big market with great potential, and local knowledge is the key to success. We felt a partnership with JSM was the best way to go.
NB: Would JSMGGC consider securing Master Franchise rights for multiple countries in future as well? If yes, then what will be the targeted locations and criteria for such selection?
SKD: Yes, JSMGGC would consider securing Master Franchise rights for a new brand for India and other countries, depending on the size of potential and opportunity.
NB: What are the points of legal and regulatory considerations expansion in the Middle East?
SKD: In the Middle East, the laws and regulations are quite similar except a few countries that have withholding tax – and therefore the development agreements are relatively straight forward.
NB: How did the company secure the Master Franchise deals? Is it in a phased manner or more than one at a time?
SKD: We have four franchises for the Middle East region which we acquired over the course of the last eight years: YO! Sushi acquired in 2003, Morelli’s and GBK both acquired in 2005 and CPK in 2008. We found the strategy to be suitable for us since every time we bought on a new brand we were able to give it the focus in order to really understand the dynamics of the brand and thus give us a clear idea of how to run it successfully. When taking many brands at one time, there are possibilities of losing focus and that could be detrimental to your business.
NB: How does GGC maintain standardisation (in terms of training, operations, support, quality etc) among all its international locations?
SKD: We maintain standardisation through strict controls on all elements of the restaurant creation and operation – from the adoption and implementation of the restaurant design, recruitment and training of front of house and back of house staff, operational standards of delivery and all supply chain elements. We employ brand specific personnel in all operational roles (and functional experts elsewhere) and have a series of ongoing checks and balances to ensure we deliver the expected brand quality eg., customer feedback cards, mystery shop programs etc.
NB: How does the company reviews profitability and performance of all its international locations?
SKD: For all restaurant businesses, the profitability will be viewed through a series of key performance indicators such as sales levels, net profitability and return on capital employed. There are a multitude of further measurements underlying these which help to manage the day to day business – covers, spend per guest, food cost, labour cost etc. With a franchise, the economic model is tried and tested although a franchisee needs to have good local knowledge of everything which will impact the commercials such as rent levels, differences in pay rates, HR legislation etc.
NB: Do you have separate terms and conditions for each country for royalties and fees and profit sharing ratio?
SKD: Each of our separate development agreements has the same terms and conditions for the countries we have the rights in terms of royalty, fees etc. None of our franchisees have a profit sharing term. The reporting system from us to the franchisor is the same for every single country where there is one point of contact for the franchisor for all of these different countries. India however has a separate point of contact directly with JSMGGC.
NB: What would be your advice to the prospective businesses or entrepreneurs seeking Master Franchise or developer partnerships for multiple countries?
SKD: Any entrepreneur considering franchise partnerships in multiple countries should ensure that they understand the different customer needs, the commercial environment and be able to devote the capital and resources to manage across borders. It is central to any successful brand roll out to maintain quality and consistency and the further from the home market the harder it becomes.
NB: Could you share GGC’s plans for development of the brand ‘California Pizza Kitchen’ (CPK) in the Middle East?
SKD: The USA-based pizza restaurant chain CPK has expanded its original agreement with us which will see 19 restaurants being launched across the Middle East. In the original Master Franchise agreement, we at Gourmet Gulf Company were to open a minimum of three locations over a two year period. The new restaurants are due to open in United Arab Emirates, State of Kuwait, Sultanate of Oman, Kingdom of Saudi Arabia, State of Qatar, the Kingdom of Bahrain and Jordon.
