Kuwait's booming economy welcomes franchises

Published Date: May 07, 2007
By Velina Nacheva, Staff writer

KUWAIT: Vibrant economic activity, the swelling of the population and the steady increase of the consumers' purchasing power have gradually led to the expansion of the franchise business in Kuwait - part of the economy that offers a further growth potential.

According to the marketing manager of a world-known brand, even inflation would help businesses that take up a value-based enterprise. George Khawam, marketing director McDonald's Kuwait, says that the boom of Kuwait's economy is bringing new people into the country. "The population increased, income also increased, and in other words even inflation would help people who move to something that has more value," Khawam said in an interview recently.  Kuwait's population grew from 2.4 million in 2004 up to almost 3.5 million by 2006.  

Vijay Elantholy, director of operations and partner, Ruby Tuesday and Peppes Pizza, Midle East further attributed the growth of the franchise business to the economic progress, the growing income, the bigger purchasing power and the greater numbers of visitors to the country. "People have enough money to spend," he concluded.

Talking to the Kuwait Times in his office above the Ruby Tuesday restaurant in Sharq - the first Ruby Tuesday franchise outlet that opened in the Middle East in the end of 2003 - Elantholy said that at that time the Kuwait market was mature but still there were options, which holds true some four years later.
Cashing in on the potential of the market, which Elantholy says still offers franchise opportunities, the casual dining restaurant chain Ruby Tuesday recently announced its expansion plans for the Middle East charting to open more than 15 new outlets.

Having currently three outlets in Kuwait and one in Jeddah, Ruby Tuesday expects to expand in the Middle East opening three stores every year for the coming five years.  Furthermore, one Ruby Tuesday restaurant is soon to open in Saudi Arabia and two others are presently under construction in Dubai. 

A safe investment
Starting up your own business in the food industry requires a considerable amount of investment, a well-outlined business plan and the know-how. Since opening up your own restaurant can be an expensive and in the long run - a slightly risky affair - entrepreneurs tend to go for the much easier option: Getting a franchise. Being a franchisee, Elantholy says, already everything is available on a plate. "You only have to study, copy and implement," he said succinctly.   

Khawam also agrees that franchising is a proven effective method. He compared it to a system that has been tested somewhere around the world and it "proved to be very efficient."

Starting up your own business as well as franchisee can work. However, according to Elantholy franchising is the easier way. In Khawam's words, "The minimising of the experience time is what makes franchising a better business opportunity than starting your own business."

The booming business in the Middle East helps entrepreneurs willing to start up a restaurant enter the dining industry. Khawam explains that franchising would be the low risk business opportunity. Many entrepreneurs want to enter the business but they do not have the know-how, Khawam said, the best thing for them, he advised, is to look for a franchising.    

Brand as success factor
Franchisers assist with management, training and know-how, the cost of the product is handled by the franchiser and the brand has already gained the confidence of the people elsewhere. To start a new business, Khawam observed, you need to build the brand, as it is the main success factor of any business. "People go after brands," Khawam says, "because they deliver certain promise to the people."

Such was the case with the evolution of McDonald's in Kuwait. Having opened its first restaurant in the country in 1994, today this household name in the fast food industry operates 48 outlets in Kuwait alone. 

With its almost 300 outlets in the fast food segment, Kuwait has served and still does, as a franchise core for the Middle East region. Brands that need no introduction - such as KFC, Hardees, Burger King and Hungry Bunny - have all started from Kuwait. "Kuwait is the most competitive and mature market in the region. The most successful brands are based in Kuwait," says Khawam and adds, "Abu Dhabi and Dubai start picking up now. Saudi Arabia is also a very big market but it starts picking up only now." 

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