Johannesburg - South Africa’s biggest restaurant franchisor, Famous Brands, has extended its footprint in the Middle East and North Africa after signing a master licence agreement with Lebanon-based food services and telecommunications company Xcelium.
Famous Brands said yesterday that the agreement signed for Saudi Arabia, Lebanon, Morocco, Iran and Egypt will apply to its Steers, Wimpy and Debonairs Pizza brands. Egypt and Morocco will also have a Mugg & Bean brand.
Under the agreement, Xcelium will have a right to perform as Famous Brands’s agent in the specified countries. The company will manage the business on behalf of Famous Brands in exchange for a royalty payment to utilise the group’s intellectual property and business systems.
Famous Brands said the deal would incorporate an aggressive roll-out plan, which targets opening 38 restaurants in these five countries.
The managing executive for the rest of Africa, Mark Hedderwick, said: “Our current footprint in the Middle East and north Africa is small, comprising three Debonairs Pizza restaurants in Dubai, four in Sudan, as well as one Steers restaurant.”
He said this was a significant opportunity to grow its network in the region, “underpinned by the robust ambitions and pragmatic enthusiasm of our partner, Xcelium. Its extensive business experience in the Middle East and north Africa provides us with invaluable insight into local markets and operating practices.”
Xcelium chief executive Yasser Zein said his company had been working on this deal since early last year. “This partnership enables us to create memorable experiences for our customers who are looking for a food offering that blends quality service with value pricing, in a friendly environment and efficient in-store experience.”
Hedderwick said the demographics of Middle Eastern and north African consumers favoured quick-service food consumption. He added that about 25 percent to 30 percent of the Middle Eastern population was aged between 15 and 29 and had grown up eating processed foods and dining in Western-style fast food restaurants and coffee shops.
“In addition, women in these regions are now better positioned to build careers and financial independence than previous generations, promoting increased disposable income.”
He added that similar to many emerging markets, as consumers became cash-rich but time-poor, they gravitated towards convenience-food solutions. He believed that, while some international brands had already penetrated certain parts of these markets, “consumer demand and aspirations remain relatively underserviced”.
“Local eateries and ‘informal’ indigenous restaurants still account for the lion’s share of consumer spend.”
From Famous Brands’s perspective, its strategic advantage would be the early-to-market or first-mover status. Hedderwick said it was crucial that the company entered these markets with partners that complemented its strength in brands and operational expertise.
Zein said his company’s knowledge of the local markets and consumer expectations, together with Famous Brands’s professional structures, support and brand repertoire, would play a significant role in promoting the success of this venture. “We believe this partnership will also strengthen our position in acquiring prime retail sites in the market.”
Last year Famous Brands opened its first Indian outlet with a Debonairs Pizza restaurant in Mumbai. It also has a footprint in London.
The shares gained 0.96 percent to close at R105 yesterday.