Middle East franchising is in a strong position with the franchise economy worth $30bn and growing by 27 per cent per annum, according to the Middle East and North Africa Franchise Association.
The picture is particularly positive here in the GCC where, like many other places in the world, food and beverage (F&B) tends to dominate. However, along with these opportunities, F&B brands are facing a number of challenges. This is also an interesting time as home-grown franchises tackle the market in different ways to larger international chains.
Recently, I spoke with a global franchisor who, having expanded to the Middle East, quickly realised that their previously successful model didn’t meet the demand here. They had made the wrong assumptions about what customers wanted in terms of menu choices and, consequently, their operations were based on a core concept that wasn’t going to succeed in this region.
As a result, the franchisee had to invest heavily, spending a significant amount of time and money tailoring the offering to local preferences. But not all franchisees are in the position to make the same decision and we are seeing more create their own concepts, rather than adapting a US or European model for Middle East customers.
The fact is, for a lot of global franchise brands, the Middle East is still a relatively small market, so their strategic focus is on generating volume sales in the current climate rather than working with franchise partners to adjust the one-size-fits-all approach.
It might make economic sense for now, but the big question is how to do their customers feel? Is the brand actually relevant for them, are they motivated to visit the outlet regularly and is the captive audience big enough for volume-driven sales to work long-term in such fast-paced environment?
It’s often said that food and beverage franchises do so well because “people need to eat”, but this assumption is a risky one. Increased opportunities come with intense competition, and complex purchasing behaviours call for greater attention to detail.
On one hand, consumers are becoming more discerning and product quality is still recognised as the most important driver, but fluctuating economic conditions mean greater awareness about where they spend their money. As a result, customers are more selective than ever and that’s where building loyalty and enhancing the overall experience is key.
People do need to eat, but if your outlet fails to understand their needs, or doesn’t cater to their tastes, then you can’t rely on them to return.
And if today’s diners are eating out less, they want more memorable moments that exceed expectations and make them feel connected to the brand. In short, it’s time to move away from the general and resonate with them on a personal level.
In the gourmet ice cream sector, for example, that could be offering culturally-inspired flavours, imaginative combinations linked to lifestyle occasions or playful parlour environments that evoke the pleasures of childhood.
A lot of newer home-grown franchises are starting from a more creative standpoint. Without the restrictions of a global blueprint, they have the flexibility to tailor their offering, capitalise on market needs and react to trends as attitudes evolve, putting them in a better position to cope with ever-changing demands. As they win local and regional customer loyalty, and build brand equity, with efficiency, originality, and innovation, we often see them then expand at a faster pace elsewhere in the world than traditional chains.
Going forward, I believe that all brands will need to focus more on putting the customer first, in order to deliver unforgettable experiences anywhere in the world. That way they can attract loyal, global ambassadors who return out of pleasure, not need, making a better recipe for success all around.
Paul Rason is chief operating officer of JB Brands Management