F&B interview: Gourmet Gulf's Sami Daud
The Gourmet Gulf CEO talks about building an empire
The last six months have been good to Gourmet Gulf CEO Sami Daud. In December 2013, he ranked 20th in the Caterer Middle East Power 50 list. One of the reasons for this was that in August 2013, Daud Arabian (the holding company of Gourmet Gulf) and Majid Al Futtaim (MAF) Ventures announced a joint venture agreement covering their mutual investments in Gourmet Gulf Company.
The partnership marked the first entry into the Middle East F&B market for MAF Ventures. When the move was announced, Daud said the partnership enabled Gourmet Gulf to scale its operations and propel its rate of expansion in a “dynamic, but considered manner”. And then of course, Daud also has his own 2020 vision — his objective is to have more than 100 outlets in operation within the next six years.
When I interview him post-announcement, Daud exudes quiet confidence about his future plans. He says: “The CEO of MAF and I have been talking for years. It took us quite a while — probably with both sides — but certainly on our side we wanted to be sure. It’s a marriage at the end of the day; you need to make sure that you are choosing the right partner.”
Expanding the empire
Daud explains that for Gourmet Gulf, the benefit is MAF’s vast real estate portfolio. He says: “In all the cities, their malls are either number one or number two.” Daud says that while the partnership makes life easier for the F&B firm to a degree, there is no guarantee of anything. “But with our current brands and with new brands coming on board, I think it’s a very strong strategic fit.”
He says the deal adds to Gourmet Gulf’s attractive franchisee package for international brands looking to move the region. “If you think of it as a total package ... now Gourmet Gulf is not only, if I might say so myself, a great operator, but also has access to real estate. For any of the new franchises we are looking at, obviously this is the big selling point for us,” explains Daud.
Gourmet Gulf currently holds the exclusive development and franchise rights in a number of Middle East markets for international brands such as California Pizza Kitchen, Morelli’s Gelato, Yo! Sushi, and Hummingbird Bakery.
However, Daud sees no reason to stop there. He hints at the announcement of a few more brands in the near future, and says the firm is busy finalising agreements.
Keeping it casual
The brands that Gourmet Gulf holds in its portfolio all stay in the ‘casual dining’ range and Daud says this will continue into the future.
He says: “At the end of the day it served very well for us, and so we are continuing down that casual dining family path, but there may be different areas or iterations of it.”
In a region famous for its bling — some cities more so than others — Daud has stayed off the oft-trodden fine dining path and invested in well-known family franchises that veer dangerously close to being labelled ‘fast food’. Did he always plan to invest in casual dining brands?
Daud is candid: “If I have to be honest, no. I think it started off more opportunistically and we just found this is what we do very well; it’s got a great market for it.” He explains that the price point his franchises operate in appeals to a very big segment of the market.
He explains: “To give you an example, when there was the economic crisis, what essentially happened is, the more affluent people traded down. When you’re in casual dining, you’re in the middle. The best way I can describe it is that in good times, people trade up and in bad times people trade down but they’re always hitting that casual dining sector. So we find that as long as you’re offering really good product at value, then essentially it’s a winner.”
Daud asserts the importance of pricing and value of money. He says: “I never want a customer to come in and say, ‘wow that was expensive!’ Some restaurants are expensive and you’re actually annoyed that you paid so much because it was garbage. In some restaurants that’s fine, it was great food and it was expensive. But I’d like to serve great food that isn’t that bad on the pocket. That’s value for money. I think this is where the loyalty comes in and the repeat business comes in.”
It’s clear from the conversation that even though these brands are not Daud’s creations and that they are franchises, he’s insistent about quality and ensuring customers get the best experience.
He admits it is a challenge for brands and restaurants to be able to deliver day in and day out without compromising on quality and price.
Daud then recounts a recent experience passionately: “We were having a discussion about changing some product and it was going to cost us 0.1% more. I said, ‘So what? Is it a much better product?’ Yes it is. So ... who cares about 0.1%? I’ll take a hit of 0.1 or 0.2%, whatever it may be. I’ll take that on the chin no problem, but I’m giving the customers a much better product. All it’s going to do is that it will make them want to come back more. So we run higher food costs by a few points or half a point of something but you’re earning on a dollar value much more money.”
He says that problems crop up when new F&B market entrants underestimate the challenges that can emerge. Daud points out that many people don’t actually realise what goes into delivering a successful F&B outlet, assume it is easy, and enter the business.
“Then they realise it’s anything but easy and the challenge always remains: how do you open the unit and then maintain the quality? Because it’s not easy to do that.”
He is not quick to apportion blame to these individuals, instead saying the process is fairly difficult. Consistency is paramount, Daud adds and says he has had personal experiences with restaurants delivering in a hit-and-miss manner, which led him to wonder whether taking the risk of going there was worth it. He adds: “These are operational nightmare problems.”
Daud says: “I think, at the end of the day, you have to give people good quality and make sure it’s consistent. You know, it’s something that I believe in: if you have a good product and good service, everything will take care of itself. I genuinely believe in that. As long as you’re able to serve good food day in and day out, and your service is good, the customers will come to you. It may be a slow start if you don’t do the marketing but the bottom line is, it will work eventually. The key is to make sure that day one and day 10 and day 1000 are the same, and that’s not easy.”
There’s a lot of bandying around about ‘home-grown’ and ‘starting from scratch’ and so on. Even with franchises, some companies think about adapting the brand to the local market. Daud, however, doesn’t think this is necessary, and apart from the obvious halal compliance, brands can exist in their original format.
He explains: “We’re quite fortunate in the sense that in the Gulf, you actually don’t need to do much adaptation. That is one of the attractions for foreign brands wanting to expand outside of their home turf. To come to the Middle East, they don’t really need to do much.
“I get asked this question by brands who don’t know much about this region and one of the things I say is: ‘it’s not like we have to take the brand and now go change this and change that’, there’s none of that. If I’m taking a franchise, I’m taking it because it works really well, because I like it for what it is and I think what it is in the home country will translate and will work well in this part of the world.
“Some people want to take a franchise and change x, y and z ... so my question would be, ‘well why take the franchise in the first place?’”
He further points out that the Middle East is not the same as other regions such as the Indian subcontinent. Daud Arabian has set up a separate India-specific F&B subsidiary and partnered with JSM Corp to own and operate Hard Rock Café, California Pizza Kitchen, Shiro, Trader Vic’s, and Pinkberry across India.
For these brands, Daud says, changes have to be made. He explains: “For India we need to make changes, like much more vegetarian into the menu. Here we don’t need to do any of this. To compare apples to apples, you take California Pizza Kitchen — when we opened it here, it was copy paste. India was not copy paste. A lot of R&D had to go into what’s going to work, what’s not going to work.”
And Daud knows what works, having introduced Gourmet Gulf to the UAE, Saudi Arabia, Kuwait, and Bahrain already. He says: “In the next 14 months, our main focus is continuing our expansion in UAE, Saudi, Kuwait and Bahrain. Of course, we’re going to Oman, Qatar, Lebanon and Egypt. These will come on [board] possibly at the end of 2014 or in 2015.
“At the moment, for us, it’s all about building scale and building units. We already have operations there but we need to build more units in those countries.”
He points out there is a demand for his brands, which is why he’s looking at growth. Competition exists, he adds, but it’s not something he’s worried about.
“I think in the space we’re in, there is some competition but genuinely, it’s healthy competition. When you ask anybody in the business, they will tell you the same: would I prefer to open in a mall and be the only F&B outlet in that wing, or would I like to be in this wing with five other F&B outlets? The answer is that I’d rather be with five other F&B outlets.”
He continues: “2012 was great versus 2011. There were huge increases in our numbers and in 2013 again a big jump from 2012. In terms of the jump I’m talking about is actually like-for-like growth of existing units. Of course it’s easier for your revenues to increase by opening new units but I’m talking about existing units where [we had] big, big jumps so it’s been fantastic.”
He also reiterates his promise of quality. “The brands that we’re going to be bringing are top notch brands. One of our core values is ‘best in class’ and certainly that holds true for the brands that we go after.
“I think the next few years are going to be a really fun ride and I’m very fortunate to have a very strong management in place; we have a very strong team which does a wonderful job so it’s exciting times ahead.”