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Al Masah Capital: GCC Foodservice Sector

April 2014

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GCC Foodservice Sector

INTRODUCTION
GCC is a fertile ground for foodservice companies, particularly due to the regions
flourishing economy; urbanization; growth of its multicultural, young population; and
steady rise in per capita income. Consequently, international fast food and casual dining
restaurants are successfully making inroads into the GCC region through franchise
agreements, the preferred method of doing business in the region.
The strategy is also suitable for local partners, who appreciate being able to acquire their
foreign partners technical knowledge and experience in operating foodservice
businesses. International foodservice partners offer this expertise as well as assist with
management and training, in addition to providing the brand name. Moreover, the GCC
population is extremely brand conscious.
There are no precise estimates of the amount of business done by foodservice
companies in GCC.
1

Our calculations indicate the annual revenues of foodservice companies in GCC


amounted to ~USD16.5 billion in 2012. Saudi Arabia led the region, registering total
foodservice sales of USD7.7 billion, followed by the UAE (USD4.6 billion), Kuwait (USD1.7
billion), Qatar (USD1.1 billion), Oman (USD1.0 billion), and Bahrain (USD370 million).
The fast food [quick service restaurant (QSR)] segment was found to be the largest,
worth USD9.5 billion as of 2012. It was followed by full service restaurants (USD5.3
billion) and the cafes, tea bars, and bakery cafes segment (USD1.8 billion).
Exhibit 1: GCC foodservice market size (2012)
Foodservice market (by Country)

Foodservice market (by Category)

Bahrain
2%

Oman
6%
Qatar
7%
Kuwait
10%

USD16.5
billion

Saudi
Arabia
47%

Cafes,
bakery
11%
Full
service
32%

USD16.5
billion

Fast
food
57%

UAE
28%

Source: Al Masah Capital Research

Saudi Arabia, with annual billings of USD4.2 billion in 2012, was the regions largest fast
food market. American fast food chains such as McDonalds, KFC, Burger King, Hardees,
and Domino's Pizza dominate the Kingdoms fast food market. The UAE and Kuwait are
the other two large fast food markets, with annual revenues of USD2.9 billion and USD1
billion, respectively.

This calculation does not consider the institutional food service market (which primarily includes
local catering companies that provide food services to the military, oil & petrochemical companies,
hospitals, universities, and schools) and the lounges and bars market.

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The full service restaurants (which includes fine and casual dining) market, estimated at
USD5.3 billion, was about 45% smaller than the QSR market. Brands in this segment
include Chilis, TGI Fridays, Carluccio's, La Petite Maison, BiCE, Nobu, and ZUMA.
Exhibit 2: GCC fast food and full service restaurant market (2012)
5.0

Values in USD bn
4.2

4.0
Saudi Arabia
3.0

2.9

UAE

2.7

Kuwait

Qatar

2.0
1.3

Oman

1.0
1.0

0.7 0.6

0.5
0.2

Bahrain
0.3 0.3

0.1

Quick service restaurants

Full service restaurants

Source: Al Masah Capital Research

The cafes, tea bars, and bakery cafes segment was worth just USD1.8 billion; however,
the segment is exhibiting rapid growth.

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COMPONENTS OF THE FOODSERVICE SECTOR


The foodservice sector can broadly be categorized as comprising: (i) full service
restaurants (fine and casual dining); (ii) quick service restaurants (fast food); (iii) cafes,
tea bars, and bakery cafes; and (iv) lounges and bars.

Full service restaurants


Fine dining
These are full service restaurants offering premium food and service. Such restaurants
are usually located in luxury hotels in metropolitan cities. Fine dining locations pay
considerable attention to their decor and ambience, attempting to create an
atmosphere that provides exclusivity and personalized service. The waiting staff is
usually highly trained and often wears formal attire. Food and beverages are typically
paid for after their consumption. Some fine dining restaurants in GCC are Hakkasan, La
Petite Maison, BiCE, Nobu, ZUMA, Gordon Ramsay, At.mosphere, STAY, LEntrecote Cafe
de Paris, Spazio, and Il Terrazzo.
Casual dining
These restaurants serve moderately priced food in a casual atmosphere. The decor,
food, and service are usually less extravagant than those of a fine dining restaurant.
Certain restaurants also provide takeaway and home delivery services. Some casual
dining restaurants in GCC are Chilis, The Cheesecake Factory, TGI Fridays, Gazebo, Tao,
and McCoys.
Exhibit 3: GCC foodservice sector
GCC Foodservice Sector

Full Service Restaurants

Fine Dining

Quick Service
Restaurants

Cafes, Tea Bars,


and Bakery-Cafes

Lounges and
Bars

Casual Dining

Source: Al Masah Capital Research

Quick service restaurants (QSRs)


Quick service restaurants (often called fast food joints) offer low-cost food options,
focusing on speed of service. The minimal table service and emphasis on self service
distinguishes this group from traditional restaurants. Moreover, at QSRs, food and

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beverages are paid for prior to consumption. Some quick service restaurants in GCC are
McDonalds, Dominos Pizza, Subway, Burger King, KFC, Papa Johns, and Wendys.

Cafes, tea bars, and bakery cafes


These outlets serve a mix of food and beverage products. However, they are more
focused on non-alcoholic beverages, including a range of coffees as well as other hot and
cold drinks. These outlets also offer quick bites such as pastries and sandwiches, apart
from breakfast items. In the GCC region, Cafe Bateel, Starbucks, PAUL, Tim Hortons, and
VOGUE Caf are amongst the most renowned brands in this category.

Lounges and bars


Lounges and bars are establishments that serve alcohol. They may also serve food;
however, they typically generate most of their revenue from the sale of alcoholic drinks.
Well-known brand names in this category in GCC include Cavalli, Hard Rock Caf,
Siddharta Lounge by Buddha Bar, Koubba, and Rivington Bar.

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GROWTH DRIVERS FOR GCCS FOODSERVICE SECTOR


Booming economy
GCCs economy is currently worth USD1.60 trillion vis--vis USD450 billion a decade ago.
Due to this robust growth, income levels in certain GCC countries have risen to levels
comparable with that in several developed countries. Moreover, the per capita income
of Qatar (a GCC member country) exceeded that of the US to become one of the highest
in the world. In 2013, GCCs per capita income was USD32,341 as compared with
US13,984 in 2003.
Exhibit 4: Per capita income (2013E)
US
Germany
Japan
UK
GCC

53
44
39
39

32

Qatar
Kuwait
UAE
Oman
Saudi Arabia
Bahrain

105

48
43
26
24
24

20

in USD 000s

40

60

80

100

120

Source: IMF, Al Masah Capital Research

By 2020, GCCs economy is estimated to be USD2.0 trillion, with Saudi Arabia


contributing USD900 billion, followed by the UAE (USD477 billion), Qatar (USD283
billion), Kuwait (USD189 billion), Oman (USD90 billion), and Bahrain (USD35 billion).
Exhibit 5: Gross domestic product, current prices from 201020 (USD trillion)
2.5
2.0

2.0
1.58

1.60

1.66

1.71
Bahrain

1.45

1.5

Oman
Kuwait

1.14

Qatar

1.0

UAE
Saudi Arabia
0.5

0
0.0
2010

2011

2012

2013E

2014E

2015E

2020E

Source: The World Bank, IMF, Al Masah Capital Research

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Multicultural, young, expanding population


GCCs population is incredibly diverse. Apart from the local residents, the region is home
to expatriates from over 200 countries. South Asians form the largest expatriate
community in GCC, followed by Europeans.
The population of the GCC region is quite young. Data from the World Bank suggests
nearly 41% of the regions population is aged between 15 and 34 years. Qatar, Oman,
and the UAE had the highest percentage of population in this age group.
Exhibit 6: GCC has a young population base
120%
100%

100

55-64

Over 65

All

17
80%
41

60%
40%
17
20%

10

0%
0-4

5-14

15-34

35-44

45-54

Age in years

Source: The World Bank, Al Masah Capital Research

According to estimates from the World Bank, GCCs population is likely to grow from
43.5 million in 2010 to 52.8 million in 2020.

Favorable changing consumption habits


Due to the regions harsh climatic conditions, eating out and shopping are the two major
forms of entertainment in GCC. Consequently, foodservice outlets are becoming the
preferred destination for casual and business meetings in the region.

Influx of tourists
The rising flow of tourists to GCC has also helped drive demand for the foodservice
sector. Tourist inflows account for a large and growing portion of demand, particularly in
Saudi Arabia and the UAE. On average, these two countries annually receive more than
25 million tourists to perform Hajj and Umrah at the holy city of Mecca and for
leisure/business.
According to the World Travel & Tourism Council, in 2013, 32.8 million international
tourists arrived in GCC for various religious and business purposes. Tourist arrivals for
the region are expected to reach 34.5 million in 2014, up 5.4%.

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Exhibit 7: International tourist arrivals in GCC (millions)


Saudi Arabia

UAE

Bahrain

Oman

Qatar

Kuwait

32.8

2013

2014E

34.5

10

15

20

25

30

35

40

Source: World Travel & Tourism Council, Al Masah Capital Research

Going forward, the rise in international tourist arrivals would drive the growth of GCCs
restaurant industry.

Rapid urbanization
Urbanization in GCC has risen substantially from the 35% level in the 1960s. Currently,
84% of the regions 47 million residents live in urban areas. Rapid urbanization in GCC is a
result of rural-to-urban migration for better job prospects, better standards of living, and
various other factors.
Exhibit 8: Rural-urban population in GCC
100%

80%

60%
Rural
Urban

40%

20%

0%
1960

1970

1980

1990

2000

2010

2011

2012

Source: The World Bank, Al Masah Capital Research

The rise in urbanization can generally be associated with increased eating out by
bachelors, working men/women, and a decline in average size of households.

Dining festivals
Dubais government, in its endeavor to make the country an ultimate tourist destination,
is constantly seeking creative ways to increase the number of visitors. Following the
success of the Dubai Shopping Festival, the government has started hosting the Dubai
Food Festival (DFF) to celebrate and enhance the countrys position as the regions
gastronomy capital.

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st

DFF, which was held between February 21 and March 15

th

2014, with almost 700

restaurants participating, presented the general public with a wide range of food-related
activities, tastings, offers, and events that showcased the emirates diverse food
offerings.
Exhibit 9: Dubai Food Festival

Source: Department of Tourism & Commerce Marketing (Dubai)

DFF included several events, entertainment activities, and attractions, including Taste of
Dubai, Gulfood, and The Big Grill.

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EMERGING TRENDS IN THE FOODSERVICE SECTOR


Changing consumer preferences
GCC residents have become richer, trendier, and more brand conscious. This new league
of urban dwellers is keen on trying new brands and concepts (including the foodservice
industry), reflecting their social status. Consequently, the food consumption pattern of
GCC residents is shifting from traditional Arabic cuisine to more international flavors,
ranging from Japanese (sushi) to Indonesian, Italian, and Lebanese food.
The conventional trend of eating excessive meat/meat products and very little
salad/vegetables is turning healthier, owing to easier availability of food from Asia,
North America, and other parts of the world.

European foodservice brands gaining ground


According to a report by Horizons, European foodservice brands have recognized the
GCC populations gastronomical appetite. Horizons developed this conclusion citing the
changing brand mix at two Dubai malls owned by the same developer.
Mirdif City Centre Mall hosted 12 European foodservice brands in 2010 vis--vis just
three at Deira City Centre Mall in 1996. In terms of percentage share, European brands
constituted 16% of all foodservice outlets at Mirdif City Centre Mall as compared with
12% at Deira City Centre Mall.
Exhibit 10: Foodservice outlet share by country of origin
Deira City Centre Mall

12%

Mirdif City Centre Mall

4%

4%
16%

Year
1996

Year
2010

47%

37%

43%

37%

US

Gulf

Europe

Others

Source: Casual Dining in the UAE from Horizons, Foodservice Europe & Middle East

Dilution of fine dining concept


The fine dining concept in GCC is being diluted, according to more than 100 chefs and
F&B-related delegates at the Caterer Chefs and Ingredients Forum held at the Mina a
Salam, Madinat Jumeirah in October 2012.
The delegates agreed the concept of fine dining would never be completely phased out;
however, they accepted the market is incorporating the new polished dining concept,
which entails less investment in design and yet carries the full service offering. The

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emergence of the new polished dining concept emanates from the demand side as
diners currently expect offerings with better quality without the rigidity of formal dining.

International brands expanding presence


International foodservice brands are rapidly expanding in GCC. Proof of this is growth
registered by Burger King and KFC, the first American quick service brands to enter the
region.
Burger King, which opened its first GCC outlet in 1992 in Saudi Arabia, has expanded to
almost 267 outlets across Saudi Arabia (95), the UAE (74), Kuwait (73), Qatar (13), and
Bahrain (12). Similarly, KFC, which opened its first store in the region in 1973, has
expanded to nearly 400 outlets.
Dunkin' Donuts has also achieved considerable success in the region. According to a
recent press release by Dunkin' Brands Group, the parent company, the chain has more
than 250 outlets in the Middle East. In February 2014, the SUBWAY restaurant chain
announced it reached the milestone of 500 locations in the Middle East & Africa region.
Exhibit 11: International brands with strong presence in GCC

Source: Al Masah Capital Research

During the last two years, several internationally acclaimed restaurant brands have
opened in GCC. These include La Porte des Indes, Fm, IHOP, PF Changs, Shake Shack,
Tim Hortons, The Cheesecake Factory, Texas Roadhouse, Tortuga, MOOYAH, Cielo Tapas
Bar & Sky Lounge, Clinton Street Baking Company, and GQ Bar.
Exhibit 12: A few new entrants in GCC

Source: Al Masah Capital Research

Interest in the foodservice business is so high that major franchise deals are being struck
with international brands almost every second week.

UAE residents lead region in dining out


According to a survey conducted by MasterCard in 2011, UAE diners spent an average of
USD229 per month on restaurant meals, followed by residents of Qatar (USD211),
Kuwait (USD196), and Oman (USD66).

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Transition from phone to online food ordering


The GCC population is transitioning from phone to online ordering. Several portals offer
online food delivery in the region, including Foodonclick.com, Otlob.com, talabat.com,
hellofood.com, and 24h.ae.
Otlob.com, which has a menu database of more than 400 restaurants and food chains,
stated the Saudi online food delivery market was worth USD4.8 million in 2012. This
market is likely to reach USD218 million by 2020, owing to the well-urbanized regions,
changing lifestyles, and emerging online culture of the young, tech-savvy population.

Growing acceptance of home/office delivery


According to a statement by Ahmed Marashde, CEO of Arabian Entertainment Co (which
holds the franchise rights to Applebees Grill and Restaurant in Saudi Arabia),
Consumers do not only want to enjoy casual dining food inside the restaurants but also
want to enjoy the same taste in their homes; hence, a lot of casual dining restaurants
have started home delivery services".
Several casual dining restaurants in GCC have begun offering home/office delivery
services. The strategy is a suitable match for restaurants, which are generally keen on
exploring new avenues to generate more business.

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CHALLENGES FOR GCCS FOODSERVICE SECTOR


High rentals
Rent/lease expense is a major cost for foodservice companies. This is since prime
commercial locations (which are usually in high demand and short supply) command a
premium over the general market rate. Owing to the advent of mall culture, several
foodservice companies currently engage in lease models that allow revenue sharing to
decrease costs. However, the growing need for mutually beneficial lease models
persists.

Staffing issues
Labor shortage, leading to high levels of attrition, is a significant problem for foodservice
companies. Due to the large number restaurants being opened, junior chefs that would
typically remain in a position such as commis one/two tend to leave their existing
employment to move up the career ladder.
GCC governments emphasis on nationalization of jobs (Emiratization and Saudization,
among others) is also impacting the foodservice sector, which largely employs
expatriates as the local population is uninterested in restaurant jobs.

Heavy dependence on imports


GCC heavily relies on food imports to meet its growing consumption requirements due
to the shortage of arable land and water. Data from the FAO suggests GCCs agricultural
imports totaled USD34.2 billion in 2011. In terms of value, Saudi Arabia was the leading
food importer (50.3%), followed by the UAE (32.2%), Oman (6.3%), Kuwait (4.6%),
Bahrain (3.3%), and Qatar (3.3%).
Exhibit 13: Value of agricultural imports in GCC (2011)
Saudi Arabia

17.2

Bahrain

Qatar

Kuwait
UAE

11.0

Oman

Oman

2.2

Kuwait

Saudi
Arabia

1.6

Bahrain

1.1

Qatar

1.1
0

UAE

in USD bn
8

12

16

20

Source: FAO, Al Masah Capital Research

We estimate the regions food import bill to exceed USD50 billion in 2020, considering
population growth and changes in food prices as well as quantity of imports (refer to
AMCL MENA Food Security Report for further details).

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Rising awareness on health issues


Over the past few years, lifestyle-related diseases, such as diabetes, cancer, and blood
pressure problems, have increased in GCC. The prevalence of Type 2 diabetes was found
to be unusually high in GCC vis--vis the rest of the world. According to the World Health
Organization (WHO), in the UAE, one in three adults is obese and one in five people has
diabetes.
Two years ago, certain GCC governments were contemplating higher taxes on beverages
(particularly carbonated ones) to control consumption, owing to the rise of lifestyle
diseases. Carbonated beverages were found to be a major contributor to the increasing
incidence of diabetes among children. Sugary and oily snacks, particularly those offered
by fast food restaurants, were also considered to be a cause of health problems.

Ban on alcoholic drinks due to Islamic traditions


Foodservice outlets in Saudi Arabia and Kuwait do not serve alcohol since Islamic
traditions prohibit the consumption of alcohol. In 2012, Pearl Qatar in Doha also placed
a complete ban on the sale/consumption of alcohol on the island.
The UAE and Bahrain, the two most liberal countries in GCC, allow foreign residents to
obtain permits and buy alcohol from designated liquor stores. In the UAE, alcohol is also
available in licensed hotels and pubs.
The ban would not benefit foodservice companies since restaurants that serve alcohol
are believed to earn a much higher profit margin than those that do not.

Socio-political unrest
During the Arab Spring of 201112, certain foodservice companies in GCC suffered
significant business losses. Bahrain, in particular, faced unrest in late 2011.
Consequently, there was a significant decline in the influx of tourists from other parts of
GCC (primarily Saudi Arabia), who would generally travel to Bahrain over the weekend.
According to an article by FT on February 2012, the manager of an Indian restaurant in
central Manama stated his restaurants business declined 60% since the previous year.
If such a wave of violence reappears in the region, foodservice companies may come
under pressure again.

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DEALS IN GCCS FOODSERVICE SECTOR


Private equity deals
A total of five private equity buys occurred in GCCs foodservice sector during 201013.
In April 2010, QInvest announced it had acquired 40.8% stake in Intercat Hospitality, a
UAE-based industrial catering and restaurant management firm. Intercat Hospitality
owns two brands: Mashawi (a restaurant that serves Lebanese cuisine) and Toast (which
serves fast food). The financial terms were not revealed.
In October 2010, GrowthGate Capital revealed it had acquired 22% stake in International
Foods Services, a Saudi Arabian company engaged in food processing, distribution of
consumables, and catering services. The company also owns Capo Grillo, a casual dining
restaurant with branches in Saudi Arabia and Syria, and Hot and Crispy, a franchise fast
food concept that serves a snack food range of crispy potatoes. The financial terms were
not revealed.
Exhibit 14: Private equity deals in GCCs foodservice sector (201013)

Year

Company

Country

Fund

Country

Category

2010
2010
2011

Intercat Hospitality
International Food Services
Alamar Foods

UAE
Saudi Arabia
Saudi Arabia

Qatar
UAE
UAE

Fast Food and QSR


Fast Food and CDR
Fast Food and QSR

2013

Hungry Bunny

Saudi Arabia

Bahrain

Fast Food

2013

Shakespeare and Co

UAE

QInvest Capital
Growthgate Capital
The Carlyle Group MENA Fund
International Investment Bank and
Tharawat Investment House
NBK Capital

Kuwait

CDR

Source: Zawya, Thomson Banker, Al Masah Capital Research

In December 2011, the Carlyle Group MENA Fund acquired 42% stake in Saudi Arabiabased Alamar Foods, the master franchise of Dominos Pizza and Wendys for the
MENAP region (except for Wendys in Saudi Arabia). Alamar owns/operates 200
restaurants across 11 countries. The financial terms were not revealed.
In February 2013, International Investment Bank, together with Tharawat Investment
House, announced the acquisition of 49% stake in Hungry Bunny, a well-known Saudi
Arabian fast food restaurant chain. Hungry Bunny owns/operates 40 outlets in Saudi
Arabia, Bahrain, Kuwait, and Oman. The financial terms were not revealed.
In November 2013, NBK Capital revealed it acquired 49% stake in Shakespeare and
Company, a popular casual dining restaurant chain based in the UAE. Shakespeare and
Company, established in 2001 by the Saad Family, has 17 company-owned and operated
establishments in the UAE and one establishment in the US. It also has franchise
locations in Jordan, Lebanon, Qatar, Oman, Bahrain, and the US. The financial terms
were not revealed.

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Mergers and acquisitions (M&A)


During 201013, seven M&A deals occurred in GCCs foodservice sector. Notably, five of
the seven deals in the period took place in 2013.
In April 2011, Belhasa Hospitality, a subsidiary of Belhasa International Co, purchased
majority stake in 800 Pizza, a Dubai-based Italian restaurant, and opened two new
outlets in Old Town and Motor City in the same year. 800 Pizza serves a range of Italian
fare including soups, appetizers, pasta, pizza, and desserts, among others.
In September 2012, Bahrains Jemball Holding Co acquired 18.6% stake in Amman-based
Model Restaurants Co from Global Investment House Jordan for USD1.9 million.
In March 2013, Galadari Brothers Group, the parent company of Galadari Ice Cream,
announced plans to form a joint venture with US-based Dunkin' Brands Group. Under
the agreement, Dunkin' Brands would maintain 20% stake in the new venture, with
Galadari being primarily responsible for the brands daily operations in Australia.
Exhibit 15: M&A activity in GCCs foodservice sector (201013)

Year

Target company

Target country

Acquirer company

Acquirer country

2011
2012
2013
2013
2013
2013
2013

800 Pizza
Model Restaurants Co
Galadari Brothers Group
Marco Pierre White Grill Stake
Little Chef
South West Coffee
Gourmet Gulf

UAE
Jordan
UAE
United Kingdom
United Kingdom
United Kingdom
UAE

Belhasa Hospitality
Jemball Holding Co
Dunkin' Brands Group
Rmal Hospitality
Kout Food Group
Kout Food Group
MAF Ventures

UAE
Bahrain
United States
UAE
Kuwait
Kuwait
UAE

Source: Thomson Banker, Bloomberg, Al Masah Capital Research

In May 2013, Rmal Hospitality, a subsidiary of UAE-based Al Fahim Group, signed an


agreement to acquire UK-based Marco Pierre White Grill & Steakhouse from celebrity
chef Marco Pierre White. According to the terms of the deal, Rmal would acquire 100%
stake in the portfolio of Marco Pierre Whites brands outside the UK & Ireland, including
Frankies and Wheelers restaurants as well as the rights to develop those brands.
In August 2013, Kout Food Group Restaurants UK Limited, Kout Food Groups UK branch,
acquired Little Chef, a UK-based roadside restaurant chain, for USD23 million from
private equity firm RCapital, buying 81 of the chains 83 sites. During the same month,
Kout Food Group also announced the purchase of the entire share capital of the UKbased South West Coffee Ltd for KWD1.4 million. This deal marked Kout Food Groups
entry into the UK coffee sector.
In August 2013, Majid Al Futtaim Ventures announced the acquisition of 50% stake in
Gourmet Gulf from Daud Investments. Consequently, Majid Al Futtaim Ventures
obtained sole ownership of Gourmet Gulf, which holds the development and franchise
rights in several Middle East markets to international foodservice brands such as
California Pizza Kitchen, Morellis Gelato, YO! Sushi, and Hummingbird Bakery.

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MAJOR PLAYERS IN GCCS FOODSERVICE BUSINESS


1. Kuwait Food Company
2. Kout Food Group
3. United Foodstuff Industries Group Company
4. Danah Al Safat Foodstuffs Company
5. Herfy Food Services Company
6. Bahrain Family Leisure Company
7. Others (privately held)

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KUWAIT FOOD COMPANY


Key statistics
Ownership
Country
Established
Price (KWD)
M-Cap (KWD mn)
No. of Employees

Major Shareholders

Public
Kuwait
1964
2.50
1,005.0
55,000

Shares Outstanding (mn)


Al Khair National
Public

391.2
66.8%
33.2%

Exhibit 16: Share price chart 1 year (in KWD)


2.75

2.50
2.25
2.00
1.75
1.50
1.25
1.00
Mar-13

May-13

Jul-13

Sep-13

Nov-13

Jan-14

Mar-14

Source: Zawya

Business description
Kuwait Food Company (Americana Group), established in 1964, operates restaurants as
well as manufactures and markets consumer foods. Americana Group has a network of
more than 1,300 outlets, making it one of the largest operators of restaurant chains in
the MENA region. The groups portfolio includes leading international brands such as
KFC, Pizza Hut (in the UAE, Egypt, Bahrain, Jordan, and Kazakhstan), Hardees, TGI
Fridays, Sbarro (in Kuwait), Costa Coffee (in Egypt, Jordan, Lebanon, and Kazakhstan),
Krispy Kreme, Baskin Robbins (in Kuwait, Egypt, and Lebanon), Signor Sassi, Red Lobster,
Olive Garden, and Longhorn Steakhouse.

Key financials
Exhibit 17: Income statement (in KWD mn)

Total Revenue
Gross Profit
Gross profit margin
Operating Income
Net Income Before Taxes
Net Income
Net profit margin

2010
680.7
120.2
18%
58.1
60.8
46.2
6.8%

2011
720.8
126.0
17%
60.9
60.8
48.0
6.7%

2012
809.6
142.8
18%
73.2
58.5
45.9
5.7%

2013
866.9
162.1
19%
82.8
66.1
50.6
5.8%

CAGR (2010-13)
8.4%
10.5%
12.5%
2.8%
3.1%

Source: Zawya

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KOUT FOOD GROUP


Key statistics
Ownership
Country
Established
Price (KWD)
M-Cap (KWD mn)
No. of Employees

Major Shareholders

Public
Kuwait
1998
0.78
57.1
4,672

Shares Outstanding (mn)


Fadwa Y. Al Humaidhi
Ya'qoub Y. Al Humaidhi
Saleh Y. Al Humaidhi
AM Y. Al Humaidhi
Public

73.2
22.4%
17.6%
16.3%
10.2%
33.6%

Exhibit 18: Share price chart 1 year (in KWD)


1.0
0.9

0.8
0.7
0.6
0.5
0.4
Apr-13

Jun-13

Aug-13

Oct-13

Dec-13

Feb-14

Source: Zawya

Business description
Kout Food Group, established in 1998, is engaged in the hospitality services business,
including establishing, managing, and operating restaurants. The company also provides
catering services and import and export of food stuffs. Kout Food Group holds the
franchise rights in Kuwait to Burger King, Pizza Hut, Applebees, and Taco Bell. The
company also operates Kabab-ji, Burj Al-Hamam, Boost Juice Bar, and SevenSeas. In
August 2013, Kout Food Group acquired Little Chef and South West Coffee.
Kout Food Group has operations in Kuwait, Iraq, and the UK.

Key financials
Exhibit 19: Income statement (in KWD mn)

Total Revenue
Gross Profit
Gross profit margin
Operating Income
Net Income Before Taxes
Net Income
Net profit margin

2010
68.8
13.7
20%
4.9
4.5
5.0
7.3%

2011
68.4
13.8
20%
5.2
4.2
4.1
6.0%

2012
73.2
14.9
20%
5.6
5.5
4.4
6.0%

2013
87.3
20.2
23%
5.9
5.8
5.4
6.2%

CAGR (2010-13)
8.3%
13.7%
6.4%
9.0%
2.3%

Source: Zawya

19

xxxxxxMENS

GCC Foodservice Sector

UNITED FOODSTUFF INDUSTRIES GROUP COMPANY


Key statistics
Ownership
Country
Established
Price (KWD)
M-Cap (KWD mn)
No. of Employees

Major Shareholders

Public
Kuwait
1992
0.295
9.83
950

Shares Outstanding (mn)


United Medical Services Co
Sayyed Hassan Hashim
Salman Sayyed Hashim
Zein Al Abdeen Hashim
Public

33.1
49.8%
9.6%
9.1%
8.1%
23.5%

Exhibit 20: Share price chart 1 year (in KWD)


0.34

0.32
0.30
0.28
0.26
0.24
0.22
0.20
Apr-13

Jun-13

Aug-13

Oct-13

Dec-13

Feb-14

Source: Zawya

Business description
Kuwait-based United Foodstuff Industries Group, established in 1992, operates retail,
restaurants, and catering businesses. The company hosts famous brands such as Sable
Sweets, Roche Sweets, Planet Donuts, Pellini Cafe, and Home Style.
United Foodstuff Industries Group was previously known as Sable General Trading
Company.

Key financials
Exhibit 21: Income statement (in KWD mn)

Total Revenue
Gross Profit
Gross profit margin
Operating Income
Net Income Before Taxes
Net Income
Net profit margin

2010
8.9
2.9
32%
(0.9)
(0.0)
(0.0)
NM

2011
10.1
3.4
34%
0.2
(0.0)
(0.0)
NM

2012
9.3
3.1
33%
0.2
0.3
0.3
2.7%

9M 2013
8.8
3.2
36%
0.2
2.3%

CAGR (2010-12)
2.3%
4.5%
NM
NM
NM

Source: Zawya

20

xxxxxxMENS

GCC Foodservice Sector

DANAH AL SAFAT FOODSTUFFS COMPANY


Key statistics
Ownership
Country
Established
Price (KWD)
M-Cap (KWD mn)
No. of Employees

Major Shareholders

Public
Kuwait
1972
0.087
24.3
1,000

Shares Outstanding (mn)


Al Safwa Group Holding
Public

282.7
37.3%
62.7%

Exhibit 22: Share price chart 1 year (in KWD)


0.16

0.12

0.08

0.04

0.00
Mar-13

May-13

Jul-13

Sep-13

Nov-13

Jan-14

Mar-14

Source: Zawya

Business description
Danah Al Safat Foodstuff Company, established in 1972 as a subsidiary of Al Safwa
Group, is primarily engaged in the fishing and catering business. The company manages
and operates the fast food outlets Shrimy Restaurants, Black & White Restaurants, and
ShrimpyGrill Restaurants.
Danah Al Safat has 12 subsidiaries operating across the Middle East, Asia, and Africa.

Key financials
Exhibit 23: Income Statement (in KWD mn)

Total Revenue
Gross Profit
Gross profit margin
Operating Income
Net Income Before Taxes
Net Income
Net profit margin

2010
11.6
5.4
46%
(1.3)
2.4
2.3
20%

2011
23.6
5.8
25%
(2.1)
(1.6)
(1.6)
NM

2012
27.8
7.1
26%
(8.4)
(7.8)
(7.7)
NM

9M 2013
23.0
6.2
27%
0.8
1.0
1.0
4.1%

CAGR (2010-12)
54.9%
15.2%
NM
NM
NM

Source: Zawya

21

xxxxxxMENS

GCC Foodservice Sector

HERFY FOOD SERVICES COMPANY


Key statistics
Ownership
Country
Established
Price (SAR)
M-Cap (SAR mn)
No. of Employees

Major Shareholders

Public
Saudi Arabia
1981
133.5
4,405.5
NA

Shares Outstanding (mn)


Savola Group
Ahmad H Al Saeed
Public

33.0
47.6%
20.3%
32.1%

Exhibit 24: Share price chart 1 year (in SAR)


150

140
130
120
110
100
90
80
Mar-13

May-13

Jul-13

Sep-13

Nov-13

Jan-14

Mar-14

Source: Zawya

Business description
Saudi Arabia-based Herfy Food Services Company, established in 1981, owns and
operates fast food restaurants under the brand name HERFY and also engages in
catering services and manufacturing and selling of meat and bakery products. In
addition, Herfy runs multiple bakery and chocolate showrooms. Furthermore, the
company owns and manages warehouses and refrigerators for food preservation.
Herfy has a network of more than 170 fast food restaurants across Saudi Arabia. The
company also has business interests in Bahrain, Kuwait, and the UAE.

Key financials
Exhibit 25: Income statement (in SAR mn)

Total Revenue
Gross Profit
Gross profit margin
Operating Income
Net Income Before Taxes
Net Income
Net profit margin

2010
579.9
192.9
33%
123.7
127.7
124.3
21%

2011
708.6
226.2
32%
148.3
150.3
146.7
21%

2012
842.0
266.4
32%
180.6
185.8
181.2
22%

2013
848.7
273.2
32%
187.8
196.6
191.4
23%

CAGR (2010-13)
13.5%
12.3%
14.9%
15.5%
15.5%

Source: Zawya

22

xxxxxxMENS

GCC Foodservice Sector

BAHRAIN FAMILY LEISURE COMPANY


Key statistics
Ownership
Country
Established
Price (BHD)
M-Cap (BHD mn)
No. of Employees

Major Shareholders

Public
Bahrain
1994
0.112
4.48
150

Shares Outstanding (mn)


Gulf Hotels Group
Public

40.0
25.2%
74.8%

Exhibit 26: Share price chart 1 year (in BHD)


0.12
0.11

0.10
0.09
0.08
0.07
0.06
Feb-13

Mar-13

Apr-13

May-13

Jun-13

Jul-13

Aug-13

Sep-13

Oct-13

Source: Zawya

Business description
Bahrain Family Leisure Company, established in 1994, is involved in the hospitality
business. The company operates franchise restaurants under brands such as Ponderosa
Steakhouse, Bennigans, and Cucina Italiana as well as provides entertainment services
through investment in and development of amusement parks.
The company also supplies amusement-related equipment.

Key financials
Exhibit 27: Income statement (in BHD mn)

Total Revenue
Operating Income
Net Income Before Taxes
Net Income
Net profit margin

2010
0.9
0.1
0.5
0.5
54%

2011
0.8
(0.0)
(0.1)
(0.1)
NM

2012
1.4
(0.0)
0.7
0.4
29%

2013
1.4
0.1
1.2
1.2
82%

CAGR (2010-13)
15.0%
31.4%
31.5%
31.5%

Source: Zawya

23

xxxxxxMENS

GCC Foodservice Sector

OTHER PRIVATE PLAYERS


Ajit Khimji Group
Oman-based Ajit Khimji Group is a conglomerate with diverse business interests,
including retailing luxury watches, jewelry, and furniture; operating a chain of
bookstores; ownership of restaurants; travel and tours; and laundry services.
The group owns/operates restaurants under the brand names Mumtaz Mahal and
Woodlands as well as MORE Caf, through its subsidiary Asha Enterprises LLC.

Al Ghunaim Trading Company


Kuwait-based Al-Ghunaim Group, established in 1978, is engaged in trading, real estate,
hospitality, and security.
The group holds the franchise rights to Chilis restaurant, Johnny Carinos Italian Kitchen,
Cinnamonster, The Noodle House (in Kuwait), The Pizzeria, Saj Express, Big Al Steak
House, The Coffee Bean & Tea Leaf, and Le Baton Sale Patisserie.

Al Khaja Group
UAE-based Al Khaja Group, established in 1986, is engaged in the hospitality,
consultancy, information technology, real estate, and retail businesses. Al Khaja Group
owns and operates several fine dining restaurants, premium coffee outlets, fast food
lounges, and ice cream parlors, including AL-Safeer, Esfahan, Hatam, Al Baiq, and Dajen.
The group also holds the franchise rights to global brands such as Hediard Caf and
Gloria Jeans Coffees (in the UAE).

Alamar Foods
Saudi Arabia-based Alamar Foods is the master franchise of Dominos Pizza and Wendys
for the MENAP region (except for Wendys in Saudi Arabia). The company
owns/operates 200 restaurants across 11 countries. The Carlyle Group owns 42% stake
in Alamar Foods.

Al Baik
Al Baik, established in 1974, operates a chain of fast food restaurants in Saudi Arabia. Al
Baik has more than 50 branches in the KSA and is widely popular for its fried chicken.

Alshaya Group
Kuwait-based Alshaya Group, established in 1890, is a leading international retail
franchiser, operating more than 55 of the most recognized retail brands globally,
including Starbucks, The Cheesecake Factory, P.F. Changs, H&M, Mothercare,
Debenhams, American Eagle, Pottery Barn, Pottery Barn Kids, Office Depot, and Boots.
The company operates 2,200 stores across seven divisions: Fashion & Footwear, Health
& Beauty, Food Service, Optics, Pharmacy, Office Supplies, and Home Furnishings. In
addition to its retail operations, Alshaya Group is also active in real estate, automotive,
hotels, trading, and investments.

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GCC Foodservice Sector

Alshaya has operations in the MENA region, Russia, Turkey, and Europe. It has more than
28,000 employees.

Arabian Entertainment Company


Arabian Entertainment Company, established in 1996, is a wholly owned subsidiary of
SEDCO, one of the largest business conglomerates in Saudi Arabia. Arabian
Entertainment Company is the largest franchise of Applebees Grill and Restaurant in the
Middle East. Arabian Entertainment Company is also a franchise of Romanos Macaroni
Grill and China Gate restaurants.

BinHendi Enterprises
UAE-based BinHendi Enterprises, established in 1974, is engaged in fashion retailing,
watches and jewelry, furniture, hospitality, real estate, and construction.
BinHendis hospitality division has more than a dozen restaurants and coffee shops,
including Caf Havana, Mini Chinese Restaurant, China Times Restaurant, Japengo Caf,
Sammach, Bella Donna Restaurant, Inferno Grill, La Brioche Caf, Business Caf, Ruby
Tuesday, Burj Al Hamam, NOW Caf, and Duck King.

Caesars Group
Kuwait-based Caesars Group, established in 1973, has business interests in restaurants
and confectioneries; trading in foodstuff, industrial equipment, spares, tools, hardware,
and safety products; IT solutions; travelling and tourism; and manufacturing corrugated
cartons and paper products.
The companys restaurants and confectioneries are spread across Kuwait, Bahrain, and
the UAE.

Cravia Incorporation
UAE-based Cravia Incorporation, established in 2001, holds the franchise rights to
Cinnabon, Seattles Best Coffee, Zaatar w Zeit, Roadster Diner, and the companys own
signature brand The Steak Bar.
Cravia Incorporation was previously known as United Restaurant Development Group.

Emirates Fast Food Company


Emirates Fast Food Company, established in 1994, runs the McDonalds restaurants in
GCC.

Gourmet Gulf
UAE-based Gourmet Gulf, established in 2003, holds development and franchise rights in
several Middle East markets to international foodservice brands such as California Pizza
Kitchen, Morellis Gelato, YO! Sushi, and Hummingbird Bakery. It also partly owns
regional outlets of Hard Rock Caf, Trader Vics, and Pinkberry.
Gourmet Gulf is owned by Daud Investments and Majid Al Futtaim Ventures.

25

xxxxxxMENS

GCC Foodservice Sector

Integral Food Services


Integral Food Services, established in 2004, is engaged in the retail food service, contract
catering, and support industries in Qatar and the UAE. Integral Food Services owns a
chain of concept restaurants, i.e., Royal Tandoor, Tandoor Express, Oriental Bowl, Janna,
Real Gelato, Pizza N Pasta, and FoodSmart. The company is also a strategic partner for
popular international food franchises such as Bombay Chowpatty, Puranmal, Mega
Wraps, Southern Fried Chicken, and 241 Pizza.

Jawad Business Group


Bahrains Jawad Business Group is a conglomerate with businesses interest in fashion,
restaurants, travel & tourism, supermarkets, money exchanges, automobile services,
and logistics. Jawad Business Group holds the franchise rights to foodservice brands such
as DQ Grill & Chill, Papa Johns Pizza, Burger King, Chilis, Romanos Macaroni Grill,
Maggianos, The Great Kabab Factory, Costa Coffee, Magic Wok, Delifrance, Aran, Thai
Express, Woodlands, Zen Express, Camilles Sidewalk Caf, Hakisushi, Fratelli la Bufala,
and Patisserie Valerie.
The group has more than 140 restaurants across Afghanistan, Bahrain, Oman, Qatar,
Saudi Arabia, Kuwait, India, and the UAE.

Jumeirah Restaurants
Jumeirah Restaurants is the branded restaurant division of the Dubai-based luxury
hotelier Jumeirah Group. The company has developed and licensed several successful
restaurant concepts globally.
The Noodle House, the groups flagship restaurant, operates across the UAE, Oman,
Qatar, Saudi Arabia, Kuwait, Cyprus, and Pakistan. Jumeirah Restaurants also owns
several other restaurants, including Sana Bonta, BYTES, AllFreshCo, Rice & Spice, and The
Flaming Revolution. The company holds the regional rights to distribute and develop
brands such as the Rivington Grill, THE IVY, Scotts, Annabels, Harrys Bar, Daphnes,
Bambou, and Le Caprice.

Just Falafel
UAE-based Just Falafel, established in 2007, runs a chain of vegetarian fast food joints
across nine countries. Earlier this year, Just Falafel signed five area franchise agreements
with different partners in New York City, New Jersey, Kentucky, and San Francisco in the
US and the Greater Toronto Area in Canada.
Falafel is a traditional Arabic food. It is a deep-fried patty made of ground chickpeas,
served in pita bread.

Kudu Corporation
Saudi Arabia-based Kudu, established in 1988, is a fast food chain that sells meals
including burgers, chicken & fries, and steak & eggs. Kudu has more than 200 outlets
across Saudi Arabia, Sudan, Jordan, and Yemen.

26

xxxxxxMENS

GCC Foodservice Sector

Olayan Group
Saudi Arabia-based Olayan Group, established in 1947, is a private, multinational
enterprise with diverse commercial and industrial operations in the Middle East and an
actively managed portfolio of international investments. The group holds the franchise
rights to Burger King in Saudi Arabia and is the master franchise for the Arab Middle
East; it also holds the master franchise rights for Texas Chicken in Oman, Bahrain, and
Qatar and franchise rights in the UAE and Egypt. The Olayan Group owns/manages 300
Burger King outlets and 30 Texas Chicken restaurants.
The Olayan Group recently signed an agreement to open 22 Buffalo Wild Wings outlets
by 2018.

Saleh Bin Lahej Group


Saleh Bin Lahej Group is engaged in the business of real estate, construction, hospitality,
and publishing. The group owns and/or operates eight international casual dining
restaurants brands: Chilis, Romanos Macaroni Grill, El Chico, Cantina Laredo, Black
Canyon, The Pizza Company, Steak n Shake, and Silver Fox Steakhouse.

27

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GCC Foodservice Sector

Al Masah Capital Management Limited


Level 9, Suite 906 & 907
ETA Star - Liberty House
Dubai International Financial Centre
Dubai-UAE
P.O. Box 506838
Tel:
+971 4 4531500
Fax:
+971 4 4534145
Email: Research@almasahcapital.com
Website: www.almasahcapital.com

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under the DIFC Companies Law and is regulated by the Dubai Financial Services Authority (DFSA). The
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Copyright 2014 Al Masah Capital Management Limited

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