The strong F&B market in the GCC is driving the expansion of Southern Franchise Group (SFG), a foodservice operator and hospitality company that manages popular brands in the UAE and India. According to chairman and managing director Kesavan Muraleedharan, the group plans to open 10 new locations across the country in the next year and a half.
“We are on track to open 10 additional locations in the UAE over the next 18 months,” said Muraleedharan. “As part of our ongoing transformation journey, the group remains very focused on our core values of continuously improving our quality and services provided to customers, and [scaling] Our casual restaurant business. “
SFC Group is currently focusing on the UAE market, although Muraleedharan recognizes growth opportunities across the GCC. The group operates more than 50 stores and employs more than 2,500 people, and internally funds new ventures, he added.
The expansion was in line with market forecasts. According to Mordor Intelligence, the foodservice industry in the UAE is expected to grow at a compound annual growth rate (CAGR) of 6.8% over the next five years. Saudi Arabia is slightly higher, with a CAGR of 7.71%.
Muraleedharan explained that this growth is being driven by rising disposable income, rising tourist arrivals, changing urban lifestyles, and changing consumer preferences.
Despite the potential for a global recession, the seasoned executive believes business will remain strong, in part because of lessons learned during the COVID-19 pandemic.
“The pandemic has disrupted the market more than any downturn, but the restaurant industry has managed to rise to the challenge by enduring and adapting to market conditions,” he said. So in any coming downturn, those who fail to keep innovating and serving customers Companies that provide a better experience will be left behind, he added.
The industry also needs to respond to market dynamics.
“A recession may affect how often you eat out, but customers will be more value-conscious.” In his book, value goes beyond price to the customer experience and the brand’s value proposition.
“Living in a very social society, where there’s a strong culture of seeing friends and family regularly, there’s always going to be a great demand for quality leisure venues,” he said.
Commercial demand is likely to shift to quick-service restaurants and casual dining, but a renewed interest in travel by consumers may offset the decline in local traffic.
“With several tourism drivers and events in the pipeline, we expect strong tourist growth to offset any change in resident demand,” Muraleedharan said.
Cloud Kitchen: A Fleeting Trend?
While food delivery has grown during the pandemic, SFC Group has no plans to compete with cloud kitchen offerings. According to Muraleedharan, the concept was a short-lived trend.
“We’re seeing a lot of players in this space being backed by online marketplaces for venture capital. A model based purely on deep discounts and offers is not [equate] Sustainable growth,” he explained.
“While they benefit from strong branding and marketing, most of these new-age cloud brands — in the race to add new concepts and storefronts to aggregators — fail to focus on the main fundamentals of restaurant operations: quality and consistency sex,” he said. “Cloud kitchens may generate good orders in the short term; however, building a brand with steady demand and revenue requires a relentless pursuit of quality and consistency.”
(Reporting by Keith J Fernandez; Editing by Seban Scaria)