NEW HORIZONS
While Dubai will remain a key market for Just Falafel, and the brand is present in locations such as Jordan, Egypt, and Turkey, it is also one of the few local concepts to expand well past the Middle East.
“We are already in 14 countries. For a business that was only operating in one country until 2012 — we opened our first international store in 2012 in Jordan — and now, from being in only one country, we are in 14. So we are growing really fast,” states Malas.
It’s been a busy time at Just Falafel — in the past three months alone, the franchisor has announced a raft of new openings in key markets, and expansion plans that tap into new regions. First up was the announcement in May this year of the signing of 57 new restaurants in the Benelux region (Belgium, the Netherlands, and Luxembourg). And in June, the group marked its entry in North America with the opening of Just Falafel stores in Canada and the United States.
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Just Falafel opened its first Canadian restaurant on Toronto’s Bay Street, a thriving commercial and residential centre that has up to 100,000 commuters passing through it every day, demonstrating the company’s strategy of picking the right location with a lot of footfall. As always, the menu features a local twist, with the restaurant serving poutine, a Canadian speciality, on its menu.
In the United States, Just Falafel signed 10 new restaurants in Texas alone in June. The expansion will see restaurants opening first in Houston, followed by more stores in Austin.
This follows the opening of the brand’s first US store in San Francisco earlier in the month, with a decidedly Californian twist in the menu, which offers gluten-free options, and The Californian wrap created by culinary chef Gerard Murphy. Another branch is also due to open this month, while Just Falafel has signed agreements with partners in locations such as New York, Kentucky, and Los Angeles.
“It’s like we’ve cornered the world. We are in Istanbul; hopefully we’ll be signing some contracts in North Africa again. We are also in Egypt. We are pretty much present in the Gulf, so we have grown,” adds Malas.
However, Malas is not happy to sit and watch his fast food empire grow in the Americas and Western Europe alone. Next up for the franchisor is the Indian Ocean region. A Just Falafel restaurant is due to open soon in Bangalore, India, while the group has also signed memorandums of understanding in Mauritius and Madagascar.
“I want to go everywhere. My wish is to honestly be in every single country because we are in an industry where everybody consumes food. If you can communicate to people what you are doing, surely you can find one or two people in the country who are willing to take up the challenge as much as you are. And it’s a food category that is new, so it’s exciting. There is a huge element of innovation. Most of the other food categories have been commoditised already and over-consumed and over-available,” he asserts.
ALL IN THE DETAILS
Before signing a new store, potential franchisees have to meet Just Falafel’s minimum financial requirement of US $75,000 of “non-borrowed personal resources”.
As with all franchises, the onus of turning a profit and marketing the store successfully falls on individual franchisees. Just Falafel charges a marketing fee and a royalty fee to all its franchisees to promote the brand globally. The fee is determined based on markets — franchisees in the Australia, Canada, and USA for instance, pay up to 4% in marketing fees and 7% in royalties, while those in other regions usually pay a 3% marketing fee and 6% in royalties.
The franchise fee for each outlet also varies between $16,350 and $25,000 depending on the country. The fee covers the cost of the Just Falafel licence, training, operations manual, menu development, support, and guidance.
In order to maintain consistency in the product, especially in new markets, Just Falafel has established a central kitchen in every new location it has opened a store in.
“Every time we go anywhere, we try to have our own central kitchen and in some areas now we are moving into outsourcing because that is an option as well. We have a very simple menu, and we try to get all our supplies locally wherever we go. Either we own the kitchen ourselves as Just Falafel, or we do a transfer of technology to our master franchise partner,” he explains.
Malas is optimistic that the recent signings mark a new era of growth for the company. He says: “Because we have such a huge interest, and because we are confident in terms of the industry we are in, which is food, we feel that we will strengthen our foothold in certain markets that we do well in — we don’t know which ones yet because we are still in early stages.
“When I tell you we have 50 stores and 20 under construction, you will see that the growth has really started now. It took me three years to get to these stores and now I can double them in the next 12 months. So we are starting to learn what it takes to operate a company with 150 stores. We are not there yet, we are still learning, and we can only do it by trial and error.”
The franchise model also benefits Just Falafel because all stores are managed as individual businesses by owners with a vested interest in running a profitable restaurant.
“Maybe only one or two of the stores are into their third year — so we don’t have many performance details [to set KPIs], but I think great franchisees will come in and put high benchmarks for themselves because these are businesses that they own and however well they perform is for their benefit and the more you shine as a franchisee, the better you are as a businessman.”
There have been times, however, when the team has had to step in and help some outlets improve service or sometimes take over management. Case in point is the Deira City Centre outlet, which Just Falafel took over from a franchisee when it wasn’t performing as expected.
“We’ve taken one of the stores from our franchisees in Dubai, and we have been able to double the sales overnight.
We didn’t do anything else differently; we were only serving the client better. So the performance of any particular store is an element of management — the same store can be managed by different people and deliver different numbers,” explains Malas.
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