Caterer Middle East met up with the region’s leading chain-outlet operators to discuss expansion plans, tenant power and the effect of the downturn on the F&B industry

Taking part

Naveed Dowlatshahi, vice president, BinHendi Hospitality

Simon Penhaligan, director of restaurant operations, RMAL Hospitality

Antonio Bautista, president, Gourmet Gulf Company

Rob de Villiers, regional operations manager, The Meat Co and Ribs & Rumps

Louay Ghandour, deputy chief executive, Cravia

Story continues below
Advertisement

What impact has the downturn had on your brands and regional expansion pipelines?

Naveed Dowlatshahi: As a business we’re going through a phase of consolidation, not just in terms of opening outlets but other details, things we should really be doing anyway: looking at costs, man power, recruitment, training and so on.

I think at the peak of 2008 a lot of people got carried away because everyone was doing so well, so we lost track of the basics. Now everyone’s going back to basics because it’s a more competitive market; there isn’t as much footfall so everyone’s vying for a piece of the pie.

In terms of growth we’re being very choosy regarding where we open. It’s about whether a site is actually feasible; it’s no longer about ‘needing’ to be there, it’s about whether it will give us a return on investment.

Louay Ghandour: I agree; for us at Cravia we had massive expansion in 2008 — and we had always planned to do that then slow down with openings in 2009.

In the past we would not look at numbers in detail but that’s changed. For example, we’re looking at potential sites for Cinnabon. Previously we looked at the big malls, the big guys, but now that doesn’t make sense from a financial perspective, so we’re looking at smaller developments.

And at Zaatar w Zeit it’s all about delivery at the moment — a great business add-on to increase top-line sales without adding much on to the cost.

We know we have to minimise food costs, minimise waste and watch our cash flow because money is tight. We have to change our mindset too, because this wasn’t the case in 2008 — it was all spend spend spend, grow grow grow, but now it’s about checking every penny you spend.

Dowlatshahi: I think in 2008 everyone was chasing the locations, because if you didn’t get in you missed out and you’d fall behind. But now it’s become more realistic; now it’s a tenants’ market, not a landlords’ market anymore; the tables are turning.

Simon Penhaligan: That’s true, but I haven’t seen much impact with the rents yet; they’re still ridiculously high. If you look at apartments, for example, rents have dropped 15-25% but for restaurant locations, if you look at Emaar or Madinat, they still want to put the rent up.

Rob de Villiers: I think every location is different — Madinat Jumeirah has always been a great location for us. But I agree, if you look at other developments such as Dubai Mall, Souk Al Bahar, places in Abu Dhabi and even further afield, the landlords are really not amenable to any discussion about reductions in rent at this particular stage.