Middle East is hotspot for Western fast casuals

Sept. 20, 2011

When the United States economy slowed a few years ago restaurant chains still needed a place to grow; they started looking overseas. And although the Middle East is a much smaller market than China or Brazil, for example, restaurant owners saw a major opportunity there, said Darren Tristiano, executive vice president of Technomic, a foodservice consulting firm.

"There's a lot of growth there around hotel and travel and as a result they are needing more restaurants to support the tourism," he said. "As hotels are being built, restaurants are also going into those cities."

David Rutkauskas of Beautiful Brands got ahead of the trend early and encouraged most of the brands he represents, including Top That!, a build-your-own pizza restaurant, Fresh Berry Frozen Yogurt and Cherry Berry, a self-serve frozen yogurt bar, to look at the Middle East. Each has locatioins already open or contracts in place in the Middle East.

"We started this back in 2008 when the economy stalled here -- when lending was difficult," said Rutkauskas, who expects to have hundreds of locations in the Middle East over the next five to 10 years. "Over there (Mid East) their economy is coming out of the ground, literally; it's about oil, and they're doing really well."

Fast Casuals are watching the success of major casual dining restaurants, such as the Cheesecake Factory and QSRs, including Subway and McDonald's, and are eager to get a piece of the action.

Smashburger is no exception; the burger chain that has about 120 locations throughout the U.S., and another 100 planned within the next year, last week announced development agreements to open stores in Kuwait, Bahrain and the Kingdom of Saudi Arabia.

"(They're) vibrant markets with strong appetites for restaurant concepts that have proven successful in the United States," said Dave Prokupek, CEO.

The company has partnered with Georgetown Advisors, an independent, Bahrain-based boutique commercial development firm, to open six locations in Kuwait and three in Bahrain.

Kuwait and the Gulf Region, has the largest under-30 age group per capita in the world, so burgers resonate well with them, according to Khalid Hajjar, Georgetown's CEO.

"Until recently the only real choices have been fast food outlets, casual dining or high end outlets," he said. "There is a real need in the market for a high-quality, better burger served in a fast casual environment. It's also important to note that this young generation in the region does have a high amount of disposable income so really all the sums add up."

Al Musbah Group, a franchisee who already operates several Western concepts including Sbarro, Cinnabon and Popeyes Louisiana Kitchen, will open eight airport locations throughout Saudi Arabia.

"(Smashburger) knows exactly what makes a brand great and what needs to be done to develop, grow and support that brand both domestically and internationally," said Ian Whitaker, general manager at Al Musbah Group. "This is important when you are a few thousand miles away."

Cover photo: Smashburger

Read more stories about growth and expansion.

Topics: Franchising & Growth , Operations Management

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