Franchising Done Right

How will you control the quality of the food and brand with this franchise model?

Quality is typically the issue for our line of business, and we have a central workshop for recipes where we control the quality. We also have a quality management team that is in charge of the franchise for the first three months. We did this exercise in Egypt when we expanded there, and customers found the same menu, recipe, and taste as in Saudi Arabia. This allows us to relax about going abroad since we have had the experience of doing such a transfer from Saudi.

Will you control the specific design of the stores?

We will control the design 100% as they will be exact copies of our stores here. No design changes can be made without our approval. We have a corporate manual from a design standpoint that covers everything from electro mechanicals, tiles, standards, the kitchen specs, and everything in terms of the materials required. This will make the job of transferring the design easier.

Can you tell us about your store expansions?

Our store in Medina opened in 2017, and we have plans in place to open one more in Jeddah, two in Mecca, and another in Khobar, as well as three stores in Riyadh in 2018. We hope to open 11 stores this year, which will increase the total number of Raydan stores to 28, along with seven stores for our sweets catering company.

Do you see growth in same-store sales?

We are extremely optimistic about the growth of in-store sales and are approaching this through different strategies and tactics to reach double-digit growth during 2018; this is our number-one priority and concern. We have to keep in mind that the takeaway business in Saudi Arabia makes up 75% of the total business, which includes takeaway, drive thru, and home delivery. If we focus on investing on the 25%, that is not the right investment as there is a large CAPEX to bring into stores. Most people focus on the takeaway business because of the changing culture; it is no longer relevant to focus solely on the in-store business.

What are your expectations for the rest of 2018?

If we increase the number of stores by 50%, revenues will increase by no more than 25% since there is a slowdown in sales in existing stores. In the first quarter, there was a small drop. There will be a recovery in 2H2018 because in the first half the drop came from the imposition of the VAT. Overall, we are continuing our strategy of going ahead to be listed on Tadawul after two years in March 2019. This is a healthy process to prepare the company to go from private to public, especially in such a market that is not as mature as Europe or the US. Overall, we are extremely optimistic about 2018.