Expanding into international markets presents challenges, but also offers significant rewards for Middle Eastern F&B brands, if planned and researched thoroughly. Diogo Ildefonso, general manager of Glee Hospitality Solutions, shares his essential guide for businesses eyeing new opportunities across borders.
The Middle East’s F&B sector is brimming with potential, with many ‘locally grown’ brands not only thriving domestically, but also making their mark on the international stage. This expansion is more than justa strategic maneuver – it represents an opportunity to diversify risks, enhance global brand presence and tap into new revenue streams. As more Middle Eastern brands venture abroad, understanding the dynamics of this journey becomes crucial for sustained success.
1-Strategic market research and selection
Selecting the right market for expansion is critical. Comprehensive research into consumer preferences, culinary trends and local regulations forms the foundation of a successful market entry. When Sunset Hospitality Group expanded its portfolio beyond the Middle East, it meticulously analyzed market conditions to ensure that its concepts resonated with the local audience. Such thorough due diligenceis indispensable as it helps avoid costly missteps, ensuring a smoother and more successful market entry.
2-Cultural adaptation and localization
Balancing authenticity with local relevance is one of the most critical aspects of international expansion. There are numerous instances where failing to adapt a concept to local tastes has led to challenges. For example, a renowned Michelin-starred Indian chef launched a restaurant in London, but almost failed by not adapting to local preferences. This serves as a powerful reminder of the necessity to tailor offerings to meet market demands. A more positive example is Kinoya, a popular Japanese restaurant from Dubai. Firmly established after being awarded a Bib Gourmand by the Michelin Guide and recognized as one of the top restaurants in the Middle East and Africa, it still adapted its offerings to meet local tastes when expanding to London. The ability to maintain a brand’s core identity while making necessary adjustments is key to success in new markets.
3-Operational differences
Each market presents unique operational challenges and understanding these differences is paramount for success. For instance, Baker & Spice, a brand that originated in Dubai, had to adjust its service models and operating hours to align with local customs and consumer behavior when entering new markets. Flexibility in business operations can significantly impact the success of a brand as it navigates diverse markets. Being adaptable not only enhances customer satisfaction, but also improves operational efficiency.
4-Regulatory compliance and supply chain management
Compliance with local regulations is a non-negotiable aspect of international expansion. This includes adhering to food safety standards, navigating import regulations and understanding local labor laws. Brands like KCal, known for its commitment to healthy dining, have successfully managed their supply chains to ensure consistent product quality across borders. Whenever possible, sourcing ingredients locally not only reduces costs but also supports sustainability, which is increasingly important to consumers worldwide. Managing supply chain logistics efficiently while adhering to local regulations can make or break a brand’s international success.
5-Standing out amongst the competition
Entering new markets invariably means facing established local and international competitors. Differentiation through unique offerings, superior customer service and consistent quality becomes crucial. Alshaya Group, with its diverse portfolio of dining concepts, stands out in competitive markets by offering distinctive experiences and maintaining high standards. Their approach highlights the importance of understanding local competition and finding ways to offer something uniquely appealing. Standing out in a crowded marketplace requires a deep understanding of local consumer behavior and a commitment to excellence.
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6-Innovation and learning Exposure
Exposure to diverse markets fosters innovation, allowing brands to learn from different consumer preferences and business practices. This can lead to the development of new products or services tailored to local tastes. For instance, Just Falafel has used insights gained from various markets to continually refine its menu and service offerings, ensuring it stays ahead of trends and meets customer expectations. Innovation driven by market insights is a powerful tool for brands seeking to establish a strong foothold in new territories.
7-Building brand perception and recognition
Establishing brand awareness in a new market requires time, effort and investment. Effective marketing and public relations campaigns are essential to building a strong brand presence. When Al Baik, a popular fast-food chain, expanded into new regions, it invested heavily in storytelling to highlight its brand values, helping to forge strong connections with local consumers. Building a brand’s reputation in a new market is a long-term endeavor, but it is crucial for sustained success.
8-Revenue diversification
Operating in multiple markets reduces reliance on any single economy, thereby mitigating risks associated with local downturns. Arabica, a brand with Japanese roots and significant presence in the Middle East, exemplifies how geographical diversification can provide stable and predictable revenue streams, contributing to long-term financial health. Diversified revenue sources can help brands weather economic fluctuations and maintain financial stability.
9-Enhancing brand equity
Successfully expanding into international markets significantly boosts brand equity. Global recognition increases a brand’s value, attracting more customers and investors alike. By establishing itself in multiple, high-profile locations, Arabian Tea House, has enhanced its brand equity, positioning itself as a leader in the upscale dining segment. Strengthening brand equity through international expansion is a strategic move that can pay dividends in the long run.
10-Economies of scale
Expanding internationally can lead to economies of scale, since centralizing operations and bulk purchasing can lower production and marketing costs. Café Bateel, a Saudi-grown concept, has streamlined its operations across the UAE, Saudi Arabia and Oman, achieving cost efficiencies that make the brand more competitive. Economies of scale not only improve profitability but also allow brands to offer better value to customers.
11-Financial risks and investments
International expansion requires substantial financial investment. Careful evaluation of potential returns is essential to mitigate financial risks. Kinoya’s measured approach to growth, which prioritizes financial stability and a gradual build-up to profitability, illustrates how meticulous planning and patience can reduce financial risks. Sound financial planning is essential for sustainable growth in new markets.
12-Partnerships and joint ventures
Collaborating with local partners can be a game-changer for brands entering new markets. Local partners bring invaluable market knowledge and help navigate complex regulatory landscapes. Sunset Hospitality’s strategic partnerships have allowed it to leverage local expertise, while maintaining brand standards, facilitating successful market entries. Partnerships can provide the local insights and resources needed for a successful market entry.
With careful planning, strategic partnerships and a willingness to adapt, the potential rewards for taking an F&B brand international can be immense. The lessons learned from successful international brands that have thrived in the Middle East provide valuable insights for local brands thinking about venturing abroad. Looking ahead, we can expect to see many more ‘local’ brands embarking on this exciting journey and contributing to the global culinary landscape.