Restaurants still find opportunity in the Middle East

More U.S.-based restaurant companies are finding developers in the Middle East, making it one of the strongest regions for international growth of American brands.

Eager regional investors and a strong economy have trumped concerns about unrest in the region, leading a wide swath of U.S. restaurant brands to partner with Middle Eastern companies to open units and expand operations.

The International Monetary Fund’s regional outlook for the Middle East, released in November, pegged economic growth at 5.1 percent in 2012, rising from 3.3 percent in 2011. The region’s oil-exporting countries of Algeria, Bahrain, Iran, Iraq, Kuwait, Libya, Oman, Qatar, Saudi Arabia, the United Arab Emirates and Yemen were expanding at 6.6 percent, “owing to higher oil prices and production,” the IMF reported.

Dallas-based Which Wich plans to open in Qatar, and Mount Olive, N.C.-based Highway 55 Burgers, Shakes & Fries has signed with an Abu Dhabi company to open 15 restaurants starting this year, and has an option for another 70 units.

Highway 55, a ’50s-themed diner, expects to open its first international location in Abu Dhabi in June. Guy Guthrie, Highway 55’s vice president of franchise sales, said Abu Dhabi-based Allied Brothers Co. is the brand’s first international master franchisee, and the company has committed to developing 85 units in the Middle East and North Africa region.

“Any challenges in building our brand overseas will quickly become opportunities with their help and deep knowledge of the region,” Guthrie said in an email.

Beautiful Brands International — which owns the Camille's Sidewalk Café, FreshBerry Frozen Yogurt Café, Rex's Bite Size Chicken and CherryBerry Self-Serve Yogurt Bar brands — expects to surpass 100 units in the Middle East this year, said David Rutkauskas, founder and chief executive of the Tulsa, Okla.-based company.

“I believe the potential is huge for franchises in the Middle East,” he said. “There's a great market for American goods and services, plus governments are encouraging foreign investment into local companies and offering competitive tax and financial incentives to attract outside interests.”

“American brands rule,” said Chris Tripoli, president of A’La Carte Foodservice Consulting Group in Houston, who has worked with concepts in Kuwait; Saudi Arabia; and Muscat, Oman.

The popularity of U.S. brands in general extends to restaurants in particular, Tripoli said. “Many Middle Eastern families tell me eating out is their preferred form of entertainment,” he said. In Saudi Arabia, for example, “there are no cinemas, so dining and shopping are the evening thing to do,” he said. “Malls open late and grocery stores are busiest after dinner. Dining out three times a week isn’t out of the norm.”
 
Still, the region poses challenges for U.S. brands. “Product procurement can become an issue and not all types of American dining segments are popular,” Tripoli said. “The fast-casual style of service is not well accepted yet, and Mexican food isn’t very popular.”