Last updated: February 7, 2013 2:32 pm

Just Falafel’s taste for fast expansion

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Just Falafel, Monmouth St, Covent Garden.©Rosie Hallam

When Just Falafel opened a store in Abu Dhabi in 2007, the fast-food outlet offered three versions of a falafel sandwich: traditional, Greek-style and Indian.

Now the young company offers 10 international versions, including a Japanese take on the ubiquitous stuffed pita-bread pocket.

Just Falafel, which opened its London store in Covent Garden this month, hopes that transforming the humble bean-based snack into a multi-cuisine menu will allow it to challenge the dominance of high-street chains.

Via franchise partners, it plans another 19 branches across the UK and Ireland, including in university cities such as Exeter and Cambridge.

The fast-growing enterprise, which says it is hiring three people a day, has tapped into the Gulf’s obsession with on-the-go eating. Increasing revenues threefold every year, the group doubled profit to about $3.5m last year and is considering an initial public offering to raise its profile further.

Despite concerns about obesity and diabetes, western chains have saturated the Gulf with fatty burgers and pizzas, helped by the prevailing mall culture. The market in Saudi Arabia and the United Arab Emirates is worth more than $6bn a year.

Bucking the trend, however, Just Falafel is one of a handful of regional companies bringing homegrown concepts to an international clientele.

“Dubai is second only to London in terms of international brand penetration,” says Fadi Malas, chief executive of Just Falafel. “As we learnt more about franchising, we thought if they [western chains] can come here, why can’t we do the same [and expand in the west.]”

Just Falafel’s expansion is part of a small, but growing, group of regional food retailers and producers selling their goods globally, a rare challenge to the one-way traffic of international brands dominating the food courts of Gulf malls.

Some restaurants are expanding outside the Middle East, such as Asian chain Noodle House, the favourite restaurant of its owner, Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum.

The chain, operated by the Jumeirah hotel chain, already has 18 outlets in nine countries across the Middle East and south Asia. It is developing 94 outlets in locations from the UK to Russia, with up to 10 set to open this year.

Okku Dubai, co-owned by expatriate Marcus Thesliff, a Japanese restaurant beloved by the emirate’s party crowd, is opening in London later this year amid plans to roll out in Hong Kong and Las Vegas.

Some Gulf consumer products are also proving their ability to travel. Bateel, owned by Saudi investors, started 25 years ago selling the dates produced from family farms near Riyadh and has since expanded in to other gourmet natural foods, as well as opening cafés.

With 40 boutiques and seven cafés in 14 countries, it is opening another four stores and five eateries this year, with a focus on Europe.

Tina Memic, Bateel’s deputy general manager for retail, says annual sales growth amounts to 40 per cent, selling 2,000 tons of dates and 300 tons of luxury chocolate last year.

Lebanese confectioner Patchi, renowned for elaborate chocolate gift boxes, now sells its sweets in 140 stores in 35 countries, from Canada to Brunei, since opening its first store in Beirut in 1974.

Sana Toukan, regional research manager for market researcher Euromonitor, argues that these well-established companies benefit from brand recognition among Arabs in Europe, as well as increasing global tourism from the Middle East.

“Just Falafel is also likely to follow in the footsteps of Bateel with a large and expanding Arab expatriate base living in London,” she says.

But Middle Eastern brands could also face resistance. A “large portion” of westerners might not find much appeal in Middle Eastern food, she warns, posing “a risk to growth of these brands abroad”.

Bateel’s Ms Memic concedes that a big challenge has been persuading global customers of dates’ gourmet potential. The company has therefore been marketing dates as a superfood, like a banana, helping drive sales to health-conscious markets looking for nutritious treats.

Mr Malas of Just Falafel has also faced difficulties in persuading retail managers to disassociate falafel from its street food heritage. He is stressing the nutritional aspect to his vegetarian sandwiches and burgers as a means to lure new customers. His chain offers baked, as well as deep-fried, bean patties.

Mr Malas believes there is interest in Arabic food, illustrated by the growing number of Middle Eastern restaurants, but the offering is “fragmented”.

“We organised it into a franchise concept – that differentiates us from the others,” he says.

There is already a precedent in the shape of Just Falafel’s most direct competitor Maoz, an Israeli-founded chain of vegetarian eateries with more than 20 outlets in the US and Europe.

Milos Ryba, senior emerging markets retail analyst at Planet Retail, a London-based consultancy, says the market in the UK is highly competitive, but opportunities for newcomers remain.

“People want to have fast, but healthy food,” he says. “That is a big trend.”

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