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Future of Food Chains

12 Dec 2017 - Aqueel Hassan Chairman of MCR (Pvt) Ltd which owns Pizza Hut, Burger King and TGI Fridays restaurants in Pakistan shared his opinions on the food chain industry of the country, and future plans of selling franchises. This is the first time in Pakistan that a local company has been given permission for master franchise. He explains the future plans of selling the sub-franchise and how they will manage the quality. Hassan serves on the Board of Habib Oil Mills (Pvt) Limited and Millenium Software (Pvt) Limited. He was also the Director of Alfalah GHP Investment Management Limited. Q. In the last couple of years, Pakistan has seen a rise in local fast food chains. Do you think these chains can compete with international brands? A. We believe competition is always healthy whether itís local or international. It keeps us on our toes and pushes us to exceed our customerís expectations to retain them. In Pakistan we have a very exciting QSR scene with a lot of players but in fast casual, the category we are in, thereís very little competition. That is primarily due to the intricate realities of keeping up high standards in a dine-in setting on a daily basis. Our international operations system, hygiene procedures and world class training has helped us to become Pakistanís favourite pizza, something we take a lot of pride in. But ultimately, itís the taste of our food that keeps people coming back again. Q. What do you think is the future of international food chains in Pakistan in light of burgeoning local fast food joints? A. There is tremendous potential for growth in the sector and we are amazingly positioned to take advantage of it. We have been growing continuously for the last 25 years and are aiming to double in size over the next five years. The same can be said for any player in the market who is willing to enter for the long haul. This business is not for people looking to make a quick profit, you need to build your brand, understand the Pakistani consumer and learn to operate reliably with the unique on-ground conditions we have. Q. How have consumer habits changed in the last 25 years in Pakistan? A. Gone are the days when consumers were willing to open their wallets for every novel concept that entered the market. Our consumers are highly savvy who are now exposed to global brands and products through the internet every single day. A fact that holds true even outside major cities. This means that we need to constantly innovate, excite and invite consumers to experience the brand or risk becoming irrelevant. Q. Where does Pizza Hut stand in terms of its competitors in Pakistan? A. We are by far the largest restaurant chain in Pakistan and by order of magnitude the largest pizza chain in Pakistan. The nation has come to love Pizza Hutís pan pizzas and numerous children have their fondest birthday memories at one of our restaurants. This connection with Pakistanís past and its present allows us to be very optimistic about our place and our future in the market; something no other QSR, fast casual or pizza brand can claim. Q. What were the problems that Pizza Hut had to face in all these years as an international brand? What are still present and how do you think they can be solved? A. The realities of operating in Pakistan are very different. The challenges keep changing as well. Once security was the biggest problem, nowadays itís chronic power outages and ensuring reliable supply chain operations. For example, our high quality cheese comes all the way from New Zealand which delivers amazing taste pizza after pizza but it also exposes us to currency fluctuations, changes in customs duties and congestion delays at the port. These affect our margins but are decisions that we took to make the best pizza in the country by far. Q. How much potential does Pizza Hut global see in Pakistan when compared with other countries in the region? A. This year we received the MLFG (Most Loved Fastest Growing) Award from Pizza Hut International and have been the first market in the region to receive it. The growing middle class and evolving consumer tastes are great indicators for the sectorís growth in Pakistan. While other countries around us are starting to approach saturation in terms of penetration, we in Pakistan are only starting to develop our presence in smaller cities. Hence we have a far greater opportunity to expand our restaurant footprint across the nation and permeate a bigger market. Q. What are your future plans in Pakistan? Where do you see Pizza Hut Pakistan in the next decade? A. Pizza Hut in Pakistan has a bright future. We are looking to double our number of stores in the next five years and bringing our world class pizzas to smaller cities and towns. To achieve this target weíre looking for business partners who will own and operate their own Pizza Huts. We have started franchising restaurants as of 2017 and only have 10 spots for new partners in 2018. The company has also promised to go public which presents huge opportunities for the public and us to bring this slice of the hospitality sector to the stock exchange. Q. Where is Pizza Hut Pakistan selling sub-franchises? How does it work?

A. We are offering sub-franchising opportunities across the country with some trade areas already identified. We are encouraging investors to approach us with trade areas that they have already identified and we are advertising ripe trade areas on our website as well. We support our sub-franchisees from business planning to operations and logistics. We help them conduct market analysis, design and build their stores, hire and train teams as well as provide supply chain solutions. This turnkey solution allows franchisees to take on a store thatís ready to go!

Q. What is the criterion for an investor who wishes to purchase the sub-franchise?

A. Weíre looking for business partners with a passion for customer service and the vision and enthusiasm for long-term growth. This is a partnership of more than 20 years and applicants must be committed for the long-run. Running a retail or fast food restaurant requires being hands-on so we encourage applicants who are owner operators.

Prior experience in the industry is not needed as we have a comprehensive on-boarding process and business coaches with extensive experience. I encourage people who are thinking about joining us to reach out to us through our website.


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