BurgerFi's (US) On-trend Brand Has Appeal in Saudi Arabia
25 Feb 2021 - To Thamer AlHathal, BurgerFi is a “revolutionary restaurant,” which is why the longtime oil and gas industry executive decided to create a restaurant group solely to bring the fast-casual burger chain to Saudi Arabia.
AlHathal, an engineer who spent 10 years with Dhahran-based Saudi Aramaco in the country’s Eastern Province and also developed several ventures in construction and manufacturing, said BurgerFi is part of his diversification strategy and as CEO of Food Supplies Co. he thinks the concept is the right fit to expand in the Saudi market. AlHathal, along with Director of Operations Waleed Naif AlHathal, plan to open six restaurants in the Eastern Province, starting with Khobar City and a location at commercial property Burj Alfardan.
“The Middle East is always looking for the best new concepts and making sure we are keeping up with trends. The trend of clean ingredients and being able to ‘pronounce’ ingredients that are in your food is a trend that is here to stay,” said AlHathal. “We knew BurgerFi was a revolutionary restaurant and was the perfect restaurant to be unveiled in Saudi Arabia.”
BurgerFi, a better burger concept founded in 2011 and now with 120-plus locations, uses beef that is free of hormones, steroids, antibiotics or other additives. The quality of its products will resonate with Saudi consumers, said AlHathal, and stand up well against competitors such as Shake Shack, which has a handful of restaurants in the capital city of Riyadh. The rest of the American offerings are largely fast-food concepts; he expects BurgerFi’s “better for you” brand position to prove attractive in the local market.
“Saudi Arabia always loves new, and newness paired with the accelerated evolution of better burger concepts is ideal for Saudi Arabia,” said AlHathal as he also noted the “huge demand” for restaurants in a culture where dining out is routine. “It’s a constant competition to stay relevant and be informed on what the next big thing will be, and we are pretty sure it will be BurgerFi.”
AlHathal doesn’t anticipate making any alterations to BurgerFi’s menu or model, at least not initially. Instead, the plan is to see how customers respond and pivot as needed. “In my opinion, there is no need to change something before giving it a tried-and-true effort,” he said.
Food Supplies Co.’s six-unit deal is just the start for BurgerFi in the kingdom, added AlHathal, and “we absolutely think we will continue to expand” the brand. Food Supplies Co. is part of a larger group with companies in various sectors in the Eastern Province and Gulf Cooperation Council countries. While the focus is on BurgerFi, “our eyes are on other franchising opportunities in coffee brands,” he said.
More expansion on tap
The jump to Saudi Arabia is likewise just the start of international growth for BurgerFi, which outside the United States has two restaurants open in Kuwait City, Kuwait, and one in Guaynabo, Puerto Rico, as part of multi-unit development agreements signed in 2016 and 2019, respectively. CEO Julio Ramirez, who joined the brand in October as part of its acquisition by Opes Acquisition Corp. for $100 million, introduced Burger King to more than 10 countries during his 26 years with the brand and said he’s now putting that international experience to work at BurgerFi.
“We’re warming the oven, as I like to say,” said Ramirez of ongoing conversations with potential partners in Mexico and Latin America, where he has many contacts from his time as president of Burger King’s Latin America/Mexico/Caribbean division. When we spoke in late January, Ramirez, 66, noted he was about to get his second COVID-19 vaccination shot and would start traveling soon.
BurgerFi “plays to a variety of demographics,” Ramirez said, and thanks to McDonald’s and Burger King, which have locations in well over 100 countries, consumers around the world are already familiar with American burger brands. “Our brand sits very well atop that,” he said, and demand for grass-fed, grain-finished beef is prevalent.
Local competitors in the better burger space are already starting to pop up, Ramirez pointed out, “so now is the time to strike.” “I think the guest outside the U.S. will spend more time eating at establishments like ours,” he said.
At one point, BurgerFi did have two restaurants open in London after signing a development deal in 2015 with United Kingdom group Ground Round. Those locations closed in 2018 but Ramirez said the company is looking at England for future development. He wants international partners who are well-capitalized, have retail, hospitality or food experience, know the market and “pass the eye test,” which he said means they work well with U.S. companies.
Though the group in Saudi Arabia didn’t work directly in foodservice, Ramirez noted AlHathal and Food Supplies Co. have “the capital and the knowledge” of the real estate market in the country, which outweighed their lack of restaurant experience.
International expansion won’t come at the expense of domestic development, stressed Ramirez, and BurgerFi is plotting focused growth as it extends its reach outside Florida, where 40 percent of the brand’s units are located. Working its way up the Eastern Seaboard, BurgerFi will create “cluster cities,” as Ramirez called them, by opening company restaurants in Atlanta, Charlotte, North Carolina, Nashville, Tennessee, and Richmond, Virginia, then adding franchisees to fill out those markets.
More brand exposure will come through Reef Kitchens, the virtual kitchen operator that places modular kitchens in parking facilities for delivery-only service. BurgerFi began working with Reef Kitchens in 2020 to add its concept to the lineup of brands at its facilities. Reef has dozens of its units placed in more than 20 major markets across the country.
The acquisition by Opes, which also took BurgerFi public, resulted in “a big pile of money that can go into development,” noted Ramirez, and will also help the company undertake consumer research on guests in its heavily penetrated markets to inform the marketing strategy, drive sales and ultimately improve unit economics. Operating and buildout costs are another area being examined with the help of Miami-based consulting firm Profitality.
The systemwide average unit volume was $1.4 million in 2019; BurgerFi’s investment range is $613,600 to $987,250 for domestic stores.