The waft of zaatar manaeesh coming from the oven where he used to make the traditional thyme pizzas back home in Lebanon always reverberated in Jihad El Eit’s mind, even while working at a Nokia distribution company in Pakistan in the late 2000s.
It was partly this nostalgia, and partly an itch to set up his own business, that drove him to set up Man'oushe Street in Dubai in 2010 as a side business, fulfilling a life-long ambition to enter the food and beverage sector.
Manoushe is a “quintessential” breakfast that was a natural fit for his first venture, he says. But his ambition goes further than just being an F&B entrepreneur.
“I want to be the McDonald’s of the manaeesh,” says the 41-year old Lebanese-Argentinian founder and chief executive of Man'oushe Street.
“I want to do what others have succeeded in doing, especially in the West. I want to be in every street and every country. Our food, our cuisine, our menu are accepted everywhere.”
It has been a long journey since Mr El Eit started investing in the business with friends and family members in 2010. He came back from Pakistan in 2013 to Dubai to focus solely on his F&B business.
Now Man’oushe Street is active in around 33 locations in the UAE, Egypt and Qatar, and is busy expanding into Bahrain, Jordan and Oman, with an ambition to have a total of 50 outlets open by the end of this year.
“I always said I wanted to enter this segment so that I can get the bigger market share and to really maximise the service and to be excellent in everything that we are providing,” he says.
“When we say a chain we always refer to Western brands, so what I am trying to do, I am really trying to create a local brand and penetrate different countries and different regions.”
Out of all the F&B options, he chose the quick service restaurant (QSR) concept for a number of factors. He didn’t want to enter the café and fine dining segment because they didn’t offer the flexibility he sees in QSR.
“The beauty of the QSR concept is that it is low in capex and you can roll into so many locations and the strength of succeeding is distributed among a number of locations and the number of people who visit QSR are much more than those of café or casual dining,” he says.
Mr El Eit was able to set up his business – which turned profitable in 2015 - without the help of outside financial investors, a move he does not regret.
“When you have a company that is starting up it is much easier to invite people to invest with you through family and friends rather than going to institutions or professional companies,” he says. “For the future, it might be an option for us once we reach a certain scale to really start talking to private equity or financial institutions to bring them as investors to continue our growth and our story.”
So far, relying on his own resources has worked for him. The company’s revenue grew 18 per cent last year from 2016 and is forecast to expand 25 per cent this year with the help of new openings in the UAE and abroad.
Mr El Eit says the ingredients of his success include competing on price, and creating a hometown feel in his restaurants and locations, which are also his biggest challenge because he has to fight the stigma of being just a local brand.
“The challenge is always related to location, and location is very difficult especially because of the rent,” he says.
“Sometimes they look at you as a local brand and they want you to be a very established brand, they want you to be an international brand to take prime locations.”
His other two challenges are attracting the right kind of employees and finding money to expand his operations. Having enough cashflow to not just get a business started but ensure that it’s sustainable longer-term is one of the key challenges of any entrepreneur, he says.
“Profitability is king but cash-flow is King Kong,” he says. “You have an entrepreneur inviting environment in Dubai so you have a lot of ideas and you have a lot of restaurants that open but the challenge is to stay open. Our business model has been proven to be a bulletproof model especially during the downturn of the economy. I am here to sustain what I have and really grow it organically.”
But the profitability of the F&B business in the UAE and the GCC overall is being tested with the introduction of the five per cent VAT in the UAE and Saudi Arabia this year. The levy is expected to dent sales at least in the beginning while consumers get used to the tax.
“Consumers became more price-conscious and particularly cut on higher value added products,” said Euromonitor International analyst Monique Naval. “However, the new cost that the industry has to bear will increase competitiveness and [in the medium to long term] benefit consumers through optimised products’ portfolios, and lower input costs as everyone in supply chain becomes more price conscious.”
For its part, Man'oushe Street does not expect its business to be affected much by VAT because of its price segment.
“I was worried but people still want to eat, especially in the QSR [segment],” Mr El Eit says.
“In January we didn’t see any impact, on the contrary it was positive.”
Differentiation will help brands to survive, according to Matthew Green, head of research and consulting at CBRE Middle East.
“With competition in the F&B market now fiercer than ever, local landlords are increasing looking for differentiation in their retail mix, and that is leading to increasing demand for F&B brands that offer new ideas and experiences to the consumer,” he says.