REPORT WRITING

Fast Food Franchising in the Gulf Cooperation Countries

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Introduction:

Fast food franchising has gained tremendous popularity worldwide, with franchises spreading across
different countries and regions. The Gulf Cooperation Countries (GCC) are no exception, and fast food
franchises have gained a significant share of the food industry in the region. The GCC countries consist of
six countries, namely, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates
(UAE). This report aims to provide a detailed analysis of the fast food franchising industry in the GCC
countries, including market size, growth potential, competitive landscape, and future prospects.

Market Size:

The GCC fast food franchising industry has witnessed significant growth in recent years. According to a
report by Alpen Capital, the fast food market in the GCC region was valued at USD 17.5 billion in 2019
and is expected to reach USD 21.1 billion by 2024, growing at a CAGR of 3.8%. The growth of the
industry is attributed to several factors, including a growing population, changing lifestyle, and increasing
disposable income.

Growth Potential:

The fast food franchising industry in the GCC region has tremendous growth potential. The region's
population is expected to reach 60 million by 2050, with a high percentage of young people. This
provides a massive market for fast food franchises, as young people are the primary consumers of fast
food. Additionally, the GCC region is witnessing an increase in tourism, with several international events
hosted in the region, such as the Dubai Expo 2020. This presents an opportunity for fast food franchises
to expand their reach and cater to a diverse consumer base.

Competitive Landscape:

The fast food franchising industry in the GCC region is highly competitive, with several local and
international franchises competing for market share. Some of the prominent international fast food
franchises operating in the region include McDonald's, KFC, Pizza Hut, Subway, and Burger King. Local
franchises such as Al Baik, Hardee's, and Texas Chicken are also popular in the region. The competition
in the industry is intense, with franchises competing on factors such as price, quality, menu diversity, and
customer experience.

One example of a fast food chain in the GCC region is Al Baik, a local Saudi Arabian fast food chain that
is very popular in the region. Al Baik is known for its signature fried chicken, which is often compared to
international chains such as KFC. The chain was founded in 1974 and has since expanded to several
locations in Saudi Arabia and other GCC countries, including Kuwait and Bahrain.Al Baik's success in
the GCC region can be attributed to its affordable prices, high-quality food, and a strong brand image that
resonates with locals. The chain has also invested in technology to enhance the customer experience, with
features such as online ordering and delivery services. Al Baik's success has inspired other local fast food
franchises in the region, and it remains a popular choice for fast food consumers in the GCC.

Fast Food Franchising Process in GCC:

The fast food franchising process in the GCC region follows a similar pattern to that of other regions.
Generally, fast food franchisors in the region seek out potential franchisees who are interested in owning
and operating a fast food franchise. Once a franchisee is selected, they are typically required to pay an
initial franchise fee and agree to follow the franchisor's business model, which includes using their
trademark, operating procedures, and supply chain. The franchisor provides support and training to the
franchisee, including assistance with site selection, restaurant design, and ongoing training for employees.
The franchisee is responsible for the day-to-day operation of the restaurant, including managing staff,
inventory, and finances. The franchisor typically collects ongoing royalty fees, which are a percentage of
the franchisee's sales. The franchising process in the GCC region is regulated by the local governments,
which may require franchisors to register with regulatory authorities and follow specific rules and
regulations.

Contribution of Fast Food Franchising in GCC Economy:

The fast food franchising business is making a significant contribution to the GCC economy. The industry
is a major employer, providing jobs to thousands of people in the region, both directly and indirectly. Fast
food franchises require staff to work in their restaurants, and also need suppliers to provide food,
equipment, and other goods and services. This has a multiplier effect on the economy, creating additional
jobs and income.

Fast food franchising is also generating significant revenue for the GCC economy. The industry has
grown rapidly in recent years, with a market size valued at USD 17.5 billion in 2019, according to a
report by Alpen Capital. The fast food industry is expected to continue growing, providing a source of
revenue for governments in the form of taxes, fees, and other forms of revenue. The industry is also
contributing to the development of local businesses in the GCC region. Local franchises, such as Al Baik,
are gaining popularity and expanding, creating a source of pride and identity for local communities.
Franchises are also helping to promote entrepreneurship, as more individuals seek to own and operate
their own businesses. Additionally the fast food franchising industry is contributing to the growth of the
tourism industry in the GCC region. As the region becomes a popular destination for international events,
such as the Dubai Expo 2020, fast food franchises are expanding to cater to the diverse needs of tourists.
This, in turn, is creating additional revenue and employment opportunities in the region.

Risks Associated with Fast Food Franchising Industry in GCC:

While there are many opportunities for fast food chains in the GCC region, there are also several risks
associated with the industry that are relevant to fast food franchising industry. Some of these risks
include:

Health Concerns: Fast food chains are often associated with high levels of salt, sugar, and unhealthy
fats, which can lead to health concerns such as obesity, heart disease, and diabetes. As consumers become
more health-conscious, fast food chains may face increased scrutiny and regulatory pressure to offer
healthier menu options.

Economic Volatility: The GCC region is heavily reliant on the oil and gas industry, which can be subject
to economic volatility. Changes in oil prices and political instability can impact consumer spending,
leading to a decline in sales for fast food chains.

Labor Shortages: The GCC region relies heavily on foreign labor, and labor shortages can impact fast
food chains. Changes to immigration policies, visa restrictions, or other factors that limit the availability
of labor can impact the ability of fast food chains to hire and retain staff.

Future of Fast Food Franchising in GCC:

In conclusion, the future of fast food chains in the GCC region looks promising, with significant growth
potential in the coming years. The industry is expected to continue growing, driven by several factors,
including a growing population, changing lifestyle, and increasing disposable income.

One trend that is likely to shape the future of fast food chains in the GCC region is a growing demand for
healthy food options. Consumers are becoming more health-conscious, and fast food chains will have to
adapt by offering more healthy food options on their menus. This trend is already evident, with some fast
food chains in the region already offering salads, vegetarian options, and other healthier menu items.

Another trend that is likely to shape the future of fast food chains in the GCC region is the growing use of
technology. Fast food chains will have to invest in technology to enhance the customer experience and
increase efficiency. This includes online ordering and delivery services, mobile apps, and digital menus.
The use of technology will also allow fast food chains to collect data on customer preferences and use this
information to personalize their offerings.