Saudi chicken chain needs more than special sauce to go global
Purveyor of popular nuggets could learn from Jollibee, the Philippine fast-food brand that used acquisitions to build its business around the world
A Saudi chicken-nugget chain is having a breakout moment at the world's fair in Dubai, prompting speculation that it might one day challenge behemoths like KFC and McDonald's. And why not? The world could always use more fried fowl and in more flavours.
But Al Baik and the Abu Ghazalah family that owns it should heed the example of the last non-American fast-food chain to bid for international status.
In the mid-1990s, Jollibee had already bested McDonald's in the Philippines, begun to branch out across Asia and the Middle East — and was plotting to make landfall in America. The expansion ultimately happened more slowly than anticipated, as Jollibee realised it needed a different business formula to become a truly global player. Al Baik might, too.
Full disclosure: My one experience of an Al Baik chicken dinner, in Jeddah 12 years ago, was underwhelming. The friend who took me there insisted it was superior to KFC or McDonald's, which seemed a very low bar. Still, far be it for me to gainsay the judgment of the late Anthony Bourdain, who visited the same Jeddah outlet that very year and declared the nuggets "not bad."
Keep updated, follow The Business Standard's Google news channel
Or ask just about any Saudi. Al Baik is the kingdom's largest restaurant chain, with more than 50 outlets, and its nuggets are the nearest thing to a national dish. The only debate among devotees is over the reason for this success.
Some attribute it to the cooking technique: The nuggets are fried under pressure, or "broasted," a process invented and trademarked by a company in Wisconsin. The method uses less oil than conventional frying and allows the meat to remain moist under a crisp batter.
Other fans swear the secret is in the sauce, a creamy and garlicky concoction they maintain is more to the Saudi taste than any condiments on offer at American chains.
Jollibee partisans in the Philippines and elsewhere view their beloved chain with equal devotion. Its sauces, which tend to be sweeter than the American norm, are drawn from the Filipino flavour palate. Banana ketchup, anyone?
As Al Baik's success is to the Saudis, Jollibee's defeat of McDonald's in the Philippines is a matter of national pride and an article of faith. Jollibee's international expansion strategy was predicated on its appeal to the worldwide Filipino diaspora.
Al Baik, for its part, is counting on the brand recognition it enjoys with tens of millions of Muslims who have sampled its nuggets while on pilgrimage to Mecca. The association, however subliminal, with the hajj cannot hurt.
But, as Jollibee discovered, tastes do not always travel. In 1996, the company's goal was to have about 500 international outlets by 2000. Two decades past that deadline, there are fewer than 300. Or, to put it another way, McDonald's has opened more restaurants in the Philippines (it now has more than 600) than Jollibee has outside the country.
Jollibee realised it needed a different business formula to become a truly global player. Al Baik might, too.
To its credit, Jollibee never allowed its international plans to distract from its domestic rollout. It has twice as many restaurants in the Philippines as McDonald's. There is a lesson there for Al Baik: Always be opening outlets in your home market.
And here is another: If at first, if you do not succeed abroad, try another way. Jollibee CEO Ernesto Tanmantiong has not given up his global ambitions.
As he told Bloomberg News recently, he still aspires to become one of the world's top five restaurant operators. Only now he has a larger menu.
Using the war chest built up from its domestic success, Jollibee has acquired a number of other chains, including Coffee Bean and Tea Leaf, Smashburger, the Red Ribbon network of bakeshops, and bubble-tea company Milkshop.
Tanmantiong will continue to expand his flagship brand: A 7,000-square-foot Jollibee restaurant opened in New York City's Times Square earlier this year. But for Americans who do not take to banana ketchup, he now has other brands from which he caters to non-Filipino tastes.
For Al Baik, then, the key might be never to depend on just one sauce.
Bobby Ghosh is a Bloomberg Opinion columnist. He writes on foreign affairs, with a special focus on the Middle East and Africa
Disclaimer: This opinion first appeared on Bloomberg, and is published by special syndication arrangement.
