Egypt: The gateway between the Middle East and Africa | Global Franchise
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Tuesday 5th July, 2022

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Egypt: The gateway between the Middle East and Africa

Insight

Egypt: The gateway between the Middle East and Africa

Many franchisors utilize Egypt’s geographical positioning as part of a wider development deal

The Egyptian franchise market is becoming an increasingly attractive one to international brands, ever since the country opened its borders to foreign investment with the Open-Door Policy of 1973. Up until this point, domestic businesses mainly catered to Egyptian consumers with products and flavors that they were accustomed to.

With this bold new direction for Egypt’s economy, however, the floodgates were truly opened. The first international fast-food brand to open in the country was the English concept Wimpy, but the Egyptian scene is now rife with many of the largest U.S. brands vying for a slice of this unsurprisingly hot franchise landscape.

Donuts in demand

Two of the most recent international development stories centering on this region concern a couple of North America’s largest confectionary brands: Krispy Kreme and Duck Donuts.

Krispy Kreme opened its first Egyptian store back in August in collaboration with Americana Group; a franchisee that has operated Krispy Kreme locations throughout the Middle East since 2007. The location opened in the fervent and dynamic hub of Cairo, and has since showcased the Egyptian embracing of Western brands.

“The world continues to crave Krispy Kreme, and we continue expanding in a disciplined manner to feed and fuel that craving, growing our business and enhancing lives through the joy that is Krispy Kreme,” said Mike Tattersfield, CEO of Krispy Kreme, at the time of this launch. “We’re thrilled to serve awesome, fresh doughnuts in Egypt with Americana, our valued franchise partner in the region.”

Duck Donuts, meanwhile, signed a considerable master franchising deal with Master Foods in May to bring 25 locations to Egypt over the next five years. Like many franchisors, Duck Donuts dipped its toes into Middle East development prior to this growth, and soon learned that this is a market that leading international brands simply cannot ignore.

“We opened in Dubai in the fall of 2020, and that kick started the buzz, interest, and awareness for our brand throughout the Middle East,” explains Betsy Hamm, CEO. “Duck Donuts also has a location in the Kingdom of Saudi Arabia, so our company objective is to continue pushing for growth in the region, as well as Egypt opening the path to North Africa expansion.”

The importance of selecting the right local partner is universal when it comes to master franchising, but this is particularly crucial in the Middle East where organizations and families have deep ties to local real estate and potential sites that brands can use to open new locations. Duck Donuts certainly didn’t overlook this fact when selecting Master Foods as a growth partner.

“Our franchise partners are local, and have strong ties and relationships in their hometown of Cairo. They understand the audience and the market. The master franchisees also own Master Express in Egypt, a managing group of retail stores including premium gas stations and convenient stores,” explains Hamm. “Their positioning in retail and real estate was a key factor in the decision; their existing network will allow for quick growth and allow for Duck Donuts to have access to prime locations across Egypt.”

Wider growth potential

Many use Egypt as a gateway between the Middle East and North Africa, though the country is certainly worthy of investment in its own right. After all, the country’s fast-food market alone is estimated to be worth upward of $800m, and increased spending power among its citizens has made development even more viable for franchise brands; Egypt has an estimated five million “A-class” consumers who have a monthly average income above $1,200, which is more than double what it was just 10 years ago.

That being said, utilizing Egypt’s consumers and geographical positioning as part of a larger franchising deal is certainly not without its benefits. This is the exact path that Happy Joe’s Pizza & Ice Cream has chosen to go down, with a recent master franchise agreement signed between the brand and H.J. Happy Joe’s for Restaurants L.L.C., meaning that the Iowa-based concept will soon increase its footprint by over 50 per cent across 10 new markets in the MENA region.

“Since the master franchisee was planning to have all 10 countries and given the potential for some of those countries to have a quick change in political party leading the government, we decided to put them all into a pool with targets for each country,” explains Tom Sacco, CEO of Happy Joe’s. “However, if changes in government occurred that were not in favor of American businesses for example, then we would have flexibility. The Happy Joe’s that couldn’t be built in one country could be built in other countries without the master franchisee being in breach of their contract.”

Similar to Duck Donuts, Happy Joe’s was keen to find a local partner that was familiar with local customs and consumer habits to really capitalize on the opportunity.

“It is very important for our team to understand the culture of the country that we are doing business in. Having a master franchisee that can assist and support that process as we currently do with the El Batran Family is critical to the success and reception of the American concept. Based on my experiences, I know it’s extremely important for a U.S. brand to respect and be familiar with the culture in the country where they are expanding.”

Egypt by the numbers

Population: 104 million
GDP: $280bn
Size: 1.1m square kilometers
Primary language: Egyptian Arabic

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