Sunday, December 4 2022

Farouk Kadous returned to Egypt in 2017 after completing his business degree at Northeastern University in Boston, USA. Initially, he worked in his family’s businesses: his father owned export-oriented textile factories, while his mother’s family founded the multinational energy products and services company, Elsewedy Electric.

Kadous became interested in venture capital (VC) investing. He and a friend set up a small US$1 million fund to invest in early stage start-ups. Back then, the region’s VC industry was much less developed and company valuations were lower than they are today. Many of the fund’s investments have seen significant growth. For example, he left on-demand trucking platform TruKKer for 10 times the original amount.

However, he was eager to open his own business and gain operational experience, which would help him better support his start-up investments. An idea of ​​his sister, an artist, to open a boutique art cafe eventually turned into a fast food brand called Chickin Worx. Kadous admired the American restaurant chain Chick-fil-A and wanted to try something similar in Egypt. The first Chickin Worx point of sale opened in mid-2019.

Jacques Maritz talks to Kadous about his journey so far and the nuances of the Egyptian restaurant industry.

Target the mass market

Kadous wants to build a restaurant chain that caters to the mass market rather than just the wealthy. He says Egyptians who have studied or traveled abroad often want to replicate in the local market the high-end dining concepts they experienced in the West. However, due to low income levels, these businesses have a limited market. “He speaks to a very small number of people in Egypt.”

Chicin Worx targets those earning more than 5,000 Egyptian pounds (around $210). According to Fitch Solutions, the average household income in 2021 was around £6,300 per month. The country has more than 110 million inhabitants. Considering that a meal for a family of four costs around £400, eating at Chickin Worx once a month is a considerable expense for households earning £5,000. “Egyptians are looking for value first, so you have to offer quality at an affordable price,” he explains.

Find the right location

It took time to find the perfect location in Cairo, a sprawling city of over 20 million people. Chicin Worx’s first outlet was in New Cairo, an urban area specifically designed to reduce congestion in downtown Cairo. The first outlet did well and the business was about to sign two more leases when Covid-19 hit. Restaurant restrictions have forced Kadous to regroup. He closed the first branch and canceled the other two potential leases, which cost the company dearly.

Once restaurants were allowed to trade again, he opened an outlet in the Heliopolis district of Cairo, which had a much lower rent than the previous store and targeted a wider group of customers. . While the location was good, the layout was not optimal and problems arose with the ventilation system; the smells from the kitchen filtered down to the restaurant.

Farouk Kadous

A real estate broker alerted him to a site that would be a game-changer for the fledgling business. Located next to a busy highway on the edge of New Cairo, tens of thousands of cars pass through it every day. Having the corporate branding next to that busy road alone was worth the rent. After some negotiations with the owner, the location was secured. Kadous sees this as a prototype for the brand’s stores in the future. It also has drive-thru facilities and has increased brand awareness. Several owners have since offered potential new locations. (The Heliopolis outlet has since been closed.)

People come to dine there

In other parts of the world, fast food restaurants cater to people on the go. Yet, in Egypt, a large percentage of customers prefer to sit down, viewing it as a family outing. Dine-in currently accounts for 60% of Chickin Worx sales. Kadous estimates that the recently launched delivery service will eventually be responsible for 20-30% of sales.

Menu streamlining

Although modeled after Chick-fil-A, which specializes in burgers, Chickin Worx initially only sold bone-in chicken. However, Kadous soon discovered that the frying took too long, around 11-14 minutes. The alternative was to prepare the chicken in advance and put it on the grill until it was purchased, but many Egyptians do not perceive it as fresh.

This, along with an impending price war with more bone-in chicken restaurants opening, prompted a shift to chicken breasts with a much shorter fry time. Although removing bone-in chicken received some pushback, it was the right move as service speed improved and sales increased.

Chickin Worx experimented with various other menu items, including Egyptian specialties, but reduced its offering to focus on burgers and chicken tenderloins, served with fries and a soft drink. Everything is fried but there are plans to come out of the grill. “Our menu must satisfy 90% of customers. When there is a group of five, two usually want to eat grilled chicken, so they end up going elsewhere.

During his travels in the United States, Europe and Dubai, Kadous often tastes other chicken restaurants. He says that while the quality of the chicken is important, the best places he’s come across serve great bread. Chickin Worx struggled to find a decent bread supplier, but has since partnered with grassroots e-commerce start-up Breadfast, which has its own bakery, to supply it with potato buns. (Breadfast is one of Kadous’ venture capital investments.)

Build a data-driven business

Chicin Worx strongly focuses on collecting as much information as possible about its customers. It has QR codes on its tables that customers can scan to complete a survey for which they receive a reward. The company also asks customers for their phone numbers, allowing it to build customer profiles and monitor retention rates.

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