Franchisee to close down three outlets

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CraviaCravia, the parent company of UAE franchises Cinnabon, Seattle's Best Coffee, Zaatar W Zeit and Roadster DinerRoadster Diner, will be slowing down its expansion plans. It will be closing down three outlets this year, which will bring the total number of shut down outlets to six since it began operations nine years ago.

"We have some branches that didn't work, whether it's because of the crisis or not is irrelevant," Walid Hajj, CEO of CraviaCravia, told Emirates Business. "Sometimes you make wrong choices in locations, but the idea is to stay healthy instead of digging yourself deeper into the hole. If you have about 50 outlets, you are supposed to have a few that are not working."

"A big mistake that a lot of firms make is that even if they are losing money, they find ways to fix it. For me, although it hurts to close them, it's better to do that than keep sinking money into it."

The company, a wholly-owned subsidiary of Saudi Arabia-based United Group, currently has 46 branches (47 branches in June when it opens its third Roadster DinerRoadster Diner restaurant), and employs 730 people. This year, it has planned only three new openings compared to last year's 20 openings.

"The year 2008 was a very aggressive one for us," Hajj said. "For 2009, even before this crisis happened, we were supposed to slow down the growth of Zaatar W Zeit, Cinnabon and Seattle's Best Coffee and focus more on Roadster DinerRoadster Diner. There will be three outlets of Roadster DinerRoadster Diner this year and beyond that we will have no more plans."

Despite the slowdown in expansion, CraviaCravia is still expecting a 50 per cent increase in sales revenue from Dh80 million in 2008 to Dh120m this year. It will also increase its workforce to 900 by the end of the year and is spending Dh2m-3m more in staff accommodation.

"We expect to have bigger revenue this year because we have built stores towards the end of 2008 and these went operational in 2009," Hajj said.

"Three branches of Roadster DinerRoadster Diner are all opening in 2009. In addition we plan to have an incremental growth of 10-15 per cent."

"Compared to other businesses and industry, we are in a very good shape. We have not let go of any of our employees. What we have done is we look at stores that are not doing so well, which have some redundant staff, and instead of letting them go we moved them to our new stores. We believe that the crisis is temporary but the people that we have on board are permanent. So we want to make sure that they are happy."

Hajj said the company's announced capital is about Dh5m-6m, with an invested capital of about Dh80m-100m. The company, he said, plans to expand it when the "dust settles".

One of the advantages of CraviaCravia, Hajj said, is that it is in a cash business thus it is spared from the pain of collection, especially at a time when most clients are defaulting. "We collect our money immediately," he said. "Although we are not a necessity, we are not expensive restaurants. People can afford us in good and bad times. There is value in what we offer, and when there is value, we will always have customers."

By Karen Remo-Listana

© Emirates Business 24/7 2009