In a marketing move designed to outmaneuver its local competitors, the nation's flagship coffee chain Cilantro takes its brand global
No one would have guessed that the quaint little coffee shop that opened its doors in Zamalek in 2000 would grow to become the nation's largest local coffee chain. Distinguished by its colorful dcor, warm atmosphere and renowned customer service, Cilantro offered its customers something new in Cairo: an exceptional variety of food and beverages in a hip setting that feels like home. Customers loved Cilantro, and the chain grew to 12 domestic locations in 2005. It is little wonder then that the successful, homegrown chain caught the eyes of Hesham El-Sewedy, a member of one of Egypt's most prominent business families. El-Sewedy purchased Cilantro's mother company, Delicious Inc., from its original owners, Maher Maksoud and Nader Lahzee in 2005 for a rumored LE 40 million.
Now, despite facing heavy competition at home and with some questioning its ability to survive, the country's flagship coffee chain is making headway in global markets, and opened its first overseas branch in London in June.
Domestic success
Since El-Sewedy took over in 2005, Cilantro has expanded rapidly, from 12 locations in 2005 to 53 in September 2008. With branches all over Egypt, from Cairo to Alexandria, the North Coast and Sharm El-Sheikh, Cilantro has become a hallmark of the country's most fashionable districts and resorts. The chain also plans to begin franchising, as well as provide training, in cities like Port Said, Mansoura, Ismailia, Hurghada and Minya, despite the fact that these areas maintain a lower per capita income than Cairo and therefore have less of a caf culture than the capital.
The secret of Cilantro's ever-growing success, says General Manager Nadine Beshir, is its unique style of management, one that gives the entire business a maneuvering edge. Cilantro currently maintains a very small management team, with no separate offices but simply shared cubicles. Beshir herself has no office of her own and shares her workspace with the entire team. She has no need for an office, she says, as she is always on the road speaking with Cilantro customers and to her staff about new ideas and how to increase sales.
As a result, Cilantro is one of the country's fastest evolving chains when it comes to releasing new menu items. Every 45 days, a new on-table promotion hits Cilantro stores. Combining two new beverages or a new drink with a new sandwich, the on-table promotion is a unique Cilantro feature not often found at other Egyptian coffee chains.
"We run a 'best idea' program where staff in all stores participate in creating new products," Beshir says, proudly showing off Cilantro's new promotion poster for chocolate Nutella coffee with whipped cream. "This is an idea one of our staff members came up with."
Keeping the local market interested, however, is a constant challenge. During the past few years, Cilantro has faced furious domestic competition. International giants like Starbucks, The Coffee Bean & Tea Leaf, Costa and more recently Second Cup, are approaching the local chain's customer base with new marketing techniques, global experience and deep pockets.
Costa specifically has managed to seize some of Cairo's prime real estate ahead of Cilantro, including the Costa shop on the cinema floor at CityStars mall and a two-floor Costa giant on Hassan Maamoun Street in Nasr City. Starbucks is never far away either, having now opened 15 branches in Egypt just two years after entering the market.
"When Starbucks came to Egypt, people were asking if we would even be able to compete," she says. "It might sound arrogant, but we believe we are the leading coffee chain in Egypt -- in terms of the number of outlets, volume, customer perception and loyalty."
Cut-throat competition has driven Cilantro to come up with marketing alternatives to match its rivals, and in 2008 the Egyptian chain decided to break its geographic barriers and go international with the Cilantro brand.
From Cairo to London
Many saw the choice of London as the prime location for Cilantro's newest branch as a surprising one, given the city's already vast array of both global and domestic coffee chains. But Beshir believes the choice was the right one in order to transform Cilantro into a global brand.
"We meant to open side-by-side with other famous brands because we don't shy away from competition," Beshir says. "London is the hub for international brands. When you are there, you are known."
The Cilantro London branch is located on the world famous Piccadilly Street, host to similar caf-style chains as well as upscale shopping malls. Putting Cilantro on one of the world's most famous streets is sure to give the name extra polish, while the company's management felt the warm Cilantro atmosphere would be much appreciated in a city where the sun rarely shines.
But Cilantro's management admits it was initially difficult to turn the idea into reality. Operating at home with already established connections and expertise was one thing, but recreating this success in a foreign land was another.
Delicious Inc. was required to establish a United Kingdom-registered company, Cilantro Limited, in order to do business there. Work permits could not be issued to Egyptian staff, so UK workers were hired and sent to Egypt to undergo training. Currently, only two of the eleven members of the London staff are Egyptian, both with UK nationality.
Initial expenses also ran high, with 400,000 (LE 4 million) paid toward permits, equipment and general maintenance. But the biggest obstacle facing Cilantro Ltd., Beshir says, was the overall negativity. "People here [in the UK] were trying to put us down," she says. "They would say to us: 'Why are you going to open in London? You are going to embarrass yourself.' Now, I receive phone calls from people in the industry asking me if I can help them open in London."
Plans to expand
Despite the hiccups, however, Beshir says London's Cilantro branch is as good as any in Egypt, and similar, too. The furniture is of a slightly better quality and the menu has different food items based on ingredients available in the British market. But it still maintains Cilantro's core features, even the tiny 'Gig Guide,' a monthly mini-guide available at all Cilantros.
The clientele is certain to vary, however. In Egypt, Cilantro's core customers are what Beshir describes as "young executives" -- affluent 21 to 40-year-olds. In London, the Cilantro branch serves everyone from young executives to senior citizens and tourists.
So far the success of Cilantro's first London branch has caused the company to begin preparing the company for another store opening in Notting Hill, a kitsch London neighborhood made famous by the Hollywood movie of the same name. Because the initial expenses for establishing Cilantro Ltd. have been paid, the cost of opening a second branch will decrease to LE 1-1.5 million, about the cost of opening an average size Cilantro in Cairo.
In addition, Cilantro has created a management squad tasked with evaluating franchise requests and developing a plan for growth both in the Middle East and Europe.
By the end of 2008, Cilantro will have opened branches in Jeddah and Amman, while Beshir is also setting her sights on European countries like Belgium, France and the Netherlands. The company has even declined franchise requests from the United States and Canada, preferring to concentrate on the European and Gulf markets.
While Cilantro's expansion outside Egypt was a bold move, it is a challenge for other Egyptian brands to take the same risks, Beshir says. "A lot of Egyptian brands are not going abroad," she says, "Not because they can't but rather because they don't believe they can." That, she says, is something that needs to change.
By Ali El Bahnasawy
Business Today Egypt 2008
