04 July 2013

BEIRUT: Few homegrown businesses have managed to expand as rapidly as Wooden Bakery has done in the midst of the past few years’ sluggish economy. The familiar windmill emblem can now be seen across the country, as well as in Saudi Arabia, and very soon in other Gulf states.

Over the past five years, the company has grown by 20-25 percent a year in terms of both revenues and profits, putting it among the fastest growing Lebanese companies.

The firm’s CEO Assaad Bou Habib spoke to The Daily Star about the business’ success from his office at the company’s headquarters and factory in Antelias, north of Beirut.

As the interview was taking place, Bou Habib’s brother was finalizing negotiations for expansion into Qatar, the UAE and Oman. Also, unfazed by the current economic downturn, the company is investing up to $15 million in a new industrial facility in Shekka, north Lebanon.

The company’s key for success, Bou Habib argued, is entirely subscribing into a perfectionist business model that keeps a close watch, develops and modernizes every segment of the business, whatever the cost may be.

“Investing in perfecting your business will always outweigh any costs ... when people see how well good products are ... your sales will flourish and any investments you make will bring a high return,” he said.

One of the most important factors is Wooden Bakery’s research and development department, which also runs a top-notch test lab that maintains stringent quality control and invents recipes among other tasks.

“Such things are fundamental and function like an internal audit for your work, your production ... It will allow you to see yourself for real and when you find any [shortfall] in any aspect, for sure you will be able to find solutions,” he said.

Instead of expanding directly, over 80 percent of Wooden Bakery shops are operated through franchises. Numerous products ranging from pita bread to chocolate cakes to cold cuts are dispatched through the mother company itself.

Even though that means dealing with the difficulties of managing an extensive chain, it comes with the benefit of economies of scale and guaranteeing high quality and standard offerings, wherever the franchisee maybe.

“Our main duty is to make the life of our franchisees easier. All products go to the branches ready mix, precooked and extremely user friendly.”

And the rewards have been high both for Wooden Bakery and franchisers. All branches have become profitable, according to Bou Habib, and most franchisees end up expanding as many as three or four shops.

Today the firm runs 30 branches and six more are due to open soon. It distributes to some 5,000 shops, groceries, restaurants and supermarkets.

Asked whether being a family business creates difficulties in running a rapidly expanding business, Bou Habib said the firm had built what could be described as a hybrid governance system.

“It’s a family business governed like a corporate,” he said explaining that like a corporation, the company’s board decides on matters by voting.

Having reaching its full capacity at its Antelias plant and with the Shekka factory in development, the company intends to launch factories in the south and Bekaa Valley soon. Market share is expected to rise rapidly above the current 15 percent.

But the current crisis has affected Wooden Bakery’s future plans,

With customers shifting from premium to basic items, the company soon plans to launch a new lower-cost product range.

“This range of products will focus on replacing expensive imported goods [with local products],” Bou Habib said. “Taking into consideration transportation costs and local dealerships commissions, many goods are reaching Lebanese consumers at very expensive prices.”

A range of healthy cereal bars will be launched soon, he said, and will be marketed at half the price of their international counterparts while offering customers a higher quality product, Bou Habib said.

Although Bou Habib dismisses the myth that Lebanon’s industry cannot survive, he admits the lack of state support can deter investors considering new ventures.

“I believe the most beautiful line of poetry that you can read is one that has perfect rhyme, form and meaning. ... Whatever business does that and satisfies the five senses will always see more success,” he added.

Copyright The Daily Star 2013.