Kuwait’s Alshaya Group targets US brands for expansion

Alshaya Group

• Alshaya operates 70 brands in 4,000 stores across 18 countries
• Its portfolio includes 2,000 branches of Starbucks
• CEO John Hadden noted the UAE’s high real estate and staffing costs

Kuwait’s Alshaya Group, one of the Gulf’s largest franchise owners, is looking at US brands as it plans further expansion across the Middle East.

While the UK was previously the go-to market in bringing brands to this part of the world, Alshaya Group chief executive John Hadden told AGBI the company’s attention has switched to the US.

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“The UK is where we’ve historically got most of our brands from and we continue to focus there on young, growing ones,” he said.

“But when you think about fast food and coffee, the brands in the US are larger and more well known than the ones in the UK.”

Alshaya operates 70 brands in 4,000 stores across 18 countries. This includes the franchise for Starbucks, with 2,000 stores in 17 countries.

The group has also been the franchise holder for US burger restaurant Shake Shack in the GCC and Turkey for the last 12 years. It currently operates 65 outlets and last week opened the first drive-through outside of the US in Dubai.

Hadden explained that the new venue will be replicated across the UAE, Saudi and Kuwait with ambitions to open 50 drive-throughs over the next five years.

Alshaya Group

The site in the Barsha area of the city is next to a new Starbucks, with plans to add another drive-through option from the US in the shape of Raising Cane’s, specialising in chicken fingers. “That area has really taken off,” said Hadden.

Alshaya is soon launching Los Angeles-based luxury activewear brand Alo Yoga in the UAE. It also plans to open a Disney store in the UAE, after opening a flagship in Kuwait in July 2021.

“We’re bringing in one or two brands every single year,” Hadden said.

According to the latest seasonally adjusted S&P Global UAE Purchasing Managers’ Index, the sub-index for new orders jumped to 61.0 in June. It was the fastest rate of expansion since June 2019, fuelled by stronger customer demand, in part due to competitive pricing and promotional offers.

“Some of this growth was predicated on discounts to customers, however. That may not be sustainable in the long-term given that input costs are rising,” said Andrew Harker, economics director at S&P.

Creative Commons/Joy Ito

Hadden said the performance of brands, particularly in the UAE, has been strong, but not without its challenges.

“The cost of running the business is higher than it is in some other markets and particularly around real estate and staffing costs,” he said. 

“But that’s not stopping us. We’ve got so much confidence in this region and the market that we’ll continue to grow and open more stores.”

Last year Alshaya closed its 130 stores in Russia as a result of the conflict with Ukraine. Hadden explained there is no intention to return.

“Not at the moment. We exited the Russia business last year with the brands that we had and we’ve no plans to re-enter,” he said.