UAE entrepreneur launches coffee shop franchise

Najib Taleb Nasser says his Grano franchise offers lower startup costs than international coffee brands in a business where 25% margins are possible.

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By  David Ingham Published  October 6, 2002

The Middle East could soon have a major coffee shop franchise of its own if plans being hatched by a UAE entrepreneur come to fruition.

Najib Taleb Nasser, owner already of several food outlets in the UAE, is now putting together plans to create a string of licensed ‘Grano’ outlets around the Middle East modelled on the lines of the first Grano in Dubai’s Wafi Centre.

Nasser is seeking to sign up individuals or small groups of investors as franchisees. One of the key selling points of Grano, he says, is that the startup costs will be much lower than those associated with international designer coffee franchises. “We’ve come up with a franchise company where [upfront] investment is low compared to other companies, where you to have to have at least Dhs1 million, even $1 million,” says Nasser.

Franchisees pay an initial upfront sum of US $10,000 to Grano and receive training and startup advice in return. Once up and running, they pay an annual royalty fee of 8% of turnover, plus a further 3.5% of turnover that goes into a group advertising ‘pot.’

Nasser says he is confident that a franchisee can have a Grano outlet in a good location up and running for around Dhs450,000. “If you think about any other coffee business [meaning international brands], it’s not less than one million [dirhams], not less,” he claims.

Nasser is confident that a well run coffee outlet could expect to make a 25% operating margin. “If the individual [franchisee] chooses the right location and the right management, he can make a reasonable amount of profit,” he says.

Despite Grano’s possible cost advantage, one of the reasons why franchisees take on expensive international brands is to acquire a ready made name. It’s perhaps no coincidence, therefore, that the Grano look and feel bares a striking resemblance to those of the international designer coffee shops it will inevitably be competing with. One definite winner for Grano could be the presence of notebook PCs that customers can use to wirelessly surf the internet, for Dhs14 per hour.

The timing of Grano, Nasser says, is nothing to do with the recent grass roots Arab boycott of American products, a boycott that has particularly focused on American food and drink brands such as Starbucks.

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