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Foreign food franchises.

There is an upsurge of foreign food franchise in Pakistan lately. A franchise according to the International Franchise Association is a continuing relationship in which a franchise provides a licensed privilege to do business plus assistance in organising, training, merchandising and management in return for a consideration from the franchise.


Pizza Hut, the first in the long chain of fast food restaurant owned by Pepsi Co. entered the local market during the last quarter of 1993. Pizza Hut was set up by a mechanical engineer from Lahore Mr. Manzar Riaz.

The franchise is said to be financed by Arfeen International who owns 33% of the franchise, 33% by Khurshid Hadi, Chairman of Bankers Equity and the remaining by Manzar Riaz, the company's Chief Executive and others. According to Manzar Riaz, Pizza Hut's target is focused on 'service, quality and cleanliness' or SQC and is targeting the upper and upper middle income segment of the society.


KFC, another chain owned by Pepsico. was introduced to the local market during the first quarter of 1997 with much publicity and since the product itself is known worldwide, the local reaction was overwhelming. Brought in by Artal Group, a privately owned food company with annual sales of over US$3 billion, the company has earmarked US$ 110 million dollars for the industry in Pakistan, $40 million of which will be spent in establishing chain of KFC restaurants in the major cities of the country and the remaining will be invested in foods, within the next five years.

The KFC plans to open 30 KFC outlets by the year 2000 creating direct employment for over 3000 while on the other hand it will help in developing the poultry and other agriculture farms.


McDonalds without any outlet in India five years ago has opened three outlets by now, while in the Philippines the number of outlets rose from 38 in 1991 to 113 outlets in 1996, the outlets in Indonesia went up from one to 59, in Japan, the number increased from 865 to 2,004 outlets while in Thailand the number increased from 8 to 52 during the same time.

Based on these figures, it is predicted that by the year 2,000 the industry alone will create more than 10,000 jobs while an indirect benefit will be incurred by the agriculture, the packaging and other subsidiary industries.

McDonalds, regarded as the largest and the best-known global food service retailer, has already signed an agreement with two business houses in the country and is expected to go into operation in the middle of this year both in Lahore and Karachi. The international franchise has 21,023 outlets in more than 101 countries with annual sales of US$31,812 million and another country added to its list of franchises with the opening of their first outlet in Cyprus. According to market sources the international food franchise, with more than 31 billion dollar sales world wide is coming in the market as an equal partner, in a 50-50 joint venture with both Akbar Group of Companies and the Lakhani Group. Akbar Group represents over 15 foreign airlines in the country. Staffed by over four hundred and fifty professionals, it is said that both Lakhani and Akbar Group are 'ready to invest over 5.5 million dollars each. The local franchises are planning to source their raw materials locally as much as possible. The advantage for the government in the coming of the international franchise is the documentation of the sector thus becoming a contributor to the exchequer.

Other Franchise

Dunkin' Donuts, a division of Allied Domecq food and beverage store with an annual turnover of over 2.5 billion dollars from 3,200 outlets in the United states and 1,200 stores in the rest of the world is another foreign franchise heading for the Pakistani market very soon. Dunkin' Donuts opened an outlet in Warble Centre, Dubai recently. And according to sources, the international franchise planned to open eight outlets in the region within a period of five years.

The Tacco Maker, a Mexican fast food franchise, wedged itself between the fast food industry and sit-in restaurants with its variety of take away and restaurant meals made from pure Mexican ingredients is being introduced in the country by Continental Business Private Limited. Others include Dominoes, Burger King, Nacho Nana, which is said to be presently looking for franchises in major cities of the country and Popeye said to have attracted the Bawany Group initially and have lost interest in the franchise now.

During a survey it was found out that the sector was growing at the rate of 10% per annum, that figure has since increased to 15% last year. based on the strong growth witnessed in the sector from this region over the past five years, it is expected that the foreign food franchisee will continue to grow. "By the year 2,000 the share of the foreign franchises will be 30%, as predicted by an analyst.

"The share of the foreign food franchises in the local market by the year 2,000 will depend on how the local market reacts to growing foreign competition and more importantly how the economy is doing.
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Title Annotation:Pakistan
Publication:Economic Review
Date:Jan 1, 1998
Previous Article:The Artal Group.
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