Hamburger was first introduced to the public in Kuwait when Kuwait Food Company (Americana) launched a branch of the famous American fast food restaurant, Hardee’s, in the country in 1981. Wendy’s followed after but shut its operation soon after. 13 years later McDonald’s was launched in Kuwait in 1994 with its first branch on Gulf Road. The entry of Johnny Rockets in Kuwait in 1995 was the beginning of premium hamburger chains which did not exist in Kuwait before. Johnny Rockets’ first branch in Salmiya was the first to provide customers a different hamburger experience from fast food. Prior to that consumers in Kuwait mainly associated hamburgers with McDonald’s, Hardee’s, and Burger King. For 15 years, hamburgers were either served in casual dining restaurants or fast food restaurants up until 2010 when Elevation Burger, with its organic food-based concept, set the stepping stone for the fast casual dining experience in Kuwait. It is worth to note that locally developed hamburger concepts launched before 2010. Burger Boutique launched in 2005 followed by The Burger Hub in 2006 and Slider Station in 2007. These brands succeeded in stimulating the hamburger market in general and plant the seeds for future change. Despite the fact that these locally developed concepts are mainly in the casual dining category but their fresh take on hamburgers attracted early investors to the hamburger restaurant business such as TABCo and Alshaya. Their early entry into the industry did not go beyond a short lived hype among youngsters and slowly faded away. They fell into the same trap that most local businesses fall into which is turning their 100 square meter restaurant concept into a brand that lives with generations. The clear definition of business concepts powered by strong operational management and social engagement are key to growth in the food service industry.
“Organic food was not popular in Kuwait, and people didn’t really seem to talk about it much. However, we took the bet that people are smarter than what general market census might say,” as stated by Ali Ashkanani, CEO of TABCo International, Elevation Burger operator in Kuwait.
The opening of Elevation Burger in the Avenues in 2010 was the wake up call to many investors to realize the potential success of such concepts in Kuwait. Many international chains such as Shake Shack, SmashBurger, and FatBurger entered the Kuwaiti market shortly after and were able to take a considerable share from those that have been operating in the country since the 1990s. Today, the current hamburger supply in Kuwait is one of these four concepts: fast food hamburger, fast casual hamburger, hamburger catering, and casual dining hamburger channels. This niche category, fast casual hamburger, is transforming from an emerging trend to become a category by itself. Fast casual hamburgers are not like other food service trends that popped into the market and died quickly such as frozen yogurt and cupcake stores. First, hamburgers are not seasonal meals to be affected by the long months of summer or few cold months of winter in Kuwait. Hamburgers can be consumed multiple times weekly because they are fast, priced reasonably, and are considered a full-fledged meal. Second, consumers in Kuwait are exposed to the international food scene and the hamburger culture is deeply integrated in their travel abroad for many decades, which makes it strongly accepted by consumers of different ages. Such strong association and acceptance of the meal makes consumers consider this particular food option at least three times a week. As a matter of fact, 15,000 Kuwaitis formed an 11 kilometer drive-through line at the opening of the first McDonald’s in Kuwait in 1994. We saw people lining up for frozen yogurt but not as much. The line for frozen yogurt and cupcake stores got shorter and shorter over time mainly because they are new derivatives of existing food concepts that did not capture a long term appeal.
The hamburger trend is now a full-grown category and is here to stay. As per the market research studies conducted by Global Markets, there are currently around eight international chained brands in Kuwait with more than 30 branches and generating more than KWD 11 million in value sales annually under the fast casual hamburger category. Some of these brands such as Elevation Burger and Shake Shack are rapidly increasing their branch count and competing head to head with brands outside their category such as McDonald’s and Burger King.
The rapid transformation witnessed in this new category will also result in a market correction, which will lead to closing of entire chains or branches. Investors who already invested in this new category and those looking to invest should study the existing competition and strategize to ensure the success of their investments. Three elements that currently differentiate the successful fast casual brands are menu prices, geographic branch allocation, and social engagement. The fast casual category is characterized by offering affordable quality food in a fast food theme. Pushing prices into the casual dining price range while offering limited customer service and smaller food portions will push customers to seek other alternatives. Geographic branch allocation is another factor that is hugely misread in the market. For some reason, franchise owners of this category enjoy competing with each other door to door. The Avenues for example features six outlets and Divone complex in Abu Al Hasania features three outlets. Such high concentration of the same food service category will result in oversupply of the same product to the same consumer demographic. Owners should scout and position themselves outside the traditional food and beverage areas such as Salmiya, Hawally, Kuwait City, and Mahboula. There are new residential areas outside the old commercial parameters that need to be considered. Social engagement is another critical factor to increase consumer retention in the long term which is something needed for a young category. Solid social media presence accompanied by strong social responsibility activities plays a major role in establishing brands as friendly day-to-day companions rather than destination. The category is still young and it would be interesting to see how it will evolve further.