Nestle Toll House Café Plans Growth In The Middle East

NRN.com|April 13, 2012 1:20 pm EST

Nestle Toll House Café by Chip is among several U.S. restaurant chains expanding to the Middle East. The Dallas-based restaurant opened its first unit in that region in 2010 in Beirut, Lebanon.

Lebanon native Ziad Dalal, chief executive and founder of Nestle Toll House Café and its parent company, Crest Foods Inc., launched the concept in Dallas in 2000 after selling his Frullati brand.

The company has since expanded its licensed Nestle product line beyond the signature chocolate chip cookie to include to coffee, frozen yogurt, ice cream, smoothies and soft drinks.

Along with units in the United States and Canada, Nestle Toll House Café has nine Middle East locations in Dubai, Kuwait and Lebanon, with a tenth scheduled to open soon. Dalal said the company plans to open additional units in Jordan and Saudi Arabia.

"We found 2011 was our best year since the financial crisis started in 2007," Dalal said. "And this year we're tracking ahead of even last year."

Dalal spoke with Nation's Restaurant News about the challenges and opportunities of growing in the Middle East.

What opportunities does developing in the Middle East offer?

We have great hope. We are executing. This year we will add another five units. It takes a little time to get up and going, from logistics to finding the right operators. It's a combination of things.

What is the biggest challenge?

Getting the pipeline of real estate is a challenge. Good real estate is a scarce commodity. You don't want to open just anywhere. Occupancy costs in the Middle East are not cheap by any means. It's more expensive than the U.S.

Is the supply chain difficult?

Although we have a limited menu, we generate quite a few SKUs. It seems to be the same process whether you carry 10 SKUs or 20 SKUs. For us it's a little bit easier because Nestle is a global brand and Nestle has a presence in the Middle East. The company has quite a bit of our product available in the Middle East for our cafes to be pulling from. We probably export in the neighborhood of 10 to 13 SKUS, no more.

How have you expanded the menu through the years?

We've added beverages and ice cream. Our goal is to be a full-fledged dessert café. We're also getting earnings from the Middle East. We're finding volumes very high overseas.

You've opened larger units in the Middle East. How has that worked?

We have one unit all the way to 3,200 square feet and an average unit about 2,000 square feet. That compares to about 1,200 square feet in the United States. We're starting to look at development here that would provide more of a dine-in experience. We have the traditional mall and airport units, of course, but we're trying to go after the experience of the sit-down, indulgent experience.

Contact Ron Ruggless at ronald.ruggless@penton.com.
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