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Kuwait Report
Marcopolis presents the Kuwait Report focused on the investments, doing business, economy and other topics featuring interviews with Kuwaiti leaders. The sectors under review in this issue are industry, oil and gas sector, investments, banking sector, telecom sector and many more.
InterviewsAugust 25, 2021
Food and Beverage Industry in Kuwait: An Interview with Ramzy Abou-Ezzeddine of Sushu Sushi
Ramzy Abou-Ezzeddine, CEO of Sushu Sushi
- Written by Sandra Francisco
- Published: August 25, 2021
Interview with Ramzy Abou-Ezzeddine, CEO of Sushu Sushi
What is your assessment of the sector, especially how the delivery and e-commerce industry has grown in light of the pandemic?
The food and beverage industry in Kuwait is very developed, very sophisticated. As an expat living in Kuwait, you eat extremely well. Kuwaitis have great taste. As a result, this is reflected in the quality of the food that is available. Obviously, you have all sorts of restaurants catering to all sorts of social classes. The government gives a lot of facilities to Kuwaitis to start their own business. Given the fact that food is so big, a lot of Kuwaitis have historically ventured into that. However, this is the old model of brick and mortar restaurants or cafes. Pre-Corona, we would notice a lot of new spots coming out, only to disappear eight months or a year down the road. For various reasons, they did not succeed. We have the very few that have stood the test of time and have managed to maintain consistency of quality. People love those brands and always go back to them. These outlets have done extremely well and have built a lot of equity in the minds of people and really set the standard for anybody else to follow. But then, the whole world was hit by a new reality that everybody had to face and accept and then had to adapt to. In Kuwait, Corona was taken very seriously by the government. They have taken measures from day one. We went into a full lockdown, then a very heavy curfew period, and a lot of restrictions on where you can go and what kind of business can be open. That was a major blow to the business, simply because even beyond the lockdown, restaurants were only allowed to open during the day and they had to close by 5:00pm, which was then extended to 7:00pm. Obviously, for any dine-in restaurant, only serving lunch does not make a lot of financial sense. This is why a lot of outlets had to close down. On the flip side of that coin, the delivery business simply boomed. Beyond the initial lockdown where everything was closed, they then started allowing the delivery outlets or kitchens to deliver. This meant that all businesses, even beyond the food business from banking to regular retail, etc., had to very rapidly switch things and do internal digital transformation. All of a sudden, e-commerce was the way to go. Where you are located physically does not matter anymore because customers find you online, they shop for what they want online, they order online, pay online, and then depending on the business, you either deliver within half an hour or an hour, or if you are a retail operation within the next two or three working days. All of a sudden, people have started to realize in the food business that the old model of brick and mortar is not the optimal way. Why would I want to invest in a huge location that can allow for the kitchen requirements and the dining area? Why do I want to pay rent for that? Why do I want to pay for all the decoration? All these things take away from our capital. What is COVID bulletproof is to not have a dine-in option, but to really focus on the delivery service. Kuwaitis order a lot of food, even beyond COVID. It is a dream come true for any food business that is successful. If you manage to market yourself into their lives, then the rest is a lot easier. In parallel to that, the concept of cloud kitchens or ghost kitchens has started to mushroom all over the world. In Kuwait, we started hearing about them a couple of years ago and now all the big players are either realizing and amending their business model to start taking cloud kitchens or the big players are building their own central cloud kitchens from where they can start delivering. Then, it becomes a question of logistics because the more kitchens they have located across the country of Kuwait, the wider your delivery perimeter will be. If you prepare and deliver hot food, your perimeter is much smaller. If you deliver room temperature food, it can go a bit wider. So, it becomes a huge logistic operation.
What has been the journey beginning Sushu Sushi?
When we started Sushu Sushi, which is our main brand, the Japanese brand, we started with one central kitchen in a very central location in Kuwait. Because sushi is not delivered hot, our perimeter of delivery when we use our own drivers and our own fleet can be as far as we want it to be. But, when you use a third party like Deliveroo or Talabat, they dictate their own perimeter. We have our own website where people go to www.lovesushu.com and they can order whatever they want and we will deliver wherever they are. A lot more common in Kuwait is to go to Talabat or to Deliveroo and search for Japanese. If their address is within the delivery perimeter of Talabat or Deliveroo, then we will appear there and if we are lucky enough, they will choose us. If they choose us once, we are confident that they will choose us again because we have very good food.
Are you planning on putting more emphasis on your own in-house logistics?
Every single business, even the giants like McDonald's or Domino's are also on Talabat or Deliveroo. The way the financial parts work, you will be much better off having people order directly from you and you delivering versus ordering through Talabat or Deliveroo, simply because there is cost of sales. Everywhere around the world, those outlets tend to give you incentives like small discounts if you order directly from them. But then, we know that the nature of human beings is very lazy... Talabat already has my credit card, they already have my address, it is just a click and I am done, whereas if I want to go to the source website, I have to enter my name, my address, my credit card. Do I trust the site for me to put in my credit card? Talabat and Deliveroo make all these things hassle-free. I have had conversations with both Talabat and Deliveroo and they always tell us stories about how some restaurant owners try to fight them. But they are so big, they generate so much traffic to your kitchen, that you cannot really afford not to be there. I personally look at it as the cost of doing business. Everybody uses these kinds of third party services.
What are some of your specific products and services at Sushu Sushi?
The food and beverage industry in Kuwait is very developed, very sophisticated. As an expat living in Kuwait, you eat extremely well. Kuwaitis have great taste. As a result, this is reflected in the quality of the food that is available.
We bought into a very young kitchen that delivers sushi called Sushu Sushi and it was still in its infancy. It was launched during Corona and it was never really promoted or advertised. Whoever used to buy from Sushu was our immediate circle of friends and family and it was quite important to keep it that way. We still had to adjust things and test our own operation, test everything on a smaller scale. Once we were ready, we started pushing that further and further. As of June 1, 2021, we became part of that operation and we started making sure that all the little details are ready in terms of packaging, in terms of the team in the kitchen, in terms of logistics, with Talabat and Deliveroo, etc. We wanted to make sure that everything was right. Then, we had three months of experience of the launch menu. We knew what the popular items were and what the less popular items were. I am a person who really believes in data so I scrutinize all the data that we have: who is ordering and why, how many times they order, the size of the order. We did the number crunching and then we created a new menu of around 20 items. We are lucky enough to have a very precious asset in the kitchen which is our head chef who is simply outstanding and the stuff he creates is really out of this world. We taste tested and we rated everything. Then, we relaunched everything in mid-July 2021. This is when we started doing promotion on social media, specifically on Instagram, because we use mostly Instagram for food advertising. Now, it is really starting to pick up. We saw a 300% increase between June and July, and in mid-August, we are already doing much better than July. July and August in Kuwait for the food business are a dead period usually because half the country is outside the country. So, we know that we are heading in the right direction and we have just added the second kitchen. Once that goes live, our perimeter of delivery increases. Because we know that we have good food and we know the operation delivers properly, we are confident that our client base will increase. Gradually, we will add more and more kitchens and deliver to wider areas of Kuwait. Now, in parallel, we have signed a deal with a US based company that creates ghost brands or virtual brands, whereby they create menus, and then they look at the market for companies like us and after they do the due diligence, they test them and they scrutinize them to make sure that you are able to handle the menu. We launched two brands. The first we launched a month ago called Poké Pick for poké bowls which are becoming the latest craze in Kuwait. The first month of operation it was only available on Deliveroo and it did surprisingly well. Now, we are onboarding it on Talabat and the outlook for that is quite encouraging. By adding more kitchens, a wider scope of clientele will be able to order from that menu. We will be launching in a couple of weeks the third brand, which is the Chinese food called Lucky Lantern. Again, it is the question of how many locations, how many kitchens you have, that will dictate how many people can see us and can try us and can order from us. The beauty of all of this is the synergies because adding Poké Pick and adding Lucky Lantern to Sushu did not require us to add a single person in the staff in the kitchen. It is all efficiencies that will enable us, because of this business model, because of the virtual kitchens, because of the virtual brands, to appear as if we are three different restaurants or three different companies catering three very different menus, but from the same location with the same staff preparing things. So, that synergy that we are creating and that we are banking on is something that will help to really take us to the next level in terms of the size of our operation, how fast we can break-even and start growing properly, geographically, horizontally, and vertically. We are very optimistic. We are very bullish on what is happening. It is still very early days, but the signs are out there and there are obvious signs.
What is your vision for the company for the medium term, the next three years?
The food industry is a business that is about speed. When you want to do something, you do it very quickly. It is about speed and it is about consistency. The first thing when we started that my foodie partner told me was in this line of business, it is very easy to fail and you do not fail because of the big decisions. The big decisions are the big ones like what is your menu? What is your location? Who is the chef that you are going to hire? But you fail because of the 100 small decisions you have to make every single day on the operation. This is where we really try to make sure we nail it properly through quality assurance, making sure the staff is happy, making sure there is chemistry within the team in the kitchen, making sure you handle customer complaints well. If I know a person who has ordered, the next day, I call them personally and I want to know how it was. We differentiate between your subjective comments like, "I don't like soy sauce,” and we focus on objective comments and comments that we would like to work on. A couple of days ago, I was talking to a friend of mine who is not Kuwaiti, but who has been living in Kuwait for a while. She told me that she found our food a bit heavy and she would rather that her sushi was a bit lighter. But, she does recognize that for the taste buds of Kuwaitis, they love the heavy sauces, they love the mayos, etc. But that conversation triggered us to relook at things and we are now working on implementing on our menu that for any roll that you order, you will have the choice to order it with sauce or without sauce. I love customers who complain because at least we know what is going wrong. We want to learn from their experience so that we can improve. The sector is about moving very fast. That is why after a month and a half we took the second kitchen and there are three others in the pipeline. We very quickly took on poké with Poké Pick and Chinese with Lucky Lantern and we are making sure that the staff is able to cope with the volume. We do not introduce everything on all platforms on the first day. We do that gradually. We make sure that we get feedback when it comes to the taste of the food. When it comes to packaging, did anything spill while it is being delivered? Can we change the packaging? We deliver for example our soy sauce in small bottles, not in small containers with a lid, because we know that the bottle will never spill. We have been very careful and looking into the tiniest details and trying to address them to make sure our customers are always happy and they always come back. Our ambition is to grow horizontally, to add more brands, and to work vertically, to add more kitchens and a wider perimeter of delivery. Hopefully, with a good formula in terms of what kind of food we deliver, how we deliver it, the quality of the food, the consistency over time, that will ensure our success. In terms of where we want to be in the next three years, we are a tiny group compared to all the giants, but we have big ambitions and we do everything from the heart. Everything we do, we do it with love, we do it from the heart, we do it passionately. This is something intangible, but I really feel that ultimately, people will start appreciating that and will start differentiating us from all the others. It is not a factory of sushi. It is not a factory of poké bowls. Every poké bowl we assemble with a lot of care, even microscopic care. That is something that we hope will differentiate us from the rest of the crowd.
Do you have any projects in the short term?
To help accelerate our growth and to let us feel that we are making progress towards our ambition, we are now in very advanced talks to merge with another operation that overnight will see us double our capacity, add another much bigger brand to our portfolio, logistically generate a lot more efficiencies in terms of call center, in terms of delivery fleet, in terms of all the support functions. Hopefully, that will materialize within the next few days and overnight, we will have five different kitchens and we will be able to serve and cater to a much wider audience across not only the three brands that we currently have but a fourth brand that we hopefully will be merging with and a fifth brand that we will be hopefully adding in Q4 of this year. Another way we were looking to grow and to differentiate ourselves is to also go into retail distribution. You will be able to buy our sushi from supermarkets and coops hopefully within the next six weeks.
What are some of the challenges that you have been facing recently and what have you done to overcome them?
The biggest challenge we are facing currently is because of COVID and because of the restriction that the government has imposed on travel into Kuwait, which is the lack of staff. Today, to find qualified staff that would fit within all our requirements is extremely challenging. This is mostly kitchen staff. Parallel to that, all the delivery companies like Talabat and Deliveroo have a huge shortage of drivers because, simply, a lot of people in some specific categories have been locked out of Kuwait with no ability to re-enter the country. This is starting to ease up as of August 1st, but still, with the capacity of incoming flights and incoming travelers, it is a very slow process. While this is helping to keep COVID under control, the delivery industry is suffering from that. Because we are growing at a fast pace, adding to our kitchen staff is proving to be quite challenging.
What drives you to do what you do? What is your inspiration?
I was always driven by challenges where either I need to fix a problem or I need to build something that does not exist. Even when I was in the corporate world, I would get headhunted and I would always hope for landing a role where I could do that. I would never be interested to join a smooth sailing company that, with me or without me, they were still going to do equally well. Ever since I graduated, I always envied friends of mine who had the guts to venture on their own and start their own business. At every milestone I had when I was changing jobs, I would always think, "What if I now jump out and start my own gig?". But, I always admitted to myself that I was always a coward. I always went for the nice, secure job with a nice, secure income, as opposed to taking the risk and jumping and building something from scratch. When I left my last job during COVID where the market was dead, where opportunities for senior roles were non-existing across the whole region, I really felt that if I do not do it now, I will never do it. If I keep waiting for the next job, I will never be able to build something for myself. Then, I linked up with another friend of mine who is a serial entrepreneur. He was never employed. Ever since he graduated, he has had his own companies. He failed many times and succeeded many times. He asked me to do something together. My international corporate experience complements his entrepreneur, gutsy experience. We explored so many different ideas in the IT sector, in entertainment, in education, etc., until I had a conversation with my foodie friend, who had started Sushu and started another company in food and he asked us to come along. He really started to educate us on the industry, on the cloud kitchen concept, on the logistics behind that. I found that fascinating. As a managing partner I learned a lot, which at this stage of my career is something that I am eager for because the last thing you want is to feel that you are stagnating. I am learning so much every day. It is something totally new to me. I can always bring in to my current role my past experience, being in marketing and financial management and operational management, etc. I am not very comfortable, but this is great because I am kept on my toes and I will eventually get to a stage where I am very comfortable. But now, I am driven by my anxiety and I am enjoying it and I am having a blast.
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