An Aussie take-away heads to Pakistan – read how the business has approached the expansion in this Austrade case study:
In June 2006, Gary Katos, a chef, fast food business operator and consultant with more than 30 years in the industry, opened the first Cone Heads store in Melbourne focusing on freshly cooked hot chips and gourmet burgers.
Katos combined the traditional fish and chip shop with innovative cooking technology to offer healthier versions of classic take-away food.
The centre of the Cone Heads business is the not-so-humble hot chip – made from premium potatoes cooked to order. Cone Heads cooks the chips in 100 per cent vegetable oil free of cholesterol, trans fat and genetically modified organisms.
They come in a cone designed to maintain flavour and freshness, with a wide range of specialty sauces. And Pakistan loves them.
Katos, CEO of Cone Heads Australia, franchised the concept and in 2014 opened his first international store in Lahore, Pakistan’s cultural and food capital.
Vibrant Brands International, the master franchisee of Cone Heads in Pakistan, Thailand and the UAE, is establishing a second store in Lahore and has opened a third in Islamabad. It plans to open another 30 outlets in Pakistan as the market grows.
Identifying niche markets
Cone Heads Pakistan prides itself on being different to the big US fast food brands – a premium product that is suitable for all ages and easy to eat on the go.
The interest for Cone Heads to launch in Pakistan came from Vibrant Brands international director, Mian Shaz. He tasted Cone Heads in Melbourne, loved the concept and saw opportunities overseas, particularly in Pakistan. Shaz presented the idea to the Vibrant Brands team and four months later Cone Heads opened its first international store in Lahore.
Cone Heads has built a strong business in Australia by perfecting its recipes and creating efficient store operations. It has taken this same approach in Pakistan.
The Australian Cone Heads team spent three weeks in Pakistan fitting out the launch restaurant, sourcing equipment, developing the local supply chain and training the local team.
‘We’ve been flexible in accommodating the master franchisee, including training and recipe development,’ says Katos.
Vibrant Brands managing director Bilal Muhabat says many international quick-service food brands have entered Pakistan in recent years, making the market much more competitive.
‘As industry insiders, we identified a niche for Cone Heads,’ says Muhabat. ‘We introduced the concept of premium hot chips.’
The Cone Heads philosophy fits a variety of business models – take-away, dine in, drive-through, kiosk or food court. It has affordable pricing to remain competitive and affordable start-up costs for a better return on investment.
Adapting to the local market
Katos says Cone Heads has worked hard to build a trusting relationship with its local partners and they regard each other as family.
‘Transparency is everything,’ he says. ‘The team is motivated and focused on sharing the same dream. Franchising internationally creates many moving parts, so it’s vital to have skilled people who are specialists for each part.’
To establish its presence in Pakistan, Cone Heads made some cultural adjustments to its menu to suit the local palate, such as providing spicier sauces made from local ingredients, using more chicken than beef, and extending the range of burgers from the five it offers in Australia to about 20 in Pakistan.
Cone Heads also modified its store model to include a staff prayer area and to appeal more directly to locals, since there is little tourist trade in Pakistan.
When Cone Heads analysed the market, it found that the average Pakistani regarded Western food as a luxury, so Cone Heads introduced a new value menu line.
‘Our sales rocketed,’ says Katos. ‘People who had never been able to afford this type of food now find it within reach. We also launched our home delivery service.’
Australia’s positive reputation
Katos says it’s best to keep an open mind about doing business in Pakistan, and to remember that Australia has a positive reputation there.
‘Pakistan is not on the radar of most international companies because of the perception people have of the market from the media,’ he says.
‘However, it’s a giant country, with a young and fast-growing population, an entrepreneurial spirit and a growing middle class. It offers many business opportunities.
‘What works in Pakistan is listening to the advice of experienced people and going with the flow. What doesn’t work is prejudgment and a lack of understanding or respect for cultural differences.
‘The Pakistani people I’ve met are genuine, friendly and very welcoming. They see Australia as a country that accepts multiculturalism.
‘They love western products, but it seems to me that anything ‘Aussie’ is their favourite. Australia has a very strong brand image in Pakistan.’
Doing business in Pakistan
Katos says the Pakistani business sector and government are fair, accommodating and will go out of their way to help. However, there are some pitfalls, such as poor infrastructure, energy shortages, higher taxes and some legal annoyances.
‘For example, Australian companies should be aware that regulations can change without notice, and they build this into their contracts to ensure there is flexibility to adapt and change as needed,’ says Katos.
‘The power grid fails for hours on most days; they call this ‘load shedding’. We had to invest in an industrial generator for each store.
‘The import duties and taxes are higher than in Australia, but wages are lower. You get used to these differences and you adapt your business model accordingly. It is what it is, and it’s the same for everyone.’
Opportunities for Australian companies in Pakistan can be lucrative – if they find a niche and offer the right product for the right price.
‘Your company’s IP should be easy to systemise and replicate,’ says Katos. ‘Local knowledge is paramount. The team you decide to work with must have an existing infrastructure and be given strong training in your product.
‘I only know of two ways to make money – solve a problem or add a benefit. If you find a niche and decide that Pakistan is of interest to you, it’s crucial to identify the right entry point into the market. Work out who your ideal client is and back it up with a great value proposition.’
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