Burgerizzr eyes 200 restaurants by 2025 as market is ‘full of opportunities’: Chairman

Mohammad Al Ruwaigh, Chairman of Burgerizzr

The Shatirah House Restaurant Co. (Burgerizzr) targets 200 new branches by 2025, as the fast-food industry reports outstanding growth rates, Board Chairman, Mohammad Al Ruwaigh, told Argaam in an exclusive interview.

The size of Saudi Arabia’s fast-food market is estimated at over SAR 30 billion. It has strong growth potential, backed by youth, which make up the majority of the Kingdom’s population and by Vision 2030 programs that strengthened woman’s role in the labor market and contributed to increasing tourism and entertainment activities in the Kingdom.

Burgerizzr developed an effective and successful business model to maintain its original identity and adapt to the market changes, Al Ruwaigh added.

Al Ruwaigh talks about the company’s domestic and overseas expansion strategy, plans to grant franchise, details of e-channel sales, along with the company’s expected financial results and stock performance after debut.

Here’s the full interview with Al Ruwaigh:

Q: How will Burgerizzr stand out among peers despite fierce competition in the fast-food sector? What is your outlook for this sector?

A: Burgerizzr bets on maintaining its original identity as a made-to-order fresh burger restaurant. Despite various challenges and market volatility, Burgerizzr maintained its original identity - the challenge that forced many competitors to give up their commitment to provide fresh beef to their customers. Today, Burgerizzr is the largest chain of fresh burger restaurants in Saudi Arabia.

For the sector outlook, the fast-food market size is huge, exceeding SAR 30 billion. The fast-food market is promising and records solid growth rates. This growth is backed by youth, who account for the largest number of the Kingdom’s population.

Moreover, Vision 2030 helped empower women in the labor market and contributed to increasing tourism and entertainment activities in the Kingdom, which largely support this growth.

Q: What about the market growth rates?

A: Growth rates range between 5% and 6%, or more. These rates have been maintained for a long time.

Q: Do you think the number of restaurants in the Kingdom reached saturation in some key markets?

A: Saudi Arabia is a very huge market and opportunities are still large and diversified. The market might have witnessed a difference in the last ten years, but the restaurant and hospitality sector is still full of opportunities.

Q: What is your estimate on the size of the Saudi fast-food market?

A: Studies show that the Kingdom’s food market is valued at nearly SAR 100 billion. The size of the fast-food market is estimated at over SAR 30 billion, while the size of burger restaurants is valued at SAR 6-7 billion.

Q: What is Burgerizzr’s market share?

A: Many companies do not share their data, so it is difficult to answer this question accurately. However, based on our studies, Burgerizzr holds a large market share in Riyadh – the highest among peers. Burgerizzr has a market share of 3.5% in the Kingdom, as it has not yet extended its reach to most cities in the Kingdom.

Q: How many branches are owned by Burgerizzr? What are their geographical distributions in the Kingdom?

A: Burgerizzr had 79 branches by the end of 2020 and targets 200 branches by 2025. The company seeks to make up for the new openings, which were delayed by the COVID-19 pandemic. Burgerizzr is still pursuing expansions in the second half of this year.

Today, the largest number of Burgerizzr’s branches are located in the Central Region, with more than a half located in Riyadh. Burgerizzr is planning more expansions in the Western Region. The Kingdom’s largest burger restaurant chain targets to expand presence in new cities in northern and southern Saudi Arabia, as it has no presence in these areas.

Q: Will the business model of these expansions depend on the company's management of operations or franchise?

A: We consider franchise as an option of expansion outside the Kingdom in the coming period. We often need a partner who understands the region's market or the country and its regulations and believes in the business model that helps Burgerizzr spread its brand.

Q: You registered Burgerizzr brand in several markets, including the UAE, Bahrain, and Morocco. Are you considering opening branches in these markets? When do you expect that?

A: We studied the markets we target to determine our priorities for expansion. There are several factors that will make us choose our first foreign markets and their suitability for our business. We do not want to expand to be present, but to build a strong relationship with customers in those markets.

Q: Do you expect to open branches in the UAE and Bahrain in 2022?

A: We expect to study overseas expansion in the next year.

Q: How much do electronic channels constitute of your total sales?

A: Our sales are classified into sales inside and outside the branches. Sales outside the branches include sales through our electronic apps, other apps, and call center, which represent 40-45% of our total sales.

Q: How will you handle the risks related to concentration of sales on delivery apps that reduce your profit margins?

A: We have a strong brand with an excellent customer base, so we have to be close and always responsive to them. We work with all applications and consider them as our main partners. We are also keen on balancing sales channels and invested in our electronic outlets effectively. Our electronic app is very popular, and its new version will be launched soon, which we trust will enhance our relationship with customers.

Q: How much was the company's total debt in H1 2021?

A: Our debt is still in the range of SAR 13 million, and this level - according to the sector currently – is not high. We have more room to borrow. For example, the ratio of debt to equity reached about 28% and the ratio of debt to total assets hit around 11% in 2020. These ratios are logical, and some people may see them low. I think we are safe.

Q: What is your expectation to 2020 financials especially after stock listing? What is your expectation to stock performance after listing?

A: We are optimistic and always expect the best. The company's staff exerts great efforts and the market performs well. We are keen on achieving growth. As for the stock performance after listing, this is always determined by the market conditions. We are always confident that our stock will be fairly priced by the market.

Q: Do you believe that the stock valuation will attract new investors?

A: We are keen on valuating the stock fairly for investors. Of course, the seller wants a high price and the buyer needs a low price. However, the market determines the fair value.

Q: Do Burgerizzr's current shareholders plan to exit after the end of the lockup period?

A: Part of our success is that investors believe in Burgerizzr brand. The main investors will remain and we hope that those who will participate in maintaining this success will continue with us, as this is one of the company's stability indicators.