Khaled Naga

In our pursuit to find out the many things that food is, Shashi from KPMG in Kuwait and Lisa from TRACCS Kuwait sat down for a conversation with Mr. Khaled Naga, Chief Executive Officer for the Restaurant Sector at Al Thiqa Food Group Company (TFGC).

Our first impression of Mr. Khaled was that he is a food connoisseur and someone who believes that a cuisine reflects the culture. For him, food is much more than a business: it’s a tradition which brings people together to celebrate and spread happiness. As we dove deeper into his ideas about the F&B industry in Kuwait, it was evident from his statements that there’s a deep emotional connection with the industry that extends beyond numbers.

Our first topic of discussion was diversity, taste, and the divide in the F&B industry, on which Mr. Khaled had a unique perspective. 

The upsurge in Kuwait’s diversity, combined with the newer generations’ affinity for unique experiences is nudging F&B businesses to consider curating just that. Consequently, Mr. Khaled feels that the future of cuisines will rely on what the younger consumers need and how the country’s population diversity shapes up.

Pointing at the generational divide w.r.t flavor and cuisines, he shares that, unlike the older generations, the newer generations of consumers have started experiencing food in different ways.

He says, “The younger generations have a knack for more sophisticated flavors. Their taste buds are completely different than ours. They are into fast food and fast-casual outlets, and they are inching towards unconventional cuisines, such as Japanese,” he says.

Mr. Khaled shares that for an F&B business to tap into the younger pool of consumers, the focus should be on developing brands and products befitting the contemporary requirements. However, he believes basic is king and that businesses must incorporate the human tendency to return to it to achieve sustained growth.

He explains that, in the F&B space, consumers do not take a one-brand-only approach. 

They love trying out different things and are well-exposed to the food in and out of Kuwait, so they want to experience newness on a regular basis. But, after a while, they always return to their regular orders.

Mr. Khaled further elaborates on how demographics and business locations play an important role in the entire ecosystem.

The location of an F&B business is as important, if not more, as the consumer demographics. And when the two are tied to each other as they are in Kuwait, adopting a one-size-fits-all approach is counterintuitive at best.

Mr. Khaled says, “In our group, we have a wide variety of cuisines and international dining options, but we see a completely different consumer profile in each location.” He shares that when you move from one end of the consumer spectrum to the other, priorities shift. He explains this further by citing an example from his own experience.

“In some of our locations, there are consumers who are particular about the type of chicken. But when you move towards the more sophisticated consumer groups in prime locations, you will notice that such factors matter less,” Mr. Khaled tells us.

He emphasizes the importance of taking into account the income of their consumers, in addition to their ICP, before designing the experiences and offerings for them.

“In one location, we are dealing with urban customers who know all there is to about us and, in the other, we are catering to consumers who don’t know about us and what we offer. That’s why what we sell in one location is completely different than what we sell in another,” stresses Mr. Khaled.

As the Al Thiqa Food Group has multiple brands under its umbrella, our next question focused on the operation models, particularly in terms of whether the organization uses a centralized, decentralized or cloud kitchen model.

Whether an F&B business should adopt cloud kitchens should be based on its size, the infrastructure it has, and how established it is. Mr. Khaled says, “If you’re an entrepreneur who is new to the business and doesn’t have the required support or infrastructure, then you might want to go in the direction of cloud kitchens.” He explains that cloud kitchens rely on delivery-based services to be successful. 

However, to be profitable using this model, one should have presence in multiple locations (15–30), owing to the low profit margins being offered by most service aggregators. Mr. Khaled shares that larger organizations like his strive to maintain a 50–50 dining-to-delivery ratio, but it is not ideal.

When it comes to QSR, he tells us that they have their own central kitchen and a cluster of cloud kitchens that they leverage for catering to delivery orders as well as orders for some of their smaller brands. He feels that dark/cloud kitchens are more suited to help F&B businesses that are looking to expand or are unable to find a location for their establishment.

Upon being asked about his plans on expanding their physical presence, he tells us maintaining their bottom line is a top priority and they are unwilling to open shops at new locations unless they can achieve that. 

Mr. Khaled is of the opinion that the simplest way to stay relevant among people is through visually identifiable brand placement. He emphasizes that F&B businesses are built on trust, and people find it difficult to back a food establishment if they don’t know where the food is coming from.

“When people pass by your signages and see them, you will always be on top of their minds. But if you are hidden in a central/cloud kitchen, you will need to spend a huge amount of money to grab people’s attention,” he says. 

He adds that while signages work well for smaller businesses, bigger, well-established, F&B businesses might need to put themselves out for the public to see by building physical presence in different locations.

Al Thiqa is known for introducing the latest food tech to the Kuwait market. So, as we steered the conversation towards technology, Mr. Khaled shared that traditional forms of advertising have been replaced by the internet and other digital alternatives. 

He points out that, given the high internet penetration among them, the younger masses are always on the lookout for F&B businesses that provide better offerings with a side of convenience. 

Mr. Khaled tells us that people are relying more on applications to order their food and, while they are at it, they want to experience a virtual food-court-like experience, be able to check different menus, see what’s trending, and (or) simply reorder a previous purchase. They also want to be able to save their addresses and cards for a quicker checkout, all of what adds to their need for a convenient food shopping experience, which is what Mr. Khaled’s company tries to deliver through their ordering platforms and websites. 

Recounting a technological initiative from their business, he shares, “We moved from using a normal grill to a charbroiler, which brought down the production time for grilled shrimps from 12 to 4 minutes (approx.) and helped us maintain consistent cooking time and taste.” 

Mr. Khaled believes that technology is a game-changer in the F&B business, and it will continue to advance, be it in terms of food-related processes, ERP, or marketing, among other aspects.

Our next question was around the challenges in the F&B industry in Kuwait. To that, Mr. Khaled had a detailed and meticulous response. 

“Kuwait is not an easy country to work in, especially when it comes to the F&B businesses because you’re dealing with people both in the back and front of the house.” However, what stood out the most in the conversation was the pertinence of talent as a concern. 

He points out that talent concerns are more prevalent in the casual dining space as compared to QSR. “When it comes to casual dining, people want to see staff that is presentable, knows how to talk to customers, can make them laugh and hold a conversation with them,” he says.

Taking the example of one of his own brands in the casual dining space, he says, “If you are a loyal customer visiting the outlet, the people there will know your name and even your regular order and personal preferences without you having to say them.”

Mr. Khaled adds that personalization requires a particular skillset. However, hiring for roles that will help you fulfil that is challenging, given most skilled talent prefer some of the other GCC countries over Kuwait, owing to the limitations in regulations in terms of VISAs, geographic origin of talent, and additional challenges in warehousing and restoring, among others.

He also feels that F&B businesses should have the flexibility to modify their prices, so they are well-positioned to tackle financial uncertainties, fuel prices, and even material costs.

We finally reached the end of the conversation with a question on the future trends in the F&B sector. We especially wanted to understand his views around plant-based food, considering it has been creating a buzz in the industry. 

While he admits the presence of a market for plant-based factory-grown products, he emphasizes that the market is marginally sized to expect rapid growth. He adds that plant-based products are more expensive than their regular alternatives. 

He believes it is understandable to offer such products if they are part of your business. However, starting a dedicated factory/store is beyond reason as there is no significant demand for it in Kuwait presently.

Mr. Khaled says, “When you use plant-based milk, the price of the coffee goes up by about 30%. If you have a condition that requires you to consume lactose-free milk, then we will serve you that, but most people will continue to consume the regular products, i.e., milk, meat, and vegetables.” 

In the defense of his statement, he explains that only about 50,000 out of the 1.2–1.4mn Kuwaitis can bear the cost of the said products on a more regular basis, which makes the business less sustainable to run on a longer term.

Concluding his conversation with us, Mr. Khaled addresses that the ease of setting up and growing an F&B in some of the other GCC countries is urging business owners to shift bases. Putting a stop to it would require every iota of government support, complemented by the right regulations, the vision to scale up, a healthy population and adequate safety measures.

“Your approach for the future should be very calculative and based around your present requirements, location, who you’re catering to, and your vision, among other key factors,” ends Mr. Khaled.