At the end of 2006, Time magazine declared the reader, the individual, the average Joe; the Man of the Year. It was a testament to the overwhelming growth in user-generated content that took the world by storm during that year. Social media platforms were empowering individuals, like me and you around the globe to become overnight sensations; citizen journalists, artists, writers and educators. Individuals worldwide were creating content and news and contributing through the available platforms (blogging websites, YouTube, twitter, Facebook, Flickr) at the same frequency as they we were consuming it. We were becoming increasingly aware of our individuality, our opinions and our need to be heard.
This egocentric attitude and massive need for customization and uniqueness forced companies worldwide to abandon their standard off the shelf products. Corporates around the world no longer had the luxury once afforded to Ford to claim that their customers “could have the car in any colour as long as it is black”. This was a new day and age and the customer was king. Moreover, this customer (existing and prospective) sought to be actively involved in product and service design, positioning and delivery.
This led to the rise of mass customization; corporates had to find a way to break down their final product into modular components that could be assembled in different ways to avail each customer the opportunity to customize and build their own unique product. This enabled corporates to massively expand their product offering as they would now make to order. Henceforth, by allowing the customer to select specifications and alternatives from a list of options, the corporate could now claim to offer countless product possibilities.
I still recall spending hours on the Dell website dreaming up and virtually assembling and building super laptops. Yet this concept, which most associate with high technology products and manufacturing, has migrated into the retail food business here in Cairo. Food and beverage manufacturers and retailers are realizing the need to interface more aggressively and dynamically with their customer. Hence we, as end users, are increasingly allowed, furthermore invited, to build our own salads, sandwiches, pastas, pizzas and even drinks all over Cairo at outlets such as TBS, Saladero, Marly’s Kitchen and countless others.
This is of great importance due to the weight of the food sector in Egypt. For according to the Central Authority for Public Mobility & Statistics the average Egyptian family spends 39.9% of their annual expenditure on food and drinks. That is almost twice the amount spent on housing and almost six folds the amount spent on healthcare. The majority of this food and beverage expenditure is eaten up by proteins, grains and vegetables. This has reflected on the retail side, where according to the general authority for investment, 47% of all retail generated sales come from food and drink outlets. Furthermore, from a manufacturing point of view, agribusiness and food and beverage manufacturing constitutes 27.5% of all manufacturing production in Egypt. Hence it was probably inevitable that all budding and successful business models would be attractive expansion strategies for those operating in the agribusiness and food and beverage segments.
Meanwhile, this global phenomenon of massive customization has been working in tandem with yet another customer-centric phenomenon; manufacturers are investing heavily in forward integration endeavors. Corporates in Cairo are seeing the benefit of operation in proximity to the end consumer, where feedback is instantaneous and real consumption statistics can be measured and analyzed. Agribusiness manufacturers are opting to integrate forward by establishing dedicated retail outlets, such as the case with regard to Wadi Food or Koki; or through setting up restaurant chains.
Shady Mokhtar of Swiss Choice is one such example. The young entrepreneur started out with an idea to bridge a gap in the Egyptian market for delicacies. He observed as the existing agribusiness manufactures of meat, chicken and fish catered their limited list of identified products to the retail and HORECA (HOtels, REstaurants and CAtering) segments. He too had come to the realization of the importance of customization. Armed with that belief, Swiss Choice embarked upon the journey of becoming the first manufacturer in Egypt that allows its customer base an extensive amount of tailoring with regard to the products. Swiss Choice indulged their customer base by inviting each customer to request that Swiss Choice manufacture his/her own unique and proprietary recipe for different sausages, salamis and pepperonis. This granted Mokhtar the instantaneous advantage of having an almost infinite product list. Mokhtar’s customers appreciated the variety and customization, moreover, several sought to stream-line their Egypt offering with their global recipes in order to ensure a unified customer experience everywhere around the world. This gave birth to Swiss Choice second selling proposition, the exclusivity in particular products granted to customers whom are very keen on maintaining the uniqueness and confidentiality of their recipes and product preferences.
Mokhtar’s business model made him an attractive partner to some other creative young individuals. He was approached with the idea of mass customization restaurant chains to capitalize on the Swiss Choice success in customized products. This newly formed partnership ventured into the restaurant industry by creating three unique local brands: Top Dawgs for American style hot dogs, Ali Baba Doner Kebab for Turkish shawerma and finally Mr. Wok for Chinese take-out (mainly Noodles). All three ventures were built on the concept of mass customization where the dish or sandwich is built using an assembly line set-up. For instance, at Top Dawgs you are free to select the bread, sausage, toppings and condiments. Mr.Wok allows you to design your own Noodles dish with a selection of Noodles, protein, vegetables and sauce.
When asked to evaluate the experience Mokhtar seemed rather pleased with the preliminary results. “Our drive”, he said, “came from the belief that there is great unmet potential in the food and beverage industry in Egypt. Hence, my partners and I decided to opt for 3 restaurant types that have not been previously tested in Egypt”. His view rings very true, since whilst mass customization is invading the restaurant business in Egypt, his three selections could greatly be considered Blue Ocean (a dive into an unsaturated market where he would have a first mover advantage) or at the least uniquely positioned.
Another key advantage or attribute of the experience that Mokhtar values greatly is the learning he and his partners have gained. Mokhtar and his partners had decided against purchasing franchising rights of famous global brands, opting instead to build their own brand. This was both challenging and cost effective, as this saved them the initial large investment and financial outlay associated with the franchising contract, moreover it gave them free reign with regard to creative aspects of the restaurants. When building your own brand you have the luxury of being able to design your own logo, setting, atmosphere and menu; more significantly it allows you to customize your offering to suit the dynamic tastes of the Egyptian consumer. Hence came the realization that for a local brand to be successful mass customization was the way forward, customer insight and involvement were instrumental to success and to the ability to compete, succeed, grow and scale the operation.
This business model has resulted in a very steep learning curve for Mokhtar and the team. “We are able to get on the spot feedback from the clients on the products we would normally sell to retailers and get limited or delayed feedback on”. This ability to interact with the customer and get first hand feedback on consumption preferences of the product, frequency of consumption, preferred complimentary products and finally comments on flavor, size, quality and variety enable the young entrepreneur to improve the Swiss Choice products in their manufacturing phases.
I wondered if these successful mass customization restaurants in Zamalek and Mohandseen have had an impact on Swiss Choice’s business to business sales by virtue of brand associations; given that Mokhtar’s restaurants proudly bear a “Powered by Swiss Choice” emblem. “It is too soon to say”, says Mokhtar, “logic would claim that the affiliation would enable us to leverage the brand and sell more. Yet the restaurants are localized to one area of the city and have not been in operation long enough for me to draw accurate inferences about their impact on business.”
The largest challenge of shifting from being solely a manufacturer and distributor, to being the retailer at which the customer can consume the product is the risk of failure. “Our competitive advantage as Swiss Choice is our ability to customize our production lines to suit changing customer requirements; this means that should we discontinue a product or start a new one, minor changes have to be made to the production floor.” Mokhtar continued, “In the restaurant business on the other hand, you invest in a location, brand, concept, staff and marketing; then if the restaurant doesn’t take-off as planned in 6 months’ time, you would have to scrap the entire investment and start over”. “There are no quick fixes in a business-to-customer or retail setting” Mokhtar concluded.
Yet, given his own experience, Mokhtar expects that more and more agribusiness manufacturers will focus on integrating forward along their value chains in order to maximize their margins and in order to gain the advantages of customer interaction. “At the end, accurate and detailed customer insight is the real advantage.”
Originally written for Business Today