Mr Beans

Cravia boss Walid Hajj tells Tamara Walid how better cash management is going to see his coffee and food business through the downturn.

Ever since he was a kid, Walid Hajj knew he would end up working for the family business. Although it started with preparing teas and coffees and sending telexes from his father's office in Riyadh, Hajj says he was "groomed" to take over once the business founder retired.

Hajj's father was in the business of food and his son decided to follow suit. After a few years at Procter & Gamble, Hajj realised it was time to take the reins of his father's company, United Group, which specialised in the supply and manufacture of food products.

It didn't take him long before heading to the UAE and setting up his own firm, United Restaurant Development Company, later renamed Cravia.

"When we started I didn't think it'll be as successful as it is today. But Dubai and its restaurant and food sector seemed promising at the time," Hajj, the CEO of Cravia, recalls.

He's come a long way from his modest office on Sheikh Zayed Road, with only three members of staff. Today, Cravia is responsible for four brands, 38 outlets, and employs 600 people.

It might be best recognised as the parent company of Cinnabon, Seattle's Best Coffee, Zaatar w Zeit and the soon to open Roadster diner in the UAE. "We grew little by little," says Hajj, as the company approaches AED100million (US$27.2million) in sales.

This year, Cravia saw major sales increases and record profits, according to Hajj. He says he prides himself on partnering only with the best brands, offering excellent customer service and high-quality products.

Cravia nearly doubled its size from 20 stores in 2007 to 38 outlets across the UAE in 2008.

The global financial crisis, which has begun to bite into different sectors of the Gulf economies, is not holding Hajj back. Preparations to open five new outlets in 2009 are underway, including burgers and fast food brand Roadster Diner. Hajj sees the crisis as an opportunity, saying he couldn't be in a better position.

"In these times, our business is the best business to be in. I am involved in real estate and I can tell you the difference. We're a cash business; we sell cheap food, and are extremely well-positioned to weather the storm as we've been in the market long enough and expanded," says Hajj.

The economic meltdown has resulted in clear advantages for fast food companies and popular reasonably-priced coffee brands. Hajj looks forward to the crisis ending. He believes there's a silver lining.

"Hopefully, when all is said and done you'll have better real estate prices, and more realistic landlords for malls. It's a sellers market today, and people are controlling you. Also, the cost of food products have skyrocketed in the last year so that's also slowed down. All this will play to our advantage," he says.

But even Hajj, who thinks of himself as an optimist, can't deny tough times are ahead. He expects 2009 to be worse than "anyone could imagine" and believes we're only seeing the tip of the iceberg.

"The crisis is going to be much bigger, much wider spread and [will see the] destruction of wealth by all means," he says.

Yet, Hajj is able to fall asleep at night, claiming he's in a much better position than the chief executives of other businesses. "Our business, although not completely immune to financial difficulties, is somewhat resilient," says Hajj.

He adds: "We are not only [selling] food, but also cheap food in terms of pricing. People will always want to eat - just like McDonald's in the US is now booming because people can't afford to eat in beautiful restaurants anymore, the same is happening here."

And while it's predominantly good news for Cravia, especially as the last month saw record sales, Hajj has to brace himself for the worst.

"We are not in denial and realise that our business is very reliant on mall traffic. If that drops, we'll definitely see a drop. We are connected to tourism, if tourism drops we are going to drop. However, I think the effect on our kind of business is very small, especially as we are in the cash business. All our customers pay immediately so we don't have any receivables, and it's a small ticket item; most people are still able to afford it."

Perhaps a sign that the business is doing well is Hajj's insistence that he is not letting any of his staff go. "No job cuts," he says.

Additionally, he says the company's "aggressive plan" to bump up salaries in 2009 has not been put on hold, but will now be executed in two phases in both halves of the year.

Plans for expansion in 2009 have also not been significantly affected, according to Hajj, who had previously decided to slow down expansion after existing brands reached a suitable number of outlets. Zaatar W Zeit will still have two additional locations next year, while three new Roadster Diner outlets will come to the UAE.

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